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® 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.

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.

 

----

| **Name and Year of Birth**                                                           | **Business Experience and                            Directorships****During the Past 5 Years**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | **Position with the DWS Funds and Length of Time                            Served** |
|--------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------|
| **Chicago Board Members                            to be Elected to New York Board** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                 |
| John W. Ballantine                            (1946)                                 | Retired; formerly,                            Executive Vice President and Chief Risk Management Officer, First                            Chicago NBD Corporation/The First National Bank of Chicago (1996-1998);                            Executive Vice President 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 | Chicago Board Member                            since 1999.                          |
| Paul K. Freeman                            (1950)                                    | Consultant, World                            Bank/Inter-American Development Bank; formerly, Project Leader,                            International Institute for Applied Systems Analysis (1998-2001); Chief                            Executive Officer, The Eric Group, Inc. (environmental insurance)                            (1986-1998). Formerly, Trustee of funds managed by DIMA or its                            affiliates (1993-2002).                                                                                                                                                                                                                                       | Chicago Board Member                            since 2002, Chairperson since 2007.  |
| William McClayton                            (1944)                                  | Chief Administrative                            Officer, Diamond Management & Technology Consultants, Inc. (global                            management consulting firm) (2001-present); formerly, Senior Partner,                            Arthur Andersen LLP (accounting) (1966-2001). Directorships: Board of                            Managers, YMCA of Metropolitan Chicago; formerly, Trustee, Ravinia                            Festival.                                                                                                                                                                                                                                     | Chicago Board Member                            since 2004.                          |
| Robert H. Wadsworth                            (1940)                                | President, Robert H.                            Wadsworth & Associates, Inc. (consulting firm) (1983 to present).                            Formerly, Trustee of funds managed by DIMA or its affiliates                            (1999-2004).                                                                                                                                                                                                                                                                                                                                                                                                                                           | Chicago Board Member                            since 2004.                          |

 

 

 

 

*Please Retain This Supplement for Future Reference*

 

November 26, 2007

DMF-3913

 

 

**Supplement to the Currently Effective Statement of Additional            Information**

 

**DWS            RREEF Global Real Estate Securities Fund**

*All references in the Fund’s statement of additional            information (the “SAI”) to “Deutsche Asset Management International            GmbH” as a sub-subadvisor to the Fund and all references to a            “sub-sub-subadvisor” to the Fund are deleted and the three paragraphs in            the subsection entitled “Sub-subadvisors” under the section of the SAI            entitled “Management of the Fund—Investment Advisor” are replaced in            their entirety by the following:*

Pursuant to investment sub-advisory agreements between RREEF and RREEF            Global Advisers Limited, Deutsche Asset Management (Hong Kong) Limited and Deutsche            Investments Australia Limited (the “sub-subadvisors”), these entities act            as sub-subadvisors to the fund. The sub-subadvisors are indirect, wholly owned            subsidiaries of Deutsche Bank AG. As sub-subadvisors, under the supervision of the            Board of Trustees, DIMA and RREEF, the sub-subadvisors manage the fund’s            investments in specific foreign markets. RREEF allocates, and re-allocates as it deems            appropriate, the fund’s assets among the sub-subadvisors.

RREEF Global Advisers Limited, Winchester House, 1 Great Winchester            Street, London, United Kingdom, EC2N 2DB, manages stock selection decisions for the            European portion of the fund’s portfolio. Deutsche Asset Management (Hong Kong)            Limited, 55/F Cheung Kong Centre, 2 Queen’s Road Central, Hong Kong, China, and            Deutsche Investments Australia Limited, Level 21, 83 Clarence Street, Sydney,            Australia, NSW, 2000, manage the stock selection decisions for the Asian and Australian            portions of the fund’s portfolio, respectively.

 

*All references in the Fund’s SAI to a            “sub-sub-subadvisor” to the Fund are deleted and any sentences with the            phrase “or sub-sub-subadvisor” or “and sub-sub-subadvisor” are            to be read as if such phrase was deleted.*

 

 

 

*Please Retain This Supplement for Future Reference*

 

October            31, 2007

DGREF-3901

 

 

 

Supplement to the currently effective Statements of Additional            Information of each of the listed funds/portfolios:

 

| **Cash Management Fund Institutional**

**Cash Reserves Fund Institutional**

**Daily Assets Fund Institutional**

**DWS Alternative Asset Allocation Plus                            Fund**

**DWS Balanced Fund**

**DWS Blue Chip Fund**

**DWS California Tax-Free Income Fund**

**DWS Capital Growth Fund**

**DWS Commodity Securities Fund**

**DWS Communications Fund**

**DWS Conservative Allocation Fund**

**DWS Core Fixed Income Fund**

**DWS Core Plus Allocation Fund**

**DWS Core Plus Income Fund**

**DWS Disciplined Long/Short Growth Fund**

**DWS Disciplined Long/Short Value Fund**

**DWS Disciplined Market Neutral Fund**

**DWS Dreman Concentrated Value Fund**

**DWS Dreman High Return Equity Fund**

**DWS Dreman Mid Cap Value Fund**

**DWS Dreman Small Cap Value Fund**

**DWS EAFE® 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 Growth Allocation Fund**

**DWS Growth Plus Allocation Fund**

**DWS Health Care Fund**

**DWS High Income 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 Japan Equity Fund**

**DWS Large Cap Value Fund**

**DWS Large Company Growth Fund**

**DWS Latin America Equity 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 Moderate Allocation Fund**

**DWS Money Market Prime Series**

**DWS Money Market Series**

**DWS New York Tax-Free Income Fund**

**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 Strategic Income Fund**

**DWS Technology Fund**

**DWS U.S. Bond Index Fund**

**DWS U.S. Government Securities Fund**

**DWS Value Builder Fund**

**NY Tax Free Money Fund**

**Tax Free Money Fund Investment**

**Tax-Exempt California Money Market                            Fund**

**Treasury Money Fund**

**Treasury Money Fund Investment** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

*The            following information replaces similar disclosure under “Revenue Sharing”            in the “Purchase and Redemption of Shares” section of each            Fund’s/Portfolio’s Statements of Additional Information:*

 

**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 the 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 the            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 the NASD 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            the 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 the 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 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, the 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)

First            Clearing/Wachovia Securities

HD Vest            Investment Securities, Inc.

ING            Group

LaSalle            Financial Services, Inc. (dba ABN Amro)

Linsco/Private Ledger Corp.

Marsh            Insurance and Investment Company

Merrill            Lynch, Pierce, Fenner & Smith Inc.

Morgan            Stanley

Oppenheimer & Co., Inc.

Pacific            Select Distributors Group

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**

ADP            Clearing & Outsourcing

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

Citibank NA

D.A.            Davidson & Company

Deutsche Bank Securities Inc.

Deutsche Bank Trust Company Americas

Emmett            A. Larkin Company

Fiduciary Trust Co. – International

H.C.            Denison Co.

Huntleigh Securities

Investors Bank & Trust

JPMorgan Chase

Lincoln            Investment Planning

Linsco            Private Ledger Financial Services

Mellon            Financial Markets LLC

Penson            Financial Services

Pershing Choice Platform

ProFunds Distributors, Inc.

Romano            Brothers and Company

SAMCO            Capital Markets (Fund Services, Inc.)

Smith            Moore & Company

State            Street Bank & Trust Co.

Sungard            Institutional Brokerage Inc.

US            Bancorp

UBS            Financial Services Inc.

William            Blair & Company

**Channel: Third Party Insurance Platforms**

Acacia            National Life Insurance

Allmerica Financial Life Insurance Company

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

Genworth Life Insurance Company of New York

Genworth Life and Annuity Insurance Company

Great            West Life and Annuity Insurance Company

Hartford Life Insurance Company

ICMG            Registered Variable Life

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 GroupSymetra 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.

 

 

*Please Retain This Supplement for Future Reference*

 

August            8, 2007

DMF-3911

 

 

 

Supplement to the currently effective Statement of Additional            Information of each of the listed funds:

**_____________________________________________________________________________________________**

 

**Class A and Class S**

 

**Cash            Account Trust**

|   | § | Tax-Exempt Portfolio |
|--------|--------|----------------------|

– DWS Tax Free Money Fund Class S

**DWS            Balanced Fund**

**DWS            Blue Chip Fund**

**DWS            California Tax-Free Income Fund**

**DWS            Capital Growth Fund**

**DWS            Commodity Securities Fund**

**DWS            Communications Fund**

**DWS            Conservative Allocation Fund**

**DWS            Core Fixed Income Fund**

**DWS            Core Plus Allocation Fund**

**DWS            Core Plus Income Fund**

**DWS Disciplined Long/Short Growth Fund**

**DWS Disciplined Long/Short Value Fund**

**DWS            Disciplined Market Neutral Fund**

**DWS            Dreman Concentrated Value Fund**

**DWS            Dreman High Return Equity Fund**

**DWS            Dreman Mid Cap Value Fund**

**DWS            Dreman Small Cap Value 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            Global Bond Fund**

**DWS            Global Opportunities Fund**

**DWS            Global Thematic Fund**

**DWS            GNMA Fund**

**DWS            Gold & Precious Metals Fund**

**DWS            Growth & Income Fund**

**DWS            Growth Allocation Fund**

**DWS            Growth Plus Allocation Fund**

**DWS            Health Care Fund**

**DWS            High Income 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 Equity Fund**

**DWS            International Select Equity Fund**

**DWS International Value Opportunities Fund**

**DWS            Japan Equity Fund**

**DWS            Large Cap Value Fund**

**DWS            Large Company Growth Fund**

**DWS            Latin America Equity 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            Moderate Allocation Fund**

**DWS            Money Market Prime Series**

|   | § | DWS Cash Investment Trust Class A |
|--------|--------|-----------------------------------|

|   | § | DWS Cash Investment Trust Class S |
|--------|--------|-----------------------------------|

**DWS            New York Tax-Free Income Fund**

**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            Strategic Income Fund**

**DWS            Technology Fund**

**DWS            U.S. Government Securities Fund**

**DWS            Value Builder Fund**

**Investors Cash Trust**

|   | § | Treasury Portfolio - DWS U.S. Treasury Money Fund Class                            S |
|--------|--------|--------------------------------------------------------------------------------------|

 

*The            following supplements the “Purchase and Redemption of Shares” section of            each of the above-referenced funds’ Statement of Additional Information for Class            A and Class S shares only:*

 

**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.

 

*Please retain this supplement for future reference.*

 

June            12, 2007

DMF-3908

 

 

 

Supplement to the currently effective Statements of Additional            Information of each of the listed funds/portfolios:

 

| **Cash Account Trust**

Tax-Exempt Portfolio

**DWS Balanced Fund**

**DWS Blue Chip Fund**

**DWS California Tax-Free Income Fund**

**DWS Capital Growth Fund**

**DWS Commodity Securities Fund**

**DWS Conservative Allocation Fund**

**DWS Core Fixed Income Fund**

**DWS Core Plus Allocation Fund**

**DWS Core Plus Income Fund**

**DWS Disciplined Long/Short Growth Fund**

**DWS Disciplined Long/Short Value Fund**

**DWS Disciplined Market Neutral Fund**

**DWS Dreman High Return Equity Fund**

**DWS Dreman Mid Cap Value Fund**

**DWS Dreman Small Cap Value 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 Europe Equity 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 Growth Allocation Fund**

**DWS Growth Plus Allocation 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 Equity Fund**

**DWS International Fund**

**DWS International Select Equity Fund**

**DWS International Value Opportunities                            Fund**

**DWS Japan Equity Fund**

**DWS Large Cap Value Fund**

**DWS Large Company Growth Fund**

**DWS Latin America Equity 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 Moderate Allocation Fund**

                              | **DWS Money Market Prime Series**

DWS Cash Investment Trust Class S

**DWS Money Market Series Premium**

**DWS Money Market Series Prime Reserve**

**DWS New York Tax-Free Income Fund**

**DWS Pacific Opportunities Equity Fund**

**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 Bond Fund**

**DWS Short-Term Municipal Bond Fund**

**DWS Small Cap Core Fund**

**DWS Small Cap Growth Fund**

**DWS Small Cap Value Fund**

**DWS Strategic Income Fund**

**DWS Tax Free Money Fund**

**DWS Technology Fund**

**DWS U.S. Government Securities Fund**

**Investors Cash Trust**

Treasury Portfolio

  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

*The            following information replaces similar disclosure to the list of eligible Class S            investors in the “Purchases — Eligible Class S Investors” section of            each Fund’s Statement of Additional Information.*

Only            certain investors are eligible to buy Class S shares, as described in greater detail            below.

 

**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 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. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

DWS-SDI may, at its discretion, require appropriate documentation that            shows an investor is eligible to purchase Class S shares.

 

*Please Retain This Supplement for Future Reference*

 

May 21,            2007

DMF-3906

 

 

**DWS ADVISOR FUNDS**

**DWS RREEF Global Real Estate Securities Fund**

Class            S Shares

 

**STATEMENT OF ADDITIONAL INFORMATION**

**May 1, 2007, as revised December 31, 2007**

 

This Statement of Additional Information is not a prospectus and should            be read in conjunction with the prospectus (the “Prospectus”) dated May 1,            2007 for Class S shares of DWS RREEF Global Real Estate Securities Fund (the            “Fund”), a non-diversified series of DWS Advisor Funds (the            “Trust”). The Prospectus may be obtained without charge by contacting DWS            Scudder Distributors, Inc., 222 South Riverside Plaza, Chicago, Illinois 60606-5808 or            calling (800) 621-1148, or by contacting 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 (the            “SEC” or the “Commission”) Internet Web site            (http://www.sec.gov            ).

The            audited financial statements for the Shares of the Fund, together with the notes            thereto, are in the Fund’s Annual Report to shareholders dated December 31, 2006,            and which are incorporated herein by reference and are deemed to be part of this            SAI.

This Statement of Additional Information is incorporated by reference            into the Prospectus of the Fund.

 

**TABLE OF CONTENTS**

**Page**

             

| INVESTMENT                            RESTRICTIONS                                                                                                                                                                                                                                  1

’’INVESTMENT                            POLICIES AND                            TECHNIQUES                                                                                                                                                                        3

Investment                            Techniques                                                                                                                                                                                                                                     3

Portfolio                            Holdings                                                                                                                                                                                                                                           24

MANAGEMENT                            OF THE                            FUND                                                                                                                                                                                                                               25

Investment                            Advisor                                                                                                                                                                                                                                         25

Compensation of                            Portfolio                            Managers                                                                                                                                                                               28

FUND SERVICE                            PROVIDERS                                                                                                                                                                                                                                   32

Administrator                                                                                                                                                                                                                                                                               32

Distributor                                                                                                                                                                                                                                                                                     33

Custodian                                                                                                                                                                                                                                                                                      34

Transfer Agent                            and Shareholder Service                            Agent                                                                                                                                                              34

Independent                            Registered Public Accounting                            Firm                                                                                                                                                           35

Legal                            Counsel                                                                                                                                                                                                                                                   35

PORTFOLIO                            TRANSACTIONS                                                                                                                                                                                                                                  35

PURCHASE                            AND REDEMPTION OF                            SHARES                                                                                                                                                                         38

DIVIDENDS                                                                                                                                                                                                                                                                                                                            49

TAXES                                                                                                                                                                                                                                                                                                                                      50

NET ASSET                            VALUE                                                                                                                                                                                                                                                     54

TRUSTEES                            AND                            OFFICERS                                                                                                                                                                                                                                      55

TRUST                            ORGANIZATION                                                                                                                                                                                                                                            64

PROXY                            VOTING                            GUIDELINES                                                                                                                                                                                                                                66

FINANCIAL                            STATEMENTS                                                                                                                                                                                                                                       67

ADDITIONAL                            INFORMATION                                                                                                                                                                                                                                 67

APPENDIX                                                                                                                                                                                                                                                                                                                              68

 

No person has been authorized to give any information or                            to make any representations not contained in this SAI or in the                            Prospectus in connection with the offering made by the Prospectus and,                            if given or made, such information or representations must not be                            relied upon as having been authorized by the Trust or its Distributor.                            The Prospectus does not constitute an offering by the Trust or by the                            Distributor in any jurisdiction in which such offering may not lawfully                            be made. Shares of the Fund may not available in certain states. Please                            call (800) 621-1148, to determine availability in your                            state.

  |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 

**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. If            there is a change in the Fund’s investment objective, shareholders should            consider whether the Fund remains an appropriate investment in light of their financial            position and needs. There can be no assurance that the Fund’s objective will be            met.

Unless otherwise indicated, with the exception of the percentage            limitations on borrowing, the following restrictions apply at the time transactions are            entered into. Accordingly, any later increase or decrease beyond the specified            limitation resulting from a change in the Fund’s net assets will not be            considered in determining whether it has complied with its investment            restrictions.

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:

| 1. | The Fund may not borrow money, except as permitted under                            the 1940 Act, and as interpreted or modified by regulatory authority                            having jurisdiction, from time to time. |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | The Fund may not 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. | The Fund may not 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. | The Fund may not 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. | The Fund may not 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. | The Fund may not make loans except as permitted under                            the 1940 Act, as amended, and as interpreted or modified by regulatory                            authority having jurisdiction, from time to time. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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 such meeting, if the holders of            more than 50% of the outstanding voting securities of the Fund are present in person or            represented by proxy, or (2) more than 50% of the outstanding voting securities of the            Fund.

The            Fund has voluntarily adopted certain policies and restrictions, which are observed in            the conduct of the Fund’s affairs. These nonfundamental policies represent the            intentions of the Trustees based upon current circumstances. Nonfundamental policies            may be changed by the Trustees without shareholder approval.

 

As            a matter of nonfundamental policy:

| (a) | The Fund may not purchase additional investment                            securities at any time during which outstanding borrowings exceed 5% of                            the total assets of the Fund. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | The Fund may not purchase any security or enter into a                            repurchase agreement if, as a result, more than 15% of its net assets                            would be invested in repurchase agreements not entitling the holder to                            payment of principal and interest within seven days and in securities                            that are illiquid by virtue of legal or contractual restrictions on                            resale or the absence of a readily available market. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | The Fund may not sell securities short unless it owns or                            has the right to obtain securities equivalent in kind and amount to the                            securities sold short, and provided that transactions in futures                            contracts and options are not deemed to constitute selling securities                            short. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d) | The Fund may not purchase securities on margin, except                            to obtain such short-term credits as are necessary for the clearance of                            transactions and provided that margin payments in connection with                            futures contracts and options on futures contracts shall not constitute                            purchasing securities on margin. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e) | The Fund may enter into futures contracts, and write and                            buy put and call options relating to futures contracts. The Fund may                            not, however, enter into leveraged futures transactions if it would be                            possible for the Fund to lose more money than it invested. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f) | The Fund may not invest 25% or more of its total assets                            in securities of companies principally engaged in any one industry,                            except that the Fund may invest without limitation in securities of                            companies engaged principally in the real estate industry. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g) | The Fund may not acquire securities of registered                            open-end investment companies or registered unit investment trusts in                            reliance on Section 12(d)(1)(F) or 12(d)(1)(G) of the 1940 Act. The                            1940 Act imposes additional restrictions on acquisition by the Fund of                            securities issued by insurance companies, broker-dealers, underwriters                            or investment advisors, and on transactions with affiliated persons as                            defined in the 1940 Act. It also defines and forbids the creation                            of cross and circular ownership. Neither the SEC nor any other agency                            of the federal or state government participates in or supervises the                            management of the Fund or its investment practices or                            policies. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

For            purposes of determining industry groups in connection with this restriction, the SEC            ordinarily uses the Standard Industry Classification codes developed by the US Office            of Management and Budget. The Fund monitors industry concentration using a more            restrictive list of industry groups than that recommended by the SEC. Deutsche            Investment Management Americas Inc. (“DIMA” or the “Advisor”)            believes that these classifications are reasonable and are not so broad that the            primary economic characteristics of the companies in a single class are materially            different. The use of these restrictive industry classifications may, however, cause            the Fund to forego investment possibilities that may otherwise be available to it under            the 1940 Act.

***Fund Name*****.**Under normal circumstances, the Fund will invest at least 80% of its net            assets, plus the amount of any borrowing for investment purposes (calculated at the            time of any investment), in the equity securities of real estate investment trusts            (REITs) and real estate companies listed on recognized stock exchanges around the            world, as the Fund’s name suggests. Currently, the Fund does not intend to borrow            for investment purposes. Equity securities include common stock, preferred stock and            securities convertible into common stock. If market fluctuations or shareholder actions            cause the Fund’s investments to fall below this percentage, the Fund will act to            remedy the situation as promptly as possible, normally within three business days.            However, the Fund will not be required to dispose of portfolio holdings or purchase            additional investments immediately if the Advisor believes such action may expose the            Fund to losses or unreasonable risks of loss. Also, the Fund may occasionally depart            from this percentage. For example, the Fund may depart from this percentage to respond            to unusually large cash inflows or redemptions, or to avoid losses caused by adverse            market, economic, political or other conditions.

 

The            Fund will provide its shareholders with at least 60 days’ prior notice of any            change in the Fund’s 80% investment policy described above.

**INVESTMENT POLICIES AND TECHNIQUES**

**General**

This section explains the extent to which the Advisor, RREEF America            L.L.C. (the “Subadvisor”) and any sub-subadvisor or sub-sub-subadvisor (for            purposes of the Investment Policies and Techniques section the Advisor and Subadvisor            and any sub-subadvisor or sub-sub-subadvisor will be defined as the            “Advisor”) can use various investment vehicles and strategies in managing            the Fund’s assets. Descriptions of the investment techniques and risks associated            with the Fund appear herein. In the case of the Fund’s principal investment            strategies, these descriptions elaborate upon discussions contained in the            Prospectus.

The            Fund is a non-diversified series of the Trust, an open-end management company which            continuously offers and redeems shares at net asset value. A non-diversified fund can            invest a greater portion of its assets in a given company. The Fund is a series of the            type commonly known as a mutual fund. The Fund offers the following classes of shares:            Class A, Class C, Class S and Institutional Class. Each class has its own features and            policies. Class A, Class C and Institutional Class shares of the Fund are offered            through a separate Statement of Additional information.

To            meet federal income tax requirements for qualification as a regulated investment            company, the Fund must limit its investments so that at the close of each quarter of            its taxable year (1) no more than 25% of its total assets are invested in the            securities of a single issuer (other than the US government or a regulated investment            company), and (2) with respect to at least 50% of its total assets, no more than 5% of            its total assets are invested in the securities of a single issuer.

In            general, within the restrictions outlined here and in the Fund’s Prospectus, the            Advisor has broad powers to decide how to invest Fund assets, including the power to            hold them uninvested.

Investments are varied according to what is judged advantageous under            changing economic conditions. It is the Advisor’s policy to retain maximum            flexibility in management without restrictive provisions as to the proportion of one or            another class of securities that may be held, subject to the investment restrictions            described herein. It is the Advisor’s intention that the Fund generally will            consist of common stocks and equity-equivalent securities. However, subject to the            specific limitations applicable to the Fund, the Advisor may invest the assets of the            Fund in varying amounts using other investment techniques, such as those reflected            below, when such a course is deemed appropriate in order to attempt to attain the            Fund’s investment objective. Senior securities that are high-grade issues, in the            opinion of the Advisor, also may be purchased for defensive purposes.

Current income is part of the Fund’s objective. As a result, a            portion of the portfolio of the Fund may consist of debt securities.

So            long as a sufficient number of acceptable securities are available, the Advisor intends            to keep the Fund fully invested. However, under exceptional conditions, the Fund may            assume a defensive position, temporarily investing all or a substantial portion of its            assets in cash or short-term securities. When the Fund is invested for temporary            defensive purposes, it may not achieve its investment objective.

The            Advisor may use stock index futures and options as a way to expose the Fund’s            cash assets to the market while maintaining liquidity. However, the Advisor may not            leverage the Fund’s portfolio, so there is no greater market risk to the Fund            than if it purchases stocks.

**Investment Techniques**

Descriptions in this Statement of Additional Information of a particular            investment practice or technique in which the Fund may engage (such as hedging, etc.)            or a financial instrument which the Fund may purchase (such as

 

options, forward foreign currency contracts, etc.) are meant to describe            the spectrum of investments that the Advisor, in its discretion, might, but is not            required to, use in managing the Fund’s portfolio assets. The Advisor 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 or investment techniques 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.

**REITS and Real Estate Companies.**Under            normal circumstances, the Fund will invest at least 80% of its net assets, plus the            amount of any borrowings for investment purposes (calculated at the time of any            investment), in equity securities of REITs and real estate operating companies listed            on recognized stock exchanges around the world. A security will be considered part of            the Fund’s investment universe if the issuer of such security has a market            capitalization of at least $50 million and, in the opinion of the portfolio managers,            at least 50% of its revenues or 50% of the market value of its assets at the time its            securities are purchased by the Fund are attributed to the ownership, construction,            management or sale of real estate and it is listed on a recognized public foreign or            domestic stock exchange, or traded over the counter.

A            REIT invests primarily in income-producing real estate or makes loans to persons            involved in the real estate industry. Some REITs, called equity REITs, buy real estate            and pay investors income from the rents received from the real estate owned by the REIT            and from any profits on the sale of its properties. Other REITs, called mortgage REITs,            lend money to building developers and other real estate companies and pay investors            income from the interest paid on those loans. There are also hybrid REITs which engage            in both owning real estate and making loans. If a REIT meets certain requirements, it            is not taxed on the income it distributes to its investors.

REITs are sometimes informally categorized into equity REITs, mortgage            REITs and hybrid REITs. Investment in REITs may subject the Fund to risks associated            with the direct ownership of real estate, such as decreases in real estate values,            overbuilding, increased competition and other risks related to local or general            economic conditions, increases in operating costs and property taxes, changes in zoning            laws, casualty or condemnation losses, possible environmental liabilities, regulatory            limitations on rent and fluctuations in rental income. Equity REITs generally            experience these risks directly through fee or leasehold interests, whereas mortgage            REITs generally experience these risks indirectly through mortgage interests, unless            the mortgage REIT forecloses on the underlying real estate. Changes in interest rates            may also affect the value of the Fund’s investment in REITs. For instance, during            periods of declining interest rates, certain mortgage REITs may hold mortgages that the            mortgagors elect to prepay, which prepayment may diminish the yield on securities            issued by those REITs.

Certain REITs have relatively small market capitalizations, which may            tend to increase the volatility of the market price of their securities. Furthermore,            REITs are dependent upon specialized management skills, have limited diversification            and are, therefore, subject to risks inherent in operating and financing a limited            number of projects. REITs are also subject to heavy cash flow dependency, defaults by            borrowers and the possibility of failing to qualify for tax-free pass-through of income            under the Code and to maintain exemption from the registration requirements of the 1940            Act. By investing in REITs indirectly through the Fund, a shareholder will bear not            only his or her proportionate share of the expenses of the Fund, but also, indirectly,            expenses of the REITs. In addition, REITs depend generally on their ability to generate            cash flow to make distributions to shareholders.

**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.

**Equity Equivalents.**In addition to            investing in common stocks, the Fund may invest in other equity securities and equity            equivalents, including securities that permit the Fund to receive an equity interest in            an issuer, the opportunity to acquire an equity interest in an issuer or the            opportunity to receive a return on its investment that permits the Fund

 

to            benefit from the growth over time in the equity of an issuer. Examples of equity            securities and equity security equivalents include preferred stock, convertible            preferred stock and convertible debt securities.

The            Fund will limit its holdings of convertible debt securities to those that, at the time            of purchase, are rated at least B- by the Standard & Poor’s Corporation            (“S&P”) or B3 by Moody’s Investors Service            (“Moody’s”), or, if not rated by S&P and Moody’s, are of            equivalent investment quality as determined by the Advisor. The Fund’s            investments in convertible debt securities and other high-yield/high-risk,            nonconvertible debt securities rated below investment-grade will comprise less than 20%            of the Fund’s net assets. Debt securities rated below the four highest categories            are not considered investment-grade obligations. These securities have speculative            characteristics and present more credit risk than investment-grade            obligations.

Equity equivalents also may include securities whose value or return is            derived from the value or return of a different security.

**Debt Securities.**The Fund may invest in            debt securities because the Fund has current income as part of the Fund’s            objective. As a result, the Fund may invest in debt securities when the Advisor            believes such securities represent an attractive investment for the Fund. It is            intended that the Fund may invest in debt securities for income or as a defensive            strategy when the Advisor believes adverse economic or market conditions            exist.

The            value of the debt securities in which the Fund may invest will fluctuate based upon            changes in interest rates and the credit quality of the issuer. Debt securities that            comprise part of the Fund’s fixed-income portfolio will be limited primarily to            investment-grade obligations. However, the Fund may invest up to 5% of its assets in            “high-yield/high-risk” securities. Investment grade means that at the time            of purchase, such obligations are rated within the four highest categories by a            nationally recognized statistical rating organization (for example, at least Baa by            Moody’s or BBB by S&P), or, if not rated, are of equivalent investment            quality as determined by the Advisor. According to Moody’s, bonds rated Baa are            medium-grade and possess some speculative characteristics. A BBB rating by S&P            indicates S&P’s belief that a security exhibits a satisfactory degree of            safety and capacity for repayment but is more vulnerable to adverse economic conditions            and changing circumstances.

“High-yield” securities, sometimes referred to as            “junk bonds,” are higher risk, non-convertible debt obligations that are            rated below investment-grade securities, or are unrated, but with similar credit            quality.

There are no credit or maturity restrictions on the fixed-income            securities in which the high-yield portion of the Fund’s portfolio may be            invested. Debt securities rated lower than Baa by Moody’s or BBB by S&P or            their equivalent are considered by many to be predominantly speculative. Changes in            economic conditions or other circumstances are more likely to lead to a weakened            capacity to make principal and interest payments on such securities than is the case            with higher quality debt securities. Regardless of rating levels, all debt securities            considered for purchase by the Fund are analyzed by the Advisor to determine, to the            extent reasonably possible, that the planned investment is sound, given the investment            objective of the Fund.

The            Fund will not necessarily dispose of high-yield securities if the aggregate value of            such securities exceeds 5% of the Fund’s assets, if such level is exceeded as a            result of market appreciation of the value of such securities or market depreciation of            the value of the other assets of the Fund. Rather, the Advisor will cease purchasing            any additional high-yield securities until the value of such securities is less than 5%            of the Fund’s assets and will monitor such investments to determine whether            continuing to hold such investments is likely to assist the Fund in meeting its            investment objective.

In            addition, the value of the Fund’s investments in fixed-income securities will            change as prevailing interest rates change. In general, the prices of such securities            vary inversely with interest rates. As prevailing interest rates fall, the prices of            bonds and other securities that trade on a yield basis generally rise. When prevailing            interest rates rise, bond prices generally fall. These changes in value may, depending            upon the particular amount and type of fixed-income securities holdings of the Fund,            impact the net asset value of the Fund’s shares.

Notwithstanding the fact that the Fund will invest primarily in equity            securities, under adverse market or economic conditions, the Fund may temporarily            invest all or a substantial portion of its assets in cash or            investment-grade

 

short-term securities (denominated in US dollars or foreign currencies).            To the extent that the Fund assumes a defensive position, it will not be investing for            capital appreciation. When the Fund is invested for temporary defensive purposes, it            may not pursue or achieve its investment objective.

**Convertible Debt Securities.**A convertible            debt security is a fixed-income security that offers the potential for capital            appreciation through a conversion feature that enables the holder to convert the            fixed-income security into a stated number of shares of common stock. As fixed-income            securities, convertible debt securities provide a stable stream of income with            generally higher yields than common stocks. Because convertible debt securities offer            the potential to benefit from increases in the market price of the underlying common            stock, they generally offer lower yields than non-convertible securities of similar            quality. Like all fixed-income securities, there can be no assurance of current income            because the issuers of the convertible securities may default on their obligations. In            addition, there can be no assurance of capital appreciation because the value of the            underlying common stock will fluctuate.

Convertible debt securities generally are subordinated to other similar            but non-convertible debt securities of the same issuer, although convertible bonds, as            corporate debt obligations, enjoy seniority in right of payment to all equity            securities. Because of the subordination feature, however, convertible securities            typically have lower ratings than similar non-convertible securities.

Convertible debt securities that comprise part of the Fund’s            fixed-income portfolio will be subject to the same limitations with respect to quality            as those described above under “Debt Securities.”

**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. Purchase and sales of shares of Central Funds are made at net asset            value.

**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 (Brady Bonds are            debt securities issued under a plan implemented to allow debtor nations to restructure            their outstanding commercial bank indebtedness), involve special risks. 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 of emerging market governmental issuers is to be            considered speculative. 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. There is a history of defaults with respect to commercial bank            loans by public and private entities issuing sovereign debt. All or a portion of the            interest payments and/or principal repayment with respect to sovereign debt may be            uncollateralized. Obligations arising from past restructuring agreements may affect the            economic performance and political and social stability of those issuers.

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.

**Foreign Investment.**Foreign securities are            normally denominated and traded in foreign currencies. As a result, the value of the            Fund’s foreign investments and the value of its shares may be affected favorably            or unfavorably by changes in currency exchange rates relative to the US dollar. There            may be less information publicly available about a foreign issuer than about a US            issuer, and foreign issuers may not be subject to accounting, auditing and financial            reporting standards and practices comparable to those in the US. The securities of some            foreign issuers are less liquid and at times more volatile than securities of            comparable US issuers. Foreign brokerage commissions and other fees are also generally            higher than in the US. Foreign settlement procedures and trade regulations may involve            certain risks (such as delay in payment or delivery of securities or in the recovery of            the Fund’s assets held abroad) and expenses not present in the settlement of            investments in US markets. Payment for securities without delivery may be required in            certain foreign markets.

In            addition, foreign securities may be subject to the risk of nationalization or            expropriation of assets, imposition of currency exchange controls or restrictions on            the repatriation of foreign currency, confiscatory taxation, political or financial            instability and diplomatic developments which could affect the value of the            Fund’s investments in certain foreign countries. Governments of many 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 these countries. As a result, government actions in the future could            have a significant effect on economic conditions which may adversely affect prices of            certain portfolio securities. There is also generally less government supervision and            regulation of stock exchanges, brokers, and listed companies than in the US. Dividends            or interest on, or proceeds from the sale of, foreign securities may be subject to            foreign withholding taxes, and special US tax considerations may apply. Moreover,            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.

Legal remedies available to investors in certain foreign countries may            be more limited than those available with respect to investments in the US or in other            foreign countries. The laws of some foreign countries may limit the Fund’s            ability to invest in securities of certain issuers organized under the laws of those            foreign countries.

Of            particular importance, many foreign countries are heavily dependent upon exports,            particularly to developed countries, and, accordingly, have been and may continue to be            adversely affected by trade barriers, managed adjustments in relative currency values,            and other protectionist measures imposed or negotiated by the US and other countries            with which they trade. These economies also have been and may continue to be negatively            impacted by economic conditions in the US and other trading partners, which can lower            the demand for goods produced in those countries.

The            risks described above, including the risks of nationalization or expropriation of            assets, typically are increased in connection with investments in ‘emerging            markets.’ For example, political and economic structures in these

 

countries may be in their infancy and developing rapidly, and such            countries may lack the social, political and economic stability characteristic of more            developed countries (including amplified risk of war and terrorism). Certain of these            countries have in the past failed to recognize private property rights and have at            times nationalized and expropriated the assets of private companies. Investments in            emerging markets may be considered speculative.

The            currencies of certain emerging market countries have experienced devaluations relative            to the US dollar, and future devaluations may adversely affect the value of assets            denominated in such currencies. In addition, currency hedging techniques may be            unavailable in certain emerging market countries. Many emerging market countries have            experienced substantial, and in some periods extremely high, rates of inflation or            deflation for many years, and future inflation may adversely affect the economies and            securities markets of such countries.

In            addition, unanticipated political or social developments may affect the value of            investments in emerging markets and the availability of additional investments in these            markets. Any change in the leadership or politics of emerging market countries, or the            countries that exercise a significant influence over those countries, may halt the            expansion of or reverse the liberalization of foreign investment policies now occurring            and adversely affect existing investment opportunities. The small size, limited trading            volume and relative inexperience of the securities markets in these countries may make            investments in securities traded in emerging markets illiquid and more volatile than            investments in securities traded in more developed countries. For example, limited            market size may cause prices to be unduly influenced by traders who control large            positions. In addition, the Fund may be required to establish special custodial or            other arrangements before making investments in securities traded in emerging markets.            There may be little financial or accounting information available with respect to            issuers of emerging market securities, and it may be difficult as a result to assess            the value of prospects of an investment in such securities.

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 a 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 a 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.

Certain of the foregoing risks may also apply to some extent to            securities of US issuers that are denominated in foreign currencies or that are traded            in foreign markets, or securities of US issuers having significant foreign            operations.

**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 or below BBB            by S&P and unrated securities judged to be of equivalent quality as determined by            the Advisor. 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.

Issuers of such high yielding 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 pay-in-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 (high risk) 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.

**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            Trust’s Board has approved guidelines for use by the Advisor in determining            whether a security is liquid or illiquid. Among the factors the Advisor 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. 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, 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.

**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).

**Impact of Large Redemptions and Purchases of Fund Shares.**From time to time, shareholders of 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 gains and could also increase transaction costs, which may            impact the Fund’s expense ratio.

**Interfund Borrowing and Lending Program.**The Fund has received exemptive relief from the 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 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 only 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 Board. To the            extent the Fund is actually engaged in borrowing through the interfund lending program,            the Fund will comply with its nonfundamental policy on borrowing.

**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:

SPDRs®: 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®: 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®: 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.

DIAMONDSSM: DIAMONDS are based            on the Dow Jones Industrial AverageSM. 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.

WEBsSM: WEBs, an acronym for            “World Equity Benchmark Shares,” are based on 17 country-specific Morgan            Stanley Capital International Indexes. They are issued by the WEBs Index Fund, Inc., an            open-end management investment company that seeks to generally correspond to the price            and yield performance of a specific Morgan Stanley Capital International            Index.

**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 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 Trustees/Directors. In addition, voting rights may pass with the loaned            securities, but if a material event occurs affecting an investment on loan, the loan            must 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).

**Micro-Cap Company Risk.**While,            historically, micro-capitalization company stocks have outperformed the stocks of large            companies, the former have customarily involved more investment risk as well. There can            be no assurance that this will continue to be true in the future. Micro-capitalization            companies may have limited product lines, markets or financial resources; may lack            management depth or experience; and may be more vulnerable to adverse general market or            economic developments than large companies. The prices of micro-capitalization company            securities are often more volatile than prices associated with large company issues,            and can display abrupt or erratic movements at times, due to limited trading volumes            and less publicly available information.

Also, because micro-capitalization companies normally have fewer shares            outstanding and these shares trade less frequently than large companies, it may be more            difficult for the Fund to buy and sell significant amounts of such shares without an            unfavorable impact on prevailing market prices.

 

Some of the companies in which the Fund may invest may distribute, sell            or produce products which have recently been brought to market and may be dependent on            key personnel. The securities of micro-capitalization companies are often traded            over-the-counter and may not be traded in the volumes typical on a national securities            exchange. Consequently, in order to sell this type of holding, the Fund may need to            discount the securities from recent prices or dispose of the securities over a long            period of time.

**Non-diversification.**The Fund is classified            as a non-diversified management investment company under the 1940 Act, which means that            the Fund is not limited by the 1940 Act in the proportion of its assets that it may            invest in the obligations of a single issuer. The investment of a large percentage of            the Fund’s assets in the securities of a small number of issuers may cause the            Fund’s share price to fluctuate more than that of a diversified fund.

**Participation Interests.**The Fund may            purchase from financial institutions participation interests in securities in which the            Fund may invest. A participation interest gives the Fund an undivided interest in the            security in the proportion that the Fund’s participation interest bears to the            principal amount of the security. These instruments may have fixed, floating or            variable interest rates, with remaining maturities of 397 days or less. If the            participation interest is unrated, or has been given a rating below that which is            permissible for purchase by the Fund, the participation interest will be backed by an            irrevocable letter of credit or guarantee of a bank, or the payment obligation            otherwise will be collateralized by US Government securities, or, in the case of            unrated participation interest, determined by the Advisor to be of comparable quality            to those instruments in which the Fund may invest. For certain participation interests,            the Fund will have the right to demand payment, on not more than seven days’            notice, for all or any part of the Fund’s participation interests in the            security, plus accrued interest. As to these instruments, the Fund generally intends to            exercise its right to demand payment only upon a default under the terms of the            security.

**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 or 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 enter            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, as described in more            detail below, 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 the Fund or as being collateral for            a loan by the 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, the 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 instrument 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            the 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.

The            Fund will limit repurchase agreement transactions to securities issued by the US            government and its agencies and instrumentalities and will enter into such transactions            with those banks and securities dealers who are deemed creditworthy pursuant to            criteria adopted by the Fund’s Board of Trustees or its designee.

The            Fund will not invest more than 15% of its net assets in repurchase agreements maturing            in more than seven days.

**Repurchase Commitments.**The Fund may enter            into repurchase commitments with any party deemed creditworthy by the Advisor,            including foreign banks and broker/dealers, if the transaction is entered into for            investment purposes and the counterparty’s creditworthiness is at least equal to            that of issuers of securities which the Fund may purchase. Such transactions may not            provide the Fund with collateral marked-to-market during the term of the            commitment.

**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 them at an            agreed time and price. The Fund maintains a segregated account in connection with            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.**The Fund may engage in short            sales, if, at the time of the short sale, the Fund owns or has the right to acquire            securities equivalent in kind and amount to the securities being sold short.

In            a short sale, the seller does not immediately deliver the securities sold and is said            to have a short position in those securities until delivery occurs. To make delivery to            the purchaser, the executing broker borrows the securities being sold short on behalf            of the seller. While the short position is maintained, the seller collateralizes its            obligation to

 

deliver the securities sold short in an amount equal to the proceeds of            the short sale plus an additional margin amount established by the Board of Governors            of the Federal Reserve. If the Fund engages in a short sale, the collateral account            will be maintained by State Street Bank and Trust Company, the Fund’s custodian.            While the short sale is open, the Fund will maintain, in a segregated custodial            account, an amount of securities convertible into, or exchangeable for, such equivalent            securities at no additional cost. These securities would constitute the Fund’s            long position.

The            Fund may make a short sale, as described above, when it wants to sell the security it            owns at a current attractive price, but also wishes to defer recognition of gain or            loss for federal income tax purposes. There will be certain additional transaction            costs associated with short sales, but the Fund will endeavor to offset these costs            with returns from the investment of the cash proceeds of short sales.

**Short-Term Securities.**In order to meet            anticipated redemptions, to hold pending the purchase of additional securities for the            Fund’s portfolio, or, in some cases, for temporary defensive purposes, the Fund            may invest a portion (up to 100%) of its assets in money market and other short-term            securities. When the Fund is invested for temporary defensive purposes, it may not            achieve or pursue its investment objective.

Examples of short-term securities include:

| **•** | Securities issued or guaranteed by the US government and                            its agencies and instrumentalities; |
|------------|-------------------------------------------------------------------------------------------------------------------------|

| **•** | Commercial Paper; |
|------------|-------------------|

| **•** | Certificates of Deposit and Euro Dollar Certificates of                            Deposit; |
|------------|---------------------------------------------------------------------------------------------|

| **•** | Bankers’ Acceptances; |
|------------|-----------------------------|

| **•** | Short-term notes, bonds, debentures or other debt                            instruments; and |
|------------|-----------------------------------------------------------------------------------------------|

| **•** | Repurchase agreements. |
|------------|------------------------|

The            Fund may also invest up to 5% of its total assets in any money market fund, including            those advised by the Advisor, if any.

**Small Company Risk.**The Advisor believes            that many small companies may have sales and earnings growth rates which exceed those            of larger companies, and that such growth rates may in turn be reflected in more rapid            share price appreciation over time. However, investing in smaller company stocks            involves greater risk than is customarily associated with investing in larger, more            established companies. For example, smaller companies can have limited product lines,            markets, or financial and managerial resources. Smaller companies may also be dependent            on one or a few key persons, and may be more susceptible to losses and risks of            bankruptcy. Also, the securities of smaller companies may be thinly traded (and            therefore have to be sold at a discount from current market prices or sold in small            lots over an extended period of time). Transaction costs in smaller company stocks may            be higher than those of larger companies.

**Sovereign Debt.**Investment in sovereign            debt can involve a high degree of risk. The governmental entity that controls the            repayment of sovereign debt may not be able or willing to repay the principal and/or            interest when due in accordance with the terms of such debt. A governmental            entity’s willingness or ability to repay principal and interest due in a timely            manner may be affected by, among other factors, its cash flow situation, the extent of            its foreign reserves, the availability of sufficient foreign exchange on the date a            payment is due, the relative size of the debt service burden to the economy as a whole,            the governmental entity’s policy toward the International Monetary Fund, and the            political constraints to which a governmental entity may be subject. Governmental            entities may also be dependent on expected disbursements from foreign governments,            multilateral agencies and others abroad to reduce principal and interest arrearages on            their debt. The commitment on the part of these governments, agencies and others to            make such disbursements may be conditioned on a governmental entity’s            implementation of economic reforms and/or economic performance and the timely service            of such debtor’s obligations. Failure to implement such

 

reforms, achieve such levels of economic performance or repay principal            or interest when due may result in the cancellation of such third parties commitments            to lend funds to the governmental entity, which may further impair such debtor’s            ability or willingness to service its debts in a timely manner. Consequently,            governmental entities may default on their sovereign debt. Holders of sovereign debt            may be requested to participate in the rescheduling of such debt and to extend further            loans to governmental entities. There is no bankruptcy proceeding by which sovereign            debt on which governmental entities have defaulted may be collected in whole or in            part.

**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 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) to cover its            obligations under options, futures and swaps to limit leveraging of the            Fund.

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.

 

**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 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.

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” adopted by the CFTC and the National Futures Association, which            regulate trading in the futures markets. 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 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 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. For example,            if the Advisor considers that the Austrian schilling is correlated to the German            deutschemark (the “D-mark”), the fund holds securities denominated in            schillings and the Advisor believes that the value of schillings will decline against            the US dollar, the Advisor may enter into a commitment or option to sell D-marks and            buy dollars. 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. 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.

**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.

**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 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, 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 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.

**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.

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 establish a segregated account in which it will maintain cash and            liquid securities equal in value to commitments for such securities.

**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, that Fund would lose the            entire purchase price of the warrant.

**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 purchase            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 convertible            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.

The            following is a chart of the various types of securities and investment strategies            employed by the Fund. Unless otherwise indicated, the Fund is permitted, but not            obligated, to pursue any of the following strategies and does not represent that these            techniques are available now or will be available at any time in the future. If the            Fund’s investment in a particular type of security is limited to a certain            percentage of the Fund’s assets, that percentage

 

limitation is listed in the chart. Following the chart is a description            of how each type of security and investment strategy may be used by the            Fund.

 

| **INVESTMENT PRACTICE**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | **DWS                            RREEF Global Real Estate Securities Fund** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------|
| **KEY TO TABLE:**

+ Permitted without stated limito Permitted without stated limited, but not expected to                            be used to a significant extentX Not permitted

*20% Italic type (e.g.                            20%)*represents an investment limitation as a                            percentage of net fund assets; does not indicate actual use

20% Roman type (e.g. 20%) represents an investment                            limitation as a percentage of total fund assets; does not indicate                            actual use |
| **EQUITY                            SECURITIES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Common Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | +                                                                           |
| Warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | +                                                                           |
| Preferred Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | +                                                                           |
| Convertible Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | +                                                                           |
| Medium Capitalization Stocks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | +                                                                           |
| Small Capitalization Stocks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | +                                                                           |
| Micro Capitalization Stocks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | +                                                                           |
| **FIXED INCOME SECURITIES                            & MONEY MARKET INSTRUMENTS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| Short-Term Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | *20%*                                                                       |
| Obligations of Banks and Other Financial                            Institutions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | *20%*                                                                       |
| Certificates of Deposit and Banker’s                            Acceptances                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | *20%*                                                                       |
| Commercial Paper                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | *20%*                                                                       |
| Variable Rate Master Demand Notes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | o                                                                           |
| US Government Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | *20%*                                                                       |
| Custodial Receipts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | o                                                                           |
| Zero Coupon Securities and Deferred Interest                            Bonds                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | o                                                                           |
| Variable Rate Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | *20%*                                                                       |
| Inverse Floating Rate Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | *5%*                                                                        |
| Lower-Rated Debt Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | *5%*                                                                        |
| Registered Loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | o                                                                           |
| **DERIVATIVE SECURITIES                            (OPTIONS)**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Options on Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | +                                                                           |
| Options on Securities Indices                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | +                                                                           |
| Options on Non-US Securities Indices                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | +                                                                           |
| Yield Curve Options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | +                                                                           |
| Spreadlocks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | +                                                                           |
| **DERIVATIVE SECURITIES                            (FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS)**                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| Futures Contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | +                                                                           |
| Futures Contracts on Securities Indices                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | +                                                                           |
| Options on Futures Contracts (including Contracts on                            Securities Indices)                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | +                                                                           |
| **DERIVATIVE SECURITIES                            (HEDGING STRATEGIES)**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| Swaps Agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | +                                                                           |
| **DERIVATIVE SECURITIES                            (HEDGING STRATEGIES)**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| Hedging Strategies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | +                                                                           |

 

 

 

| **MORTGAGE-BACKED AND                            ASSET-BACKED SECURITIES**                          |
|-----------------------------------------------------------------------------------------------------|
| Government Guaranteed Mortgage-Backed                            Securities                         | o |
| Ginnie Mae Certificates                                                                             | o |
| Fannie Mae Certificates                                                                             | o |
| Freddie Mac Certificates                                                                            | o |
| Multi-Class Mortgage-Backed Securities (CMOs and                            REMICs)                 | o |
| Private Issued Mortgage -Backed Securities                                                          | o |
| Mortgage Pass-Through Securities                                                                    | o |
| Stripped-Mortgage Backed Securities                                                                 | o |
| Adjustable Rate Mortgages                                                                           | o |
| Asset-Backed Securities                                                                             | o |
| **SECURITIES OF NON-US                            ISSUERS**                                         |
| Foreign Securities & Depositary Receipts (ADRs,                            EDRs, GDRs and IDRs) | + |
| Foreign Corporate Debt Securities                                                                   | o |
| Foreign Government Debt Securities                                                                  | o |
| Brady Bonds                                                                                         | o |
| Investments in Emerging Markets                                                                     | + |
| Region and Country Investing                                                                        | + |
| **CURRENCY                            MANAGEMENT**                                                  |
| Currency Exchange Transactions                                                                      | + |
| Currency Hedging Transactions                                                                       | + |
| Cross Hedging                                                                                       | + |
| Forward Currency Exchange Contracts                                                                 | + |
| Options on Foreign Currencies                                                                       | + |
| **OTHER INVESTMENTS AND                            INVESTMENT PRACTICES**                           |
| Illiquid Securities                                                                                 | *15%* |
| When-Issued and Delayed Delivery                            Securities                              | + |
| Repurchase Agreements                                                                               | *20%* |
| Reverse Repurchase Agreements                                                                       | 33                            1/3% |
| Mortgage Dollar Rolls                                                                               | o |
| Lending of Portfolio Securities                                                                     | 33                            1/3% |
| Borrowing                                                                                           | 33                            1/3% |
| Short Sales                                                                                         | o |
| Other Investment Companies                                                                          | 10% |
| Temporary Defensive Investments                                                                     | 100% |

 

**Portfolio Holdings**

In            addition to the public disclosure of Fund portfolio holdings through required 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            Prospectuses. 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 trustees/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 Trustees/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 receivedwhile 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 Trustees/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.

Registered investment companies that are subadvised by DeAM may be            subject to different portfolio holdings disclosure policies, and neither DeAM nor the            Fund’s Trustees 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 subadvised 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” or the            “Advisor”), which is part of Deutsche Asset Management            (“DeAM”), is the investment advisor for the Fund. Under the supervision of            the Board of Trustees, DIMA, with headquarters at 345 Park Avenue, New York, NY 10154,            supervises the activities of the subadvisor and the sub-subadvisors. DIMA and its            predecessors have more than 80 years of experience managing mutual funds and DIMA            provides a full range of investment advisory services to institutional and retail            clients. DIMA 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 Asset Management Inc., 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 the            Advisor and its affiliates to the DWS Mutual Funds.

Pursuant to an investment management agreement (the            “Agreement”) with the Fund, the Advisor acts as the Fund’s investment            advisor, manages its investments, administers its business affairs, furnishes office            facilities and equipment, provides clerical and administrative services and permits its            officers and employees to serve without compensation as trustees or officers of one or            more funds if elected to such positions. To the extent permissible by law, the Advisor            may appoint certain of its affiliates as sub-advisors to perform certain of the            Advisor’s duties.

In            certain cases, the investments for the Fund is managed by the same individuals who            manage one or more other mutual funds advised by the Advisor that have similar names,            objectives and investment styles. You should be aware that the Fund is likely to differ            from these other mutual funds in size, cash flow pattern and tax matters. Accordingly,            the holdings and performance of a Fund can be expected to vary from those of these            other mutual funds.

Certain investments may be appropriate for the Fund and also for other            clients advised by the Advisor. 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. Frequently, 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, a particular            security may be bought for one or more clients when one or more other clients are            selling the security. 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 equitable to            each. In some cases, this procedure could have an adverse 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.

The            Agreement was approved by the Board of Trustees of the Trust (including a majority of            the Non-interested Trustees) on June 28, 2006. The Agreement will continue in effect            until September 30, 2007, and from year to year only if its continuance is approved            annually by the vote of a majority of those Trustees who are not parties to such            Agreement or interested persons of the Advisor or the Trust, cast in person at a            meeting called for the purpose of voting on such approval, and either by a vote of the            Trust’s Trustees or of a majority of the outstanding voting securities of the            Fund.

The            Advisor provides assistance to the 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 Agreement, (unless otherwise provided in the Agreement            or as determined by the Board), 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            Fund pays the Advisor an advisory fee at the annual rates shown below:

 

| **Average daily net                            assets** | **Fee Rate** |
|---------------------------------------------------------|--------------|
| first $500 million                                      | 1.000%       |
| next $500 million                                       | 0.985%       |
| next $1 billion                                         | 0.960%       |
| over $2 billion                                         | 0.945%       |

 

Through September 30, 2007, the Advisor has contractually agreed to            waive all or a portion of its management fee and reimburse or pay operating expenses of            the Fund to the extent necessary to maintain the Fund’s total operating expenses            at 1.40% for Class S shares, excluding certain expenses such as extraordinary expenses,            taxes, brokerage, interest, proxy and organizational and offering expenses.

 

The            Agreement provides that the Fund is responsible for expenses that include: fees payable            to the Advisor; outside legal, accounting or auditing expenses; 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; portfolio pricing or valuation services; 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            Agreement allows the Advisor to delegate any of its duties under the Agreement to a            sub-adviser, 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 applicable, subject to            a majority vote of the Fund’s shareholders.

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 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 Agreement may be terminated at any time, without payment of penalty, by either            party on 60 days’ written notice.

For            the period from July 3, 2006 (commencement of operations) to December 31, 2006, the            investment management fee aggregated $901,898, of which $54,354 was waived, which            resulted in an annualized effective rate of 0.94% of the Fund’s average daily net            assets. During this period the Advisor had contractually agreed to waive management            fees to the extent necessary to maintain the Fund’s total operating expenses at            1.40% for Class S shares, excluding certain expenses such as extraordinary expenses,            taxes, brokerage, interest, proxy and organizational and offering expenses.

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.

***Subadvisor.***RREEF America L.L.C.            (“RREEF”), located at 875 North Michigan Avenue, 41st Floor, Chicago,            Illinois 60611, an affiliate of the Advisor, is the subadvisor for the Fund. RREEF            serves as sub-advisor pursuant to the terms of a subadvisory agreement (the            “Subadvisory Agreement”) between it and the Advisor. RREEF has provided            real estate investment management services to institutional investors since 1975 and            has been an investment advisor of real estate securities since 1993.

While DIMA is the investment advisor to the Fund, the day-to-day            activities of managing the Fund’s portfolio have been delegated to RREEF. DIMA            compensates RREEF out of the management fee it receives from the Fund.

The            Subadvisory Agreement provides that RREEF 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 Subadvisory Agreement relates, except a loss resulting from willful            misconduct, bad faith or gross negligence on the part of RREEF in the performance of            its duties or from reckless disregard by RREEF of its obligations and duties under the            Research and Advisory Agreement.

The            Subadvisory Agreement 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 Trustees of the Trust who are not parties to such agreement or            interested persons of any such party except in their capacity as Trustees of the Trust,            and (b) by the shareholders or the Board of Trustees of the Trust. The Research and            Advisory Agreement may be terminated at any time upon sixty days’ notice by the            Advisor or by the Board of Trustees of the Trust or by majority vote of the outstanding            shares of the Fund, and will terminate automatically upon assignment or upon            termination of the Fund’s investment management agreement.

***Sub-subadvisors.***Pursuant to            investment sub-subadvisory agreements between RREEF and Deutsche Asset Management            International GmbH, RREEF Global Advisers Limited, Deutsche Asset Management (Hong            Kong) Limited and Deutsche Investments Australia Limited (the            “sub-subadvisors”), these entities act as sub-subadvisors

 

to            the Fund. The sub-subadvisors are indirect, wholly owned subsidiaries of Deutsche Bank            AG. As sub-subadvisors, under the supervision of the Board of Trustees, DIMA and RREEF,            the sub-subadvisors manage the Fund’s investments in specific foreign            markets.

Deutsche Asset Management International GmbH, Mainzer Landstrasse            178-190, Frankfurt am Main, Germany, manages stock selection decisions for the European            portion of the Fund’s portfolio. Currently, RREEF Global Advisers Limited,            Winchester House, 1 Great Winchester Street, London, United Kingdom, EC2N 2DB, acts as            an adviser to Deutsche Asset Management International GmbH with respect to the            Fund.

Deutsche Asset Management (Hong Kong) Limited, 55/F Cheung Kong Centre,            2 Queen’s Road Centre, Hong Kong, China, and Deutsche Investments Australia            Limited, Level 21, 83 Clarence Street, Sydney, Australia, NSW, 2000, manage the stock            selection decisions for the Asian and Australian portions of the Fund’s            portfolio.

The            Fund’s shareholder report for the period ended December 31, 2006 will contain a            discussion regarding tile basis for the Board of Trustees’ approval of the            Agreement, the Subadvisory Agreement and the sub-subadvisory agreements for the            Fund.

**Compensation of Portfolio Managers**

The            Fund has been advised that the Advisor, RREEF, and the sub-subadvisors or            sub-sub-subadvisor seek to offer their investment professionals competitive short-term            and long-term compensation. Portfolio managers and research professionals are paid (i)            fixed base salaries, which are linked to job function, responsibilities and financial            services industry peer comparison and (ii) variable compensation, which is linked to            investment performance, individual contributions to the team and DWS Scudder’s            and Deutsche Bank’s financial results. Variable compensation may include a cash            bonus incentive and participation in a variety of long-term equity programs (usually in            the form of Deutsche Bank equity). The portfolio managers are compensated by RREEF and            the sub-subadvisors or sub-sub-subadvisor, as applicable.

Bonus and long-term incentives comprise a greater proportion of total            compensation as an investment professional’s seniority and compensation levels            increase. Top performing investment professionals earn a total compensation package            that is highly competitive, including a bonus that is a multiple of their base salary.            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%-40% of the            total compensation award. As incentive compensation increases, the percentage of            compensation awarded in Deutsche Bank equity also increases. Certain senior investment            professionals may be subject to a mandatory diverting of a portion of their equity            compensation into proprietary mutual funds that they manage.

To            evaluate its investment professionals, the Advisor, RREEF, and the sub-subadvisors or            sub-sub-subadvisor use a Performance Management Process. Objectives evaluated by the            process are related to investment performance and generally take into account peer            group and benchmark related data. The ultimate goal of this process is to link the            performance of investment professionals with client investment objectives and to            deliver investment performance that meets or exceeds clients’ risk and return            objectives. When determining total compensation, the Advisor, RREEF, and the            sub-subadvisors or sub-sub-subadvisor consider a number of quantitative and qualitative            factors such as:

| **•** | DWS Scudder performance and the performance of Deutsche                            Asset Management, quantitative measures which include 1, 3 and 5 year                            pre-tax returns versus benchmark (such as the benchmark used in the                            prospectus) and appropriate peer group, taking into consideration risk                            targets. Additionally, the portfolio manager’s                            retail/institutional asset mix is weighted, as appropriate for                            evaluation purposes. |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **•** | Qualitative measures include adherence to the investment                            process and individual contributions to the process, among other                            things. In addition, the Advisor, RREEF, and the sub-subadvisors or                            sub-sub-subadvisor assess compliance, risk management and teamwork                            skills. |
|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| **•** | Other factors, including contributions made to the                            investment team as well as adherence to compliance, risk management,                            and "living the values" of the Advisor, RREEF, and the sub-subadvisors                            or sub-sub-subadvisor, are part of a discretionary component which                            gives management the ability to reward these behaviors on a subjective                            basis through bonus incentives. |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

In            addition, the Advisor, RREEF, and the sub-subadvisors or sub-sub-subadvisor analyzes            competitive compensation levels through the use of extensive market data surveys.            Portfolio manager compensation is reviewed and may be modified each year as appropriate            to reflect changes in the market, as well as to adjust the factors used to determine            overall compensation to promote good sustained investment performance.

**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.

 

| **Name of Portfolio Manager**                | **Dollar Range of****Fund Shares Owned** | **Dollar Range of All DWS****Fund Shares Owned** |
|----------------------------------------------|------------------------------------------|--------------------------------------------------|
|                                         |                                     |                                             |
| Kurt                            Klauditz     | $0                                       | $0                                               |
| John W.                            Vojticek  | $0                                       | $1                            - $10,000          |
| John F.                            Robertson | $0                                       | $500,001 - $1,000,000                            |
| John                            Hammond      | $0                                       | $0                                               |
| William                            Leung     | $0                                       | $0                                               |
| Daniel                            Ekins      | $0                                       | $0                                               |

 

**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. 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:***

 

| **Name of Portfolio Manager**                | **Number of Registered Investment****Companies** | **Total Assets of Registered Investment****Companies** | **Number of Investment Company Accounts with                            Performance-****Based                            Fee** | **Total Assets of Performance- Based Fee****Accounts** |
|----------------------------------------------|--------------------------------------------------|--------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------|
|                                         |                                             |                                                   |                                                                                                                           |                                                   |
| Kurt                            Klauditz     | 2                                                | $194,400,000                                           | 0                                                                                                                              | $0                                                     |
| John W.                            Vojticek  | 9                                                | $5,017,200,000                                         | 0                                                                                                                              | $0                                                     |
| John F.                            Robertson | 9                                                | $5,537,700,000                                         | 0                                                                                                                              | $0                                                     |
| John                            Hammond      | 2                                                | $194,400,000                                           | 0                                                                                                                              | $0                                                     |
| William                            Leung     | 2                                                | $233,000,000                                           | 0                                                                                                                              | $0                                                     |

 

 

 

| Daniel                            Ekins | 2 | $91,400,000 | 0 | $0 |
|-----------------------------------------|---|-------------|---|----|

 

***Other Pooled Investment Vehicles Managed:***

 

| **Name of Portfolio Manager**                | **Number of Pooled Investment****Vehicles** | **Total Assets of Pooled Investment****Vehicles** | **Number of Pooled Investment Vehicle Accounts with                            Performance-****Based                            Fee** | **Total Assets of Performance- Based Fee****Accounts** |
|----------------------------------------------|---------------------------------------------|---------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------|
|                                         |                                        |                                              |                                                                                                                                  |                                                   |
| Kurt                            Klauditz     | 1                                           | $60,300,000                                       | 0                                                                                                                                     | $0                                                     |
| John W.                            Vojticek  | 8                                           | $1,009,100,000                                    | 3                                                                                                                                     | $205,300,000                                           |
| John F.                            Robertson | 8                                           | $1,009,100,000                                    | 3                                                                                                                                     | $205,300,000                                           |
| John                            Hammond      | 7                                           | $274,300,000                                      | 2                                                                                                                                     | $92,000,000                                            |
| William                            Leung     | 0                                           | $0                                                | 0                                                                                                                                     | $0                                                     |
| Daniel                            Ekins      | 7                                           | $985,200,000                                      | 0                                                                                                                                     | $0                                                     |

 

***Other Accounts Managed:***

 

| **Name of Portfolio Manager**                | **Number of Other****Accounts** | **Total Assets of****Other                            Accounts** | **Number of Other Accounts with Performance-****Based Fee** | **Total Assets of Performance- Based Fee****Accounts** |
|----------------------------------------------|---------------------------------|------------------------------------------------------------------|-------------------------------------------------------------|--------------------------------------------------------|
|                                         |                            |                                                             |                                                        |                                                   |
| Kurt                            Klauditz     | 3                               | $121,000,000                                                     | 1                                                           | $78,300,000                                            |
| John W.                            Vojticek  | 45                              | $5,031,900,000                                                   | 2                                                           | $626,500,000                                           |
| John F.                            Robertson | 45                              | $5,031,900,000                                                   | 2                                                           | $626,500,000                                           |
| John                            Hammond      | 4                               | $160,300,000                                                     | 1                                                           | $78,300,000                                            |
| William                            Leung     | 2                               | $44,000,000                                                      | 0                                                           | $0                                                     |
| Daniel                            Ekins      | 6                               | $1,020,200,000                                                   | 0                                                           | $0                                                     |

 

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, RREEF, and the sub-subadvisors or sub-sub-subadvisor 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:

| **•** | 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 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.

| **•** | 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. |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **•** | 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. |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **•** | 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, RREEF, and the sub-subadvisors and sub-sub-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 Trust and employees of the Advisor,            RREEF, and the sub-subadvisors and sub-sub-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 certain requirements            and restrictions set forth in the applicable Code of Ethics. The Advisor’s,            RREEF’s, and the sub-subadvisors’ and sub-sub-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, RREEF’s, and the            sub-subadvisors’ or sub-sub-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            advisory process. Exceptions to these and other provisions of the Advisor’s,            RREEF’s, and the sub-subadvisors’ or sub-sub-subadvisor’s Code of            Ethics may be granted in particular circumstances after review by appropriate            personnel.

***Regulatory Matters***

On            September 28, 2006, the SEC and the National Association of Securities Dealers            (“NASD”) 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.

For            discussion of other regulatory matters see the Fund’s prospectus.

**FUND SERVICE PROVIDERS**

**Administrator**

The            Advisor serves as the Fund’s administrator pursuant to an Administrative Services            Agreement. Pursuant to the Administrative Services Agreement, the Advisor provides most            administrative services to the Fund including, among others, providing the Fund with            personnel, preparing and making required filings on behalf of the Fund, maintaining            books and records for the Fund, and monitoring the valuation of Fund securities. For            its services under the Administration Agreement, the Advisor receives a fee of 0.10% of            the aggregate average daily net assets of the Fund.

Under the Administrative Services Agreement, DIMA is obligated on a            continuous basis to provide such administrative services as the Board of Trustees of            the Fund reasonably deems necessary for the proper administration of the Fund. DIMA            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 shareholders; prepares and files updates to the Fund’s Prospectus            and Statement 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 Fund; 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 period from July 3, 2006 (commencement of operations) through December 31, 2006,            DIMA received an Administration Fee of $102,674.

Pursuant to an agreement between the Advisor and State Street Bank and            Trust Company (“SSB”), the Advisor has delegated certain administrative            functions to SSB. The costs and expenses of such delegation are borne by the Advisor,            not by the Fund.

Pursuant to Deutsche Asset Management procedures approved by the Boards            on behalf of the DWS Funds, proof of claim forms are routinely filed on behalf of the            DWS Funds by a third party service provider, with certain limited exceptions. The            Boards of the DWS Funds receive periodic reports regarding the implementation of these            procedures.

**Distributor**

The            Trust, on behalf of the Fund, has entered into a Underwriting and Distribution Services            Agreement (the “Distribution Agreement”) pursuant to which DWS-SDI, 222            South Riverside Plaza, Chicago, IL 60606 as agent, serves as principal underwriter for            the continuous offering of shares of the Fund. DWS-SDI, an affiliate of the Advisor, is            a wholly owned subsidiary of Deutsche Bank AG. DWS-SDI has agreed to use its best            efforts to solicit orders for the purchase of shares of the Fund, although it is not            obligated to sell any particular amount of shares. The Distribution Agreement for the            Fund, dated July 1, 2006, was initially approved by the Directors on June 28,            2006.

Under the Distribution 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 Prospectus annually to            existing shareholders (see below for expenses relating to Prospectus 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 Prospectus 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 Fund and the            Distributor.

The            Distributor will pay for printing and distributing Prospectus 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.

Although the Fund does not currently have a 12b-1 Plan for Class S            shares, and the Trustees have no current intention of adopting one, the Fund will also            pay those fees and expenses permitted to be paid or assumed by the Trust pursuant to a            12b-1 Plan, if any, adopted by the Trust, notwithstanding any other provision to the            contrary in the underwriting agreement.

 

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 acquire shares            of the Fund.

**Custodian**

Brown Brothers Harriman and Co. (the “Custodian”), 40 Water            Street, Boston, Massachusetts 02109, serves as the Trust’s custodian pursuant to            a Custodian Agreement. Under its custody agreement with the Trust, the Custodian            (i) maintains separate accounts in the name of the Fund, (ii) holds and            transfers portfolio securities on account of the Fund, (iii) accepts receipts and            makes disbursements of money on behalf of the Fund, (iv) collects and receives all            income and other payments and distributions on account of the Fund’s portfolio            securities and (v) makes periodic reports to the Trust’s Board of Trustees            concerning the Fund’s operations. The Custodian is authorized to select one or            more foreign or domestic banks or companies to serve as sub-custodian on behalf of the            Fund, pursuant to Rule 17f-5 under the 1940 Act.

**Transfer Agent and Shareholder Service            Agent**

DWS            Scudder Investments Service Company (“DWS-SISC” or the “Transfer            Agent”), 210 W. 10th Street, Kansas City, Missouri 64105-1614, an affiliate of            the Advisor, is the transfer agent, dividend-paying agent and shareholder service agent            for the Fund pursuant to a transfer agency agreement (the “Transfer Agency            Agreement”), under which the Transfer Agent (i) maintains record shareholder            accounts, and (ii) makes periodic reports to the Trust’s Board of Trustees            concerning the operations of the Fund. Prior to April 1, 2007, DWS Scudder Service            Corporation (“DWS-SSC”) was the transfer agent, dividend-paying agent and            shareholder service agent for the Fund. On April 1, 2007 DWS-SCC merged into            DWS-SISC. As a result of the merger, DWS-SISC is now the Fund’s transfer agent,            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 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.

Pursuant to a sub-transfer agency agreement between DWS-SISC and DST            Systems, Inc. (“DST”), DWS-SISC has delegated certain transfer agent and            dividend paying agent functions to DST. The costs and expenses of such delegation are            borne by DWS-SISC, not by the Fund.

For            the period from July 3, 2006 (commencement of operations) through December 31, 2006,            transfer agent charges to the Fund by DWS-SSC were $2,183, of which $1,085 was waived            for Class S shares.

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 beneficial owners of Fund shares whose interests are generally            held in an omnibus account.

 

**Independent Registered Public Accounting Firm**

PricewaterhouseCoopers LLP, 125 High Street, Boston, MA 02110,            independent registered public accounting firm, given on the authority of said firm as            experts in auditing and accounting, audits the financial statements of the Fund and            provides other audit, tax and related services. Shareholders will receive annual            audited financial statements and semi-annual unaudited financial statements.

**Legal Counsel**

Willkie Farr & Gallagher LLP, 787 Seventh Avenue, New York, New York            10019, serves as legal counsel to the Fund.

Ropes & Gray, One International Place, Boston, Massachusetts            02110-2624, serves as counsel to the Independent Trustees to the Trust.

**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 RREEF            and the sub-subadvisors or sub-sub-subadvisor, as applicable, except as noted            below.

The            policy of the Advisor in placing orders for the purchase and sale of securities for the            Fund 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 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 Fund 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.

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 Fund to their customers.            However, the Advisor does not consider sales of shares of the Fund as a factor in the            selection of broker-dealers to execute portfolio transactions for the Fund 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 1934 Act, when placing portfolio            transactions for the 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            the 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. Research and brokerage services            received from a broker-dealer may be useful to the Advisor in providing services to            clients other than the Fund making the trade, and not all such information is used by            the Advisor in connection with the Fund. Conversely, such information provided to the            Advisor by broker-dealers through which other clients of the Advisor effect securities            transactions may be useful to the Advisor in providing services to the 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 is typically received in the form of written 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 associated hardware, 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 hardware 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 Fund 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.

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 the 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            the 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 Fund’s 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, 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 Fund            and receive brokerage commissions or other transaction-related compensation from the            Fund 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 Fund’s            Board, 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 Fund a rate consistent with that charged to            comparable unaffiliated customers in similar transactions.

During the period of July 3, 2006 (commencement of operations) through            December 31, 2006, the Fund paid brokerage commissions equal to $490,206 to such            brokers. During the last year, the Advisor directed brokerage transactions for the Fund            to brokers based on research services provided on behalf of the Fund.

**Securities of Regular Broker-Dealers.**The            Fund is required to identify any securities of its “regular brokers or            dealers” (as such term is defined in the 1940 Act) that the Fund has acquired            during its most recent fiscal year. As of December 31, 2006, the Fund did not hold            any securities of its regular brokers or dealers.

***Portfolio Turnover***

The            Advisor will purchase and sell securities without regard to the length of time the            security has been held. Accordingly, the Fund’s rate of portfolio turnover may be            substantial.

The            Advisor intends to purchase a given security whenever it believes it will contribute to            the stated objective of the Fund. In order to achieve the Fund’s investment            objectives, the Advisor may sell a given security, no matter how long or how short a            period it has been held in the portfolio, and no matter whether the sale is at a gain            or at a loss, if the Advisor believes that the security is not fulfilling its purpose,            either because, among other things, it did not live up to the Advisor’s            expectations, or because it may be replaced with another security holding greater            promise, or because it has reached its optimum potential, or because of a change in the            circumstances of a particular company or industry or in general economic conditions, or            because of some combination of such reasons.

Because investment decisions are based on the anticipated contribution            of the security in question to the Fund’s objective, the Advisor believes that            the rate of portfolio turnover is irrelevant when it believes a change is in order to            achieve the objectives. As a result, the Fund’s annual portfolio turnover rate            cannot be anticipated and may be higher than other mutual funds with similar investment            objective. Higher turnover would generate correspondingly greater brokerage            commissions, which is a cost the Fund pays directly. Portfolio turnover also may affect            the character of capital gains realized and distributed by the Fund, if any, because            short-term capital gains are taxable as ordinary income.

For            the period of July 3, 2006 (commencement of operations) through December 31, 2006, the            Fund’s portfolio turnover rate was 28%.

**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 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. 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            determination of net asset value next determined after receipt by DWS-SDI will be            confirmed at a price based on the net asset value (“trade            date”).

**Certificates.**Share certificates will not            be issued.

**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 balances are $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. Scudder group retirement plans and certain other accounts have similar or            lower minimum share balance requirements.

Reductions in value that result solely from market activity will not            trigger involuntary redemption. 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 automatic redemption.

Fiduciary (e.g., IRA or Roth IRA) and custodial accounts (e.g., UGMA or            UTMA) with balances below $250 are subject to automatic redemption following 90            days’ written notice to applicable shareholders.

**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            (“DWS-SSC” or 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 will be deemed to have received a purchase or redemption order when an authorized            broker, service organization or, if applicable, an authorized designee, accepts the            order. Shares of the Fund may be purchased or redeemed on any business day at the net            asset value next determined after receipt of the order, in good order, by the Transfer            Agent. Investors who invest through authorized brokers, service organizations or their            designated intermediaries should submit purchase and redemption orders directly to            their broker, service organization or designated intermediary. The broker or            intermediary may charge you a transaction fee.

The            Fund has authorized one or more financial service institutions, including certain            members of the NASD 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 Trustees 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 Trustees 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 your financial            advisor, who in turn may recommend that you 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 three product            categories—“Core,” “Satellite” or            “Non-Core/Satellite”–taking into consideration, among other things,            the following criteria, where applicable:

 

| **•** | The Fund’s 3-year performance; |
|------------|--------------------------------------|

| **•** | The Fund’s Morningstar rating; |
|------------|--------------------------------------|

| **•** | Market size for the fund category; |
|------------|------------------------------------|

| **•** | The Fund’s size, including sales and redemptions                            of the Fund’s shares; |
|------------|---------------------------------------------------------------------------------------------------------------|

| **•** | The length of time the Fund’s Portfolio Managers                            have managed the Fund; and |
|------------|--------------------------------------------------------------------------------------------------------------|

| **•** | 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 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 atwww.dws-scudder.com            , approximately one month after the end of each quarter. DWS Scudder Wholesalers will            receive the highest compensation for Core funds, less for Satellite funds and the            lowest for Non-Core/Satellite funds.

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 a New            Fund 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 fund in the New Fund category will be            reviewed by the committee and either assigned to one of the three categories or            continued as a New 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 or            Satellite funds over the Non-Core/Satellite 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 may be liable for any losses, expenses or            costs arising out of fraudulent or unauthorized instructions pursuant to these            privileges unless 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 such as            IRAs.

**Tax-Sheltered Retirement Plans.**The            Shareholder Service Agent provides retirement plan services and documents and SDI can            establish investor accounts in any of the following types of retirement            plans:

|   | **•** | 403(b)(7) Custodial Accounts, prototype money purchase                            pension and profit-sharing plans. Forms for existing plans are                            available through the Shareholder Service Agent. |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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.

**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 the NASD, other than the            Distributor, it is the responsibility of the member broker, rather than the fund, to            forward the purchase order to the 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 a            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.

***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            Prospectus.

The            Fund may waive the minimum for purchases by trustees, directors, officers or employees            of the Fund or the Advisor and its affiliates.

Class S shares of the Fund will generally not be available to new            investors.

**Eligible Class S Investors.**

| A. | The following investors may purchase Class S shares of                            DWS Funds either (i) directly from DWS-SDI, the Fund’s principal                            underwriter; or (ii) through an intermediary 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 who own 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. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | Any participant who owns 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. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4. | 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. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5. | Existing shareholders of Class AARP shares of any DWS                            Fund as of July 17, 2006, and household members residing at the same                            address. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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 the Portfolios of 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. | Existing shareholders of Class M of any DWS Fund as of                            August 18, 2006, and household members residing at the same                            address. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10. | Shareholders of Investment Class of any DWS Fund who                            became shareholders of Class S shares of the Fund 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 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. |
|--------|----|----------------------------------------------------------------------------------------------------------|

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 the NASD and banks may, if they prefer, subscribe initially for at least            $2,500 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 the 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 the            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 the NASD 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            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 the 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 and DWS Fund shares 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, .05% to .40% 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 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, the 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

Cadaret, Grant & Co. Inc.

Brown            Brothers Harriman

Capital            Analyst, Incorporated

Citicorp Investment Services

Citigroup Global Markets, Inc. (dba Smith Barney)

Commonwealth Equity Services, LLP (dba Commonwealth Financial            Network)

HD Vest            Investment Securities, Inc.

ING            Group

 

LaSalle            Financial Services, Inc.

Linsco/Private Ledger Corp.

McDonald Investments Inc.

Merrill            Lynch, Pierce, Fenner & Smith Inc.

Morgan            Stanley

Oppenheimer & Co., Inc.

Pacific            Select Distributors Group

The            Principal Financial Group

Prudential Investments

Raymond            James & Associates

Raymond            James Financial Services

RBC            Dain Rauscher, Inc

Securities America, Inc.

UBS            Financial Services

Wachovia Securities

Wells            Fargo Investments, LLC

 

**Channel: Fund Supermarket Platforms**

 

ADP            Clearing

Charles            Schwab & Co., Inc.

E*Trade

Fidelity Investments

First            Trust

National Financial

National Investor Services Corporation

Pershing LLC

USAA            Investment Management

 

**Channel: Defined Contribution Investment Only            Platforms**

 

401K            Investment Services

ACS /            Buck Consultants

ADP,            Inc.

Alliance Benefit Group Financial Services Corp.

American Express Financial Advisors, Inc.

AMG            Service Corp. / Lincoln Retirement Services Company, LLC

AST            Trust Company

Benefit            Administration

BISYS

Ceridian Retirement Plan Services

Charles            Schwab & Co., Inc.

Charles            Schwab Trust Company

City            National Bank

Citistreet

C.N.A.            Trust

Compusys/ERISA Group Inc.

Copeland Companies

CPI            Qualified Plans Daily Access.Com Inc.

Digital            Retirement Solutions

Edgewood Services

Expert            Plan Inc.

Federated Securities Corp.

Fidelity Institutional Retirement Services Company

Fisserv

Franklin Templeton Defined Contribution

 

GoldK

Great            West Life and Annuity / BenefitsCorp Equities Inc.

Hand            Securities

Hartford Life Insurance Company

Hewitt            Assoc. LLC

INGAetna Trust Company

Invesmart

JPMorgan Retirement Plan Services LLC

John            Hancock

Lincoln            National Life

Marsh            Insurance & Investment Company

Marshall & Ilsley Trust Company

Maryland Supplemental Retirement Plan

Matrix            Settlement & Clearance

Mercer            HR Services

Merrill            Lynch, Pierce, Fenner & Smith Inc.

Met            Life

MFS

Mid            Atlantic Capital Corporation

Nationwide Trust Company

Nationwide Financial

Neuberger Berman

New            York Life Investment Management Service Company

Nyhart/Alliance Benefit Group Indiana

PFPC,            Inc.

Plan            Administrators, Inc.

PNC            Bank N.A.

Principal Life Insurance Company

Prudential Investments

Reliance Trust Company

Resource Trust (IMS)

Retirement Financial Services

State            Street Bank and Trust Company

SunGard            Investment Products Inc.

The            Princeton Retirement Group, Inc.

T. Rowe            Price

Union            Bank of California

UMB            Bank

Valic/Virsco Retirement Services Co

Vanguard Group

Wachovia Bank (First Union National Bank)

Wells            Fargo

Wilmington Trust

 

**Channel: Cash Product Platform**

 

ADP            Clearing & Outsourcing

Allegheny Investments LTD

Bank of            New York (Hare & Co.)

Bear            Stearns

Brown            Investment Advisory & Trust Company

Brown            Brothers Harriman

Cadaret            Grant & Co.

Chase            Manhattan Bank

Chicago            Mercantile Exchange

| Citibank, N.A. |
|----------------|

 

D.A.            Davidson & Company

DB Alex            Brown/Pershing

DB            Securities

Deutsche Bank Trust Company Americas

Emmett            A. Larkin Company

Fiduciary Trust Co. – International

Huntleigh Securities

Lincoln            Investment Planning

Linsco            Private Ledger Financial Services

Mellon            Bank

Nesbitt            Burns Corp.

Penson            Financial Services

Pershing Choice Platform

Profunds Distributors, Inc.

SAMCO            Capital Markets (Fund Services, Inc.)

Saturn            & Co. (Investors Bank & Trust Company)

Smith            Moore & Company

Sungard            Financial

Turtle            & Co. (State Street)

UBS

US            Bank

William            Blair & Company

 

**Channel: Third Party Insurance Platforms**

 

Allmerica Financial Life Insurance Company

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

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 Insurance Company

First            MetLife Investors Insurance 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

Hartford Life and Annuity Insurance Company

ICMG            Registered Variable Life

John            Hancock Life Insurance Company of New York

John            Hancock Life Insurance Company (U.S.A.)

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 Company

MetLife            Group

Minnesota Life Insurance Company

Mutual            of America Life Insurance Company

National Life Insurance Company

Nationwide Financial Services Inc.

 

Nationwide Life and Annuity Company of America

Nationwide Life Insurance Company of America

New            York Life Insurance and Annuity Corporation

Phoenix            Life Insurance Company

Protective Life Insurance

Prudential Insurance Company of America

Sun            Life Assurance Company of Canada (U.S.)

Sun            Life Assurance and Annuity Company of New York

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 a 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 both initial and 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 Plan in the event            that any item is unpaid by the shareholder’s financial institution.

**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 the NASD, and banks may open an            account by wire by calling 1-800-728-3337 for instructions. The investor must send a            duly completed and signed application to the Fund promptly. A subsequent purchase order            for $10,000 or more that is not greater than four times an account value may be placed            by telephone, fax, etc. 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 the NASD, 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 a fund does not offer Institutional Class shares, these individuals will be            allowed to buy Class A shares at NAV. The fund also reserves 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.

***Redemptions***

**Redemption Fee.**The Fund will impose 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.

**General.**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.

In            addition, the 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 the 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.

A            request for repurchase (confirmed redemption) may be communicated by a shareholder            through a financial services firm to DWS-SDI, which 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.

 

**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 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. Shares are redeemed so that the payee should receive payment approximately on            the first of the month. Investors using the Automatic Withdrawal Plan must reinvest            Fund distributions.

Non-retirement plan shareholders may establish an Automatic Withdrawal            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 Automatic Withdrawal 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 Automatic Withdrawal 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 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, subject to the provisions            below.

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 fund of funds they are            exchanging into from dealers, other firms or DWS-SDI. Exchanges are taxable            transactions for federal income tax purposes.

**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. 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 follow the practice of distributing substantially all of its investment            company taxable income, which includes any excess of net realized short-term capital            gains over net realized long-term capital losses. The Fund may follow the practice of            distributing the entire excess of net realized long-term capital gains over net            realized short-term capital losses. However, the Fund may retain all or part of such            gain for reinvestment, after paying the related federal taxes for which shareholders            may then be able to claim a credit against their federal income tax liability. If the            Fund does not distribute the amount of capital gain and/or ordinary income required to            be distributed by an excise tax provision of the Internal Revenue Code of 1986, as            amended (the “Code”), the Fund may be subject to that excise tax. In            certain circumstances, the Fund may determine that it is in the interest of            shareholders to distribute less than the required amount.

The            Fund intends to pay distributions of substantially all of its income annually. 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.

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. See “Combined Purchases” for a listing of such other funds.            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 Fund unless the shareholder requests that            such policy not be applied to the shareholder’s account.

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 the Fund and confirmations will be mailed to            the shareholder. If a shareholder has chosen to receive cash, a check will be sent.            Distributions of investment company taxable income and net realized capital gains are            taxable, 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 Fund. It is not intended as a complete discussion of            all such consequences, nor does it purport to deal with all categories of investors.            Investors are therefore advised to consult with their tax advisors before making an            investment in the Fund. The summary is based on the laws in effect on the date of this            statement of additional information and existing judicial and administrative            interpretations thereof, all of which are subject to change, possibly with retroactive            effect.

The            Fund has elected to be treated as a regulated investment company under Subchapter M of            the Code and has qualified as such since its inception. The Fund intends to continue to            so qualify in each taxable year as required under the Code in order to avoid payment of            federal income tax at the Fund level. In order to qualify as a regulated investment            company, the Fund must meet certain requirements regarding the source of its income,            the diversification of its assets, and the distribution of its income:

| (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 derived from interests in                            “qualified publicly traded partnerships” (i.e.,                            partnerships that are traded on an established securities market or                            tradable on a secondary market, other than partnerships that derive 90%                            of their income from interest, dividends, capital gains and other                            traditional permitted mutual fund income); |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | The Fund must diversify its holdings so that, at the end                            of each quarter of its taxable year, (i) at least 50% of the market                            value of the Fund’s 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 of                            such other securities to a value not greater than 5% of the value of                            the Fund’s total assets and to not more than 10% of the                            outstanding voting securities of such issuer, and (ii) not more than                            25% of the value of its assets is invested in the securities (other                            than those of the US Government or other regulated investment                            companies) of any one issuer, of two or more issuers of which 20% or                            more of the voting securities are held by the Fund and which are                            engaged in the same, similar, or related trades or businesses or in the                            securities of one or more qualified publicly traded                            partnerships. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | The Fund is required to distribute to its shareholders                            at least 90% of its taxable and tax-exempt net investment income                            (including the excess of net short-term capital gain over net long-term                            capital losses) and generally is not subject to federal income tax to                            the extent that it distributes annually such net investment income and                            net realized capital gains in the manner required under the                            Code. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Fund investments in partnerships, including in qualified publicly traded            partnerships, may result in the Fund’s being subject to state, local or foreign            income, franchise or withholding tax liabilities.

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,            would be taxable to shareholders as ordinary income. Such distributions would 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 required to be but that are            not distributed 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 the Fund.

**Taxation of Fund Distributions.**Distributions from the Fund generally will be taxable to shareholders as            ordinary income to the extent derived from investment income and net short-term capital            gains. Distributions of net capital gains (that is, the excess of net gains from the            sale of capital assets held more than one year over net losses from the sale of capital            assets held for not more than one year) properly designated as capital gain dividends            will be taxable to shareholders as long-term capital gain, regardless of how long a            shareholder has held the shares in the Fund.

Long-term capital gain rates applicable to individuals have been            temporarily reduced — in general, to 15% with a lower rate applying to taxpayers            in the 10% and 15% rate brackets — for taxable years beginning before            January 1, 2011.

For            taxable years beginning on or before December 31, 2010, “qualified dividend            income” received by an individual will be taxed at the rates applicable to            long-term capital gain. Qualified dividend income does not include interest from            fixed-income securities. 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, or (3) if the recipient elects to have the            dividend income treated as investment income for purposes of the limitation on            deductibility of investment interest. In order for a dividend paid by a foreign            corporation to constitute “qualified dividend income,” the foreign            corporation must (1) be eligible for the benefits of a comprehensive income tax treaty            with the United States (or the stock on which the dividend is paid must be readily            tradable on an established securities market in the United States), and (2) not be            treated as a passive foreign investment company. Qualified dividend income does not            include interest from fixed-income securities. Dividends received by the Fund from a            REIT may be treated as qualified dividend income only to the extent the dividends are            attributable to qualified dividend income received by such REIT.

In            general, distributions of investment income designated by a regulated investment            company as derived from qualified dividend income will be treated as qualified dividend            income by a shareholder taxed as an individual, provided the shareholder meets the            holding period and other requirements described above with respect to the Fund’s            shares. If the aggregate qualified dividends received by the Fund during any taxable            year are 95% or more of its gross income (excluding net long-term capital gain over net            short-term capital loss), then 100% of the Fund’s dividends (other than properly            designated 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.

Capital gains distributions may be reduced if Fund capital loss            carryforwards are available.

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.

Under current law, the Fund serves to block unrelated business taxable            income (“UBTI”) from being realized by its tax-exempt shareholders.            Notwithstanding the foregoing, a tax-exempt shareholder could realize UBTI by virtue of            its investment in the Fund if shares in the Fund constitute debt-financed property in            the hands of the tax-exempt shareholder within the meaning of Code Section 514(b).            Certain types of income received by the Fund from real

 

estate investment trusts ("REITs"), real estate mortgage investment            conduits ("REMICs"), taxable mortgage pools or other investments may cause the Fund to            designate some or all of its distributions as "excess inclusion income." To Fund            shareholders such excess inclusion income may (1) constitute taxable income, as UBTI            for those shareholders who would otherwise be tax-exempt such as individual retirement            accounts, 401(k) accounts, Keogh plans, pension plans and certain charitable entities;            (2) not be offset against net operating losses for tax purposes; (3) not be eligible            for reduced US withholding for non-US shareholders even from tax treaty countries; and            (4) cause the Fund to be subject to tax if certain "disqualified organizations" as            defined by the Code are Fund shareholders.

**Sale or Redemption of Shares.**The sale,            exchange or redemption of Fund shares 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 one year. Otherwise,            the gain or loss on the taxable disposition of Fund shares will be treated as            short-term capital 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 Fund shares 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.

**Dividends Received Deduction.**It is not            anticipated that dividends from domestic corporations will comprise a substantial part            of the Fund’s gross income. If any such dividends constitute a portion of the            Fund’s gross income, a portion of the income distributions of the 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 those 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 fewer than 46 days during            the 91-day period beginning 45 days before the shares become ex-dividend.

**Foreign Taxation.**Foreign withholding or            other foreign taxes with respect to income (possibly 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. The Fund may elect            for US income tax purposes to treat foreign taxes paid by it as paid by its            shareholders if more than 50% of the Fund’s total assets at the close of its            taxable year consists of stock or securities of foreign corporations. The Fund may            qualify for and make this election in some, but not necessarily all, of its taxable            years. If the Fund were to make such an election, shareholders of the Fund would be            required to take into account an amount equal to their pro rata portions of such            foreign taxes in computing their taxable income and then treat an amount equal to those            foreign taxes as a US federal income tax deduction or as a foreign tax credit against            their US federal income taxes. No deduction for foreign taxes may be claimed by a            shareholder who does not itemize deductions. Certain limitations will be imposed on the            extent to which the credit (but not the deduction) for foreign taxes may be            claimed.

**Passive Foreign Investment Companies.**Equity investments by the Fund in certain “passive foreign            investment companies” (“PFICs”) including certain types of non-US            real estate investment companies 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 the Fund shareholders. However, the 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 will 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. The Fund also may make an election to mark the gains (and to a limited            extent losses) in such 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. The election must be made separately for each PFIC owned by the Fund and, once            made, would be effective for all subsequent taxable years, unless revoked with the            consent of the IRS. 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 the 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.”

 

**Other Federal Income Tax Considerations.**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 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.

Transactions in foreign currencies, foreign investment            currency-denominated debt securities and certain foreign currency options, futures            contracts, forward contracts and similar instruments (to the extent permitted) 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 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.

As            a result of entering into swap contracts, the Fund may make or receive periodic net            payments. The Fund may also make or receive a payment when a swap is terminated prior            to maturity through an assignment of the swap or other closing transaction. Periodic            net payments will generally constitute ordinary income or deductions, while termination            of a swap will generally result in capital gain or loss (which will be a long-term            capital gain or loss if the Fund has been a party to the swap for more than one            year).

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 through defined contribution            plans and other tax-qualified plans. Shareholders should consult their tax advisers to            determine the suitability of shares of the Fund as an investment through such plans and            the precise effect of an investment on their particular tax situation.

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. 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.

**Backup Withholding.**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, including those who            fail to furnish the Fund with their taxpayer identification numbers and certifications            as to their tax status.

**Non-US Shareholders.**In general, dividends            (other than capital gain distributions) 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, 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. 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 for 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 contact their intermediaries with respect to the            application of these rules to their accounts.

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 net income taxation at regular income tax rates.

In            general, United States federal withholding tax will not apply to any gain or income            realized by a non-US shareholder upon the sale or other disposition of shares of the            Fund.

Foreign shareholders of the Fund must treat a distribution attributable            to the Fund’s sale of a real estate investment trust or other US real property            holding company as real property gain if 50% or more of the value of the Fund’s            assets are invested in real estate investment trusts and other US real property holding            corporations and if the foreign shareholder has held more than 5% of a class of stock            at any time during the one-year period ending on the date of the distribution. After            December 31, 2007, a distribution from the Fund will be treated as attributable to a US            real property interest only if such distribution is attributable to a distribution            received by the Fund from a real estate investment trust. Restrictions apply regarding            wash sales and substitute payment transactions.

Investors are advised to consult their own tax advisors with respect to            their own circumstances regarding the above-described general federal income taxation            rules and with respect to other federal state, local or foreign tax consequences to            them of an investment in shares of the Fund.

**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.

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 approved 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 approved 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 security’s primary exchange.            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 Fund’s Board and            overseen primarily by the Fund’s Pricing Committee.

**TRUSTEES AND OFFICERS**

The            following table presents certain information regarding the Board Members of the Trust.            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 persons” (as defined in the 1940 Act) of the Trust 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 otherwise provided in the governing documents of the Trust.            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.

 

***Independent Board Members***

 

| **Name, Year of                            Birth, Position with the Trust and Length of Time Served** | **Business                            Experience and****Directorships During the Past 5 Years**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | **Number of                            Funds in DWS Fund Complex Overseen** |
|-------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------|
| Dawn-Marie Driscoll (1946)Chairperson since 2006Board Member since2006                           | President, Driscoll Associates (consulting firm);                            Executive Fellow, Center for Business Ethics, Bentley College;                            formerly, Partner, Palmer & Dodge (1988-1990); Vice President of                            Corporate Affairs and General Counsel, Filene’s (1978-1988).                            Directorships: 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)                | 83                                                                          |
| Henry P. Becton, Jr. (1943)Board Member since2006                                                     | President, WGBH Educational Foundation. Directorships:                            Association of Public Television Stations; Becton Dickinson and                            Company(1) (medical technology company); Belo                            Corporation(1) (media company); 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                                                                                                                                                   | 81                                                                          |
| Keith R. Fox (1954)Board Member since2006                                                             | Managing General Partner, Exeter Capital Partners (a                            series of private equity funds). Directorships: Progressive Holding                            Corporation (kitchen goods importer and distributor); Natural History,                            Inc. (magazine publisher); Box Top Media Inc. (advertising). Former                            Directorships: The Kennel Shop (retailer)                                                                                                                                                                                                                                                                                                                                                                                                | 83                                                                          |
| Kenneth C. Froewiss(1945)Board Member since2006                                                       | Clinical Professor of Finance, NYU Stern School of                            Business (1997-present); Member, Finance Committee, Association for                            Asian Studies (2002-present); Director, Mitsui Sumitomo Insurance Group                            (US) (2004-present); prior thereto, Managing Director, J.P. Morgan                            (investment banking firm) (until 1996)                                                                                                                                                                                                                                                                                                                                                                                                     | 83                                                                          |
| Martin J. Gruber(1937)Board Member since1999                                                          | Nomura Professor of Finance, Leonard N. Stern School of                            Business, New York University (since September 1965); Director, Japan                            Equity Fund, Inc. (since January 1992), Thai Capital Fund, Inc. (since                            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) | 83                                                                          |
| Richard J. Herring(1946)Board Member since1999                                                        | Jacob Safra Professor of International Banking and                            Professor, Finance Department, The Wharton School, University of                            Pennsylvania (since July 1972); Co-Director, Wharton Financial                            Institutions Center (since July 2000). Formerly, Vice Dean and                            Director, Wharton Undergraduate Division (July 1995-June 2000);                            Director, Lauder Institute of International Management Studies (July                            2000-June 2006)                                                                                                                                                                                                                                                 | 83                                                                          |
| Graham E. Jones(1933)Board Member since2002                                                           | Senior Vice President, BGK Realty, Inc. (commercial real                            estate) (since 1995). Formerly, Trustee of various investment companies                            managed by Sun Capital Advisors, Inc. (1998-2005), Morgan Stanley Asset                            Management (1985-2001) and Weiss, Peck and Greer (1985-2005)                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 83                                                                          |

 

 

 

| Rebecca W. Rimel(1951)Board Member since2002                           | President and Chief Executive Officer, The Pew                            Charitable Trusts (charitable foundation) (1994 to present); Trustee,                            Thomas Jefferson Foundation (charitable organization) (1994 to                            present); Trustee, Executive Committee, Philadelphia Chamber of                            Commerce (2001 to present); Director, Viasys Health Care(1)                            (since January 2007). Formerly, Executive Vice President, The Glenmede                            Trust Company (investment trust and wealth management) (1983 to 2004);                            Board Member, Investor Education (charitable organization)                            (2004-2005)                                                                                                                                                                                                                       | 83 |
|------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----|
| Philip Saunders, Jr.(1935)Board Member since1986                       | Principal, Philip Saunders Associates (economic and                            financial consulting) (since November 1988). Formerly, Director,                            Financial Industry Consulting, Wolf & Company (consulting)                            (1987-1988); President, John Hancock Home Mortgage Corporation                            (1984-1986); Senior Vice President of Treasury and Financial Services,                            John Hancock Mutual Life Insurance Company, Inc. (1982-1986)                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 83 |
| William N. Searcy, Jr.(1946)Board Member since2002 | Private investor since October 2003; Trustee of 8                            open-end mutual funds managed by Sun Capital Advisers, Inc. (since                            October 1998). Formerly, Pension & Savings Trust Officer, Sprint                            Corporation(1) (telecommunications) (November 1989-September                            2003)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 83 |
| Jean Gleason Stromberg(1943)Board Member since2006                     | Retired. Formerly, Consultant (1997-2001); Director, US                            Government Accountability Office (1996-1997); Partner, Fulbright &                            Jaworski, L.L.P. (law firm) (1978-1996). Directorships: The William and                            Flora 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)                                                                                                                                                                                                                                                                                                                                                                                        | 83 |
| Carl W. Vogt(1936)Board Member since2006                               | Retired Senior Partner, Fulbright & Jaworski, L.L.P.                            (law firm); formerly, President (interim) of Williams College                            (1999-2000); formerly, President of certain funds in the Deutsche Asset                            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 | 81 |

 

***Interested Board Member***

 

| **Name, Year of                            Birth, Position with the Trust and Length of Time Served** | **Business                            Experience and****Directorships During the Past 5 Years**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | **Number of                            Funds in DWS Fund Complex Overseen** |
|-------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------|
| Axel Schwarzer(2)(1958)Board Member since2006                                                         | Managing Director(4), Deutsche Asset                            Management; Head of Deutsche Asset Management Americas; CEO of DWS                            Scudder; formerly board member of DWS Investments, Germany (1999-2005);                            formerly, Head of Sales and 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) | 82                                                                          |

 

 

 

***Officers*****(3)**

 

| **Name, Year of                            Birth, Position with the Trust and Length of Time Served**                               | **Business                            Experience and****Directorships During the Past 5 Years**                                                                                                                                                                                                                                                                                                                                                                  |
|-------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Michael G. Clark(5) (1965)President, 2006-present                                                                                   | Managing Director(4), Deutsche Asset                            Management (2006-present); President of DWS family of funds; 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)Vice President and Secretary, 2003-present                                        | Director(4), Deutsche Asset                            Management                                                                                                                                                                                                                                                                                                                                                                                                |
| Paul                            H. Schubert(5) (1963)Chief Financial Officer, 2004-presentTreasurer, 2005-present                   | Managing Director(4), Deutsche Asset                            Management (since July 2004); formerly, Executive Director, Head of                            Mutual Fund Services and Treasurer for UBS Family of Funds (1998-2004);                            Vice President and Director of Mutual Fund Finance at UBS Global Asset                            Management (1994-1998)                                                                       |
| Patricia DeFilippis(5) (1963)Assistant Secretary, 2005-present                                                                      | Vice President, Deutsche Asset Management (since June                            2005); Counsel, New York Life Investment Management LLC (2003-2005);                            legal associate, Lord, Abbett & Co. LLC (1998-2003)                                                                                                                                                                                                                         |
| Elisa                            D. Metzger(5) (1962)Assistant Secretary, 2005-present                                              | Director(4), Deutsche Asset Management (since                            September 2005); Counsel, Morrison and Foerster LLP                            (1999-2005)                                                                                                                                                                                                                                                                                              |
| Caroline Pearson(6) (1962)Assistant Secretary, 2002-present                                                                         | Managing Director(4), Deutsche Asset                            Management                                                                                                                                                                                                                                                                                                                                                                                       |
| Paul                            Antosca(6)(1957)Assistant Treasurer, 2007-present                                                   | Director(4), Deutsche Asset Management (since                            2006); Vice President, The Manufacturers Life Insurance Company                            (U.S.A.) (1990 – 2006)                                                                                                                                                                                                                                                                 |
| Kathleen Sullivan D’Eramo(6)(1957)Assistant Treasurer, 2003-present                                                           | Director(4), Deutsche Asset                            Management                                                                                                                                                                                                                                                                                                                                                                                                |
| Jason                            Vazquez(5) (1972)Anti-Money Laundering Compliance Officer,                            2007-present | Vice President, Deutsche Asset Management (since 2006);                            formerly, AML Operations Manager for Bear Stearns (2004-2006),                            Supervising Compliance Principal and Operations Manager for AXA                            Financial (1999-2004)                                                                                                                                                                    |
| Robert                            Kloby(5) (1962)Chief Compliance Officer, 2006-present                                             | Managing Director(4), Deutsche Asset                            Management (2004-present); formerly, Chief Compliance Officer/Chief                            Risk Officer, Robeco USA (2000-2004); Vice President, The Prudential                            Insurance Company of America (1988-2000); E.F. Hutton and Company                            (1984-1988)                                                                                          |
| J.                            Christopher Jackson(5)

(1951)Chief Legal Officer, 2006 - present                                     | Director(4), Deutsche Asset Management (2006                            - present); formerly, Director, Senior Vice President, General Counsel,                            and Assistant Secretary, Hansberger Global Investors, Inc. (1996                            – 2006); Director, National Society of Compliance Professionals                            (2002 - 2005)(2006 - 2009)                                                               |

             

 

| (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. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (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.

**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 Trust met ten (10) times during the calendar year ended December 31,            2006 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 May 2006.

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, Graham E. Jones,            Philip Saunders, Jr., William N. Searcy, Jr. and Jean Gleason Stromberg. The Audit            Committee held eight (8) meetings during the calendar year 2006.

**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 2006.

**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 when actual market values are unavailable 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, Martin J. Gruber, Richard J. Herring and Philip            Saunders, Jr. (Chair). The Valuation Committee held six (6) meetings during the            calendar year 2006.

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, Philip Saunders, Jr. 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            2006.

**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 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 six (6) meetings during the            calendar year 2006.

**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 2006.

**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, Kenneth C.            Froewiss, Graham E. Jones (Chair), Philip Saunders, Jr. and William N. Searcy, Jr. This            committee held seven (7) meetings during the calendar year 2006.

**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. In 2006, various ad hoc committees of the Board            held an additional seven (7) meetings.

**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 2006. 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.

 

| **Name of Board Member**        | **Aggregate Compensation****from DWS RREEF Global Real Estate                            SecuritiesFund** | **Total** **Compensation** **from Fund** **and** **DWS Fund Complex(1)** |
|---------------------------------|-----------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------|
|                            |                                                                                                      |                                                                                         |
| Henry P. Becton, Jr.(3)(5)      | $72                                                                                                       | $189,000                                                                                     |
| Dawn-Marie Driscoll(2)(3)(4)(5) | $14                                                                                                       | $251,000                                                                                     |
| Keith R. Fox(3)(4)(5)           | $11                                                                                                       | $195,000                                                                                     |
| Kenneth C. Froewiss(3)(4)(5)    | $12                                                                                                       | $234,988                                                                                     |
| Martin J. Gruber(3)(5)          | $11                                                                                                       | $188,000                                                                                     |
| Richard J. Herring(3)(4)(5)     | $187                                                                                                      | $184,000                                                                                     |
| Graham E. Jones(3)(4)(5)        | $189                                                                                                      | $206,000                                                                                     |
| Rebecca W. Rimel(3)(5)          | $11                                                                                                       | $185,000                                                                                     |
| Philip Saunders, Jr.(3)(4)(5)   | $12                                                                                                       | $207,000                                                                                     |
| William N. Searcy, Jr.(3)(4)(5) | $12                                                                                                       | $206,000                                                                                     |
| Jean Gleason Stromberg(3)(4)(5) | $12                                                                                                       | $202,000                                                                                     |
| Carl W. Vogt(3)(5)              | $72                                                                                                       | $189,000                                                                                     |

             

| 1) | The DWS Fund Complex is composed of 155                            funds. |
|----|---------------------------------------------------------------------------|

| (2) | Includes $50,000 in annual retainer fees in                            Ms. Driscoll’s role as Chairperson of the Board. |
|-----|------------------------------------------------------------------------------------------------------------------------------------|

| (3) | For each Board Member, except Mr. Becton, Mr.                            Froewiss and Mr. Vogt, total compensation includes compensation for                            service on the boards of 34 trusts/corporations comprised of 87                            funds/portfolios. For Messrs. Becton and Vogt total compensation                            includes compensation for service on the boards of 32                            trusts/corporations comprised of 85 funds/portfolios. For Mr. Froewiss                            total compensation includes compensation for services on the boards of                            37 trusts/corporations comprised of 90 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 $16,000                            for Ms. Driscoll, $1,000 for Mr. Fox, $17,000 for Mr.                            Froewiss, $1,000 for Dr. Herring, $16,000 for Mr. Jones,                            $17,000 for Dr. Saunders, $16,000 for Mr. Searcy and $16,000                            for Ms. Stromberg. These meeting fees were borne by the applicable                            DWS Funds. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | During calendar year 2006, the total number of funds                            overseen by each Board Member was 87 funds, except for Mr. Becton and                            Mr. Vogt, who oversaw 85 funds, and Mr. Froewiss, who oversaw 90                            funds. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Board Member Ownership in the            Fund***(1)

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, 2006.

 

| **Board                            Member**              | **Dollar Range of Beneficial Ownership****in DWS RREEF Global Real Estate                            Securities****Fund** | **Aggregate Dollar Range of****Ownership in all Funds Overseen by****Board Member****in the DWS Fund                            Complex(2)** |
|----------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------|
|                                                     |                                                                                                                      |                                                                                                                                         |
| **Independent Board                            Member:** |                                                                                                                      |                                                                                                                                         |
|                                                     |                                                                                                                      |                                                                                                                                         |

 

 

 

| Henry P. Becton, Jr.         | None             | Over $100,000 |
|------------------------------|------------------|---------------|
| Dawn-Marie Driscoll          | $10,001-$50,000  | Over $100,000 |
| Keith R. Fox                 | None             | Over $100,000 |
| Kenneth C. Froewiss          | $1-$10,000       | Over $100,000 |
| Martin J. Gruber             | None             | Over $100,000 |
| Richard J. Herring           | None             | Over $100,000 |
| Graham E. Jones              | $50,001-$100,000 | Over $100,000 |
| Rebecca W. Rimel             | None             | Over $100,000 |
| Philip Saunders, Jr.         | 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                 | None             | Over $100,000 |
|                         |             |          |
| **Interested Board Member:** |             |          |
|                         |             |          |
| Axel Schwarzer               | None             | Over $100,000 |

             

| (1) | The amount shown includes share equivalents of funds                            which the Board Member is deemed to be invested pursuant to the                            Fund’s deferred compensation plan. The inclusion therein of any                            shares deemed beneficially owned does not constitute an admission of                            beneficial ownership of the shares. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | 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, 2006. 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 (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).

             

| **Independent****Board Member**                   | **Owner and Relationship to****Board Member** | **Company** | **Title of****Class** | **Value of Securities on an Aggregate****Basis** | **Percent of Class on an Aggregate****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        |                  |                                             |                                          |
| Philip Saunders, Jr.                              |                                          | None        |                  |                                             |                                          |
| William N. Searcy, Jr.                            |                                          | None        |                  |                                             |                                          |
| Jean                            Gleason Stromberg |                                          | None        |                  |                                             |                                          |
| Carl                            W. Vogt           |                                          | None        |                  |                                             |                                          |

 

 

 

***Securities Beneficially Owned***

As            of April 5, 2007, the Board Members and officers of the Trust owned, as a group, less            than 1% of the outstanding shares of the Fund.

To            the best of the Fund’s knowledge, as of April 5, 2007, no person owned of record            or beneficially 5% or more of any class of the Fund’s outstanding shares, except            as noted below.

 

| **Name and Address of Investor                            Ownership**                                                                        | **Shares**   | **% of Total Shares**         |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------------|-------------------------------|
|                                                                                                                                         |         |                          |
| MLPF&S FOR THE SOLE BENEFIT OF

ITS CUSTOMERS

ATTN FUND ADMINISTRATION

SEC #97JS4

JACKSONVILLE FL 32246                               | 1,072,760.85 | 16.77% of Class C             |
|                                                                                                                                         |         |                          |
| DEUTSCHE INVESTMENT MANAGEMENT AMERICAS INC

ATTN JOHN KOZLOWSKI CONTROLLING

NEW YORK NY 10017-1216                                         | 388,754.40   | 6.08% of Class C              |
|                                                                                                                                         |         |                          |
| CHARLES SCHWAB & CO INC

SPECIAL CUSTODY ACCOUNT FOR THE

EXCLUSIVE BENEFIT OF CUSTOMERS

ATTN MUTUAL FUNDS

SAN FRANCISCO CA 94104-4151 | 1,013,810.14 | 52.70% of Institutional Class |
|                                                                                                                                         |         |                          |
| DEUTSCHE INVESTMENT MANAGEMENT AMERICAS INC

ATTN JOHN KOZLOWSKI CONTROLLING

NEW YORK NY 10017-1216                                         | 395,449.92   | 20.56% of Institutional Class |
|                                                                                                                                         |         |                          |
| SEI PRIVATE TR CO

C/O MELLON BANK

ATTN MUTUAL FUNDS ADMINISTRATOR

ONE FREEDOM VALLEY DRIVE

OAKS PA 19456                                 | 354,038.50   | 18.40% of Institutional Class |
|                                                                                                                                         |         |                          |
| CHARLES SCHWAB & CO INC

SAN FRANCISCO CA 94104-4151                                                                                     | 696,124.73   | 20.77% of Class S             |
|                                                                                                                                         |         |                          |
| MERRILL LYNCH PIERCE FENNER

& SMITH FOR THE SOLE BENEFIT OF

ITS CUSTOMERS

ATTN SERVICE TEAM

JACKSONVILLE FL 32246-6484               | 524,167.37   | 15.64% of Class S             |
|                                                                                                                                         |         |                          |
| DEUTSCHE INVESTMENT MANAGEMENT AMERICAS INC

ATTN JOHN KOZLOWSKI CONTROLLING

NEW YORK NY 10017-1216                                         | 395,130.58   | 11.79% of Class S             |

 

 

 

***Agreement to Indemnify Independent Trustees for Certain            Expenses***

In            addition to customary indemnification rights provided by the governing instruments of            the Trust, Trustees may be eligible to seek indemnification from the Advisor in            connection with certain matters as follows.

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 Fund, DIMA has agreed to indemnify and hold harmless the Fund 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 DIMA (“Enforcement Actions”)            or that are the basis for private actions brought by shareholders of the Fund against            the Fund, their Trustees and officers, DIMA 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 Fund and in            light of the rebuttable presumption generally afforded to independent Trustees of            investment companies that they have not engaged in disabling conduct, DIMA has also            agreed to indemnify the Independent Trustees against certain liabilities the            Independent Trustees 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 Trustees in connection with any Enforcement Actions or Private Litigation.            DIMA is not, however, required to provide indemnification and advancement of expenses:            (1) with respect to any proceeding or action which the Fund’s Boards            determines that the Independent Trustee ultimately would not be entitled to            indemnification or (2) for any liability of the Independent Trustee to the Fund or            their shareholders to which the Independent Trustee would otherwise be subject by            reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the            Independent Trustee’s duties as a Trustee of the Fund as determined in a final            adjudication in such action or proceeding. The estimated amount of any expenses that            may be advanced to the Independent Trustees or indemnity that may be payable under the            indemnity agreements is currently unknown. This undertaking by DIMA will survive the            termination of the investment management agreement between DIMA and the            Fund.

**TRUST ORGANIZATION**

**General.**The Fund is a series of DWS            Advisor Funds (the “Trust”). The Trust was organized on July 21, 1986 under            the laws of The Commonwealth of Massachusetts. The Trust was organized under the name            BT Tax-Free Investment Trust and assumed its former name of BT Investment Funds on May            16, 1988. The Trust’s name was changed to Scudder Advisor Funds effective May 16,            2003 and to DWS Advisor Funds effective February 6, 2006.

The            Trust is a Massachusetts business trust organized under the laws of Massachusetts and            is governed by an Amended and Restated Declaration of Trust dated June 27, 2006, as may            be further amended from time to time (the “Declaration of Trust”). All            shares issued and outstanding are fully paid and non-assessable, transferable, have no            pre-emptive or conversion rights (except as may be determined by the Board of Trustees)            and are redeemable as described in the SAI and a Fund’s Prospectus. Each share            has equal rights with each other share of the same class of the Fund as to voting,            dividends, exchanges, conversion features and liquidation. Shareholders are entitled to            one vote for each full share held and fractional votes for fractional shares            held.

A            Fund generally is not required to hold meetings of its shareholders. Under the            Declaration of Trust, however, shareholder meetings will be held in connection with the            following matters to the extent and as provided in the Declaration of Trust and as            required by applicable law: (a) the election or removal of trustees if a meeting is            called for such purpose; (b) the termination of the Trust or a Fund; (c) an amendment            of the Declaration of Trust; (d) to the same extent as stockholders of Massachusetts            business corporation as to whether or not a court action, proceeding or claims should            or should not be brought or maintained derivatively or as a class action on behalf of            the Trust or any series or class thereof or the Shareholders; and (e) such additional            matters as may be required by law, the Declaration of Trust, the By-laws of the Trust,            or any registration of a Fund with the SEC or any state, or as the Trustees may            determine to be necessary or desirable. Shareholders also vote upon changes in            fundamental policies or restrictions.

 

On            any matter submitted to a vote of shareholders, all shares of the Trust entitled to            vote shall, except as otherwise provided in the Trust’s By-Laws, be voted in the            aggregate as a single class without regard to series or classes of Shares, except (a)            when required by applicable law or when the Trustees shall have determined that the            matter affects one or more series or classes of shares materially differently, shares            shall be voted by individual series or class; and (b) when the Trustees have determined            that the matter affects only the interests of one or more series or classes, only            shareholders of such series or classes shall be entitled to vote thereon.

The            Declaration of Trust provides that the Board of Trustees 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 Trustees, in its sole discretion,            also may cause the Trust to redeem all of the shares of the Trust 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 a particular 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 Trust 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 class or series of shares, (e) if the Board of Trustees            determines (or pursuant to policies established by the Board it is determined) that            share ownership by a particular shareholder is not in the best interests of remaining            shareholders, (f) when a Fund is requested or compelled to do so by governmental            authority or applicable law and (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 Trust. The Declaration of Trust also authorizes the Board of Trustees to terminate            a Fund or any class without shareholder approval, and the Trust may suspend the right            of shareholders to require the Trust to redeem shares to the extent permissible under            the 1940 Act.

Under Massachusetts law, shareholders of a Massachusetts business trust            could, under certain circumstances, be held personally liable for obligations of a            Fund. The Declaration of Trust, however, disclaims shareholder liability for acts or            obligations of the Fund and requires that notice of such disclaimer be given in each            agreement, obligation, or instrument entered into or executed by the Fund or the            Fund’s trustees. Moreover, the Declaration of Trust provides for indemnification            out of Fund property for all losses and expenses of any shareholder held personally            liable for the obligations of the Fund and the Fund may be covered by insurance which            the Trustees consider adequate to cover foreseeable tort claims. Thus, the risk of a            shareholder incurring financial loss on account of shareholder liability is considered            by the Advisor remote and not material, since it is limited to circumstances in which a            disclaimer is inoperative and the Fund itself is unable to meet its            obligations.

**PROXY VOTING GUIDELINES**

The            Fund has delegated proxy voting responsibilities to the 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:

| **•** | Shareholder Rights — The Advisor generally votes                            against proposals that restrict shareholder rights. |
|------------|---------------------------------------------------------------------------------------------------------------------------------------|

| **•** | 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. |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **•** | 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. |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| **•** | 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. |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **•** | 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 the            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.

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 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 SEC’s Web            site at www.sec.gov or by visiting our Web site at: dws-scudder.com (click on            “proxy voting” at the bottom of the page).

**FINANCIAL STATEMENTS**

The            audited financial statements for the Fund for the year ended December 31, 2006 are            included in, and incorporated by reference into, this SAI in reliance upon the report            of PricewaterhouseCoopers LLP, the Fund’s independent registered public            accounting firm, as experts in accounting and auditing.

 

A            copy of the Fund’s Annual Report may be obtained without charge by contacting            Shareholder Services at 1-800-621-1048.

**ADDITIONAL INFORMATION**

The            CUSIP number for the class of DWS RREEF Global Real Estate Securities Fund offered            herein is:

| Class S: | 23336Y649 |
|----------|-----------|

DWS            RREEF Global Real Estate Securities Fund has a fiscal year ending December            31.

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:            dws-scudder.com (click on “proxy voting” at the bottom of the            page).

Many of the changes in the Fund’s investment portfolio will be            made at prices different from those prevailing at the time they may be reflected in a            regular report to shareholders of the Fund. These transactions will reflect investment            decisions made by the Advisor in light of the Fund’s investment objective and            policies, its other portfolio holdings and tax considerations, and should not be            construed as recommendations for similar action by other investors.

The            Fund’s Prospectus and this Statement of Additional Information omit certain            information contained in the Registration Statement which the Fund has filed with the            SEC under the Securities Act of 1933 and reference is hereby made to the Registration            Statement 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.

 

**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

 

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 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.”