As filed with the Securities and Exchange Commission on February 10, 2009

                                                      1933 Act File No. 33-07404
                                                     1940 Act File No. 811-04760

================================================================================

            SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

                                    FORM N-1A

             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                       POST-EFFECTIVE AMENDMENT NO. 166                      [X]

                                       and

                          REGISTRATION STATEMENT UNDER
                       THE INVESTMENT COMPANY ACT OF 1940

                               AMENDMENT NO. 166                             [X]

                                DWS ADVISOR FUNDS
               (Exact Name of Registrant as Specified in Charter)

                       345 Park Avenue, New York, NY 10154
                    (Address of Principal Executive Offices)

                                 (617) 295-2572
                         (Registrant's Telephone Number)

                   John Millette, Vice President and Secretary
                                One Beacon Street
                                Boston, MA 02108
                     (Name and Address of Agent for Service)

                                    Copy to:
                             Cathy G. O'Kelly, Esq.
                              David A. Sturms, Esq.
                                Vedder Price P.C.
                            222 North LaSalle Street
                                Chicago, IL 60601

It is proposed that this filing will become effective (check appropriate box):

|___|    immediately upon filing pursuant to paragraph (b) of Rule 485
|___|    on ____________ pursuant to paragraph (b) of Rule 485
|___|    60 days after filing pursuant to paragraph (a)(1) of Rule 485(a)
|___|    on ____________ pursuant to paragraph (a)(1) of Rule 485
|___|    75 days after filing pursuant to paragraph (a)(2) of Rule 485
|___|    on ___________ pursuant to paragraph  (a)(2) of Rule 485
| X |    on March 1, 2009 pursuant to paragraph  (a)(3) of Rule 485

If appropriate, check the following box:

|___|    this post-effective amendment designates a new effective date for a
         previously filed post-effective amendment.


<PAGE>

                                EXPLANATORY NOTE
                                ----------------

This post-effective amendment contains the prospectus and Statement of
Additional Information relating to the following series of the registrant:

o        DWS Diversified International Equity Fund (formerly DWS International
         Select Equity Fund) - Classes A, B, C, R, S and Institutional

This post-effective amendment is not intended to update or amend any other
prospectuses or Statements of Additional Information of the registrant's other
series or classes.


                                       2
<PAGE>

<PAGE>


                                 MARCH 1, 2009








                                   PROSPECTUS

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

                             CLASSES A, B, C AND R



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


                    DWS DIVERSIFIED INTERNATIONAL EQUITY FUND
                (FORMERLY DWS INTERNATIONAL SELECT EQUITY FUND)

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


                                     RESHAPING INVESTING. [DWS INVESTMENTS LOGO]
                                                             Deutsche Bank Group


<PAGE>

CONTENTS





<TABLE>
<S>      <C>
HOW THE FUND WORKS
  4      The Fund's Main Investment
         Strategy
  5      The Main Risks of Investing in
         the Fund
  9      The Fund's Performance
         History
 11      How Much Investors Pay
 13      Other Policies and Secondary
         Risks
 15      Who Manages and Oversees
         the Fund
 19      Financial Highlights


</TABLE>
<TABLE>
<S>      <C>
HOW TO INVEST IN THE FUND
 25      Choosing a Share Class
 32      How to Buy Class A, B and C
         Shares
 33      How to Exchange or Sell
         Class A, B and C Shares
 34      How to Buy and Sell Class R
         Shares
 36      Policies You Should Know
         About
 50      Understanding Distributions
         and Taxes
 54      Appendix
</TABLE>


<PAGE>

HOW THE FUND WORKS

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

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

CLASSES A, B AND C shares are generally intended for investors seeking the
advice and assistance of a financial advisor. CLASS R shares are only available
to participants in certain retirement plans.

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


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

<PAGE>


<TABLE>
<S>                                       <C>        <C>        <C>        <C>
                                           Class A    Class B    Class C    Class R
  ticker symbol                            DBISX      DBIBX      DBICX      DBITX
    fund number                            499        699        799        1501

    DWS INTERNATIONAL SELECT EQUITY FUND


</TABLE>

            THE FUND'S MAIN INVESTMENT STRATEGY

            The fund seeks capital appreciation.

            Under normal circumstances, the fund invests at least 80% of its
            assets, determined at the time of purchase, in equity securities
            and other securities with equity characteristics.


            Although the fund can invest in companies of any size and from any
            country, it invests mainly in common stocks of established
            companies in countries with developed economies (other than the
            United States).

            At least 50% of the fund's assets will be invested in securities
            that are represented in the MSCI EAFE (Reg. TM) Index. The MSCI
            EAFE (Reg. TM) Index tracks stocks in Australia, Austria, Belgium,
            Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy,
            Japan, Malaysia, the Netherlands, New Zealand, Norway, Portugal,
            Singapore, Spain, Sweden, Switzerland and the United Kingdom. In
            addition, the fund may invest in Canada.

            In choosing securities, the portfolio managers consider various
            countries and sectors. The portfolio managers review the fund's
            allocation among countries and sectors periodically and may adjust
            the allocation based on current or expected market conditions or to
            manage risk consistent with the fund's investment objective.

            The fund's equity investments are mainly common stocks, but may
            also include preferred stocks and other securities with equity
            characteristics, such as convertible securities, warrants and
            exchange-traded funds ("ETFs")"

            The fund may also invest up to 20% of its assets in cash
            equivalents, US investment-grade fixed-income securities, and US
            stocks and other equities.



4 | DWS International Select Equity Fund
<PAGE>


            The fund may invest a portion of its assets in companies located in
            countries with emerging markets. These countries are generally
            located in Latin America, the Middle East, Eastern Europe, Asia and
            Africa. Typically, the fund will not hold more than 35% of its net
            assets in securities of emerging markets issuers.


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

            In particular, the fund may use futures, currency options and
            forward currency transactions.

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


            THE MAIN RISKS OF INVESTING IN THE FUND

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

            STOCK MARKET RISK. As with most stock funds, an important
            factor with this fund is how stock markets perform. To the extent
            that the fund invests in a particular geographic region, the fund's
            performance may be proportionately affected by that region's
            general performance. When stock prices fall, you should expect the
            value of your investment to fall as well. Because a stock
            represents ownership in its issuer, stock prices can be hurt by
            poor management, shrinking product demand and other business risks.
            These may affect single companies as well as groups of companies.
            In addition, movements in financial markets may adversely affect a
            stock's price, regardless of how well the company performs. The
            market as a whole may not favor the types of investments the fund
            makes and the fund may not be able to get attractive prices for
            them.




THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

The fund is designed for individuals who are seeking high capital appreciation
and are willing to accept the risks of investing in the stocks of foreign
companies.









                                       DWS International Select Equity Fund  | 5
<PAGE>

            SECURITY SELECTION RISK. A risk that pervades all investing is the
            risk that the securities in the fund's portfolio may decline in
            value.

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


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


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


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


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

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

6 | DWS International Select Equity Fund
<PAGE>

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

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

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


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

            Some governments exercise substantial influence over the private
            economic sector and the social and political uncertainties that
            exist for many developing countries is significant. In adverse
            social and political circumstances, governments have been involved
            in policies of expropriation, confiscatory taxation,
            nationalization, intervention in the securities markets and trade
            settlement, and imposition of foreign investment restrictions and
            exchange controls.


            PRICING RISK. At times, market conditions may make it difficult to
            value some investments, and the fund may use certain valuation
            methodologies for some of its investments, such as fair value
            pricing. Given the subjective nature of such valuation
            methodologies, it is possible that the value determined for an
            investment may be different than the value realized upon such
            investment's sale. If the fund has valued its securities too


                                       DWS International Select Equity Fund  | 7
<PAGE>

            highly, you may pay too much for fund shares when you buy into the
            fund. If the fund has underestimated the price of its securities,
            you may not receive the full market value when you sell your fund
            shares.

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

            Another factor that could affect performance is:

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


8 | DWS International Select Equity Fund
<PAGE>

THE FUND'S PERFORMANCE HISTORY

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


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

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


The performance figures provided below and on the next page for the fund, prior
to July 10, 2006, are those of the fund's predecessor fund, DWS International
Select Equity Fund, a series of DWS Investments Trust (the "Predecessor Fund").
On July 10, 2006, the Predecessor Fund transferred its assets to the fund,
which is a new series of DWS Advisor Funds. The fund also acquired the
Predecessor Fund's liabilities. The performance figures provided below and on
the next page, beginning July 10, 2006, are those of the fund.

The inception date for Classes A, B and C shares of the Predecessor Fund is
February 28, 2001. The inception date for Class R shares of the Predecessor
Fund is July 1, 2003. In the bar chart, the performance figures for Class A of
the Predecessor Fund before its inception date are based on the historical
performance of the Predecessor Fund's original share class (Institutional
Class), adjusted to reflect the higher gross total annual operating expenses of
Class A. In the table, the performance figures for each share class prior to
its inception date are based on the historical performance of the Predecessor
Fund's Institutional Class, adjusted to reflect both the higher gross total
annual operating expenses of Class A, B, C or R and the current applicable
sales charges for Class A, B or C. Institutional Class shares are offered in a
separate prospectus.

DWS International Select Equity Fund

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


[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]



<TABLE>
<S>        <C>         <C>         <C>         <C>        <C>        <C>        <C>        <C>
88.24       -14.28      -16.42      -14.27     32.25      16.25      13.15      24.81      15.87
1999        2000        2001        2002       2003       2004       2005       2006       2007
</TABLE>




                                       DWS International Select Equity Fund  | 9
<PAGE>





<TABLE>
<CAPTION>
FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                        <C>
BEST QUARTER: _____%, _______              WORST QUARTER: _____, ________
</TABLE>




AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2008 (Fund returns include the
effects of maximum sales load.)




<TABLE>
<CAPTION>
                                                1 YEAR       5 YEARS      10 YEARS
<S>                                          <C>            <C>          <C>
 CLASS A
   Return before Taxes
   Return after Taxes on Distributions
   Return after Taxes on Distributions
   and Sale of Fund Shares
 CLASS B (Return before Taxes)
 CLASS C (Return before Taxes)
 CLASS R (Return before Taxes)
 MORGAN STANLEY CAPITAL
 INTERNATIONAL (MSCI) EUROPE,
 AUSTRALASIA AND THE FAR EAST (EAFE)
 INDEX (reflects no deductions for fees,
 expenses or taxes)
</TABLE>



 *   Return after Taxes on Distributions and Sale of Fund Shares is higher than
     other return figures for the same period due to a foreign tax credit.


 MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA AND THE FAR EAST
 (MSCI EAFE (Reg. TM)) INDEX is an unmanaged index that tracks international
 stock performance in the 21 developed markets of Europe, Australasia and the
 Far East.



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

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



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

Return information assumes that fund shares were sold at the end of the period.


RETURN AFTER TAXES ON DISTRIBUTIONS reflects taxes only on the fund's
distributions and not on a shareholder's gain or loss from selling fund shares.


RETURN AFTER TAXES ON DISTRIBUTIONS AND SALE OF FUND SHARES reflects taxes on
both the fund's distributions and a shareholder's gain or loss from selling
fund shares.



10 | DWS International Select Equity Fund
<PAGE>

HOW MUCH INVESTORS PAY

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



<TABLE>
<CAPTION>
FEE TABLE                                      CLASS A        CLASS B      CLASS C      CLASS R
<S>                                         <C>              <C>          <C>          <C>
 SHAREHOLDER FEES, paid directly from your investment
___________________________________________________________________________________________________
 Maximum Sales Charge (Load) Imposed
 on Purchases (as % of offering price)           5.75% 1        None         None         None
 Maximum Deferred Sales Charge (Load)
 (as % of redemption proceeds)                   None 2         4.00%        1.00%       None
 Redemption/Exchange fee on shares
 owned less than 15 days (as % of
 redemption proceeds) 3                          2.00           2.00         2.00        2.00
 ANNUAL OPERATING EXPENSES, deducted from fund assets
___________________________________________________________________________________________________
 Management Fee
 Distribution/Service (12b-1) Fee
 Other Expenses4
 TOTAL ANNUAL OPERATING EXPENSES 5,6,7
</TABLE>



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

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

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

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

5    The Advisor has agreed to voluntarily waive a portion of its fees and
     reimburse or pay operating expenses of the fund so that total annual
     operating expenses of the fund will not exceed 1.50%, 2.25%, 2.25% and
     1.75% for Class A, Class B, Class C, and Class R shares, respectively,
     excluding certain expenses such as extraordinary expenses, taxes, brokerage
     and interest. This voluntary waiver or reimbursement may be terminated at
     any time at the option of the Advisor.


6    Through September 30, 2009, the Advisor has contractually agreed to waive
     all or a portion of its fees and reimburse or pay operating expenses of the
     fund to the extent necessary to maintain the fund's total operating
     expenses at 1.84% for Class R shares,excluding certain expenses such as
     extraordinary expenses, taxes, brokerage and interest. Although there can
     be no assurance that the current waiver/reimbursement arrangement will be
     maintained beyond September 30, 2009, the Advisor has committed to review
     the continuance of waiver/expense reimbursement arrangements by September
     30, 2009.

7    Except as otherwise noted, the information in the table is based on amounts
     incurred during the fund's most recent fiscal year. It is important for
     investors to understand that a decline in the fund's average net assets
     during the current fiscal year due to recent unprecedented market
     volatility or other factors could cause the fund's expense ratios for the
     fund's current fiscal year to be higher than the expense information
     presented.



                                      DWS International Select Equity Fund  | 11
<PAGE>

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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR      3 YEARS      5 YEARS      10 YEARS
<S>                   <C>         <C>          <C>          <C>
 EXPENSES, assuming you sold your shares at the end of each period.
_________________________________________________________________________
 Class A shares
 Class B shares*
 Class C shares
 Class R shares
 EXPENSES, assuming you kept your shares.
_________________________________________________________________________
 Class A shares
 Class B shares*
 Class C shares
 Class R shares
</TABLE>



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

12 | DWS International Select Equity Fund
<PAGE>

OTHER POLICIES AND SECONDARY RISKS

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

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

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


           -  The fund may trade actively. This could raise transaction costs
              (thus lowering return) and could mean increased taxable
              distributions to shareholders and distributions that will be
              taxable to shareholders at higher federal income tax rates.



           -  Certain DWS fund-of-funds are permitted to invest in the fund. As
              a result, the fund may have large inflows or outflows of cash
              from time to time. This could have adverse effects on the fund's
              performance if the fund were required to sell securities or
              invest cash at times when it otherwise would not do so. This
              activity could also accelerate the realization of capital gains
              and increase the fund's transaction costs. The Advisor will
              monitor the impact of these transactions and the fund may
              discontinue such arrangements if they are not deemed to be in the
              best interests of the fund.



                                        Other Policies and Secondary Risks  | 13
<PAGE>

           Secondary risks


           IPO RISK. Securities purchased in initial public offerings (IPOs)
           may be very volatile. The price of such securities may rise and fall
           rapidly, often based, among other reasons, on investor perceptions
           rather than economic reasons. Additionally, investments in IPOs may
           magnify the fund's performance if it has a small asset base. The
           fund is less likely to experience a similar impact on its
           performance as its assets grow because it is unlikely that the fund
           will obtain proportionately larger IPO allocations.

           SMALL COMPANY CAPITALIZATION RISK. Small company stocks tend to
           experience steeper price fluctuations than the stocks of larger
           companies. A shortage of reliable information can also pose added
           risk to small company stocks. Industry-wide reversals may have a
           greater impact on small companies, since they lack the financial
           resources of larger companies. Small company stocks are typically
           less liquid than large company stocks. Accordingly, it may be harder
           to find buyers for small company shares.


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



           For more information

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

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


14 | Other Policies and Secondary Risks
<PAGE>

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


           A complete list of the fund's portfolio holdings as of the month-end
           is posted on www.dws-investments.com on or about the 15th day of the
           following month. More frequent posting of portfolio holdings
           information may be made from time to time on
           www.dws-investments.com. The posted portfolio holdings information
           is available by fund and generally remains accessible at least until
           the date on which the fund files its Form N-CSR or N-Q with the
           Securities and Exchange Commission for the period that includes the
           date as of which the posted information is current. The fund's
           Statement of Additional Information includes a description of the
           fund's policies and procedures with respect to the disclosure of the
           fund's portfolio holdings.



WHO MANAGES AND OVERSEES THE FUND


           The investment advisor

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


           DWS Investments is part of Deutsche Bank's Asset Management division
           and, within the US, represents the retail asset management
           activities of Deutsche Bank AG, Deutsche Bank Trust Company
           Americas, DIMA and DWS Trust Company.


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


                                         Who Manages and Oversees the Fund  | 15
<PAGE>

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


16 | Who Manages and Oversees the Fund
<PAGE>

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


<TABLE>
<CAPTION>
FUND NAME                                              FEE PAID
<S>                                                  <C>
           DWS International Select Equity Fund
</TABLE>


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


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


           Under a separate administrative services agreement between the fund
           and the Advisor, the fund pays the Advisor a fee for providing most
           of the fund's administrative services.



                                         Who Manages and Oversees the Fund  | 17
<PAGE>

Portfolio management


The following people handle the day-to-day management of DWS International
Select Equity Fund.

Robert Wang
Managing Director of Deutsche Asset Management and Portfolio Manager of the
fund.


- Joined Deutsche Asset Management in 1995 as portfolio manager for asset
  allocation after 13 years of experience of trading fixed income, foreign
  exchange and derivative products at J.P.Morgan.
- Global Head of Quantitative Strategies Portfolio Management: New York.
- Joined the fund in 2009.
- BS, The Wharton School, University of Pennsylvania.

Russell Shtern, CFA
Vice President of Deutsche Asset Management and Portfolio Manager of the fund.


- Joined Deutsche Asset Management in 1999, previously serving as trader's
  assistant supporting program, options and equity swaps trading desks.


- Portfolio manager for GrOWE and Tax Managed Equity: New York.

-
-

- Joined the fund in 2009.
- BBA, Pace University.


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


18 | Who Manages and Oversees the Fund
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights are designed to help you understand recent financial
performance. The figures in the first part of each table are for a single
share. The total return figures represent the percentage that an investor in
the fund would have earned (or lost), assuming all dividends and distributions
were reinvested. This information has been audited by PricewaterhouseCoopers
LLP, independent registered public accounting firm, whose report, along with
the fund's financial statements, is included in the fund's annual report (see
"Shareholder reports" on the back cover). On July 10, 2006, DWS International
Select Equity Fund acquired all the assets and assumed all the liabilities of
the Predecessor Fund. The information contained in the following table for
periods prior to July 10, 2006 has been derived from the Predecessor Fund's
financial statements.


                                                      Financial Highlights  | 19
<PAGE>

DWS International Select Equity Fund - Class A



[TO BE UPDATED]




20 | Financial Highlights
<PAGE>

DWS International Select Equity Fund - Class B



[TO BE UPDATED]


                                                      Financial Highlights  | 21
<PAGE>

DWS International Select Equity Fund - Class C



[TO BE UPDATED]


22 | Financial Highlights
<PAGE>

DWS International Select Equity Fund - Class R



[TO BE UPDATED]


                                                      Financial Highlights  | 23
<PAGE>

HOW TO INVEST IN THE FUND

This prospectus offers the share classes noted on the front cover. Each class
has its own fees and expenses, offering you a choice of cost structures. The
fund offers other classes of shares in a separate prospectus. These shares are
intended for investors seeking the advice and assistance of a financial
advisor, who will typically receive compensation for those services. Class R
shares are only available to participants in certain retirement plans.


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


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


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

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

CHOOSING A SHARE CLASS


We describe each share class in detail on the following pages. But first, you
may want to look at the table below, which gives you a brief description and
comparison of the main features of each class. You should consult with your
financial advisor to determine which class of shares is appropriate for you.




<TABLE>
<CAPTION>
 CLASSES AND FEATURES                      POINTS TO HELP YOU COMPARE
<S>                                           <C>
 CLASS A

 -  Sales charge of up to 5.75% charged    -  Some investors may be able to reduce
    when you buy shares                       or eliminate their sales charge; see
                                              "Class A shares"
 -  In most cases, no charge when you      -  Total annual expenses are lower than
    sell shares                               those for Class B or Class C
 -  Up to 0.25% annual shareholder         -  Distributions are generally higher than
    servicing fee                             Class B or Class C

 CLASS B
 -  No sales charge when you buy shares        -  The deferred sales charge rate falls to
                                                  zero after six years
 -  Deferred sales charge declining from
    4.00%, charged when you sell shares        -  Shares automatically convert to
    you bought within the last six years          Class A after six years, which means
                                                  lower annual expenses going forward
 -  0.75% annual distribution fee and up
    to 0.25% annual shareholder servicing      -  Distributions are generally lower than
    fee                                           Class A

 CLASS C
 -  No sales charge when you buy shares        -  The deferred sales charge rate for one
                                                  year is lower for Class C shares than
 -  Deferred sales charge of 1.00%,               Class B shares, but your shares never
    charged when you sell shares you              automatically convert to Class A, so
    bought within the last year                   annual expenses remain higher than
 -  0.75% annual distribution fee and up          Class A
    to 0.25% annual shareholder servicing      -  Distributions are generally lower than
    fee                                           Class A

 CLASS R
 -  No sales charge when you buy or sell       -  Class R is only available to participants
    shares                                        in certain retirement plans
 -  0.25% annual distribution fee and up
    to 0.25% annual shareholder servicing
    fee
</TABLE>




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



                                                    Choosing a Share Class  | 25
<PAGE>

           Class A shares

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

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

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


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


           1   The offering price includes the sales charge.

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


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


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


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

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

26 | Choosing a Share Class
<PAGE>

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

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

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


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


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


                                                    Choosing a Share Class  | 27
<PAGE>

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

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

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


           Class B shares

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

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


28 | Choosing a Share Class
<PAGE>

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


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


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


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

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


                                                    Choosing a Share Class  | 29
<PAGE>

           Class C shares

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

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

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

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


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


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


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

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


30 | Choosing a Share Class
<PAGE>

           Class R shares

           Class R shares have no initial sales charge or deferred sales
           charge. Class R shares have a 12b-1 plan, under which a distribution
           fee of 0.25% and a shareholder servicing fee of up to 0.25% are
           deducted from class assets each year. Because distribution fees are
           continuous in nature, these fees may, over time, increase the cost
           of your investment and may cost you more than paying other types of
           sales charges.


           Eligibility requirements


           YOU MAY BUY CLASS R SHARES if you are a participant in certain
           retirement plan platforms that offer Class R shares of the fund
           through a plan level or omnibus account, including:

           -  Section 401(a) and 457 plans


           -  Certain section 403(b)(7) plans

           -  401(k), profit sharing, money purchase pension and defined
              benefit plans

           -  Non-qualified deferred compensation plans


           -  Individual Retirement Accounts (IRAs)


                                                    Choosing a Share Class  | 31
<PAGE>

How to BUY Class A, B and C Shares




<TABLE>
<CAPTION>
 FIRST INVESTMENT                               ADDITIONAL INVESTMENTS
<S>                                             <C>
 $1,000 or more for most accounts               $50 or more for most accounts and IRAs
 $500 or more for IRAs                          $50 or more for an account with an
 $500 or more for an account with an            Automatic Investment Plan
 Automatic Investment Plan

 THROUGH A FINANCIAL ADVISOR
 -  To obtain an application, contact your      -  Contact your advisor using the
    advisor                                        method that's most convenient for you

 BY MAIL OR EXPRESS MAIL (SEE BELOW)
 -  Fill out and sign an application            -  Send a check payable to "DWS
                                                   Investments" and an investment slip
 -  Send it to us at the appropriate
    address, along with an investment           -  If you don't have an investment slip,
    check made payable to "DWS                     include a letter with your name,
    Investments"                                   account number, the full name of the
                                                   fund and the share class and your
                                                   investment instructions

 BY WIRE
 -  Call (800) 621-1048 for instructions        -  Call (800) 621-1048 for instructions

 BY PHONE
 Not available                                  -  Call (800) 621-1048 for instructions

 WITH AN AUTOMATIC INVESTMENT PLAN
 -  Fill in the information on your             -  To set up regular investments from a
    application including a check for the          bank checking account call (800) 621-
    initial investment and a voided check          1048 ($50 minimum)

 USING QuickBuy
 Not available                                  -  Call (800) 621-1048 to make sure
                                                   QuickBuy is set up on your account; if
                                                   it is, you can request a transfer from
                                                   your bank account of any amount
                                                   between $50 and $250,000

 ON THE INTERNET
 Not available                                  -  Call (800) 621-1048 to ensure you have
                                                   electronic services
                                                -  Register at www.dws-
                                                   investments.com or log in if already
                                                   registered
                                                -  Follow the instructions for buying
                                                   shares with money from your bank
                                                   account
</TABLE>



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

REGULAR MAIL:

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


EXPRESS, REGISTERED OR CERTIFIED MAIL:

DWS Investments, 210 West 10th Street, Kansas City, MO 64105-1614


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

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


<TABLE>
<CAPTION>
 EXCHANGING INTO ANOTHER FUND                    SELLING SHARES
<S>                                             <C>

 -  Exchanges into existing accounts:            Some transactions, including most for
    $50 minimum per fund                         over $100,000, can only be ordered in
                                                 writing with a signature guarantee;
 -  Exchanges into new accounts:                 please see "Signature Guarantee"
    $1,000 minimum per fund for most
    accounts
    $500 minimum for IRAs

 THROUGH A FINANCIAL ADVISOR
 -  Contact your advisor using the              -  Contact your advisor using the
    method that's most convenient for you          method that's most convenient for you

 BY PHONE                                       BY PHONE OR WIRE
 -  Call (800) 621-1048 for instructions        -  Call (800) 621-1048 for instructions

 BY MAIL OR EXPRESS MAIL
 (see previous page for address)
 Write a letter that includes:                  Write a letter that includes:
 -  the fund, class and account number          -  the fund, class and account number
    you're exchanging out of                       from which you want to sell shares
 -  the dollar amount or number of shares       -  the dollar amount or number of shares
    you want to exchange                           you want to sell
 -  the name and class of the fund you          -  your name(s), signature(s) and
    want to exchange into                          address, as they appear on your account
 -  your name(s), signature(s) and              -  a daytime telephone number
    address, as they appear on your
    account
 -  a daytime telephone number

 WITH AN AUTOMATIC EXCHANGE PLAN                 WITH AN AUTOMATIC WITHDRAWAL PLAN
 -  To set up regular exchanges from a          -  Call (800) 621-1048 (minimum $50)
    fund account, call (800) 621-1048

 USING QuickSell
 Not available                                  -  Call (800) 621-1048 to make sure
                                                   QuickSell is set up on your account; if
                                                   it is, you can request a transfer to your
                                                   bank account of any amount between
                                                   $50 and $250,000

 ON THE INTERNET
 -  Register at www.dws-                        -  Register at www.dws-
    investments.com or log in if already           investments.com or log in if already
    registered                                     registered
 -  Follow the instructions for making on-      -  Follow the instructions for making on-
    line exchanges                                 line redemptions
</TABLE>



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


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




                           How to Exchange or Sell Class A, B and C Shares  | 33
<PAGE>

How to BUY and SELL Class R Shares



           If your plan sponsor has selected Class R shares as an investment
           option, you may buy Class R shares through your securities dealer or
           through any financial institution that is authorized to act as a
           shareholder servicing agent ("shareholder servicing agent"). Contact
           them for details on how to enter and pay for your order. Shareholder
           servicing agents include brokers, financial representatives or any
           other bank, dealer or other institution that has a sub-shareholder
           servicing agreement with the funds. Shareholder servicing agents may
           charge additional fees to investors for those services not otherwise
           included in their sub-distribution or servicing agreement, such as
           cash management or special trust or retirement investment reporting.
           In addition, the Advisor or administrator may provide compensation
           to shareholder servicing agents for distribution, administrative and
           promotional services.

           There are no minimum investments with respect to Class R shares.


           Instructions for buying and selling shares must generally be
           submitted by your retirement plan, not by plan participants for
           whose benefit the shares are held. Please contact your shareholder
           servicing agent for more information on how to open a fund account.



           Financial intermediary support payments


           The Advisor, DWS Investments Distributors, Inc. (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
           selected affiliated and unaffiliated brokers, dealers, participating
           insurance companies or other financial intermediaries ("financial
           advisors") in connection with the sale and/or distribution of fund
           shares or the retention and/or servicing of fund investors and fund
           shares ("revenue sharing"). Such revenue sharing payments are in
           addition to any distribution or service fees payable under any Rule
           12b-1 or service plan of the 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
           charge, commissions, non-cash compensation arrangements expressly
           permitted under applicable rules of the Financial Industry
           Regulatory Authority or other concessions described in the fee table
           or elsewhere in



34 | How to Buy and Sell Class R Shares
<PAGE>

           this prospectus or the Statement of Additional Information as
           payable to all financial advisors. For example, the Advisor, the
           Distributor and/or their affiliates may compensate financial
           advisors for providing 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 revenue sharing payments is
           determined at the discretion of the Advisor, the Distributor and/or
           their affiliates from time to time, may be substantial, and may be
           different for different financial advisors based on, for example,
           the nature of the services provided by the financial advisor.


           The Advisor, the Distributor and/or their affiliates currently make
           revenue sharing payments from their own assets in connection with
           the sale and/or distribution of DWS fund shares or the retention
           and/or servicing of investors and DWS fund shares to financial
           advisors in amounts that generally range from .01% up to .50% of
           assets of the fund serviced and maintained by the financial advisor,
           .05% to .25% of sales of the fund attributable to the financial
           advisor, a flat fee of $13,350 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 the 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 the fund. Additional information regarding these
           revenue sharing payments is



                                        How to Buy and Sell Class R Shares  | 35
<PAGE>

           included in the fund's Statement of Additional Information, which is
           available to you on request at no charge (see the back cover of this
           prospectus for more information on how to request a copy of the
           Statement of Additional Information).


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


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


POLICIES YOU SHOULD KNOW ABOUT

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

           If you are investing through a financial advisor or through a
           retirement plan, check the materials you received from them about
           how to buy and sell shares because particular financial advisors or
           other intermediaries may adopt policies, procedures


36 | Policies You Should Know About
<PAGE>

           or limitations that are separate from those described by the fund.
           Please note that a financial advisor may charge fees separate from
           those charged by the fund and may be compensated by the fund.

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

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


           Policies about transactions

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

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

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


                                            Policies You Should Know About  | 37
<PAGE>

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

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

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

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

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


           INITIAL PURCHASE MINIMUMS. The minimum initial investment for Class
           A, B and C shares is $1,000, except for investments on behalf of
           participants in certain fee-based and wrap programs offered through
           certain financial intermediaries approved by the Advisor, for which
           there is no minimum initial investment; and IRAs, for which the
           minimum initial investment is $500 per account. The minimum initial
           investment is $500 per account if you establish an automatic
           investment plan. Group retirement plans and certain other accounts
           have similar or lower minimum share balance requirements.


           SUB-MINIMUM BALANCES. The fund may close your account and send you
           the proceeds if your balance falls below $1,000 ($250 for retirement
           accounts and $500 for accounts with an Automatic Investment Plan
           funded with $50 or more per month in subsequent investments); we
           will give you 60 days' notice (90 days for retirement accounts) so
           you can either increase your balance or close your account (these
           policies don't apply to investors with $100,000 or more in DWS fund
           shares, investors


38 | Policies You Should Know About
<PAGE>

           in certain fee-based and wrap programs offered through certain
           financial intermediaries approved by the Advisor, group retirement
           plans and certain other accounts having lower minimum share balance
           requirements or Class R shares).

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


           IRA ROLLOVERS. You may complete a direct rollover from a retirement
           plan offering Class R shares to a DWS IRA account by reinvesting up
           to the full amount of your distribution in Class A shares of any DWS
           fund at net asset value. Subsequent purchases of Class A shares will
           be made at the public offering price as described in the prospectus
           for Class A shares. Please note that if you terminate your
           participation in a retirement plan and transfer all of your Class R
           shares, you will lose the privilege of purchasing Class R shares in
           the future. Rollovers to a DWS Class R share IRA are not permitted.


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

           Pursuant to its policies, the fund will impose a 2% redemption fee
           on fund shares held for less than a specified holding period
           (subject to certain exceptions discussed below under "Redemption
           fees"). The fund also reserves the right to reject or cancel a
           purchase or exchange order for any reason without prior notice. For
           example, the fund may in its discretion reject or cancel a purchase
           or an exchange order even if the transaction is not


                                            Policies You Should Know About  | 39
<PAGE>

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


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

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

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



40 | Policies You Should Know About
<PAGE>

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

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

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

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

           REDEMPTION FEES. The fund imposes a redemption fee of 2% of the
           total redemption amount (calculated at net asset value, without
           regard to the effect of any contingent deferred sales charge; any
           contingent deferred sales charge is also assessed on the total
           redemption amount without regard to the assessment of the 2%
           redemption fee) on all fund shares redeemed or exchanged within 15
           days of buying them (either by purchase or exchange). The redemption
           fee is paid directly to the fund and


                                            Policies You Should Know About  | 41
<PAGE>

           is designed to encourage long-term investment and to offset
           transaction and other costs associated with short-term or excessive
           trading. For purposes of determining whether the redemption fee
           applies, shares held the longest time will be treated as being
           redeemed first and shares held the shortest time will be treated as
           being redeemed last.

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

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


42 | Policies You Should Know About
<PAGE>


           account rebalancing, or loan origination and repayments; (ix)
           transactions involving shares purchased through the reinvestment of
           dividends or other distributions; (x) transactions involving shares
           transferred from another account in the same fund or converted from
           another class of the same fund (the redemption fee period will carry
           over to the acquired shares); (xi) transactions initiated by the
           fund or administrator (e.g., redemptions for not meeting account
           minimums, to pay account fees funded by share redemptions, or in the
           event of the liquidation or merger of the fund); or (xii)
           transactions in cases when there are legal or contractual
           limitations or restrictions on the imposition of the redemption fee
           (as determined by the fund or its agents in their sole discretion).
           It is the policy of the DWS funds to permit approved fund platform
           providers to execute transactions with the funds without the
           imposition of a redemption fee if such providers have implemented
           alternative measures that are determined by the Advisor to provide
           controls on short-term and excessive trading that are comparable to
           the DWS funds' policies.

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


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

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





THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

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




                                            Policies You Should Know About  | 43
<PAGE>

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

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

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


           THE FUND ACCEPTS PAYMENT FOR SHARES ONLY IN US DOLLARS by a check
           drawn on a US bank, a bank or Federal Funds wire transfer or an
           electronic bank transfer. The fund does not accept third party
           checks. A third party check is a check made payable to one or more
           parties and offered as payment to one or more other parties (e.g., a
           check made payable to you that you offer as payment to someone
           else). Checks should normally be payable to DWS Investments and
           drawn by you or a financial institution on your behalf with your
           name or account number included with the check.


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


44 | Policies You Should Know About
<PAGE>

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

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

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

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

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

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

           -  withdrawals related to certain retirement or benefit plans

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

           -  for Class A shares purchased through the Large Order NAV

              Purchase Privilege, redemption of shares whose dealer of record
              at the time of the investment notifies the Distributor that the
              dealer waives the applicable commission



THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

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









                                            Policies You Should Know About  | 45
<PAGE>

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

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


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

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

           MONEY FROM SHARES YOU SELL is normally sent out within one business
           day of when your order is processed (not when it is received),
           although it could be delayed for up to seven days. There are
           circumstances when it could be longer, including, but not limited
           to, when you are selling shares you bought recently by check  or ACH
           (the funds will be placed under a 10 calendar day hold to ensure
           good funds) or when unusual circumstances prompt the SEC to allow
           further delays. Certain expedited redemption processes (e.g.,
           redemption proceeds by wire) may also be delayed or unavailable when
           you are selling shares recently purchased or in the event of the
           closing of the Federal Reserve wire payment system. 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



46 | Policies You Should Know About
<PAGE>

           closings; 2) trading on the New York Stock Exchange is restricted;
           3) an emergency exists which makes the disposal of securities owned
           by the 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. For additional rights
           reserved by the fund, please see "Other rights we reserve."

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


           How the fund calculates share price

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


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



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


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


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



                                            Policies You Should Know About  | 47
<PAGE>

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

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


           Other rights we reserve

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

           -  withdraw or suspend the offering of shares at any time


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


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

48 | Policies You Should Know About
<PAGE>

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


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


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

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


                                            Policies You Should Know About  | 49
<PAGE>

UNDERSTANDING DISTRIBUTIONS AND TAXES


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


           THE FUND INTENDS TO PAY DIVIDENDS AND DISTRIBUTIONS to its
           shareholders in December and, if necessary, may do so at other times
           as well.


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


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


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


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



THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

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


50 | Understanding Distributions and Taxes
<PAGE>

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

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


<TABLE>
<CAPTION>
GENERALLY TAXED AT LONG-TERM                        GENERALLY TAXED AT ORDINARY
CAPITAL GAIN RATES:                                 INCOME RATES:
<S>                                                 <C>
DISTRIBUTIONS FROM THE FUND
- gains from the sale of                            -  gains from the sale of
  securities held (or treated as                       securities held by the fund for
  held) by the fund for more                           one year or less
  than one year                                     -  all other taxable income
- qualified dividend income

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



           ANY DIRECT INVESTMENTS IN FOREIGN SECURITIES BY THE FUND MAY BE
           SUBJECT TO FOREIGN WITHHOLDING TAXES. In that case, the fund's yield
           on those securities would generally be decreased. The fund may elect
           to pass through to its shareholders a credit or deduction for
           foreign taxes it has paid if at the end of its fiscal year more than
           50% of the value of the fund's total assets consists of stocks or
           securities of foreign corporations. In addition, any investments in
           foreign securities or foreign currencies may increase or accelerate
           the fund's recognition of ordinary income and may affect the timing
           or amount of the fund's distributions. If you invest in the fund
           through a taxable account, your after-tax return could be negatively
           impacted.

           Investments in certain debt obligations or other securities may
           cause the fund to recognize taxable income in excess of the cash
           generated by them. Thus, the fund could be required at times to
           liquidate other investments in order to satisfy its distribution
           requirements.

           For taxable years beginning before January 1, 2011, distributions to
           individuals and other noncorporate shareholders of investment income
           designated by the fund as derived from qualified dividend income are
           eligible for taxation for federal



                                     Understanding Distributions and Taxes  | 51
<PAGE>


           income tax purposes at the more favorable long-term capital gain
           rates. Qualified dividend income generally includes dividends
           received by the fund from domestic and some foreign corporations. It
           does not include income from investments in debt securities  or,
           generally, from real estate investment trusts. In addition, the fund
           must meet certain holding period and other requirements with respect
           to the dividend-paying stocks in its portfolio and the shareholder
           must meet certain holding period and other requirements with respect
           to the fund's shares for the lower tax rates to apply.

           For taxable years beginning before January 1, 2011, the maximum
           federal income tax rate imposed on long-term capital gains
           recognized by individuals and other noncorporate shareholders has
           been temporarily reduced to 15%, in general, with lower rates
           applying to taxpayers in the 10% and 15% rate brackets. For taxable
           years beginning on or after January 1, 2011, the maximum long-term
           capital gain rate is scheduled to return to 20%.


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


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

           If the fund's distributions exceed its current and accumulated
           earnings and profits, the excess will be treated for federal income
           tax purposes as a tax-free return of capital to the extent of your
           basis in your shares and thereafter as a gain from the sale or
           exchange of your shares. Because a return of capital distribution
           reduces the basis of your shares, a return of capital distribution
           may result in a higher capital gain or a lower capital loss when you
           sell your shares.


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


52 | Understanding Distributions and Taxes
<PAGE>

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


                                     Understanding Distributions and Taxes  | 53
<PAGE>

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



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


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


54 | Appendix
<PAGE>

                DWS International Select Equity Fund - Class A




<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               5.75%                   $10,000                            5%
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER      ANNUAL FEES
              FEES AND        EXPENSE        FEES AND           FEES AND            AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
<S>       <C>                <C>          <C>               <C>                <C>
   1
   2
   3
   4
   5
   6
   7
   8
   9
  10
  TOTAL
</TABLE>



DWS International Select Equity Fund - Class B





<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER        ANNUAL
              FEES AND        EXPENSE        FEES AND           FEES AND         FEES AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
<S>       <C>                <C>          <C>               <C>                <C>
   1
   2
   3
   4
   5
   6
   7
   8
   9
  10
  TOTAL
</TABLE>




                                                                  Appendix  | 55
<PAGE>

                DWS International Select Equity Fund - Class C




<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER      ANNUAL FEES
              FEES AND        EXPENSE        FEES AND           FEES AND            AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
<S>       <C>                <C>          <C>               <C>                <C>
   1
   2
   3
   4
   5
   6
   7
   8
   9
  10
  TOTAL
</TABLE>



DWS International Select Equity Fund - Class R





<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER        ANNUAL
              FEES AND        EXPENSE        FEES AND           FEES AND         FEES AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
<S>       <C>                <C>          <C>               <C>                <C>
   1
   2
   3
   4
   5
   6
   7
   8
   9
  10
  TOTAL
</TABLE>




56 | Appendix
<PAGE>

TO GET MORE INFORMATION

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

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


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




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




<TABLE>
<S>                    <C>                                       <C>
SEC FILE NUMBER:
DWS Advisor Funds        DWS International Select Equity Fund    811-04760
</TABLE>







(03/01/09) DISEF-1
[RECYCLE GRAPHIC APPEARS HERE]
                                                          [DWS INVESTMENTS LOGO]
                                                             Deutsche Bank Group


<PAGE>



                                 MARCH 1, 2009








                                   PROSPECTUS

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

                              INSTITUTIONAL CLASS


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

                    DWS DIVERSIFIED INTERNATIONAL EQUITY FUND
                (FORMERLY DWS INTERNATIONAL SELECT EQUITY FUND)

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


                                     RESHAPING INVESTING. [DWS INVESTMENTS LOGO]
                                                             Deutsche Bank Group
<PAGE>

CONTENTS





<TABLE>
<S>      <C>
HOW THE FUND WORKS
  4      The Fund's Main Investment
         Strategy
  5      The Main Risks of Investing in
         the Fund
  9      The Fund's Performance
         History
 11      How Much Investors Pay
 12      Other Policies and Secondary
         Risks
 15      Who Manages and Oversees
         the Fund
 18      Financial Highlights


</TABLE>
<TABLE>
<S>      <C>
HOW TO INVEST IN THE FUND
 21      Buying and Selling
         Institutional Class Shares
 28      Policies You Should Know
         About
 39      Understanding Distributions
         and Taxes
 43      Appendix
</TABLE>


<PAGE>

HOW THE FUND WORKS

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

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

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


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

<PAGE>


<TABLE>
<S>                                         <C>
                                              Institutional Class
  ticker symbol                               MGINX
    fund number                               559

    DWS INTERNATIONAL SELECT EQUITY FUND


</TABLE>

            THE FUND'S MAIN INVESTMENT STRATEGY

            The fund seeks capital appreciation.

            Under normal circumstances, the fund invests at least 80% of its
            assets, determined at the time of purchase, in equity securities
            and other securities with equity characteristics.


            Although the fund can invest in companies of any size and from any
            country, it invests mainly in common stocks of established
            companies in countries with developed economies (other than the
            United States).

            At least 50% of the fund's assets will be invested in securities
            that are represented in the MSCI EAFE (Reg. TM) Index. The MSCI
            EAFE (Reg. TM) Index tracks stocks in Australia, Austria, Belgium,
            Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy,
            Japan, Malaysia, the Netherlands, New Zealand, Norway, Portugal,
            Singapore, Spain, Sweden, Switzerland and the United Kingdom. In
            addition, the fund may invest in Canada.

            In choosing securities, the portfolio managers consider various
            countries and sectors. The portfolio managers review the fund's
            allocation among countries and sectors periodically and may adjust
            the allocation based on current or expected market conditions or to
            manage risk consistent with the fund's investment objective.

            The fund's equity investments are mainly common stocks, but may
            also include preferred stocks and other securities with equity
            characteristics, such as convertible securities, warrants and
            exchange-traded funds ("ETFs")"

            The fund may also invest up to 20% of its assets in cash
            equivalents, US investment-grade fixed-income securities, and US
            stocks and other equities.



4 | DWS International Select Equity Fund
<PAGE>


            The fund may invest a portion of its assets in companies located in
            countries with emerging markets. These countries are generally
            located in Latin America, the Middle East, Eastern Europe, Asia and
            Africa. Typically, the fund will not hold more than 35% of its net
            assets in securities of emerging markets issuers.


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

            In particular, the fund may use futures, currency options and
            forward currency transactions.

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


            THE MAIN RISKS OF INVESTING IN THE FUND

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

            STOCK MARKET RISK. As with most stock funds, an important
            factor with this fund is how stock markets perform. To the extent
            that the fund invests in a particular geographic region, the fund's
            performance may be proportionately affected by that region's
            general performance. When stock prices fall, you should expect the
            value of your investment to fall as well. Because a stock
            represents ownership in its issuer, stock prices can be hurt by
            poor management, shrinking product demand and other business risks.
            These may affect single companies as well as groups of companies.
            In addition, movements in financial markets may adversely affect a
            stock's price, regardless of how well the company performs. The
            market as a whole may not favor the types of investments the fund
            makes and the fund may not be able to get attractive prices for
            them.




THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

The fund is designed for individuals who are seeking high capital appreciation
and are willing to accept the risks of investing in the stocks of foreign
companies.





                                       DWS International Select Equity Fund  | 5
<PAGE>

            SECURITY SELECTION RISK. A risk that pervades all investing is the
            risk that the securities in the fund's portfolio may decline in
            value.

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


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


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


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


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

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

6 | DWS International Select Equity Fund
<PAGE>

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

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

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


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

            Some governments exercise substantial influence over the private
            economic sector and the social and political uncertainties that
            exist for many developing countries is significant. In adverse
            social and political circumstances, governments have been involved
            in policies of expropriation, confiscatory taxation,
            nationalization, intervention in the securities markets and trade
            settlement, and imposition of foreign investment restrictions and
            exchange controls.


            PRICING RISK. At times, market conditions may make it difficult to
            value some investments, and the fund may use certain valuation
            methodologies for some of its investments, such as fair value
            pricing. Given the subjective nature of such valuation
            methodologies, it is possible that the value determined for an
            investment may be different than the value realized upon such
            investment's sale. If the fund has valued its securities too


                                       DWS International Select Equity Fund  | 7
<PAGE>

            highly, you may pay too much for fund shares when you buy into the
            fund. If the fund has underestimated the price of its securities,
            you may not receive the full market value when you sell your fund
            shares.

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

            Another factor that could affect performance is:

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


8 | DWS International Select Equity Fund
<PAGE>

THE FUND'S PERFORMANCE HISTORY

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


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

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


The performance data provided below and on the next page, prior to July 10,
2006, are those of the fund's predecessor fund, DWS International Select Equity
Fund, a series of DWS Investments Trust (the "Predecessor Fund"). On July 10,
2006, the Predecessor Fund transferred its assets to the fund, which is a new
series of DWS Advisor Funds. The fund also acquired the Predecessor Fund's
liabilities. The performance figures provided below and on the next page,
beginning July 10, 2006, are those of the fund.

DWS International Select Equity Fund

ANNUAL TOTAL RETURN (%) AS OF 12/31 EACH YEAR - Institutional Class


[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]


<TABLE>
<S>        <C>         <C>         <C>         <C>        <C>        <C>        <C>        <C>
88.85       -14.01      -16.52      -14.13     32.41      16.57      13.50      25.19      16.27
1999        2000        2001        2002       2003       2004       2005       2006       2007
</TABLE>







<TABLE>
<CAPTION>
FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                        <C>
BEST QUARTER: ____%, ____              WORST QUARTER: ____%, _____
</TABLE>




                                       DWS International Select Equity Fund  | 9
<PAGE>


AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2008




<TABLE>
<CAPTION>
                                                1 YEAR       5 YEARS      10 YEARS
<S>                                          <C>            <C>          <C>
 INSTITUTIONAL CLASS
   Return before Taxes
   Return after Taxes on Distributions
   Return after Taxes on Distributions
   and Sale of Fund Shares
 MORGAN STANLEY CAPITAL
 INTERNATIONAL (MSCI) EUROPE,
 AUSTRALASIA AND THE FAR EAST (EAFE)
 INDEX (reflects no deductions for fees,
 expenses or taxes)
</TABLE>



 *   Return after Taxes on Distributions and Sale of Fund Shares is higher than
     other return figures for the same period due to a foreign tax credit.

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


 MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA AND THE FAR EAST
 (MSCI EAFE (Reg. TM)) INDEX is an unmanaged index that tracks international
 stock performance in the 21 developed markets of Europe, Australasia and the
 Far East.



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

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



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

Return information assumes that fund shares were sold at the end of the period.


RETURN AFTER TAXES ON DISTRIBUTIONS reflects taxes only on the fund's
distributions and not on a shareholder's gain or loss from selling fund shares.


RETURN AFTER TAXES ON DISTRIBUTIONS AND SALE OF FUND SHARES reflects taxes on
both the fund's distributions and a shareholder's gain or loss from selling
fund shares.



10 | DWS International Select Equity Fund
<PAGE>

HOW MUCH INVESTORS PAY

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



<TABLE>
<CAPTION>
FEE TABLE
<S>                                            <C>
 SHAREHOLDER FEES, paid directly from your investment
_____________________________________________________________________________
 Redemption/Exchange Fee on shares
 owned less than 15 days (as % of
 redemption proceeds)1                                     2.00%
 ANNUAL OPERATING EXPENSES, deducted from fund assets
_____________________________________________________________________________
 Management Fee                                            0.70%
 Distribution and/or Service (12b-1) Fees                  None
 Other Expenses 2
 TOTAL ANNUAL OPERATING EXPENSES 3,4
</TABLE>



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

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

3    The Advisor has agreed to voluntarily waive a portion of its fees and
     reimburse or pay operating expenses of the fund so that total annual
     operating expenses of the fund will not exceed 0.92% for Institutional
     Class shares, excluding certain expenses such as extraordinary expenses,
     taxes, brokerage and interest. This voluntary waiver or reimbursement may
     be terminated at any time at the option of the Advisor.


4   Except as otherwise noted, the information in the table is based on amounts
   incurred during the fund's most recent fiscal year. It is important for
   investors to understand that a decline in the fund's average net assets
   during the current fiscal year due to recent unprecedented market
   volatility or other factors could cause the fund's expense ratios for the
   fund's current fiscal year to be higher than the expense information
   presented.


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



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




                                      DWS International Select Equity Fund  | 11
<PAGE>

OTHER POLICIES AND SECONDARY RISKS

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

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

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


           -  The fund may trade actively. This could raise transaction costs
              (thus lowering return) and could mean increased taxable
              distributions to shareholders and distributions that will be
              taxable to shareholders at higher federal income tax rates.



           -  Certain DWS fund-of-funds are permitted to invest in the fund. As
              a result, the fund may have large inflows or outflows of cash
              from time to time. This could have adverse effects on the fund's
              performance if the fund were required to sell securities or
              invest cash at times when it otherwise would not do so. This
              activity could also accelerate the realization of capital gains
              and increase the fund's transaction costs. The Advisor will
              monitor the impact of these transactions and the fund may
              discontinue such arrangements if they are not deemed to be in the
              best interests of the fund.



12 | Other Policies and Secondary Risks
<PAGE>

           Secondary risks


           IPO RISK. Securities purchased in initial public offerings (IPOs)
           may be very volatile. The price of such securities may rise and fall
           rapidly, often based, among other reasons, on investor perceptions
           rather than economic reasons. Additionally, investments in IPOs may
           magnify the fund's performance if it has a small asset base. The
           fund is less likely to experience a similar impact on its
           performance as its assets grow because it is unlikely that the fund
           will obtain proportionately larger IPO allocations.

           SMALL COMPANY CAPITALIZATION RISK. Small company stocks tend to
           experience steeper price fluctuations than the stocks of larger
           companies. A shortage of reliable information can also pose added
           risk to small company stocks. Industry-wide reversals may have a
           greater impact on small companies, since they lack the financial
           resources of larger companies. Small company stocks are typically
           less liquid than large company stocks. Accordingly, it may be harder
           to find buyers for small company shares.



                                        Other Policies and Secondary Risks  | 13
<PAGE>

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



           For more information

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

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

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


           A complete list of the fund's portfolio holdings as of the month-end
           is posted on www.dws-investments.com on or about the 15th day of the
           following month. More frequent posting of portfolio holdings
           information may be made from time to time on
           www.dws-investments.com. The posted portfolio holdings information
           is available by fund and generally remains accessible at least until
           the date on which the fund files its Form N-CSR or N-Q with the
           Securities and Exchange Commission for the period that includes the
           date as of which the posted information is current. The fund's
           Statement of Additional Information includes a description of the
           fund's policies and procedures with respect to the disclosure of the
           fund's portfolio holdings.



14 | Other Policies and Secondary Risks
<PAGE>

WHO MANAGES AND OVERSEES THE FUND


           The investment advisor

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


           DWS Investments is part of Deutsche Bank's Asset Management division
           and, within the US, represents the retail asset management
           activities of Deutsche Bank AG, Deutsche Bank Trust Company
           Americas, DIMA and DWS Trust Company.


           Deutsche Asset Management is a global asset management organization
           that offers a wide range of investing expertise and resources,
           including hundreds of portfolio managers and analysts and an office
           network that reaches the world's major investment centers. This
           well-resourced global investment platform brings together a wide
           variety of experience and investment insight across industries,
           regions, asset classes and investing styles.

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


                                         Who Manages and Oversees the Fund  | 15
<PAGE>

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


<TABLE>
<CAPTION>
FUND NAME                                              FEE PAID
<S>                                                  <C>
           DWS International Select Equity Fund
</TABLE>


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


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


           Under a separate administrative services agreement between the fund
           and the Advisor, the fund pays the Advisor a fee for providing most
           of the fund's administrative services.



16 | Who Manages and Oversees the Fund
<PAGE>

Portfolio management


The following people handle the day-to-day management of DWS International
Select Equity Fund.

Robert Wang
Managing Director of Deutsche Asset Management and Portfolio Manager of the
fund.


- Joined Deutsche Asset Management in 1995 as portfolio manager for asset
  allocation after 13 years of experience of trading fixed income, foreign
  exchange and derivative products at J.P.Morgan.
- Global Head of Quantitative Strategies Portfolio Management: New York.
- Joined the fund in 2009.
- BS, The Wharton School, University of Pennsylvania.

Russell Shtern, CFA
Vice President of Deutsche Asset Management and Portfolio Manager of the fund.


- Joined Deutsche Asset Management in 1999, previously serving as trader's
  assistant supporting program, options and equity swaps trading desks.


- Portfolio manager for GrOWE and Tax Managed Equity: New York.

-
-

- Joined the fund in 2009.
- BBA, Pace University.


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


                                         Who Manages and Oversees the Fund  | 17
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights are designed to help you understand recent financial
performance. The figures in the first part of the table are for a single share.
The total return figures represent the percentage that an investor in the fund
would have earned (or lost), assuming all dividends and distributions were
reinvested. This information has been audited by PricewaterhouseCoopers LLP,
independent registered public accounting firm, whose report, along with the
fund's financial statements, is included in the fund's annual report (see
"Shareholder reports" on the back cover). On July 10, 2006, DWS International
Select Equity Fund acquired all the assets and assumed all the liabilities of
the Predecessor Fund. The information contained in the following table for
periods prior to July 10, 2006 has been derived from the Predecessor Fund's
financial statements.


18 | Financial Highlights
<PAGE>

DWS International Select Equity Fund - Institutional Class



[TO BE UPDATED]


                                                      Financial Highlights  | 19
<PAGE>

HOW TO INVEST IN THE FUND

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


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


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

<PAGE>

Buying and Selling INSTITUTIONAL CLASS Shares


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


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



           Eligibility requirements

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

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

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

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

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

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

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


           Investment minimum

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

           The minimum initial investment is waived for:

                             Buying and Selling Institutional Class Shares  | 21
<PAGE>

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

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

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

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

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


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


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


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



           -  Employee benefit plan platforms approved by the Advisor that
              invest in the fund through an omnibus account, and that meet or,
              in the Advisor's judgment, will meet within a reasonable period
              of time, the $1,000,000 minimum investment.

           The fund reserves the right to modify the above eligibility
           requirements and investment minimum at any time. In addition, the
           fund, in its discretion, may waive the minimum initial investment
           for specific employee benefit plans (or family of plans) whose
           aggregate investment in Institutional Class shares of the fund
           equals or exceeds the minimum initial investment amount but where a
           particular account or program may not on its own meet such minimum
           amount.



           How to contact the transfer agent


<TABLE>
<S>              <C>
  BY PHONE:       (800) 730-1313
</TABLE>

22 | Buying and Selling Institutional Class Shares
<PAGE>



<TABLE>
<S>                       <C>
  FIRST INVESTMENTS       DWS Investments Service Company
  BY MAIL:                P.O. Box 219210
                          Kansas City, MO 64121-9210

  ADDITIONAL              DWS Investments Service Company
  INVESTMENTS BY          P.O. Box 219210
  MAIL:                   Kansas City, MO 64121-9210

  BY OVERNIGHT MAIL:      DWS Investments Service Company
                          210 West 10th Street
                          Kansas City, MO 64105-1614
</TABLE>



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



           How to open your account



<TABLE>
<S>                  <C>
  MAIL:              Complete and sign the account application that
                     accompanies this prospectus. (You may obtain
                     additional applications by calling the transfer agent.)
                     Mail the completed application along with a check
                     payable to the fund you have selected to the transfer
                     agent. Be sure to include the fund number. The
                     applicable addresses are shown under "How to
                     contact the transfer agent."

  WIRE:              Call the transfer agent to set up a wire account.

  FUND NAME AND      Please use the complete fund name. Refer to the
  FUND NUMBER:       start of "The Fund's Main Investment Strategy" above
                     for the fund number.
</TABLE>



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


           How to BUY and SELL shares

           MAIL:


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

           SELLING: Send a signed letter to the transfer agent with your name,
           your fund number and account number, the fund's name, and either the
           number of shares you wish to sell or the dollar amount you wish to
           receive. In certain circumstances, a



                             Buying and Selling Institutional Class Shares  | 23
<PAGE>


           signature guarantee may be required to sell shares of the fund by
           mail. For information about a signature guarantee, see "Signature
           Guarantee." Unless exchanging into another DWS fund, you must submit
           a written authorization to sell shares in a retirement account.



24 | Buying and Selling Institutional Class Shares
<PAGE>

           WIRE:

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



<TABLE>
<S>                <C>
  BANK NAME:        State Street Bank Boston

  ROUTING NO:       011000028

  ATTN:             DWS Investments

  DDA NO:           9903-5552

  FBO:              (Account name) (Account number)

  CREDIT:           (Fund name, Fund number and, if applicable, class
                    name) (see "How to open your account")
</TABLE>



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

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


                             Buying and Selling Institutional Class Shares  | 25
<PAGE>

           TELEPHONE TRANSACTIONS:


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


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


           Financial intermediary support payments


           The Advisor, DWS Investments Distributors, Inc. (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
           selected affiliated and unaffiliated brokers, dealers, participating
           insurance companies or other financial intermediaries ("financial
           advisors") in connection with the sale and/or distribution of fund
           shares or the retention and/

           or servicing of fund investors and fund shares ("revenue sharing").
           Such revenue sharing payments are in addition to any distribution or
           service fees payable under any Rule 12b-1 or service plan of the
           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 charge, commissions, non-cash
           compensation arrangements expressly permitted under applicable rules
           of the Financial Industry Regulatory Authority or other concessions
           described in the fee table or elsewhere in this prospectus or the
           Statement of Additional Information as payable to all financial
           advisors. For example, the Advisor, the Distributor and/or their
           affiliates may compensate financial advisors for providing 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


26 | Buying and Selling Institutional Class Shares
<PAGE>

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

           The level of revenue sharing payments made to financial advisors may
           be a fixed fee or based upon one or more of the following factors:
           gross sales, current assets and/or number of accounts of 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 revenue sharing payments is
           determined at the discretion of the Advisor, the Distributor and/or
           their affiliates from time to time, may be substantial, and may be
           different for different financial advisors based on, for example,
           the nature of the services provided by the financial advisor.


           The Advisor, the Distributor and/or their affiliates currently make
           revenue sharing payments from their own assets in connection with
           the sale and/or distribution of DWS fund shares or the retention
           and/or servicing of investors and DWS fund shares to financial
           advisors in amounts that generally range from .01% up to .50% of
           assets of the fund serviced and maintained by the financial advisor,
           .05% to .25% of sales of the fund attributable to the financial
           advisor, a flat fee of $13,350 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 the 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 the fund. Additional information regarding these
           revenue sharing payments is included in the fund's Statement of
           Additional Information, which is available to you on request at no
           charge (see the back cover of this prospectus for more information
           on how to request a copy of the Statement of Additional
           Information).


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


                             Buying and Selling Institutional Class Shares  | 27
<PAGE>


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


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


POLICIES YOU SHOULD KNOW ABOUT

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

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

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


28 | Policies You Should Know About
<PAGE>

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


           Policies about transactions

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

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

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

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

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


                                            Policies You Should Know About  | 29
<PAGE>

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

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

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

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

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

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


30 | Policies You Should Know About
<PAGE>

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


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

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

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



                                            Policies You Should Know About  | 31
<PAGE>

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

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

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

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

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


32 | Policies You Should Know About
<PAGE>

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

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

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


                                            Policies You Should Know About  | 33
<PAGE>


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

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


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

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

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





THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

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




34 | Policies You Should Know About
<PAGE>

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

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


           THE FUND ACCEPTS PAYMENT FOR SHARES ONLY IN US DOLLARS by a check
           drawn on a US bank, a bank or Federal Funds wire transfer or an
           electronic bank transfer. The fund does not accept third party
           checks. A third party check is a check made payable to one or more
           parties and offered as payment to one or more other parties (e.g., a
           check made payable to you that you offer as payment to someone
           else). Checks should normally be payable to DWS Investments and
           drawn by you or a financial institution on your behalf with your
           name or account number included with the check.


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

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

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





THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

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









                                            Policies You Should Know About  | 35
<PAGE>

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


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


           MONEY FROM SHARES YOU SELL is normally sent out within one business
           day of when your order is processed (not when it is received),
           although it could be delayed for up to seven days. There are
           circumstances when it could be longer, including, but not limited
           to, when you are selling shares you bought recently by check  or ACH
           (the funds will be placed under a 10 calendar day hold to ensure
           good funds) or when unusual circumstances prompt the SEC to allow
           further delays. Certain expedited redemption processes (e.g.,
           redemption proceeds by wire) may also be delayed or unavailable when
           you are selling shares recently purchased or in the event of the
           closing of the Federal Reserve wire payment system. 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 the
           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. For additional rights reserved
           by the fund, please see "Other rights we reserve."


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


           How the fund calculates share price

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


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



36 | Policies You Should Know About
<PAGE>


           The price at which you buy and sell shares is based on the NAV per
           share next calculated after the order is received and accepted by
           the transfer agent.


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


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


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


                                            Policies You Should Know About  | 37
<PAGE>

           Other rights we reserve

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

           -  withdraw or suspend the offering of shares at any time


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


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

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


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


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

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


38 | Policies You Should Know About
<PAGE>

UNDERSTANDING DISTRIBUTIONS AND TAXES


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


           THE FUND INTENDS TO PAY DIVIDENDS AND DISTRIBUTIONS to its
           shareholders in December and, if necessary, may do so at other times
           as well.


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


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


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


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





THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

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


                                     Understanding Distributions and Taxes  | 39
<PAGE>

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

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


<TABLE>
<CAPTION>
GENERALLY TAXED AT LONG-TERM                       GENERALLY TAXED AT ORDINARY
CAPITAL GAIN RATES:                                INCOME RATES:
<S>                                                   <C>
DISTRIBUTIONS FROM THE FUND
- gains from the sale of                           -  gains from the sale of
  securities held (or treated as                      securities held by the fund for
  held) by the fund for more                          one year or less
  than one year                                    -  all other taxable income
- qualified dividend income

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



           ANY DIRECT INVESTMENTS IN FOREIGN SECURITIES BY THE FUND MAY BE
           SUBJECT TO FOREIGN WITHHOLDING TAXES. In that case, the fund's yield
           on those securities would generally be decreased. The fund may elect
           to pass through to its shareholders a credit or deduction for
           foreign taxes it has paid if at the end of its fiscal year more than
           50% of the value of the fund's total assets consists of stocks or
           securities of foreign corporations. In addition, any investments in
           foreign securities or foreign currencies may increase or accelerate
           the fund's recognition of ordinary income and may affect the timing
           or amount of the fund's distributions. If you invest in the fund
           through a taxable account, your after-tax return could be negatively
           impacted.

           Investments in certain debt obligations or other securities may
           cause the fund to recognize taxable income in excess of the cash
           generated by them. Thus, the fund could be required at times to
           liquidate other investments in order to satisfy its distribution
           requirements.

           For taxable years beginning before January 1, 2011, distributions to
           individuals and other noncorporate shareholders of investment income
           designated by the fund as derived from qualified dividend income are
           eligible for taxation for federal



40 | Understanding Distributions and Taxes
<PAGE>


           income tax purposes at the more favorable long-term capital gain
           rates. Qualified dividend income generally includes dividends
           received by the fund from domestic and some foreign corporations. It
           does not include income from investments in debt securities  or,
           generally, from real estate investment trusts. In addition, the fund
           must meet certain holding period and other requirements with respect
           to the dividend-paying stocks in its portfolio and the shareholder
           must meet certain holding period and other requirements with respect
           to the fund's shares for the lower tax rates to apply.

           For taxable years beginning before January 1, 2011, the maximum
           federal income tax rate imposed on long-term capital gains
           recognized by individuals and other noncorporate shareholders has
           been temporarily reduced to 15%, in general, with lower rates
           applying to taxpayers in the 10% and 15% rate brackets. For taxable
           years beginning on or after January 1, 2011, the maximum long-term
           capital gain rate is scheduled to return to 20%.


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


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

           If the fund's distributions exceed its current and accumulated
           earnings and profits, the excess will be treated for federal income
           tax purposes as a tax-free return of capital to the extent of your
           basis in your shares and thereafter as a gain from the sale or
           exchange of your shares. Because a return of capital distribution
           reduces the basis of your shares, a return of capital distribution
           may result in a higher capital gain or a lower capital loss when you
           sell your shares.


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


                                     Understanding Distributions and Taxes  | 41
<PAGE>

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


42 | Understanding Distributions and Taxes
<PAGE>

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



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


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


                                                                  Appendix  | 43
<PAGE>

          DWS International Select Equity Fund - Institutional Class




<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER      ANNUAL FEES
              FEES AND        EXPENSE        FEES AND           FEES AND            AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
<S>       <C>                <C>          <C>               <C>                <C>
   1
   2
   3
   4
   5
   6
   7
   8
   9
  10
  TOTAL
</TABLE>




44 | Appendix
<PAGE>

TO GET MORE INFORMATION

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

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


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




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




<TABLE>
<S>                    <C>                                       <C>
SEC FILE NUMBER:
DWS Advisor Funds        DWS International Select Equity Fund    811-04760
</TABLE>







(03/01/09) DISEF-1-IN
[RECYCLE GRAPHIC APPEARS HERE]
                                                          [DWS INVESTMENTS LOGO]
                                                             Deutsche Bank Group

<PAGE>



                                 MARCH 1, 2009








                                   PROSPECTUS

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

                                    CLASS S

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


                    DWS DIVERSIFIED INTERNATIONAL EQUITY FUND
                (FORMERLY DWS INTERNATIONAL SELECT EQUITY FUND)

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


                                     RESHAPING INVESTING. [DWS INVESTMENTS LOGO]
                                                             Deutsche Bank Group

<PAGE>

CONTENTS





<TABLE>
<S>      <C>
HOW THE FUND WORKS
  4      The Fund's Main Investment
         Strategy
  5      The Main Risks of Investing in
         the Fund
  9      The Fund's Performance
         History
 11      How Much Investors Pay
 12      Other Policies and Secondary
         Risks
 15      Who Manages and Oversees
         the Fund
 18      Financial Highlights


</TABLE>
<TABLE>
<S>      <C>
HOW TO INVEST IN THE FUND
 21      How to Buy Class S Shares
 22      How to Exchange or Sell
         Class S Shares
 25      Policies You Should Know
         About
 37      Understanding Distributions
         and Taxes
 41      Appendix
</TABLE>


<PAGE>

HOW THE FUND WORKS

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

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

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

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


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

<PAGE>


<TABLE>
<S>                                         <C>
                                              Class S
  ticker symbol                               DBIVX
    fund number                               2399

    DWS INTERNATIONAL SELECT EQUITY FUND


</TABLE>

            THE FUND'S MAIN INVESTMENT STRATEGY

            The fund seeks capital appreciation.

            Under normal circumstances, the fund invests at least 80% of its
            assets, determined at the time of purchase, in equity securities
            and other securities with equity characteristics.


            Although the fund can invest in companies of any size and from any
            country, it invests mainly in common stocks of established
            companies in countries with developed economies (other than the
            United States).

            At least 50% of the fund's assets will be invested in securities
            that are represented in the MSCI EAFE (Reg. TM) Index. The MSCI
            EAFE (Reg. TM) Index tracks stocks in Australia, Austria, Belgium,
            Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy,
            Japan, Malaysia, the Netherlands, New Zealand, Norway, Portugal,
            Singapore, Spain, Sweden, Switzerland and the United Kingdom. In
            addition, the fund may invest in Canada.

            In choosing securities, the portfolio managers consider various
            countries and sectors. The portfolio managers review the fund's
            allocation among countries and sectors periodically and may adjust
            the allocation based on current or expected market conditions or to
            manage risk consistent with the fund's investment objective.

            The fund's equity investments are mainly common stocks, but may
            also include preferred stocks and other securities with equity
            characteristics, such as convertible securities, warrants and
            exchange-traded funds ("ETFs")"

            The fund may also invest up to 20% of its assets in cash
            equivalents, US investment-grade fixed-income securities, and US
            stocks and other equities.



4 | DWS International Select Equity Fund
<PAGE>


            The fund may invest a portion of its assets in companies located in
            countries with emerging markets. These countries are generally
            located in Latin America, the Middle East, Eastern Europe, Asia and
            Africa. Typically, the fund will not hold more than 35% of its net
            assets in securities of emerging markets issuers.


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

            In particular, the fund may use futures, currency options and
            forward currency transactions.

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


            THE MAIN RISKS OF INVESTING IN THE FUND

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

            STOCK MARKET RISK. As with most stock funds, an important
            factor with this fund is how stock markets perform. To the extent
            that the fund invests in a particular geographic region, the fund's
            performance may be proportionately affected by that region's
            general performance. When stock prices fall, you should expect the
            value of your investment to fall as well. Because a stock
            represents ownership in its issuer, stock prices can be hurt by
            poor management, shrinking product demand and other business risks.
            These may affect single companies as well as groups of companies.
            In addition, movements in financial markets may adversely affect a
            stock's price, regardless of how well the company performs. The
            market as a whole may not favor the types of investments the fund
            makes and the fund may not be able to get attractive prices for
            them.





THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

The fund is designed for individuals who are seeking high capital appreciation
and are willing to accept the risks of investing in the stocks of foreign
companies.









                                       DWS International Select Equity Fund  | 5
<PAGE>

            SECURITY SELECTION RISK. A risk that pervades all investing is the
            risk that the securities in the fund's portfolio may decline in
            value.

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


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


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


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


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

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

6 | DWS International Select Equity Fund
<PAGE>

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

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

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


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

            Some governments exercise substantial influence over the private
            economic sector and the social and political uncertainties that
            exist for many developing countries is significant. In adverse
            social and political circumstances, governments have been involved
            in policies of expropriation, confiscatory taxation,
            nationalization, intervention in the securities markets and trade
            settlement, and imposition of foreign investment restrictions and
            exchange controls.


            PRICING RISK. At times, market conditions may make it difficult to
            value some investments, and the fund may use certain valuation
            methodologies for some of its investments, such as fair value
            pricing. Given the subjective nature of such valuation
            methodologies, it is possible that the value determined for an
            investment may be different than the value realized upon such
            investment's sale. If the fund has valued its securities too


                                       DWS International Select Equity Fund  | 7
<PAGE>

            highly, you may pay too much for fund shares when you buy into the
            fund. If the fund has underestimated the price of its securities,
            you may not receive the full market value when you sell your fund
            shares.

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

            Another factor that could affect performance is:

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


8 | DWS International Select Equity Fund
<PAGE>

THE FUND'S PERFORMANCE HISTORY

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


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

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


The performance data provided below and on the next page, prior to July 10,
2006, are those of the fund's predecessor fund, DWS International Select Equity
Fund, a series of DWS Investments Trust (the "Predecessor Fund"). On July 10,
2006, the Predecessor Fund transferred its assets to the fund, which is a new
series of DWS Advisor Funds. The fund also acquired the Predecessor Fund's
liabilities. The performance figures below and on the next page, beginning July
10, 2006, are those of the fund.

The inception date for Class S shares of the Predecessor Fund is February 28,
2005. In the bar chart and in the table, the performance figures for Class S of
the Predecessor Fund before its inception date are based on the historical
performance of the original share class of the Predecessor Fund (Institutional
Class), adjusted to reflect the higher gross total annual operating expenses of
Class S. Institutional Class shares are offered in a separate prospectus.

DWS International Select Equity Fund

ANNUAL TOTAL RETURN (%) AS OF 12/31 EACH YEAR - Class S




<TABLE>
<S>        <C>         <C>         <C>         <C>        <C>        <C>        <C>        <C>
88.51       -14.16      -16.67      -14.28     32.17      16.36      13.23      25.00      16.43
1999        2000        2001        2002       2003       2004       2005       2006       2007
</TABLE>



[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]


<TABLE>
<CAPTION>
FOR THE PERIODS INCLUDED IN THE BAR CHART:

<S>                                        <C>
BEST QUARTER: ______%, ________              WORST QUARTER: _______%, ________
</TABLE>




                                       DWS International Select Equity Fund  | 9
<PAGE>


AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2008




<TABLE>
<CAPTION>
                                                1 YEAR       5 YEARS      10 YEARS
<S>                                          <C>            <C>          <C>
 CLASS S
   Return before Taxes
   Return after Taxes on Distributions
   Return after Taxes on Distributions
   and Sale of Fund Shares
 MORGAN STANLEY CAPITAL
 INTERNATIONAL (MSCI) EUROPE,
 AUSTRALASIA AND THE FAR EAST (EAFE)
 INDEX (reflects no deductions for fees,
 expenses or taxes)
</TABLE>



 *   Return after Taxes on Distributions and Sale of Fund Shares is higher than
     other return figures for the same period due to a foreign tax credit.

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


 MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA AND THE FAR EAST
 (MSCI EAFE (Reg. TM)) INDEX is an unmanaged index that tracks international
 stock performance in the 21 developed markets of Europe, Australasia and the
 Far East.



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

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



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

Return information assumes that fund shares were sold at the end of the period.


RETURN AFTER TAXES ON DISTRIBUTIONS reflects taxes only on the fund's
distributions and not on a shareholder's gain or loss from selling fund shares.


RETURN AFTER TAXES ON DISTRIBUTIONS AND SALE OF FUND SHARES reflects taxes on
both the fund's distributions and a shareholder's gain or loss from selling
fund shares.



10 | DWS International Select Equity Fund
<PAGE>

HOW MUCH INVESTORS PAY

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



<TABLE>
<CAPTION>
FEE TABLE                                          CLASS S
<S>                                      <C>
 SHAREHOLDER FEES, paid directly from your investment
_______________________________________________________________________
 Redemption/Exchange Fee on shares
 owned less than 15 days (as % of
 redemption proceeds)1                               2.00%
 ANNUAL OPERATING EXPENSES, deducted from fund assets
_______________________________________________________________________
 Management Fee                                      0.70%
 Distribution/Service (12b-1) Fee                   None
 Other Expenses2                                     0.52
 TOTAL ANNUAL OPERATING EXPENSES3,4
</TABLE>



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

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

3   The Advisor has agreed to voluntarily waive a portion of its fees and
   reimburse or pay operating expenses of the fund so that total annual
   operating expenses of the fund will not exceed 0.97% for Class S shares,
   excluding certain expenses such as extraordinary expenses, taxes, brokerage
   and interest. This voluntary waiver or reimbursement may be terminated at
   any time at the option of the Advisor.


4   Except as otherwise noted, the information in the table is based on amounts
   incurred during the fund's most recent fiscal year. It is important for
   investors to understand that a decline in the fund's average net assets
   during the current fiscal year due to recent unprecedented market
   volatility or other factors could cause the fund's expense ratios for the
   fund's current fiscal year to be higher than the expense information
   presented.


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


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



                                      DWS International Select Equity Fund  | 11
<PAGE>

OTHER POLICIES AND SECONDARY RISKS

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

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

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


           -  The fund may trade actively. This could raise transaction costs
              (thus lowering return) and could mean increased taxable
              distributions to shareholders and distributions that will be
              taxable to shareholders at higher federal income tax rates.



           -  Certain DWS fund-of-funds are permitted to invest in the fund. As
              a result, the fund may have large inflows or outflows of cash
              from time to time. This could have adverse effects on the fund's
              performance if the fund were required to sell securities or
              invest cash at times when it otherwise would not do so. This
              activity could also accelerate the realization of capital gains
              and increase the fund's transaction costs. The Advisor will
              monitor the impact of these transactions and the fund may
              discontinue such arrangements if they are not deemed to be in the
              best interests of the fund.



12 | Other Policies and Secondary Risks
<PAGE>

           Secondary risks


           IPO RISK. Securities purchased in initial public offerings (IPOs)
           may be very volatile. The price of such securities may rise and fall
           rapidly, often based, among other reasons, on investor perceptions
           rather than economic reasons. Additionally, investments in IPOs may
           magnify the fund's performance if it has a small asset base. The
           fund is less likely to experience a similar impact on its
           performance as its assets grow because it is unlikely that the fund
           will obtain proportionately larger IPO allocations.

           SMALL COMPANY CAPITALIZATION RISK. Small company stocks tend to
           experience steeper price fluctuations than the stocks of larger
           companies. A shortage of reliable information can also pose added
           risk to small company stocks. Industry-wide reversals may have a
           greater impact on small companies, since they lack the financial
           resources of larger companies. Small company stocks are typically
           less liquid than large company stocks. Accordingly, it may be harder
           to find buyers for small company shares.



                                        Other Policies and Secondary Risks  | 13
<PAGE>

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



           For more information

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

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

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


           A complete list of the fund's portfolio holdings as of the month-end
           is posted on www.dws-investments.com on or about the 15th day of the
           following month. More frequent posting of portfolio holdings
           information may be made from time to time on
           www.dws-investments.com. The posted portfolio holdings information
           is available by fund and generally remains accessible at least until
           the date on which the fund files its Form N-CSR or N-Q with the
           Securities and Exchange Commission for the period that includes the
           date as of which the posted information is current. The fund's
           Statement of Additional Information includes a description of the
           fund's policies and procedures with respect to the disclosure of the
           fund's portfolio holdings.



14 | Other Policies and Secondary Risks
<PAGE>

WHO MANAGES AND OVERSEES THE FUND


           The investment advisor

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


           DWS Investments is part of Deutsche Bank's Asset Management division
           and, within the US, represents the retail asset management
           activities of Deutsche Bank AG, Deutsche Bank Trust Company
           Americas, DIMA and DWS Trust Company.


           Deutsche Asset Management is a global asset management organization
           that offers a wide range of investing expertise and resources,
           including hundreds of portfolio managers and analysts and an office
           network that reaches the world's major investment centers. This
           well-resourced global investment platform brings together a wide
           variety of experience and investment insight across industries,
           regions, asset classes and investing styles.

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


                                         Who Manages and Oversees the Fund  | 15
<PAGE>

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


<TABLE>
<CAPTION>
FUND NAME                                              FEE PAID
<S>                                                  <C>
           DWS International Select Equity Fund
</TABLE>


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


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


           Under a separate administrative services agreement between the fund
           and the Advisor, the fund pays the Advisor a fee for providing most
           of the fund's administrative services.



16 | Who Manages and Oversees the Fund
<PAGE>

Portfolio management


The following people handle the day-to-day management of DWS International
Select Equity Fund.

Robert Wang
Managing Director of Deutsche Asset Management and Portfolio Manager of the
fund.


- Joined Deutsche Asset Management in 1995 as portfolio manager for asset
  allocation after 13 years of experience of trading fixed income, foreign
  exchange and derivative products at J.P.Morgan.
- Global Head of Quantitative Strategies Portfolio Management: New York.
- Joined the fund in 2009.
- BS, The Wharton School, University of Pennsylvania.

Russell Shtern, CFA
Vice President of Deutsche Asset Management and Portfolio Manager of the fund.


- Joined Deutsche Asset Management in 1999, previously serving as trader's
  assistant supporting program, options and equity swaps trading desks.


- Portfolio manager for GrOWE and Tax Managed Equity: New York.

-
-

- Joined the fund in 2009.
- BBA, Pace University.


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


                                         Who Manages and Oversees the Fund  | 17
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights are designed to help you understand recent financial
performance. The figures in the first part of the table are for a single share.
The total return figures represent the percentage that an investor in the fund
would have earned (or lost), assuming all dividends and distributions were
reinvested. This information has been audited by PricewaterhouseCoopers LLP,
independent registered public accounting firm, whose report, along with the
fund's financial statements, is included in the fund's annual report (see
"Shareholder reports" on the back cover). On July 10, 2006, DWS International
Select Equity Fund acquired all the assets and assumed all the liabilities of
the Predecessor Fund. The information contained in the following table for
periods prior to July 10, 2006 has been derived from the Predecessor Fund's
financial statements.


18 | Financial Highlights
<PAGE>

DWS International Select Equity Fund - Class S



[TO BE UPDATED]


                                                      Financial Highlights  | 19
<PAGE>

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


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


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

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

<PAGE>


How to BUY Class S Shares





<TABLE>
<CAPTION>
 FIRST INVESTMENT                             ADDITIONAL INVESTMENTS
<S>                                           <C>
 $2,500 or more for regular accounts          $50 or more for regular accounts and
 $1,000 or more for IRAs and UTMAs/           IRAs
 UGMAs                                        $50 or more for an account with an
 $1,000 or more for an account with an        Automatic Investment Plan
 Automatic Investment Plan

 BY MAIL OR EXPRESS MAIL (SEE BELOW)

 -  Fill out and sign an application          Send a DWS Investments investment
                                              slip or short note that includes:
 -  Send it to us at the appropriate          -  fund and class name
    address, along with an investment         -  account number
    check made payable to "DWS                -  check made payable to "DWS
    Investments"                                 Investments"

 BY WIRE
 -  Call (800) 728-3337 for instructions      -  Call (800) 728-3337 for instructions

 BY PHONE
 Not available                                -  Call (800) 728-3337 for instructions

 WITH AN AUTOMATIC INVESTMENT PLAN
 -  Fill in the information on your           -  To set up regular investments from a
    application including a check for the        bank checking account, call
    initial investment and a voided check       (800) 728-3337 (minimum $50)

 USING QuickBuy
 Not available                                -  Call (800) 728-3337 to make sure
                                                 QuickBuy is set up on your account; if
                                                 it is, you can request a transfer from
                                                 your bank account of any amount
                                                 between $50 and $250,000
 ON THE INTERNET
 -  Register at                               -  Call (800) 728-3337 to ensure you have
    www.dws-investments.com or log in if         electronic services
    already registered                        -  Register at www.dws-
 -  Print out a prospectus and a new             investments.com
    account application                          or log in if already registered
 -  Complete and return the application       -  Follow the instructions for buying
    with your check                              shares with money from your bank
                                                 account
</TABLE>



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


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

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



                                                 How to Buy Class S Shares  | 21
<PAGE>


How to EXCHANGE or SELL Class S Shares





<TABLE>
<CAPTION>
 EXCHANGING INTO ANOTHER FUND                   SELLING SHARES
<S>                                             <C>

 -  Exchanges into existing accounts:           Some transactions, including most for
    $50 minimum per fund                        over $100,000, can only be ordered in
                                                writing with a signature guarantee;
 -  Exchanges into new accounts:                please see "Signature Guarantee"
    $2,500 minimum per fund
    $1,000 minimum for IRAs and UTMAs/
    UGMAs

 BY PHONE                                       BY PHONE OR WIRE
 -  Call (800) 728-3337 for instructions        -  Call (800) 728-3337 for instructions

 USING THE AUTOMATED INFORMATION LINE
 -  Call (800) 728-3337 for instructions        -  Call (800) 728-3337 for instructions

 BY MAIL OR EXPRESS MAIL
 (see previous page for address)
 Your instructions should include:              Your instructions should include:
 -  the fund, class and account number          -  the fund, class and account number
    you're exchanging out of                       from which you want to sell shares
 -  the dollar amount or number of shares       -  the dollar amount or number of shares
    you want to exchange                           you want to sell
 -  the name and class of the fund you          -  your name(s), signature(s) and
    want to exchange into                          address, as they appear on your
                                                   account
 -  your name(s), signature(s) and              -  a daytime telephone number
    address, as they appear on your
    account
 -  a daytime telephone number

 WITH AN AUTOMATIC EXCHANGE PLAN                WITH AN AUTOMATIC WITHDRAWAL PLAN
 -  To set up regular exchanges from a          -  To set up regular cash payments from
    fund account, call (800) 728-3337              a DWS fund account, call
                                                  (800) 728-3337

 USING QuickSell
 Not available                                  -  Call (800) 728-3337 to make sure
                                                   QuickSell is set up on your account; if
                                                   it is, you can request a transfer to your
                                                   bank account of any amount between
                                                   $50 and $250,000

 ON THE INTERNET
 -  Register at www.dws-                        -  Register at www.dws-
    investments.com or log in if already           investments.com or log in if already
    registered                                     registered
 -  Follow the instructions for making on-      -  Follow the instructions for making on-
    line exchanges                                 line redemptions
</TABLE>



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


<TABLE>
<S>               <C>
TO REACH US:      WEB SITE: www.dws-investments.com
                  TELEPHONE REPRESENTATIVE: (800) 728-3337, M-F, 9 a.m. - 6 p.m. ET
                  TDD LINE: (800) 972-3006, M-F, 9 a.m.- 6 p.m. ET
</TABLE>




22 | How to Sell or Exchange Class S Shares
<PAGE>

           Financial intermediary support payments


           The Advisor, DWS Investments Distributors, Inc. (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
           selected affiliated and unaffiliated brokers, dealers, participating
           insurance companies or other financial intermediaries ("financial
           advisors") in connection with the sale and/or distribution of fund
           shares or the retention and/or servicing of fund investors and fund
           shares ("revenue sharing"). Such revenue sharing payments are in
           addition to any distribution or service fees payable under any Rule
           12b-1 or service plan of the 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
           charge, commissions, non-cash compensation arrangements expressly
           permitted under applicable rules of the Financial Industry
           Regulatory Authority or other concessions described in the fee table
           or elsewhere in this prospectus or the Statement of Additional
           Information as payable to all financial advisors. For example, the
           Advisor, the Distributor and/or their affiliates may compensate
           financial advisors for providing 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 revenue sharing payments is
           determined at the discretion of the Advisor, the Distributor and/or
           their affiliates from time to time, may be substantial, and may be
           different for different financial advisors based on, for example,
           the nature of the services provided by the financial advisor.


                                    How to Sell or Exchange Class S Shares  | 23
<PAGE>


           The Advisor, the Distributor and/or their affiliates currently make
           revenue sharing payments from their own assets in connection with
           the sale and/or distribution of DWS fund shares or the retention
           and/or servicing of investors and DWS fund shares to financial
           advisors in amounts that generally range from .01% up to .50% of
           assets of the fund serviced and maintained by the financial advisor,
           .05% to .25% of sales of the fund attributable to the financial
           advisor, a flat fee of $13,350 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 the 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 the fund. Additional information regarding these
           revenue sharing payments is included in the fund's Statement of
           Additional Information, which is available to you on request at no
           charge (see the back cover of this prospectus for more information
           on how to request a copy of the Statement of Additional
           Information).

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


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


24 | How to Sell or Exchange Class S Shares
<PAGE>

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


POLICIES YOU SHOULD KNOW ABOUT

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

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

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

           In order to reduce the amount of mail you receive and to help reduce
           expenses, we generally send a single copy of any shareholder report
           and prospectus to each household. If you do not want the mailing of
           these documents to be combined with those for other members of your
           household, please contact your financial advisor or call (800)
           728-3337.


           Policies about transactions


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



THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

Questions? You can speak to a DWS Investments representative between 9 a.m. and
6 p.m. Eastern time on any fund business day by calling (800) 728-3337.



                                            Policies You Should Know About  | 25
<PAGE>

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

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

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

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

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

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

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


26 | Policies You Should Know About
<PAGE>


           INITIAL PURCHASE MINIMUMS. The minimum initial investment is $2,500,
           except for investments on behalf of participants in certain
           fee-based and wrap programs offered through certain financial
           intermediaries approved by the Advisor, for which there is no
           minimum initial investment; and fiduciary accounts such as IRAs and
           custodial accounts such as Uniform Gifts to Minors Act and Uniform
           Transfers to Minors Act accounts for which the minimum initial
           investment is $1,000 per account. In addition, the minimum initial
           investment is $1,000 if an automatic investment plan of $50 per
           month is established. Group retirement plans and certain other
           accounts have similar or lower minimum share balance requirements.


           SUB-MINIMUM BALANCES. The fund may close your account and send you
           the proceeds if your balance falls below $2,500 ($1,000 with an
           Automatic Investment Plan funded with $50 or more per month in
           subsequent investments); $250 for retirement accounts. We will give
           you 60 days' notice (90 days for retirement accounts) so you can
           either increase your balance or close your account (these policies
           don't apply to investors with $100,000 or more in DWS fund shares,
           investors in certain fee-based and wrap programs offered through
           certain financial intermediaries approved by the Advisor, or group
           retirement plans and certain other accounts having lower minimum
           share balance requirements).

           Because of the high cost of servicing accounts with low balances, an
           account maintenance fee of $6.25 per quarter (for a $25 annual fee)
           will be assessed on accounts whose balances fail to meet the minimum
           initial investment requirement for a period of 90 days prior to the
           assessment date. The quarterly assessment will occur on or about the
           15th of the last month in each calendar quarter. Please note that
           the fee will be assessed on accounts that fall below the minimum for
           any reason, including due to market value fluctuations, redemptions
           or exchanges. The account maintenance fee will apply to all
           shareholders of the DWS Funds except for: accounts with an automatic
           investment plan, accounts held in an omnibus account through a
           financial services firm, accounts maintained on behalf of
           participants in certain fee based and wrap programs offered through
           certain financial intermediaries approved by the Advisor and
           participant level accounts in group retirement plans held on the
           records of a retirement plan record keeper.


                                            Policies You Should Know About  | 27
<PAGE>

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

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

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


28 | Policies You Should Know About
<PAGE>


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

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

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


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


                                            Policies You Should Know About  | 29
<PAGE>

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

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

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

           REDEMPTION FEES. The fund imposes a redemption fee of 2% of the
           total redemption amount (calculated at net asset value) on all fund
           shares redeemed or exchanged within 15 days of buying them (either
           by purchase or exchange). The redemption fee is paid directly to the
           fund and is designed to encourage long-term investment and to offset
           transaction and other costs associated with short-term or excessive
           trading. For purposes of determining whether the redemption fee
           applies, shares held the longest time will be treated as being
           redeemed first and shares held the shortest time will be treated as
           being redeemed last.

           The redemption fee is applicable to fund shares purchased either
           directly or through a financial intermediary, such as a
           broker-dealer. Transactions through financial intermediaries
           typically are placed with the fund on an omnibus basis and include
           both purchase and sale transactions placed on behalf of multiple
           investors. These purchase and sale transactions are generally


30 | Policies You Should Know About
<PAGE>

           netted against one another and placed on an aggregate basis;
           consequently the identities of the individuals on whose behalf the
           transactions are placed generally are not known to the fund. For
           this reason, the fund has undertaken to notify financial
           intermediaries of their obligation to assess the redemption fee on
           customer accounts and to collect and remit the proceeds to the fund.
           However, due to operational requirements, the intermediaries'
           methods for tracking and calculating the fee may be inadequate or
           differ in some respects from the fund's.


           The redemption fee will not be charged in connection with the
           following exchange or redemption transactions: (i) transactions on
           behalf of participants in certain research wrap programs; (ii)
           transactions on behalf of a shareholder to return any excess IRA
           contributions to the shareholder; (iii) transactions on behalf of a
           shareholder to effect a required minimum distribution on an IRA;
           (iv) transactions on behalf of any mutual fund advised by the
           Advisor and its affiliates (e.g., "funds of funds") or, in the case
           of a master/feeder relationship, redemptions by the feeder fund from
           the master portfolio; (v) transactions on behalf of certain
           unaffiliated mutual funds operating as funds of funds; (vi)
           transactions following death or disability of any registered
           shareholder, beneficial owner or grantor of a living trust with
           respect to shares purchased before death or disability; (vii)
           transactions involving hardship of any registered shareholder;
           (viii) systematic transactions with pre-defined trade dates for
           purchases, exchanges or redemptions, such as automatic account
           rebalancing, or loan origination and repayments; (ix) transactions
           involving shares purchased through the reinvestment of dividends or
           other distributions; (x) transactions involving shares transferred
           from another account in the same fund or converted from another
           class of the same fund (the redemption fee period will carry over to
           the acquired shares); (xi) transactions initiated by the fund or
           administrator (e.g., redemptions for not meeting account minimums,
           to pay account fees funded by share redemptions, or in the event of
           the liquidation or merger of the fund); or (xii) transactions in
           cases when there are legal or contractual limitations or
           restrictions on the imposition of the redemption fee (as determined
           by the fund or its agents in their sole discretion). It is the
           policy of the DWS funds to permit approved fund platform providers
           to execute transactions with


                                            Policies You Should Know About  | 31

<PAGE>

           the funds without the imposition of a redemption fee if such
           providers have implemented alternative measures that are determined
           by the Advisor to provide controls on short-term and excessive
           trading that are comparable to the DWS funds' policies.


           THE AUTOMATED INFORMATION LINE IS AVAILABLE 24 HOURS A DAY BY
           CALLING (800) 728-3337. You can use our automated phone services to
           get information on DWS funds generally and on accounts held directly
           at DWS Investments. You can also use this service to make exchanges
           and to purchase and sell shares.


           QUICKBUY AND QUICKSELL let you set up a link between a DWS fund
           account and a bank account. Once this link is in place, you can move
           money between the two with a phone call. You'll need to make sure
           your bank has Automated Clearing House (ACH) services. Transactions
           take two to three days to be completed and there is a $50 minimum
           and a $250,000 maximum. To set up QuickBuy or QuickSell on a new
           account, see the account application; to add it to an existing
           account, call (800) 728-3337.

           TELEPHONE AND ELECTRONIC TRANSACTIONS. Generally, you are
           automatically entitled to telephone and electronic transaction
           privileges, but you may elect not to have them when you open your
           account or by contacting Shareholder Services at (800) 728-3337 at a
           later date.

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

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





THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

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




32 | Policies You Should Know About
<PAGE>

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


           THE FUND ACCEPTS PAYMENT FOR SHARES ONLY IN US DOLLARS by a check
           drawn on a US bank, a bank or Federal Funds wire transfer or an
           electronic bank transfer. The fund does not accept third party
           checks. A third party check is a check made payable to one or more
           parties and offered as payment to one or more other parties (e.g., a
           check made payable to you that you offer as payment to someone
           else). Checks should normally be payable to DWS Investments and
           drawn by you or a financial institution on your behalf with your
           name or account number included with the check.


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

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

           SELLING SHARES OF TRUST ACCOUNTS AND BUSINESS OR ORGANIZATION
           ACCOUNTS may require additional documentation. Please call (800)
           728-3337 or contact your financial advisor for more information.


           MONEY FROM SHARES YOU SELL is normally sent out within one business
           day of when your order is processed (not when it is received),
           although it could be delayed for up to seven days. There are
           circumstances when it could be longer, including, but not limited
           to, when you are selling shares you bought recently by check  or ACH
           (the funds will be placed under a 10 calendar day hold to ensure
           good funds) or when unusual circumstances





THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

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







                                            Policies You Should Know About  | 33
<PAGE>


           prompt the SEC to allow further delays. Certain expedited redemption
           processes (e.g., redemption proceeds by wire) may also be delayed or
           unavailable when you are selling shares recently purchased or in the
           event of the closing of the Federal Reserve wire payment system. 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 the
           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. For additional rights reserved
           by the fund, please see "Other rights we reserve."


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


34 | Policies You Should Know About
<PAGE>

           How the fund calculates share price

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


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



           The price at which you buy and sell shares is based on the NAV per
           share next calculated after the order is received and accepted by
           the transfer agent.


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


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


           TO THE EXTENT THAT THE FUND INVESTS IN SECURITIES THAT ARE TRADED
           PRIMARILY IN FOREIGN MARKETS, the value of its holdings could change
           at a time when you aren't able to buy or sell fund shares. This is
           because some foreign markets are open on days


                                            Policies You Should Know About  | 35
<PAGE>

           or at times when the fund doesn't price its shares. (Note that
           prices for securities that trade on foreign exchanges can change
           significantly on days when the New York Stock Exchange is closed and
           you cannot buy or sell fund shares. Price changes in the securities
           the fund owns may ultimately affect the price of fund shares the
           next time the NAV is calculated.)


           Other rights we reserve

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

           -  withdraw or suspend the offering of shares at any time


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


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

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


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


36 | Policies You Should Know About
<PAGE>

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

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


UNDERSTANDING DISTRIBUTIONS AND TAXES


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


           THE FUND INTENDS TO PAY DIVIDENDS AND DISTRIBUTIONS to its
           shareholders in December and, if necessary, may do so at other times
           as well.


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


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

           YOU CAN CHOOSE HOW TO RECEIVE YOUR DIVIDENDS AND DISTRIBUTIONS. You
           can have them all automatically reinvested in fund shares (at NAV),
           all deposited directly to your bank account or all sent to you by
           check, have one type reinvested and the other sent to you by check
           or have them invested in a different fund. Tell us your preference
           on your application. If you don't indicate a preference, your
           dividends and distributions will all be reinvested in shares of the
           fund without a sales charge (if



THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

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



                                     Understanding Distributions and Taxes  | 37
<PAGE>


           applicable). Distributions are treated the same for federal income
           tax purposes whether you receive them in cash or reinvest them in
           additional shares. Under the terms of employer-sponsored qualified
           plans, and retirement plans, reinvestment (at NAV) is the only
           option.


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

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


<TABLE>
<CAPTION>
GENERALLY TAXED AT LONG-TERM              GENERALLY TAXED AT ORDINARY
CAPITAL GAIN RATES:                       INCOME RATES:
<S>                                       <C>
DISTRIBUTIONS FROM THE FUND
- gains from the sale of                  -  gains from the sale of
  securities held (or treated as             securities held by the fund for
  held) by the fund for more                 one year or less
  than one year                           -  all other taxable income
- qualified dividend income

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



           ANY DIRECT INVESTMENTS IN FOREIGN SECURITIES BY THE FUND MAY BE
           SUBJECT TO FOREIGN WITHHOLDING TAXES. In that case, the fund's yield
           on those securities would generally be decreased. The fund may elect
           to pass through to its shareholders a credit or deduction for
           foreign taxes it has paid if at the end of its fiscal year more than
           50% of the value of the fund's total assets consists of stocks or
           securities of foreign corporations. In addition, any investments in
           foreign securities or foreign currencies may increase or accelerate
           the fund's recognition of ordinary income and may affect the timing
           or amount of the fund's distributions. If you invest in the fund
           through a taxable account, your after-tax return could be negatively
           impacted.



38 | Understanding Distributions and Taxes
<PAGE>


           Investments in certain debt obligations or other securities may
           cause the fund to recognize taxable income in excess of the cash
           generated by them. Thus, the fund could be required at times to
           liquidate other investments in order to satisfy its distribution
           requirements.

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

           For taxable years beginning before January 1, 2011, the maximum
           federal income tax rate imposed on long-term capital gains
           recognized by individuals and other noncorporate shareholders has
           been temporarily reduced to 15%, in general, with lower rates
           applying to taxpayers in the 10% and 15% rate brackets. For taxable
           years beginning on or after January 1, 2011, the maximum long-term
           capital gain rate is scheduled to return to 20%.


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


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

           If the fund's distributions exceed its current and accumulated
           earnings and profits, the excess will be treated for federal income
           tax purposes as a tax-free return of capital to the extent of your
           basis in your shares and thereafter as a gain from the



                                     Understanding Distributions and Taxes  | 39
<PAGE>


           sale or exchange of your shares. Because a return of capital
           distribution reduces the basis of your shares, a return of capital
           distribution may result in a higher capital gain or a lower capital
           loss when you sell your shares.


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

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


40 | Understanding Distributions and Taxes
<PAGE>

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



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


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


                                                                  Appendix  | 41
<PAGE>

                DWS International Select Equity Fund - Class S




<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER      ANNUAL FEES
              FEES AND        EXPENSE        FEES AND           FEES AND            AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
<S>       <C>                <C>          <C>               <C>                <C>
   1
   2
   3
   4
   5
   6
   7
   8
   9
  10
  TOTAL
</TABLE>




42 | Appendix
<PAGE>

TO GET MORE INFORMATION

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

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


For a free copy of any of these documents or to request other information about
the fund, call (800) 728-3337, or contact DWS Investments at the address listed
below. The fund's SAI and shareholder reports are also available through the
DWS Investments Web site at www.dws-investments.com. These documents and other
information about the fund are available from the EDGAR Database on the SEC's
Internet site at www.sec.gov. If you like, you may obtain copies of this
information, after paying a copying fee, by e-mailing a request to
publicinfo@sec.gov or by writing the SEC at the address listed below. You can
also review and copy these documents and other information about the fund,
including the fund's SAI, at the SEC's Public Reference Room in Washington,
D.C. Information on the operation of the SEC's Public Reference Room may be
obtained by calling (800) SEC-0330.




<TABLE>
<CAPTION>
DWS INVESTMENTS      SEC                     DISTRIBUTOR
-----------------    --------------------    ------------------------------
<S>                  <C>                     <C>
PO Box 219151        100 F Street, N.E.      DWS Investments Distributors,
Kansas City, MO      Washington, D.C.        Inc.
64121-9151           20549-0102              222 South Riverside Plaza
WWW.DWS-             WWW.SEC.GOV             Chicago, IL 60606-5808
INVESTMENTS.COM      (800) SEC-0330          (800) 621-1148
(800) 728-3337
</TABLE>




<TABLE>
<S>                    <C>                                       <C>
SEC FILE NUMBER:
DWS Advisor Funds        DWS International Select Equity Fund    811-04760
</TABLE>







(03/01/09) 399-2

[RECYCLE GRAPHIC APPEARS HERE]
                                                          [DWS INVESTMENTS LOGO]
                                                             Deutsche Bank Group


<PAGE>



                                DWS ADVISOR FUNDS

                      DWS Diversified International Equity Fund
                (formerly DWS International Select Equity Fund)
           Class A, Class B, Class C, Class R and Institutional Class








                       STATEMENT OF ADDITIONAL INFORMATION


                                  March 1, 2009


This Statement of Additional Information is not a prospectus and should be read
in conjunction with the prospectuses dated March 1, 2009, as amended from time
to time, for DWS International Select Equity Fund (the "Fund"), a series of DWS
Advisor Funds (the "Trust"), copies of which may be obtained without charge by
contacting DWS Investments Distributors, Inc., 222 South Riverside Plaza,
Chicago, Illinois 60606, (800) 621-1148, or from the firm from which this
Statement of Additional Information was obtained and are available along with
other materials on the Securities and Exchange Commission's Internet Web site
(http://www.sec.gov).

Portions of the Annual Report to Shareholders of the Fund, dated October 31,
2008, are incorporated herein by reference, as specified herein. A copy of the
Fund's Annual Report may be obtained without charge from Shareholder Services by
calling (800) 621-1048.


This Statement of Additional Information ("SAI") is incorporated by reference
into the corresponding prospectuses for each class of shares of the Fund.


                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----


INVESTMENT RESTRICTIONS........................................................1

INVESTMENT POLICIES AND TECHNIQUES.............................................2

MANAGEMENT OF THE FUND........................................................40
         Investment Advisor...................................................40


FUND SERVICE PROVIDERS........................................................50
         Administrator........................................................50
         Distributor..........................................................51
         Custodian............................................................56
         Transfer Agent.......................................................56
         Legal Counsel........................................................57
         Independent Registered Public Accounting Firm........................57

PORTFOLIO TRANSACTIONS........................................................57

PURCHASES AND REDEMPTIONS OF SHARES...........................................59

DIVIDENDS.....................................................................80

TAXES.........................................................................81

NET ASSET VALUE...............................................................86

BOARD MEMBERS AND OFFICERS....................................................87

TRUST ORGANIZATION...........................................................106

PROXY VOTING GUIDELINES......................................................107

FINANCIAL STATEMENTS.........................................................108

ADDITIONAL INFORMATION.......................................................109

APPENDIX A -- PROXY VOTING GUIDELINES........................................110

APPENDIX B -- RATINGS OF INVESTMENTS.........................................137




                             INVESTMENT RESTRICTIONS

Except as otherwise indicated, the Fund's investment objective and policies are
not fundamental and may be changed without a vote of shareholders. There can be
no assurance that the Fund's objective will be met.

Any investment restrictions herein which involve a maximum percentage of
securities or assets shall not be considered to be violated unless an excess
over the percentage occurs immediately after and is caused by an acquisition or
encumbrance of securities or assets of, or borrowings by, the Fund.

The Fund has elected to be classified as an open-end management investment
company. A diversified Fund may not, with respect to 75% of total assets, invest
more than 5% of total assets in the securities of a single issuer (other than US
government securities or securities of investment companies) or invest in more
than 10% of the outstanding voting securities of such issuer.

Fundamental Investment Restrictions

(1)      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.

(2)      The Fund may not borrow money, except as permitted under the 1940 Act,
         as amended, and as interpreted or modified by regulatory authority
         having jurisdiction, from time to time.

(3)      The Fund may not engage in the business of underwriting securities
         issues by others, except to the extent that a Fund may be deemed to be
         the 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 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.

(6)      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.

(7)      The Fund may not concentrate its investments in a particular industry,
         as that term is used in the 1940 Act, as amended, and as interpreted or
         modified by regulatory authority having jurisdiction, from time to
         time.

(8)      The Fund has elected to be treated as a diversified investment company,
         as that term is used in 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 a meeting, if
the holders of more than 50% of the outstanding voting securities of the Fund
are present or represented by proxy, or (2) more than 50% of the outstanding
voting securities of the Fund.

Non-Fundamental Investment Restrictions

In addition to the fundamental policies mentioned above, the Board of Trustees
of the Trust has adopted the following non-fundamental policies that may be
changed or amended by action of the Board of Trustees without shareholder
approval.

The Fund may not:

(a)      Participate on a joint-and-several basis in any securities trading
         account. The "bunching" of orders for the sale or purchase of
         marketable portfolio securities with other accounts under the
         management of the Advisor to save commissions or to average prices
         among them is not deemed to result in a securities trading account.

(b)      Purchase securities of other investment companies, except as permitted
         by the 1940 Act and the rules, regulations and any applicable exemptive
         order issued thereunder.

(c)      Invest for the purpose of exercising control over or management of any
         company.

(d)      Purchase any security, including any repurchase agreement maturing in
         more than seven days, which is illiquid, if more than 15% of the net
         assets of the Fund, taken at market value, would be invested in such
         securities.

(e)      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 staff of the SEC has taken the position that fixed time deposits maturing in
more than seven days that cannot be traded on a secondary market and
participation interests in loans are illiquid. Until such time (if any) as this
position changes, the Trust, on behalf of the Fund, will include such
investments in determining compliance with the 15% limitation on investments in
illiquid securities. Restricted securities (including commercial paper issued
pursuant to Section 4(2) of the 1933 Act) which the Advisor has determined are
readily marketable will not be deemed to be illiquid for purposes of such
restriction.

To meet federal income tax requirements for qualification as a regulated
investment company, the Fund must, among other things, limit its investments so
that at the close of each quarter of its taxable year (1) no more than 25% of
the value of its total assets is invested in the securities (other than
securities of the US Government or a regulated investment company) of a single
issuer or two or more issuers which the Fund controls 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, and (2) at least 50% of the value
of its total assets is represented by cash, cash items (including receivables),
US Government securities, securities of other regulated investment companies and
other securities of any issuer that does not represent more than 5% of the value
of the Fund's total assets and not more than 10% of the issuer's outstanding
voting securities.

"Value" for the purposes of the foregoing investment restrictions means the
market value used in determining the Fund's net asset value.

                       INVESTMENT POLICIES AND TECHNIQUES

Investment Techniques

Descriptions in this Statement of Additional Information of a particular
investment practice or technique in which the Fund may engage are meant to
describe the spectrum of investments that Deutsche Investment Management
Americas Inc. (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.

Equity Securities

General. The Fund may invest in equity securities listed on any domestic or
non-US securities exchange or traded in the over-the-counter (or "OTC") market
as well as certain restricted or unlisted securities. As used herein, "equity
securities" include common stock, preferred stock, trust or limited partnership
interests, rights and warrants (to subscribe to or purchase such securities) and
convertible securities (consisting of debt securities or preferred stock that
may be converted into common stock or that carry the right to purchase common
stock).

Common Stocks. Common stocks, the most familiar type of equity securities,
represent an equity (i.e., ownership) interest in a corporation. They may or may
not pay dividends or carry voting rights. Common stock occupies the most junior
position in a company's capital structure. Although equity securities have a
history of long-term growth in value, their prices fluctuate based on changes in
a company's financial condition, as well as changes in overall market and
economic conditions. This affects the value of the shares of the Fund, and thus
the value of your investment. Smaller companies are especially sensitive to
these factors.

Warrants. The Fund may invest in warrants. Warrants are securities that give the
holder the right but not the obligation to buy a specified number of shares of
common stock at a specified price, which is often higher than the market price
at the time of issuance, for a specified period (or in perpetuity). Warrants may
be issued in units with other securities or separately, and may be freely
transferable and traded on exchanges. Investing in warrants can provide a
greater potential for profit or loss than an equivalent investment in the
underlying security, and, thus is a speculative investment. At the time of
issue, the cost of a warrant is substantially less than the cost of the
underlying security itself, and price movements in the underlying security are
generally magnified in the price movements of the warrant. This leveraging
effect enables the investor to gain exposure to the underlying security with a
relatively low capital investment. This leveraging increases an investor's risk,
however, in the event of a decline in the value of the underlying security and
can result in a complete loss of the amount invested in the warrant.

While the market value of a warrant tends to be more volatile than that of the
securities underlying the warrant, changes in the market value of a warrant may
not necessarily correlate with that of the underlying security. A warrant ceases
to have value if it is not exercised prior to the expiration date, if any, to
which the warrant is subject.

The purchase of warrants involves a risk that the Fund could lose the purchase
value of a warrant if the right to subscribe to additional shares is not
exercised prior to the warrant's expiration. Also, the purchase of warrants
involves the risk that the effective price paid for the warrant added to the
subscription price of the related security may exceed the value of the
subscribed security's market price such as when there is no movement in the
level of the underlying security. The value of a warrant may decline because of
a decline in the value of the underlying security, the passage of time, changes
in interest rates or in the dividend or other policies of the company whose
equity underlies the warrant or a change in the perception as to the future
price of the underlying security, or any combination thereof. Also, warrants do
not entitle the holder to dividends or voting rights with respect to the
underlying securities and do not represent any rights in the assets of the
issuing company.

Preferred Stock. The Fund may invest in preferred stock. Preferred stock has a
preference (i.e., ranks higher) in liquidation (and generally dividends) over
common stock but is subordinated (i.e., ranks lower) in liquidation to fixed
income securities. Dividends on preferred stock may be cumulative, and in such
cases, all cumulative dividends usually must be paid prior to dividend payments
to common stockholders. Because of this preference, preferred stocks generally
entail less risk than common stocks. As a general rule the market value of
preferred stocks with fixed dividend rates and no conversion rights moves
inversely with interest rates and perceived credit risk, with the price
determined by the dividend rate. Some preferred stocks are convertible into
other securities (e.g., common stock) at a fixed price and ratio or upon the
occurrence of certain events. The market price of convertible preferred stocks
generally reflects an element of conversion value. Because many preferred stocks
lack a fixed maturity date, these securities generally fluctuate substantially
in value when interest rates change; such fluctuations often exceed those of
long-term bonds of the same issuer. Some preferred stocks pay an adjustable
dividend that may be based on an index, formula, auction procedure or other
dividend rate reset mechanism. In the absence of credit deterioration,
adjustable rate preferred stocks tend to have more stable market values than
fixed rate preferred stocks.

All preferred stocks are also subject to the same types of credit risks as
corporate bonds. In addition, because preferred stock is subordinate to debt
securities and other obligations of an issuer, deterioration in the credit
rating of the issuer will cause greater changes in the value of a preferred
stock than in a more senior debt security with similar yield characteristics.
Preferred stocks may be rated by the Standard & Poor's Division of The
McGraw-Hill Companies, Inc. ("S&P") and Moody's Investors Service, Inc.
("Moody's") although there is no minimum rating which a preferred stock must
have to be an eligible investment for the Fund.

Convertible Securities. The Fund may invest in convertible securities. A
convertible security is a bond or preferred stock which may be converted at a
stated price within a specific period of time into a specified number of shares
of common stock of the same or different issuer. Convertible securities are
senior to common stock in a corporation's capital structure, but are generally
subordinate to non-convertible debt securities. While providing a fixed income
stream, generally higher in yield than in the income derived from a common stock
but lower than that afforded by a non-convertible debt security, a convertible
security also affords an investor the opportunity, through its conversion
feature, to participate in the capital appreciation of common stock into which
it is convertible.

The terms of any convertible security determine its ranking in a company's
capital structure. In the case of subordinated convertible debentures, the
holders' claims on assets and earnings are subordinated to the claims of other
creditors, and are senior to the claims of preferred and common shareholders. In
the case of convertible preferred stock, the holders' claims on assets and
earnings are subordinated to the claims of all creditors and are senior to the
claims of common shareholders.

In general, the market value of a convertible security is the greater of its
investment value (its value as a fixed income security) or its conversion value
(the value of the underlying shares of common stock if the security is
converted). Because a convertible security is a fixed income security, its
market value generally increases when interest rates decline and generally
decreases when interest rates rise; however, the price of a convertible security
also generally increases as the market value of the underlying stock increases,
and generally decreases as the market value of the underlying stock declines.
Investments in convertible securities generally entail less risk than
investments in the common stock of the same issuer.

Medium-Capitalization, Small-Capitalization and Micro-Capitalization Stocks

The Fund may invest in lesser-known companies with medium-, small- and
micro-market capitalizations. Such companies frequently offer greater growth
potential than larger, more mature, better-known companies. Investments in such
companies involve considerations that are not applicable to investing in
securities of established, larger capitalization issuers including reduced and
less reliable information about the issuer, less stringent financial disclosure
requirements and higher brokerage commissions and fees and greater market risk
in general.

In addition, investing in the securities of these companies also involves the
possibility of greater portfolio price volatility. Among the reasons for the
greater price volatility of such companies are the less certain growth prospects
of medium and smaller firms, the greater illiquidity in the markets for the
stocks of such companies and the greater sensitivity of such companies to
changing economic conditions in their respective geographic region.

For example, securities of these companies involve higher investment risk than
that normally associated with larger firms due to the greater business risks of
small size and limited product lines, markets, distribution channels and
financial and managerial resources. Therefore such securities may be subject to
more abrupt or erratic market movements than securities of larger, more
established companies or the market averages in general.

In addition, many medium-, small- and micro market capitalization companies in
which the Fund may invest are not well-known to the investing public, do not
have significant institutional ownership and are followed by relatively few
securities analysts. As a result, it may be difficult to obtain reliable
information and financial data on such companies and the securities of smaller
capitalization companies may not be readily marketable, making it difficult to
dispose of shares when desirable. Also, the securities of smaller capitalization
companies traded on the OTC market may have fewer market makers, wider spreads
between their quoted bid and asked prices and lower trading volumes, resulting
in comparatively greater price volatility and less liquidity than exists for
securities of larger capitalization companies.

An additional risk of investing in smaller emerging companies is that smaller
issuers may face increased difficulty in obtaining the capital necessary to
continue operations and thus may go into bankruptcy, which could result in a
complete loss of an investment. Furthermore, when the economy enters into
recession there tends to be a "flight to quality" which exacerbates the
increased risk and greater price volatility normally associated with smaller
capitalization companies.

All of these risks are heightened for micro-capitalization companies.

Fixed Income Securities and Money Market Instruments

General. The Fund may invest in a broad range of domestic and foreign fixed
income (debt) securities. Fixed income securities, including (but not limited
to) bonds, are used by issuers to borrow money from investors. The issuer pays
the investor a fixed or variable rate of interest, and must repay the amount
borrowed at maturity. Some debt securities, such as zero coupon bonds, do not
pay current interest, but are purchased at a discount from their face values.

The value of fixed income securities in the Fund's portfolio generally varies
inversely with changes in interest rates. Prices of fixed income securities with
longer effective maturities are more sensitive to interest rate changes than
those with shorter effective maturities.

In periods of declining interest rates, the yield (the income generated over a
stated period of time) of the Fund that invests in fixed income securities may
tend to be higher than prevailing market rates, and in periods of rising
interest rates, the yield of the Fund may tend to be lower. Also, when interest
rates are falling, the inflow of net new money to the Fund from the continuous
sale of its shares will likely be invested in portfolio instruments producing
lower yields than the balance of the Fund's portfolio, thereby reducing the
yield of the Fund. In periods of rising interest rates, the opposite can be
true. To the extent it invests in fixed income securities, the net asset value
of the Fund can generally be expected to change as general levels of interest
rates fluctuate.

Fixed-Income Security Risk. Fixed income securities generally expose the Fund to
four types of risk: (1) interest rate risk (the potential for fluctuations in
bond prices due to changing interest rates); (2) income risk (the potential for
a decline in the Fund's income due to falling market interest rates); (3) credit
risk (the possibility that a bond issuer will fail to make timely payments of
either interest or principal to the Fund); (4) prepayment risk or call risk (the
likelihood that, during a period of falling interest rates, securities with high
stated interest rates will be prepaid, or "called" prior to maturity, requiring
the Fund to invest the proceeds at generally lower interest rates); and (5)
extension risk (the likelihood that as interest rates increase, slower than
expected principal payments may extend the average life of fixed income
securities, which will have the effect of locking in a below-market interest
rate, increasing the security's duration and reducing the value of the
security).


Impact of Sub-Prime Mortgage Market. The Fund may invest in mortgage-backed,
asset-backed and other fixed-income securities whose value and liquidity may be
adversely affected by the critical downturn in the sub-prime mortgage lending
market in the US. Sub-prime loans, which, have higher interest rates, are made
to borrowers with low credit ratings or other factors that increase the risk of
default. Concerns about widespread defaults on sub-prime loans have also created
heightened volatility and turmoil in the general credit markets. As a result,
the Fund's investments in certain fixed-income securities may decline in value,
their market value may be more difficult to determine, and the Fund may have
more difficulty disposing of them.




Short-Term Instruments. When the Fund experiences large cash inflows, for
example, through the sale of securities or of its shares and attractive
investments are unavailable in sufficient quantities, the Fund may hold
short-term investments (or shares of a money market mutual fund) for a limited
time pending availability of such investments. In addition, when in the
Advisor's opinion, it is advisable to adopt a temporary defensive position
because of unusual and adverse market or other conditions, up to 100% of the
Fund's assets may be invested in such short-term instruments.

Short-term instruments consist of foreign and domestic: (1) short-term
obligations of sovereign governments, their agencies, instrumentalities,
authorities or political subdivisions; (2) other investment grade short-term
debt securities; (3) commercial paper; (4) bank obligations, including
negotiable certificates of deposit, time deposits and banker's acceptances; and
(5) repurchase agreements. At the time the Fund invests in commercial paper,
bank obligations or repurchase agreements, the issuer or the issuer's parent
must have outstanding debt, commercial paper or bank obligations rated
investment grade; or, if no such ratings are available, the instrument must be
deemed to be of comparable quality in the opinion of the Advisor. These
instruments may be denominated in US dollars or in foreign currencies.

Obligations of Banks and Other Financial Institutions. The Fund may invest in US
dollar-denominated fixed rate or variable rate obligations of US or foreign
financial institutions, including banks, only when the Advisor determines that
the credit risk with respect to the instrument is minimal. Obligations of
domestic and foreign financial institutions in which the Fund may invest include
(but are not limited to) certificates of deposit, bankers' acceptances, bank
time deposits, commercial paper, and other instruments issued or supported by
the credit of US or foreign financial institutions, including banks.

For purposes of the Fund's investment policies with respect to bank obligations,
the assets of a bank will be deemed to include the assets of its domestic and
foreign branches. Obligations of foreign branches of US banks and foreign banks
may be general obligations of the parent bank in addition to the issuing bank or
may be limited by the terms of a specific obligation and by government
regulation. If the Advisor deems the instruments to present minimal credit risk,
the Fund may invest in obligations of foreign banks or foreign branches of US
banks, which include banks located in the United Kingdom, Grand Cayman Island,
Nassau, Japan and Canada.

Investments in these obligations may entail risks that are different from those
of investments in obligations of US domestic banks because of differences in
political, regulatory and economic systems and conditions. These risks include
future political and economic developments, currency blockage, the possible
imposition of withholding taxes on interest payments, possible seizure or
nationalization of foreign deposits, difficulty or inability of pursuing legal
remedies and obtaining judgments in foreign courts, possible establishment of
exchange controls or the adoption of other foreign governmental restrictions
that might affect adversely the payment of principal and interest on bank
obligations. Foreign branches of US banks and foreign banks may also be subject
to less stringent reserve requirements and to different accounting, auditing,
reporting and record keeping standards that those applicable to domestic
branches of US banks.

Certificates of Deposit and Bankers' Acceptances. The Fund may invest in
certificates of deposit and bankers' acceptances. Certificates of deposit are
receipts issued by a depository institution in exchange for the deposit of
funds. The issuer agrees to pay the amount deposited plus interest to the bearer
of the receipt on the date specified on the certificate. The certificate usually
can be traded in the secondary market prior to maturity.

Bankers' acceptances typically arise from short-term credit arrangements
designed to enable businesses to obtain Fund to finance commercial transactions.
Generally, an acceptance is a time draft drawn on a bank by an exporter or an
importer to obtain a stated amount of funds to pay for specific merchandise. The
draft is then "accepted" by a bank that, in effect, unconditionally guarantees
to pay the face value of the instrument on its maturity date. The acceptance may
then be held by the accepting bank as an earning asset or it may be sold in the
secondary market at the going rate of discount for a specific maturity. Although
maturities for acceptances can be as long as 270 days, most acceptances have
maturities of six months or less.

Commercial Paper. The Fund may invest in commercial paper. The Fund may invest
in fixed rate or variable rate commercial paper, issued by US or foreign
entities. Commercial paper consists of short-term (usually up to one year)
unsecured promissory notes issued by US or foreign corporations in order to
finance their current operations. Any commercial paper issued by a foreign
entity corporation and purchased by the Fund must be US dollar-denominated and
must not be subject to foreign withholding tax at the time of purchase.

Commercial paper when purchased by the Fund must be rated in the highest
short-term rating category by any two Nationally Recognized Statistical Rating
Organizations ("NRSROs") (or one NRSRO if that NRSRO is the only such NRSRO
which rates such security) or, if not so rated, must be determined by the
Advisor to be of comparable quality. Investing in foreign commercial paper
generally involves risks similar to those described above relating to
obligations of foreign banks or foreign branches and subsidiaries of US and
foreign banks.

For a description of commercial paper ratings, see the Appendix to this SAI.

Variable Rate Master Demand Notes. The Fund may also invest in variable rate
master demand notes. A variable value master demand note (which is a type of
commercial paper) represents a direct borrowing arrangement involving
periodically fluctuating rates of interest under a letter agreement between a
commercial paper issuer and an institutional lender pursuant to which the lender
may determine to invest varying amounts.

US Government Securities. The Fund may invest in obligations issued or
guaranteed by the US government which include: (1) direct obligations of the US
Treasury and (2) obligations issued by US government agencies and
instrumentalities. Included among direct obligations of the US are Treasury
Bills, Treasury Notes and Treasury Bonds, which differ in terms of their
interest rates, maturities and dates of issuance. Treasury Bills have maturities
of less than one year, Treasury Notes have maturities of one to 10 years and
Treasury Bonds generally have maturities of greater than 10 years at the date of
issuance. Included among the obligations issued by agencies and
instrumentalities of the US are: instruments that are supported by the full
faith and credit of the US (such as certificates issued by the Government
National Mortgage Association ("GNMA" or "Ginnie Mae")); instruments that are
supported by the right of the issuer to borrow from the US Treasury (such as
securities of Federal Home Loan Banks); and instruments that are supported by
the credit of the instrumentality (such as Federal National Mortgage Association
("FNMA" or "Fannie Mae") and Federal Home Loan Mortgage Corporation ("FHLMC" or
"Freddie Mac")).

Other US government securities the Fund may invest in include (but are not
limited to) securities issued or guaranteed by the Federal Housing
Administration, Farmers Home Loan Administration, Export-Import Bank of the US,
Small Business Administration, General Services Administration, Central Bank for
Cooperatives, Federal Farm Credit Banks, Federal Intermediate Credit Banks,
Federal Land Banks, Maritime Administration, Tennessee Valley Authority,
District of Columbia Armory Board and Student Loan Marketing Association.
Because the US government is not obligated by law to provide support to an
instrumentality it sponsors, the Fund will invest in obligations issued by such
an instrumentality only if the Advisor determines that the credit risk with
respect to the instrumentality does not make its securities unsuitable for
investment by the Fund.

The Fund may also invest in separately traded principal and interest component
of securities guaranteed or issued by the US government or its agencies,
instrumentalities or sponsored enterprises if such components trade
independently under the Separate Trading of Registered Interest and Principal of
Securities program ("STRIPS") or any similar program sponsored by the US
government.
STRIPS are sold as zero coupon securities.  See "Zero Coupon Securities."

Custodial Receipts. The Fund may invest in custodial receipts which are
interests in separately traded interest and principal component parts of US
government securities that are issued by banks or brokerage firms and are
created by depositing US government securities into a special account at a
custodian bank. The custodian holds the interest and principal payments for the
benefit of the registered owners of the certificates or receipts. The custodian
arranges for the issuance of the certificates or receipts evidencing ownership
and maintains the register. Custodial receipts include Treasury Receipts
("TRs"), Treasury Investment Growth Receipts ("TIGRs"), and Certificates of
Accrual on Treasury Securities ("CATS"). TIGRs and CATS are interests in private
proprietary accounts while TRs and STRIPS are interests in accounts sponsored by
the US Treasury. Receipts are sold as zero coupon securities.
See "Zero Coupon Securities and Deferred Interest Bonds."

The Fund may acquire US government securities and their unmatured interest
coupons that have been separated ("stripped") by their holder, typically a
custodian bank or investment brokerage firm. Having separated the interest
coupons from the underlying principal of the US government securities, the
holder will resell the stripped securities in custodial receipt programs with a
number of different names, including TIGRs, and CATS. The stripped coupons are
sold separately from the underlying principal, which is usually sold at a deep
discount because the buyer receives only the right to receive a future fixed
payment on the security and does not receive any rights to periodic interest
(cash) payments. The underlying US Treasury bonds and notes themselves are
generally held in book-entry form at a Federal Reserve Bank. Counsel to the
underwriters of these certificates or other evidences of ownership of US
Treasury securities have stated that, in their opinion, purchasers of the
stripped securities most likely will be deemed the beneficial holders of the
underlying US government securities for federal tax and securities purposes. In
the case of CATS and TIGRS, the Internal Revenue Service ( the "IRS") has
reached this conclusion for the purpose of applying the tax diversification
requirements applicable to regulated investment companies such as the Fund. CATS
and TIGRS are not considered US government securities by the staff of the SEC.
Further, the IRS conclusion noted above is contained only in a general counsel
memorandum, which is an internal document of no precedential value or binding
effect, and a private letter ruling, which also may not be relied upon by the
Fund. The Trust is not aware of any binding legislative, judicial or
administrative authority on this issue.

Zero Coupon Securities and Deferred Interest Bonds. The Fund may invest in zero
coupon securities and deferred interest bonds. Zero coupon and deferred interest
bonds are debt obligations which are issued at a significant discount from face
value. The original discount approximates the total amount of interest the bonds
will accrue and compound over the period until maturity or the first interest
accrual date at a rate of interest reflecting the market rate of the security at
the time of issuance. Zero coupon securities are redeemed at face value at their
maturity date without interim cash payments of interest or principal. The amount
of this discount is accrued over the life of the security, and the accrual
constitutes the income earned on the security for both accounting and tax
purposes. Because of these features, the market prices of zero coupon securities
are generally more volatile than the market prices of securities that have
similar maturity but that pay interest periodically.

While zero coupon bonds do not require the periodic payment of interest,
deferred interest bonds generally provide for a period of delay before the
regular payment of interest begins. Although this period of delay is different
for each deferred interest bond, a typical period is approximately one-third of
the bond's term to maturity. Such investments benefit the issuer by mitigating
its initial need for cash to meet debt service, but some also provide a higher
rate of return to attract investors who are willing to defer receipt of such
cash.

The Fund will accrue income on such investments for tax and accounting purposes,
as required, which is distributable to shareholders and which, because no cash
is generally received at the time of accrual, may require the liquidation of
other portfolio securities to satisfy the Fund's distribution obligations. See
"Taxes."

Inverse Floating Rate Securities. The Fund may invest up to 5% of its net assets
in inverse floating rate securities ("inverse floaters"). The interest rate on
an inverse floater resets in the opposite direction from the market rate of
interest to which the inverse floater is indexed. An inverse floater may be
considered to be leveraged to the extent that its interest rate varies by a
magnitude that exceeds the magnitude of the change in the index rate of
interest. The higher degree of leverage inherent in inverse floaters is
associated with greater volatility in their market values. See "Illiquid
Securities."

Yields and Ratings. The yields on certain obligations in which the Fund may
invest (such as commercial paper and bank obligations) are dependent on a
variety of factors, including the ratings of the issue. The ratings of S&P,
Moody's and other recognized rating organizations represent their respective
opinions as to the quality of the obligations they undertake to rate. Ratings,
however, are general and are not absolute standards of quality or value.
Consequently, obligations with the same rating, maturity and interest rate may
have different market prices. See the Appendix for a description of the ratings
provided by recognized statistical ratings organizations.

Lower-Rated Debt Securities ("Junk Bonds" or "High Yield Debt Securities"). The
Fund may invest in debt securities rated in the fifth and sixth long-term rating
categories by S&P, Moody's and Duff & Phelps Credit Rating Company, or
comparably rated by another NRSRO, or if not rated by an NRSRO, of comparable
quality as determined by the Advisor in its sole discretion.

These securities, often referred to as Junk Bonds or High Yield Debt Securities,
are considered speculative and, while generally offering greater income than
investments in higher quality securities, involve greater risk of loss of
principal and income, including the possibility of default or bankruptcy of the
issuers of such securities, and have greater price volatility, especially during
periods of economic uncertainty or change. These lower quality bonds tend to be
affected by economic changes and short-term corporate and industry developments,
as well as public perception of those changes and developments, to a greater
extent than higher quality securities, which react primarily to fluctuations in
the general level of interest rates.

In addition, the market for lower-rated debt securities may be thinner and less
active than that for higher rated debt securities, which can adversely affect
the prices at which the former are sold. If market quotations are not available,
lower-rated debt securities will be valued in accordance with procedures
established by the Board of Trustees, including the use of outside pricing
services. Judgment plays a greater role in valuing high-yield corporate debt
securities than is the case for securities for which more external sources for
quotations and last sale information are available. Adverse publicity and
changing investor perception may also affect the availability of outside pricing
services to value lower-rated debt securities and the Fund's ability to dispose
of these securities. In addition, such securities generally present a higher
degree of credit risk. Issuers of lower-rated debt securities are often highly
leveraged and may not have more traditional methods of financing available to
them so that their ability to service their obligations during an economic
downturn or during sustained periods of rising interest rates may be impaired.
The risk of loss due to default by such issuers is significantly greater because
below investment grade securities generally are unsecured and frequently are
subordinated to the prior payment of senior indebtedness.

Since the risk of default is higher for lower-rated debt securities, the
Advisor's research and credit analysis are an especially important part of
managing securities of this type held by the Fund. In considering investments
for the Fund, the Advisor will attempt to identify those issuers of high
yielding debt securities whose financial conditions are adequate to meet future
obligations, have improved or are expected to improve in the future. The
Advisor's analysis focuses on relative values based on such factors as interest
on dividend coverage, asset coverage, earnings prospects and the experience and
managerial strength of the issuer.

While the market for high yield corporate debt securities has been in existence
for many years and has weathered previous economic downturns, past experience
may not provide an accurate indication of future performance of the high yield
bond market, especially during periods of economic recession.

The Fund may choose, at its expense or in conjunction with others, to pursue
litigation or otherwise exercise its rights as a security holder to seek to
protect the interest of security holders if it determines this to be in the
interest of the Fund.

Rating Downgrades. Subsequent to its purchase by the Fund, a rated security may
cease to be rated or its rating may be reduced below the minimum rating required
for purchase by the Fund. The Advisor will consider such an event in determining
whether the Fund should continue to hold the security in accordance with the
interests of the Fund and applicable regulations of the SEC. The Fund will not
continue to hold fixed income securities that have been downgraded below
investment grade if more than 5% of the Fund's net assets would consist of such
securities.

Registered Loans. The Fund may invest in loan obligations issued or guaranteed
by sovereign governments or their agencies and instrumentalities. The ownership
of these loans is registered in the books of an agent bank and/or the borrower,
and transfers of ownership are effected by assignment agreements. Documentation
for these assignments includes a signed notice of assignment, which is sent to
the agent and/or borrower for registration shortly after the execution of the
assignment agreement. Prior to the notice of assignment being registered with
the agent and/or borrower, the borrower or its agent will make any payments of
principal and interest to the last registered owner.

Given the volume of secondary market trading in registered loans, the agent
and/or borrower's books may be out of date, making it difficult for the Fund to
establish independently whether the seller of a registered loan is the owner of
the loan. Generally, registered loans trade in the secondary market with
interest (i.e., the right to accrued but unpaid interest is transferred to
purchasers).

Other Debt Obligations. The Fund may invest in deposits, bonds, notes and
debentures and other debt obligations that at the time of purchase have, or are
comparable in priority and security to other securities of such issuer which
have, outstanding short-term obligations meeting the above short-term rating
requirements, or if there are no such short-term ratings, are determined by the
Advisor to be of comparable quality.

Derivative Securities

General. The Fund may invest in various instruments that are commonly known as
"derivatives." Generally, a derivative is a financial arrangement, the value of
which is based on, or "derived" from, a traditional security, asset or market
index. Some "derivatives" such as mortgage-related and other asset-backed
securities are in many respects like any other investment, although they may be
more volatile and/or less liquid than more traditional debt securities. There
are, in fact, many different types of derivatives and many different ways to use
them. For example, the Fund may use futures and options as a low-cost method of
gaining exposure to a particular securities market without investing directly in
those securities, for speculative purposes, and for traditional hedging purposes
to attempt to protect the Fund from exposure to changing interest rates,
securities prices or currency exchange rates and for cash management or other
investment purposes.

There is a range of risks associated with those uses. The use of derivatives may
result in leverage, which tends to magnify the effects of an instrument's price
changes as market conditions change. Leverage involves the use of a small amount
of money to control a large amount of financial assets, and can in some
circumstances, lead to significant losses. The Fund will limit the leverage
created by its use of derivatives for investment purposes by "covering" such
positions as required by the Commission. The Advisor may use derivatives in
circumstances where the Advisor believes they offer an economical means of
gaining exposure to a particular asset class. Derivatives will not be used to
increase portfolio risk above the level that could be achieved using only
traditional investment securities or to acquire exposure to changes in the value
of assets or indexes that by themselves could not be purchased for the Fund. The
use of derivatives for non-hedging purposes may be considered speculative.

The Fund's investment in options, futures or forward contracts, swaps and
similar strategies (collectively, "derivatives") depends on the Advisor's
judgment as to the potential risks and rewards of different types of strategies.
Derivatives can be volatile investments and may not perform as expected. If the
Advisor applies a hedge at an inappropriate time or judges price trends
incorrectly, derivative strategies may lower the Fund's return. The Fund could
also experience losses if the prices of its derivative positions were poorly
correlated with its other investments, or if it could not close out its
positions because of an illiquid secondary market. Options and futures traded on
foreign exchanges generally are not regulated by US authorities, and may offer
less liquidity and less protection to the Fund in the event of default by the
other party to the contract.

Derivative Securities:  Options

Options on Securities. The Fund may purchase and write (sell) put and call
options on securities. A call option gives the purchaser of the option the right
to buy, and obligates the writer to sell, the underlying security at the
exercise price at any time during the option period. Similarly, a put option
gives the purchaser of the option the right to sell, and obligates the writer to
buy, the underlying security at the exercise price at any time during the option
period.

The Fund may write (sell) covered call and put options to a limited extent on
its portfolio securities ("covered options") in an attempt to increase income
through the premiums it receives for writing the option(s). However, in return
for the premium, the Fund may forgo the benefits of appreciation on securities
sold or may pay more than the market price on securities acquired pursuant to
call and put options written by the Fund. All options written by the Fund are
"covered."

A call option written by the Fund is "covered" if the Fund owns the underlying
security covered by the call or has an absolute and immediate right to acquire
that security without additional cash consideration (or for additional cash
consideration held in a segregated account) upon conversion or exchange of other
securities held in its portfolio. A call option is also covered if the Fund
holds a call option on the same security and in the same principal amount as the
written call option where the exercise price of the call option so held (a) is
equal to or less than the exercise price of the written call option or (b) is
greater than the exercise price of the written call option if the difference is
segregated by the Fund in cash or liquid securities.

When the Fund writes a covered call option, it gives the purchaser of the option
the right to buy the underlying security at the price specified in the option
(the "exercise price") by exercising the option at any time during the option
period. If the option expires unexercised, the Fund will realize income in an
amount equal to the premium received for writing the option. If the option is
exercised, a decision over which the Fund has no control, the Fund must sell the
underlying security to the option holder at the exercise price. By writing a
covered call option, the Fund forgoes, in exchange for the premium less the
commission ("net premium"), the opportunity to profit during the option period
from an increase in the market value of the underlying security above the
exercise price. In addition, the Fund may continue to hold a security which
might otherwise have been sold to protect against depreciation in the market
price of the security.

A put option written by the Fund is "covered" when, among other things, cash or
liquid securities are placed in a segregated account to fulfill the obligations
undertaken. When the Fund writes a covered put option, it gives the purchaser of
the option the right to sell the underlying security to the Fund at the
specified exercise price at any time during the option period. If the option
expires unexercised, the Fund will realize income in the amount of the net
premium received for writing the option. If the put option is exercised, a
decision over which the Fund has no control, the Fund must purchase the
underlying security from the option holder at the exercise price. By writing a
covered put option, the Fund, in exchange for the net premium received, accepts
the risk of a decline in the market value of the underlying security below the
exercise price.

The Fund may terminate its obligation as the writer of a call or put option by
purchasing an option with the same exercise price and expiration date as the
option previously written. This transaction is called a "closing purchase
transaction." The Fund will realize a profit or loss on a closing purchase
transaction if the amount paid to purchase an option is less or more, as the
case may be, than the amount received from the sale thereof. To close out a
position as a purchaser of an option, the Fund may enter into a "closing sale
transaction" which involves liquidating the Fund's position by selling the
option previously purchased. Where the Fund cannot effect a closing purchase
transaction, it may be forced to incur brokerage commissions or dealer spreads
in selling securities it receives or it may be forced to hold underlying
securities until an option is exercised or expires.

The current market value of a traded option is the last sale price or, in the
absence of a sale, the mean between the closing bid and asked price. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, the Fund will realize a gain (or loss if the cost
of a closing purchase transaction exceeds the premium received when the option
was sold), and the deferred credit related to such option will be eliminated. If
a call option is exercised, the Fund will realize a gain or loss from the sale
of the underlying security and the proceeds of the sale will be increased by the
premium originally received.

The Fund may also purchase call and put options on any securities in which they
may invest. The Fund would normally purchase a call option in anticipation of an
increase in the market value of such securities. The purchase of a call option
would entitle the Fund, in exchange for the premium paid, to purchase a security
at a specified price during the option period. The Fund would ordinarily have a
gain if the value of the securities increased above the exercise price
sufficiently to cover the premium and would have a loss if the value of the
securities remained at or below the exercise price during the option period.

The Fund would normally purchase put options in anticipation of a decline in the
market value of securities in its portfolio ("protective puts") or securities of
the type in which it is permitted to invest. The purchase of a put option would
entitle the Fund, in exchange for the premium paid, to sell a security, which
may or may not be held by the Fund at a specified price during the option
period. The purchase of protective puts is designed merely to offset or hedge
against a decline in the market value of the Fund. Put options also may be
purchased by the Fund for the purpose of affirmatively benefiting from a decline
in the price of securities that the Fund does not own. The Fund would ordinarily
recognize a gain if the value of the securities decreased below the exercise
price sufficiently to cover the premium and would recognize a loss if the value
of the securities remained at or above the exercise price. Gains and losses on
the purchase of protective put options would tend to be offset by countervailing
changes in the value of underlying portfolio securities.

The hours of trading for options on securities may not conform to the hours
during which the underlying securities are traded. To the extent that the option
markets close before the markets for the underlying securities, significant
price and rate movements can take place in the underlying securities markets
that cannot be reflected in the option markets. It is impossible to predict the
volume of trading that may exist in such options, and there can be no assurance
that viable exchange markets will develop or continue.

The Fund may enter into closing transactions in order to offset an open option
position prior to exercise or expiration by selling an option it has purchased
or by entering into an offsetting option. If the Fund cannot effect closing
transactions, it may have to retain a security in its portfolio it would
otherwise sell or deliver a security it would otherwise retain. The Fund may
purchase and sell options traded on recognized foreign exchanges. The Fund may
also purchase and sell options traded on US exchanges and, to the extent
permitted by law, options traded over-the-counter.

The Fund may also engage in options transactions in the OTC market with
broker-dealers who make markets in these options. The Fund will engage in OTC
options only with broker-dealers deemed by the Advisor to be creditworthy. The
ability to terminate OTC option positions is more limited than with
exchange-traded option positions because the predominant market is the issuing
broker rather than an exchange, and may involve the risk that broker-dealers
participating in such transactions will not fulfill their obligations. To reduce
this risk, the Fund will purchase such options only from a counter party
approved for these purposes by the Advisor. The Advisor will monitor the
creditworthiness of dealers with whom the Fund enters into such options
transactions.

Options on Securities Indices. The Fund may also purchase and write
exchange-listed and OTC put and call options on securities indices. A securities
index measures the movement of a certain group of securities by assigning
relative values to the securities included in the index, fluctuating with
changes in the market values of the securities included in the index. Some
securities index options are based on a broad market index, such as the NYSE
Composite Index, or a narrower market index such as the Standard & Poor's 100.
Indices may also be based on a particular industry or market segment.

Options on securities indices are similar to options on securities except that
(1) the expiration cycles of securities index options are monthly, while those
of securities options are currently quarterly, and (2) the delivery requirements
are different. Instead of giving the right to take or make delivery of
securities at a specified price, an option on a securities index gives the
holder the right to receive a cash "exercise settlement amount" equal to (a) the
amount, if any, by which the fixed exercise price of the option exceeds (in the
case of a put) or is less than (in the case of a call) the closing value of the
underlying index on the date of exercise, multiplied by (b) a fixed "index
multiplier." Receipt of this cash amount will depend upon the closing level of
the securities index upon which the option is based being greater than, in the
case of a call, or less than, in the case of a put, the exercise price of the
index and the exercise price of the option times a specified multiple. The
writer of the option is obligated, in return for the premium received, to make
delivery of this amount. Securities index options may be offset by entering into
closing transactions as described above for securities options.

As discussed in "Options on Securities," the Fund would normally purchase a call
option in anticipation of an increase in the market value of the relevant index.
The purchase of a call option would entitle the Fund, in exchange for the
premium paid, to receive upon exercise a cash payment based on the level of the
index on the exercise date. The Fund would ordinarily have a gain if the value
of the index increased above the exercise price sufficiently to cover the
premium and would have a loss if the value of the index remained at or below the
exercise price during the option period.

As discussed in "Options on Securities," the Fund would normally purchase
"protective puts" in anticipation of a decline in the market value of the
relevant index. The purchase of a put option would entitle the Fund, in exchange
for the premium paid, to receive upon exercise a cash payment based on the level
of the index on the exercise date. The purchase of protective puts is generally
designed to offset or hedge against a decline in the market value of the index.
The Fund would ordinarily recognize a gain if the value of the index decreased
below the exercise price sufficiently to cover the premium and would recognize a
loss if the value of the index remained at or above the exercise price. Gains
and losses on the purchase of protective put options would tend to be offset by
countervailing changes in the value of the index.

Because the value of an index option depends upon movements in the level of the
index rather than the price of a particular security, whether the Fund will
realize a gain or loss from the purchase or writing of options on an index
depends upon movements in the level of securities prices in the securities
market generally or, in the case of certain indices, in an industry or market
segment, rather than movements in the price of a particular security.
Accordingly, successful use by the Fund of options on securities indices will be
subject to the Advisor's ability to predict correctly movements in the direction
of the securities market generally or of a particular industry. This requires
different skills and techniques than predicting changes in the price of
individual securities.

Options on securities indices entail risks in addition to the risks of options
on securities. The absence of a liquid secondary market to close out options
positions on securities indices may be more likely to occur, although the Fund
generally will only purchase or write such an option if the Advisor believes the
option can be closed out. Use of options on securities indices also entails the
risk that trading in such options may be interrupted if trading in certain
securities included in the index is interrupted. The Fund will not purchase such
options unless the Advisor believes the market is sufficiently developed such
that the risk of trading in such options is no greater than the risk of trading
in options on securities.

Price movements in the Fund's portfolio may not correlate precisely with
movements in the level of an index and, therefore, the use of options on indices
cannot serve as a complete hedge. Because options on securities indices require
settlement in cash, the Advisor may be forced to liquidate portfolio securities
to meet settlement obligations. The Fund's activities in index options may also
be restricted by the requirements of the Code for qualification as a regulated
investment company.

In addition, the hours of trading for options on the securities indices may not
conform to the hours during which the underlying securities are traded. To the
extent that the option markets close before the markets for the underlying
securities, significant price and rate movements can take place in the
underlying securities markets that cannot be reflected in the option markets. It
is impossible to predict the volume of trading that may exist in such options,
and there can be no assurance that viable exchange markets will develop or
continue.

Options on Non-US Securities Indices. The Fund may purchase and write put and
call options on foreign securities indices listed on domestic and foreign
securities exchanges. The Fund will write call options only if they are
"covered." The Fund may also purchase and write OTC options on foreign
securities indices.

The Fund may, to the extent allowed by federal and state securities laws, invest
in options on non-US securities indices instead of investing directly in
individual non-US securities. The Fund may also use foreign securities index
options for bona fide hedging and non-hedging purposes.

Yield Curve Options. The Fund may enter into options on the yield spread or
yield differential between two securities. These options are referred to as
yield curve options. In contrast to other types of options, a yield curve option
is based on the difference between the yields of designated securities, rather
than the prices of the individual securities, and is settled through cash
payments. Accordingly, a yield curve option is profitable to the holder if this
differential widens (in the case of a call) or narrows (in the case of a put),
regardless of whether the yields of the underlying securities increase or
decrease.

Spreadlocks. The Fund may enter into spreadlocks. A spreadlock is a form of swap
contract which is an exchange of a one-time cash payment between the Fund and
another party which is based on a specific financial index. A spreadlock allows
an interest rate swap user to lock in the forward differential between the
interest rate swap rate and the yield of the government bond underlying the
swap. Essentially, a spreadlock allows the investor to buy or sell the spread
forward by entering into a forward contract on the swap spread (i.e., the spread
between the government yield and the swap rate (or yield)) for a given maturity.
The price of a spreadlock is determined by the yield spread between a forward
starting fixed/floating swap and a forward transaction in a government bond. The
value of the swap is adjusted daily and the change in value is recorded as
unrealized appreciation or depreciation up until the agreement matures at which
time the cash payment, based on the value of the swap on the maturity date, is
exchanged between the two parties.

Derivative Securities:  Futures Contracts and Options on Futures Contracts

General. The Fund may enter into futures contracts on securities, securities
indices, foreign currencies and interest rates, and purchase and write (sell)
options thereon which are traded on exchanges designated by the Commodity
Futures Trading Commission (the "CFTC") or, if consistent with CFTC regulations,
on foreign exchanges. These futures contracts are standardized contracts for the
future delivery of, among other things, a commodity, a non-US currency, an
interest rate sensitive security or, in the case of index futures contracts or
certain other futures contracts, a cash settlement with reference to a specified
multiplier times the change in the index. 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.

The Fund will engage in futures and related options transactions only for bona
fide hedging or other non-hedging purposes as permitted by CFTC regulations
which permit principals of an investment company registered under the Investment
Company Act of 1940 ("1940 Act") to engage in such transactions without
registering as commodity pool operators. The Fund may, for example, enter into
futures contracts and options on futures contracts on securities, securities
indices and currencies to manage its exposure to changing interest rates,
security prices and currency exchange rates or as an efficient means of managing
allocations between asset classes. All futures contracts entered into by the
Fund is traded on US exchanges or boards of trade that are licensed and
regulated by the CFTC or on foreign exchanges approved by the CFTC. The Fund
will determine that the price fluctuations in the futures contracts and options
on futures used for hedging purposes are substantially related to price
fluctuations in securities or instruments held by the Fund or securities or
instruments which they expect to purchase. 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 ("CEA").

The Fund's futures transactions may be entered into for traditional hedging
purposes -- i.e., futures contracts will be sold to protect against a decline in
the price of securities (or the currency in which they are denominated) that the
Fund owns or futures contracts will be purchased to protect the Fund against an
increase in the price of securities (or the currency in which they are
denominated) that the Fund intends to purchase. As evidence of this hedging
intent, the Fund expects that, on 75% or more of the occasions on which it takes
a long futures or option position (involving the purchase of futures contracts),
the Fund will have purchased, or will be in the process of purchasing,
equivalent amounts of related securities (or assets denominated in the related
currency) in the cash market at the time when the futures or option position is
closed out. However, in particular cases, when it is economically advantageous
for the Fund to do so, a long futures position may be terminated or an option
may expire without the corresponding purchase of securities or other assets. The
Fund may not invest more than 25% of its total assets in purchased protective
put options.

The successful use of futures contracts and options thereon draws upon the
Advisor's skill and experience with respect to such instruments and are subject
to special risk considerations. A liquid secondary market for any futures or
options contract may not be available when a futures or options position is
sought to be closed. In addition, there may be an imperfect correlation between
movements in the securities or currency in the Fund. Successful use of futures
or options contracts is further dependent on the Advisor's ability to predict
correctly movements in the securities or foreign currency markets and no
assurance can be given that its judgment will be correct.

Futures Contracts. Futures contracts are contracts to purchase or sell a fixed
amount of an underlying instrument, commodity or index at a fixed time and place
in the future. US futures contracts have been designed by exchanges which have
been designated "contract markets" by the CFTC, and must be executed through a
futures commission merchant, or brokerage firm, which is a member of the
relevant contract market. Futures contracts trade on a number of exchange
markets, and, through their clearing corporations, the exchanges guarantee
performance of the contracts as between the clearing members of the exchange.
The Fund may enter into contracts for the purchase or sale for future delivery
of fixed-income or equity securities, foreign currencies, or financial indices
including any index of US or foreign securities, US government securities,
foreign government securities, or corporate debt securities. Futures contracts
on foreign currencies may be used for speculative purposes or to hedge the value
of securities that are denominated in foreign currencies.

At the same time a futures contract is entered into, the Fund must allocate cash
or liquid securities as a good faith deposit to maintain the position ("initial
margin"). Daily thereafter, the futures contract is valued and the payment of
"variation margin" may be required, since each day the Fund would provide or
receive cash that reflects any decline or increase in the contract's value.

Although futures contracts (other than those that settle in cash, such as index
futures) by their terms call for the actual delivery or acquisition of the
instrument underlying the contract, in most cases the contractual obligation is
fulfilled by offset before the date of the contract without having to make or
take delivery of the instrument underlying the contract. The offsetting of a
contractual obligation is accomplished by entering into an opposite position in
an identical futures contract on the commodities exchange on which the futures
contract was entered into (or a linked exchange) calling for delivery in the
same month. Such a transaction, which is effected through a member of an
exchange, cancels the obligation to make or take delivery of the instrument
underlying the contract. Since all transactions in the futures market are made,
offset or fulfilled through a clearinghouse associated with the exchange on
which the contracts are traded, the Fund will incur brokerage fees when it
enters into futures contracts.

One purpose of the acquisition or sale of a futures contract, in cases where the
Fund holds or intends to acquire fixed-income or equity securities, is to
attempt to protect the Fund from fluctuations in interest or foreign exchange
rates or in securities prices without actually buying or selling fixed-income or
equity securities or foreign currencies. For example, if interest rates were
expected to increase (which thus would cause the prices of debt securities to
decline), the Fund might enter into futures contracts for the sale of debt
securities. Such a sale would have much the same effect as selling an equivalent
value of the debt securities owned by the Fund. If interest rates did increase,
the value of the debt security in the Fund would decline, but the value of the
futures contracts to the Fund would increase at approximately the same rate,
thereby keeping the net asset value of the Fund from declining as much as it
otherwise would have. The Fund could accomplish similar results by selling debt
securities and investing in bonds with short maturities when interest rates are
expected to increase. However, since the futures market is more liquid than the
cash market, the use of futures contracts as an investment technique allows the
Fund to maintain a defensive position without having to sell its portfolio
securities.

Similarly, when it is expected that interest rates may decline (thus increasing
the value of debt securities), futures contracts may be purchased to attempt to
hedge against anticipated purchases of debt securities at higher prices. Since
the fluctuations in the value of futures contracts should be similar to those of
debt securities, the Fund could take advantage of the anticipated rise in the
value of debt securities without actually buying them until the market had
stabilized. At that time, the futures contracts could be liquidated and the Fund
could then buy debt securities on the cash market. The segregated assets
maintained to cover the Fund's obligations with respect to such futures
contracts will consist of cash or liquid securities in an amount equal to the
difference between the fluctuating market value of such futures contracts and
the aggregate value of the initial and variation margin payments made by the
Fund with respect to such futures contracts.

The ordinary spreads between prices in the cash and futures market, due to
differences in the nature of those markets, are subject to distortions. First,
all participants in the futures market are subject to initial and variation
margin requirements. Rather than meeting additional variation margin
requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, the liquidity of the futures market depends on most
participants entering into offsetting transactions rather than making or taking
delivery. To the extent that many participants decide to make or take delivery,
liquidity in the futures market could be reduced, thus producing distortion.
Third, from the point of view of speculators, the margin requirements in the
futures market are less onerous than margin requirements in the securities
market. Therefore, increased participation by speculators in the futures market
may cause temporary price distortions. Due to the possibility of distortion, a
correct forecast of securities price, general interest rate or currency exchange
rate trends by the Advisor may still not result in a successful transaction.

In addition, futures contracts entail significant risks. Although the Advisor
believes that use of such contracts will benefit the Fund, if the Advisor's
investment judgment about the general direction of securities prices, currency
rates, interest rates or an index is incorrect, the Fund's overall performance
would be poorer than if it had not entered into any such contract. For example,
if the Fund has hedged against the possibility of an increase in interest rates
or a decrease in an index which would adversely affect the value of securities
held in its portfolio and interest rates decrease or securities prices increase
instead, the Fund will lose part or all of the benefit of the increased value of
its securities which it has hedged because it will have offsetting losses in its
futures positions. In addition, in such situations, if the Fund has insufficient
cash, it may have to sell securities from its portfolio to meet daily variation
margin requirements. Such sales of securities may be, but will not necessarily
be, at increased prices which reflect the rising market. The Fund may have to
sell securities at a time when it may be disadvantageous to do so.

Futures contracts (and options thereon) are valued at the most recent settlement
price, if available, on the exchange on which they are traded most extensively.
With the exception of S&P 500 and NASDAQ 100 futures contracts, closing
settlement times are prior to the close of trading on The New York Stock
Exchange, Inc. ("NYSE"). For S&P 500 and NASDAQ 100 futures contracts, closing
settlement prices are normally available at approximately 4:20 Eastern time. If
no settlement is available, the last traded price on such exchange will be used.

Futures Contracts on Securities Indices. The Fund may also enter into futures
contracts providing for the making and acceptance of a cash settlement based
upon changes in the value of an index of US or non-US securities. Index futures
may be used for speculative purposes, as a low-cost method of gaining exposure
to a particular securities market without investing directly in those securities
or to hedge against anticipated future changes in general market prices which
otherwise might either adversely affect the value of securities held by the Fund
or adversely affect the prices of securities which are intended to be purchased
at a later date for the Fund or as an efficient means of managing allocation
between asset classes. An index futures contract may also be entered into to
close out or offset an existing futures position.

When used for hedging purposes, each transaction in futures contracts on a
securities index involves the establishment of a position which, the Advisor
believes, will move in a direction opposite to that of the investment being
hedged. If these hedging transactions are successful, the futures positions
taken for the Fund will rise in value by an amount which approximately offsets
the decline in value of the portion of the Fund's investments that are being
hedged. Should general market prices move in an unexpected manner, the full
anticipated benefits of futures contracts may not be achieved or a loss may be
realized.

Options on Futures Contracts (Including Futures Contracts on Securities
Indices). The Fund may purchase and write (sell) options on futures contracts
for speculative or hedging purposes. For example, as with the purchase of
futures contracts, when the Fund is not fully invested, it may purchase a call
option on an interest rate sensitive futures contract to hedge against a
potential price increase on debt securities due to declining interest rates.

The purchase of a call option on a futures contract is similar in some respects
to the purchase of a call option on an index or individual security. Depending
on the pricing of the option compared to either the price of the futures
contract upon which it is based or the price of the underlying debt securities,
it may or may not be less risky than ownership of the futures contract or
underlying debt securities.

The writing of a call option on a futures contract may constitute a partial
hedge against declining prices of the underlying portfolio securities which are
the same as or correlate with the security or foreign currency futures contract
that is deliverable upon exercise of the option on that futures contract. If the
futures price at expiration of the option is below the exercise price specified
in the option, the Fund will retain the full amount of the net premium (the
premium received for writing the option less any commission), which provides a
partial hedge against any decline that may have occurred in the Fund's holdings.

The writing of a put option on an index futures contract may constitute a
partial hedge against increasing prices of the underlying securities or foreign
currency that are deliverable upon exercise of the futures contract. If the
futures price at expiration of the option is higher than the exercise price, the
Fund will retain the full amount of the option net premium, which provides a
partial hedge against any increase in the price of securities that the Fund
intends to purchase.

If a put or call option the Fund has written is exercised, the Fund will incur a
loss that will be reduced by the amount of the net premium it receives.
Depending on the degree of correlation between changes in the value of its
portfolio securities and changes in the value of its futures positions, the
Fund's losses from existing options on futures may to some extent be reduced or
increased by changes in the value of portfolio securities.

The purchase of a call or put option on a futures contract with respect to an
index is similar in some respects to the purchase of a call or protective put
option on an index. For example, the Fund may purchase a put option on an index
futures contract to hedge against the risk of declining securities values.

The amount of risk the Fund assumes when it purchases an option on an index
futures contract is the premium paid for the option plus related transaction
costs. In addition to the correlation risks discussed above, the purchase of
such an option also entails the risk that changes in the value of the underlying
futures contract will not be fully reflected in the value of the option
purchased.

Derivative Securities:  Swap Agreements

General. The Fund may enter into swaps relating to indices, currencies, interest
rates, equity and debt interests without limit. A swap transaction is an
agreement between the Fund and a counter party to act in accordance with the
terms of the swap contract. Interest rate swaps involve the exchange by the Fund
with another party of their respective commitments to pay or receive interest,
such as an exchange of fixed rate payments for floating rate payments. Mortgage
swaps are similar to interest rate swaps in that they represent commitments to
pay and receive interest. The notional principal amount, however, is tied to a
reference pool or pools of mortgages. Index swaps involve the exchange by the
Fund with another party of the respective amounts payable with respect to a
notional principal amount related to one or more indexes. Currency swaps involve
the exchange of cash flows on a notional amount of two or more currencies based
on their relative future values. An equity swap is an agreement to exchange
streams of payments computed by reference to a notional amount based on the
performance of a basket of stocks or a single stock. The purchase of an interest
rate cap entitles the purchaser, to the extent that a specified index exceeds a
predetermined interest rate, to receive payment of interest on a notional
principal amount from the party selling such interest rate cap. The purchase of
an interest rate floor entitles the purchaser, to the extent that a specified
index falls below a predetermined interest rate, to receive payments of interest
on a notional principal amount from the party selling the interest rate floor.
An interest rate collar is the combination of a cap and a floor that preserves a
certain return within a predetermined range of interest rates.

The Fund may enter into these transactions to preserve a return or spread on a
particular investment or portion of its assets, 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 may also use such transactions for speculative purposes, such as
to obtain the price performance of a security without actually purchasing the
security in circumstances, for example, where the subject security is illiquid,
is unavailable for direct investment or available only on less attractive terms.
Swaps have special risks associated including possible default by the
counterpart to the transaction, illiquidity and, where swaps are used as hedges,
the risk that the use of a swap could result in losses greater than if the swap
had not been employed. See "Illiquid Securities."

The Fund will usually enter into swaps on a net basis (i.e. the two payment
streams are netted out in a cash settlement on the payment date or dates
specified in the agreement, with the Fund receiving or paying, as the case may
be, only the net amount of the two payments). Swaps do not involve the delivery
of securities, other underlying assets or principal. Accordingly, the risk of
loss with respect to swaps is limited to the net amount of payments that the
Fund is contractually obligated to make or receive. If the counter party to a
swap defaults, the Fund's risk of loss consists of the net amount of payments
that the Fund is contractually entitled to receive. Where swaps are entered into
for good faith hedging purposes, the Advisor believes such obligations do not
constitute senior securities under the 1940 Act and, accordingly, will not treat
them as being subject to the Fund's borrowing restrictions. Where swaps are
entered into for other than hedging purposes, the Fund will segregate an amount
of cash or other liquid securities having a value equal to the accrued excess of
its obligations over entitlements with respect to each swap on a daily basis.

Whether the use of swap agreements will be successful in furthering its
investment objective will depend on the Advisor's ability to correctly predict
whether certain types of investments are likely to produce greater returns than
other investments. Certain swap agreements may be considered to be illiquid
because they are two party contracts and because they may have terms of greater
than seven days. Moreover, the Fund bears the risk of loss of the amount
expected to be received under a swap agreement in the event of the default or
bankruptcy of a swap agreement counter party. In addition, the Fund will enter
into swap agreements only with counter parties that would be eligible for
consideration as repurchase agreement counter parties under the Fund's
repurchase agreement guidelines. Certain restrictions imposed on the Fund by the
Code may limit the Fund's ability to use swap agreements. The swaps market is a
relatively new market and is largely unregulated. It is possible that
developments in the swaps market, including potential government regulation,
could adversely affect the Fund's ability to terminate existing swap agreements
or to realize amounts to be received under such agreements.

Certain swap agreements are exempt from most provisions of the CEA and,
therefore, are not regulated as futures or commodity option transactions under
the CEA, pursuant to regulations approved by the CFTC effective February 22,
1993. To qualify for this exemption, a swap agreement must be entered into by
eligible participants, which includes the following, provided the participant's
total assets exceed established levels: a bank or trust company, savings
association or credit union, insurance company, investment company subject to
regulation under the 1940 Act, commodity pool, corporation, partnership,
proprietorship, organization, trust or other entity, employee benefit plan,
governmental entity, broker-dealer, futures commission merchant, natural person,
or regulated foreign person. To be eligible, natural persons and most other
entities must have total assets exceeding $10 million; commodity pools and
employee benefit plans must have asset exceeding $5 million. In addition, an
eligible swap transaction must meet three conditions. First, the swap agreement
may not be part of a fungible class of agreements that are standardized as to
their material economic terms. Second, the creditworthiness of parties with
actual or potential obligations under the swap agreement must be a material
consideration in entering into or determining the terms of the swap agreement,
including pricing, cost or credit enhancement terms. Third, swap agreements may
not be entered into and traded on or through a multilateral transaction
execution facility.

This exemption is not exclusive, and participants may continue to rely on
existing exclusions for swaps, such as the Policy Statement issued in July 1989
which recognized a "safe harbor" for swap transactions from regulation as
futures or commodity option transactions under the CEA or its regulations. The
Policy Statement applies to swap transactions settled in cash that: (1) have
individually tailored terms; (2) lack exchange style offset and the use of a
clearing organization or margin system; (3) are undertaken in conjunction with a
line of business; and (4) are not marketed to the public.

The Fund will not enter into any swap, cap or floor transaction unless the
unsecured commercial paper, senior debt or the claims-paying ability of the
other party thereto is considered to be investment grade by the Advisor. If
there is a default by the other party to such a transaction, the Fund will have
contractual remedies pursuant to the agreements related to the transaction. The
swap market has grown substantially in recent years with a large number of banks
and investment banking firms acting both as principals and as agents utilizing
standardized swap documentation. As a result, the swap market has become
relatively liquid in comparison with the markets for other similar instruments
which are traded in the interbank market. See "Illiquid Securities."
Restrictions adopted by the CFTC may in the future restrict the Fund's ability
to enter into swap transactions.

Derivative Securities:  Hedging Strategies

Hedging Strategies. The Fund may use certain strategies designed to adjust the
overall risk of its investment portfolio. These "hedging" strategies involve
derivative contracts, including (but not limited to) futures contracts and
exchange-traded put and call options on such futures contracts. New financial
products and risk management techniques continue to be developed and may be used
if consistent with the Fund's investment objectives and policies. Among other
purposes, these hedging strategies may be used to effectively maintain a desired
portfolio duration or to protect against market risk.

The Fund might not use any hedging strategies, and there can be no assurance
that any strategy used will succeed. If the Advisor is incorrect in its judgment
on market values, interest rates, currency rates or other economic factors in
using a hedging strategy, the Fund may have lower net income and a net loss on
the investment. Each of these strategies involves certain risks, which include:
o the fact that the skills needed to use hedging instruments are different from
those needed to select securities for the Fund;

o        the possibility of imperfect correlation, or even no correlation,
         between the price movements of hedging instruments and price movements
         of the securities or currencies being hedged;

o        possible constraints placed on the Fund's ability to purchase or sell
         portfolio investments at advantageous times due to the need for the
         Fund to maintain "cover" or to segregate securities; and

o        the possibility that the Fund will be unable to close out or liquidate
         its hedged position.

A hedge is designed to offset a loss in a portfolio position with a gain in the
hedged position; at the same time, however, a properly correlated hedge will
result in a gain in the portfolio position being offset by a loss in the hedged
position. As a result, the use of derivative transactions for hedging purposes
could limit any potential gain from an increase in the value of the position
hedged. With respect to futures contracts, since the value of portfolio
securities will generally far exceed the value of the futures contracts sold by
the Fund, an increase in the value of the futures contracts could only mitigate,
but not totally offset, the decline in the value of the Fund's assets.

In hedging transactions based on an index, whether the Fund will realize a gain
or loss depends upon movements in the level of securities prices in the
securities market generally or, in the case of certain indexes, in an industry
or market segment, rather than movements in the price of a particular security.
The risk of imperfect correlation increases as the composition of the Fund's
portfolio varies from the composition of the index. In an effort to compensate
for imperfect correlation of relative movements in the hedged position and the
hedge, the Fund's hedge positions may be in a greater or lesser dollar amount
than the dollar amount of the hedged position. Such "over hedging" or "under
hedging" may adversely affect the Fund's net investment results if market
movements are not as anticipated when the hedge is established.

Securities index futures transactions may be subject to additional correlation
risks. First, all participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting additional margin
deposit requirements, investors may close futures contracts through offsetting
transactions which would distort the normal relationship between the securities
index and futures markets. Secondly, from the point of view of speculators, the
deposit requirements in the futures market are less onerous than margin
requirements in the securities market. Therefore, increased participation by
speculators in the futures market also may cause temporary price distortions.
Because of the possibility of price distortions in the futures market and the
imperfect correlation between movements in a securities index and movements in
the price of securities index futures, a correct forecast of general market
trends by the Advisor still may not result in a successful hedging transaction.

To the extent that the Fund engages in the strategies described above, the Fund
may experience losses greater than if these strategies had not been utilized. In
addition to the risks described above, these instruments may be illiquid and/or
subject to trading limits, and the Fund may be unable to close out a position
without incurring substantial losses, if at all. The Fund is also subject to the
risk of a default by a counterparty to an off-exchange transaction. See
"Illiquid Securities."

Mortgage-Backed and Asset-Backed Securities

General Characteristics. The Fund may invest in mortgage-backed securities. A
mortgage-backed security consists of a pool of mortgage loans evidenced by
promissory notes secured by first mortgages or first deeds of trust or other
similar security instruments creating a first lien on owner occupied and
non-owner occupied one-unit to four-unit residential properties, multifamily
(i.e., five or more) properties, agriculture properties, commercial properties
and mixed use properties.

The investment characteristics of adjustable and fixed rate mortgage-backed
securities differ from those of traditional fixed-income securities. The major
differences include the payment of interest and principal on mortgage-backed
securities on a more frequent (usually monthly) schedule, and the possibility
that principal may be prepaid at any time due to prepayments on the underlying
mortgage loans or other assets. These differences can result in significantly
greater price and yield volatility than is the case with traditional
fixed-income securities. As a result, if the Fund purchases mortgage-backed
securities at a premium, a faster than expected prepayment rate will decrease
both the market value and the yield to maturity from those which were
anticipated. A prepayment rate that is slower than expected will have the
opposite effect of increasing yield to maturity and market value. Conversely, if
the Fund purchases mortgage-backed securities at a discount, faster than
expected prepayments will increase, while slower than expected prepayments will
decrease yield to maturity and market values. To the extent that the Fund
invests in mortgage-backed securities, the Advisor may seek to manage these
potential risks by investing in a variety of mortgage-backed securities and by
using certain hedging techniques.

Government Guaranteed Mortgage-Backed Securities. The Fund's investments in
mortgage-backed securities may include securities issued or guaranteed by the US
government or one of its agencies, authorities, instrumentalities or sponsored
enterprises, such as Ginnie Mae, Fannie Mae and Freddie Mac. There are several
types of guaranteed mortgage-backed securities currently available, including
guaranteed mortgage pass-through certificates and multiple class securities,
which include guaranteed Real Estate Mortgage Investment Conduit Certificates
("REMIC Certificates"), collateralized mortgage obligations and stripped
mortgage-backed securities. The Fund are permitted to invest in other types of
mortgage-backed securities that may be available in the future to the extent
consistent with the Fund's investment policies and objectives.

Ginnie Mae Certificates. Ginnie Mae is a wholly owned corporate instrumentality
of the United States within the Department of Housing and Urban Development. The
National Housing Act of 1934, as amended (the "Housing Act"), authorizes Ginnie
Mae to guarantee the timely payment of the principal of and interest on
certificates that are based on and backed by a pool of mortgage loans insured by
the Federal Housing Administration under the Housing Act, or Title V of the
Housing Act of 1949 ("FHA Loans"), or guaranteed by the Department of Veterans
Affairs under the Servicemen's Readjustment Act of 1944, as amended ("VA
Loans"), or by pools of other eligible mortgage loans. The Housing Act provides
that the full faith and credit of the US government is pledged to the payment of
all amounts that may be required to be paid under any Ginnie Mae guaranty. In
order to meet its obligations under such guaranty, Ginnie Mae is authorized to
borrow from the US Treasury with no limitations as to amount.

The Ginnie Mae Certificates in which the Fund may invest will represent a pro
rata interest in one or more pools of the following types of mortgage loans: (1)
fixed-rate level payment mortgage loans; (2) fixed-rate graduated payment
mortgage loans; (3) fixed-rate growing equity mortgage loans; (4) fixed-rate
mortgage loans secured by manufactured (mobile) homes; (5) mortgage loans on
multifamily residential properties under construction; (6) mortgage loans on
completed multifamily projects; (7) fixed-rate mortgage loans as to which
escrowed Fund are used to reduce the borrower's monthly payments during the
early years of the mortgage loans ("buy down" mortgage loans); (8) mortgage
loans that provide for adjustments in payments based on periodic changes in
interest rates or in other payment terms of the mortgage loans; and (9)
mortgage-backed serial notes.

Fannie Mae Certificates. Fannie Mae is a federally chartered and privately owned
corporation organized and existing under the Federal National Mortgage
Association Charter Act of 1938. The obligations of Fannie Mae are not backed by
the full faith and credit of the US government. Each Fannie Mae Certificate will
represent a pro rata interest in one or more pools of FHA Loans, VA Loans or
conventional mortgage loans (i.e., mortgage loans that are not insured or
guaranteed by any governmental agency) of the following types: (1) fixed-rate
level payment mortgage loans; (2) fixed-rate growing equity mortgage loans; (3)
fixed-rate graduated payment mortgage loans; (4) variable rate mortgage loans;
(5) other adjustable rate mortgage loans; and (6) fixed-rate and adjustable
mortgage loans secured by multifamily projects.

Freddie Mac Certificates. Freddie Mac is a corporate instrumentality of the
United States created pursuant to the Emergency Home Finance Act of 1970, as
amended (the "FHLMC Act"). The obligations of Freddie Mac are obligations solely
of Freddie Mac and are not backed by the full faith and credit of the US
government. Freddie Mac Certificates represent a pro rata interest in a group of
mortgage loans (a "Freddie Mac Certificate group") purchased by Freddie Mac. The
mortgage loans underlying the Freddie Mac Certificates will consist of
fixed-rate or adjustable rate mortgage loans with original terms to maturity of
between ten and thirty years, substantially all of which are secured by first
liens on one- to four-family residential properties or multifamily projects.
Each mortgage loan must meet the applicable standards set forth in the FHLMC
Act. A Freddie Mac Certificate group may include whole loans, participating
interests in whole loans and undivided interests in whole loans and
participations comprising another Freddie Mac Certificate group.

Multiple Class Mortgage-Backed Securities (Collateralized Mortgage Obligations
and REMIC Certificates). The Fund may invest in multiple class mortgage-backed
securities including collateralized mortgage obligations ("CMOs") and REMIC
Certificates. These securities may be issued by US government agencies and
instrumentalities such as Fannie Mae or Freddie Mac or by trusts formed by
private originators of, or investors in, mortgage loans, including savings and
loan associations, mortgage bankers, commercial banks, insurance companies,
investment banks and special purpose subsidiaries of the foregoing. In general,
CMOs are debt obligations of a legal entity that are collateralized by a pool of
mortgage loans or mortgage-backed securities the payments on which are used to
make payments on the CMOs or multiple class mortgage-backed securities. REMIC
Certificates represent beneficial ownership interests in a REMIC trust,
generally consisting of mortgage loans or Fannie Mae, Freddie Mac or Ginnie Mae
guaranteed mortgage-backed securities (the "Mortgage Assets"). The obligations
of Fannie Mae or Freddie Mac under their respective guaranty of the REMIC
Certificates are obligations solely of Fannie Mae or Freddie Mac, respectively.
Although investors may purchase beneficial interests in REMICs, which are known
as "regular" interests or "residual" interests, the Fund does not intend to
purchase such residual interests in REMICs.

Fannie Mae REMIC Certificates are issued and guaranteed as to timely
distribution of principal and interest by Fannie Mae. In addition, Fannie Mae
will be obligated to distribute the principal balance of each class of REMIC
Certificates in full, whether or not sufficient Fund are otherwise available.

Freddie Mac guarantees the timely payment of interest on Freddie Mac REMIC
Certificates and also guarantees the payment of principal as payments are
required to be made on the underlying mortgage participation certificates
("PCs"). PCs represent undivided interests in specified level payment,
residential mortgages or participation therein purchased by Freddie Mac and
placed in a PC pool. With respect to principal payments on PCs, Freddie Mac
generally guarantees ultimate collection of all principal of the related
mortgage loans without offset or deduction. Freddie Mac also guarantees timely
payment of principal of certain PCs.

CMOs and REMIC Certificates are issued in multiple classes. Each class of CMOs
or REMIC Certificates, often referred to as a "tranche," is issued at a specific
adjustable or fixed interest rate and must be fully retired no later than its
final distribution date. Principal prepayments on the underlying mortgage loans
or the mortgaged assets underlying the CMOs or REMIC Certificates may cause some
or all of the classes of CMOs or REMIC Certificates to be retired substantially
earlier than their final distribution dates. Generally, interest is paid or
accrues on all classes of CMOs or REMIC Certificates on a monthly basis.

The principal of and interest on the mortgaged assets may be allocated among the
several tranches in various ways. In certain structures (known as "sequential
pay" CMOs or REMIC Certificates), payments of principal, including any principal
prepayments, on the Mortgage Assets generally are applied to the classes of CMOs
or REMIC Certificates in the order of their respective final distribution dates.
Thus, no payment of principal will be made on any class of sequential pay CMOs
or REMIC Certificates until all other classes having an earlier final
distribution date have been paid in full. Additional structures of CMOs and
REMIC Certificates include, among others, "parallel pay" CMOs and REMIC
Certificates. Parallel pay CMOs or REMIC Certificates are those which are
structured to apply principal payments and prepayments of the mortgaged assets
to two or more classes concurrently on a proportionate or disproportionate
basis. These simultaneous payments are taken into account in calculating the
final distribution date of each class.

A wide variety of REMIC Certificates may be issued in parallel pay or sequential
pay structures. These securities include accrual certificates (also known as
"Z-Bonds"), which only accrue interest at a specified rate until all other
certificates having an earlier final distribution date have been retired and are
converted thereafter to an interest-paying security, and planned amortization
class ("PAC") certificates, which are parallel pay REMIC Certificates that
generally require that specified amounts or principal be applied on each payment
date to one or more classes or REMIC Certificates (the "PAC Certificates"), even
though all other principal payments and prepayments of the Mortgage Assets are
then required to be applied to one or more other classes of the PAC
Certificates. The scheduled principal payments for the PAC Certificates
generally have the highest priority on each payment date after interest due has
been paid to all classes entitled to receive interest currently. Shortfalls, if
any, are added to the amount payable on the next payment date. The PAC
Certificate payment schedule is taken into account in calculating the final
distribution date of each class of PAC. In order to create PAC tranches, one or
more tranches generally must be created that absorb most of the volatility in
the underlying mortgage assets. These tranches tend to have market prices and
yields that are much more volatile than other PAC classes.

Privately Issued Mortgage-Backed Securities. The Fund may also invest in
mortgage-backed securities issued by trusts or other entities formed or
sponsored by private originators of and institutional investors in mortgage
loans and other foreign or domestic non-governmental entities (or representing
custodial arrangements administered by such institutions). These private
originators and institutions include domestic and foreign savings and loan
associations, mortgage bankers, commercial banks, insurance companies,
investment banks and special purpose subsidiaries of the foregoing. Privately
issued mortgage-backed securities are generally backed by pools of conventional
(i.e., non-government guaranteed or insured) mortgage loans. Since such
mortgage-backed securities are not guaranteed by an entity having the credit
standing of Ginnie Mae, Fannie Mae or Freddie Mac, in order to receive a high
quality rating, they normally are structured with one or more types of "credit
enhancement." Such credit enhancements fall generally into two categories; (1)
liquidity protection and (2) protection against losses resulting after default
by a borrower and liquidation of the collateral. Liquidity protection refers to
the providing of cash advances to holders of mortgage-backed securities when a
borrower on an underlying mortgage fails to make its monthly payment on time.

Protection against losses resulting after default and liquidation is designed to
cover losses resulting when, for example, the proceeds of a foreclosure sale are
insufficient to cover the outstanding amount on the mortgage. Such protection
may be provided through guarantees, insurance policies or letters of credit,
through various means of structuring the transaction or through a combination of
such approaches.

Mortgage Pass-Through Securities. The Fund may invest in mortgage pass-through
securities, which are fixed or adjustable rate mortgage-backed securities that
provide for monthly payments that are a "pass-through" of the monthly interest
and principal payments (including any prepayments) made by the individual
borrowers on the pooled mortgage loans, net of any fees or other amounts paid to
any guarantor, administrator and/or servicers of the underlying mortgage loans.

Stripped Mortgage-Backed Securities. The Fund may purchase stripped
mortgage-backed securities ("SMBS"), which are derivative multi-class mortgage
securities. The market value of the class consisting entirely of principal
payments generally is unusually volatile in response to changes in interest
rates. The yields on a class of SMBS that receives all or most of the interest
from the mortgaged assets are generally higher than prevailing market yields on
other mortgage-backed securities because their cash flow patterns are more
volatile and there is a greater risk that the initial investment will not be
fully recouped. See "Illiquid Securities."

In accordance with a requirement imposed by the staff of the Commission, the
Advisor will consider privately issued fixed rate IOs and POs to be illiquid
securities for purposes of the Fund's limitation on investments in illiquid
securities. Unless the Advisor determines that a particular government-issued
fixed rate IO or PO is liquid, it will also consider these IOs and POs to be
illiquid.

Adjustable Rate Mortgages-Interest Rate Indices. Adjustable rate mortgages in
which the Fund invests may be adjusted on the basis of one of several indices.
The One Year Treasury Index is the figure derived from the average weekly quoted
yield on US Treasury Securities adjusted to a constant maturity of one year. The
Cost of Funds Index reflects the monthly weighted average cost of funds of
savings and loan associations and savings banks whose home offices are located
in Arizona, California and Nevada (the "FHLB Eleventh District") that are member
institutions of the Federal Home Loan Bank of San Francisco (the "FHLB of San
Francisco"), as computed from statistics tabulated and published by the FHLB of
San Francisco. The FHLB of San Francisco normally announces the Cost of Funds
Index on the last working day of the month following the month in which the cost
of funds was incurred.

A number of factors affect the performance of the Cost of Funds Index and may
cause the Cost of Funds Index to move in a manner different from indices based
upon specific interest rates, such as the One Year Treasury Index. Because of
the various origination dates and maturities of the liabilities of members of
the FHLB Eleventh District upon which the Cost of Funds Index is based, among
other things, at any time the Cost of Funds Index may not reflect the average
prevailing market interest rates on new liabilities of similar maturities. There
can be no assurance that the Cost of Funds Index will necessarily move in the
same direction or at the same rate as prevailing interest rates, since as longer
term deposits or borrowings mature and are renewed at market interest rates, the
Cost of Funds Index will rise or fall depending upon the differential between
the prior and the new rates on such deposits and borrowings. In addition,
dislocations in the thrift industry in recent years have caused and may continue
to cause the cost of funds of thrift institutions to change for reasons
unrelated to changes in general interest rate levels. Furthermore, any movement
in the Cost of Funds Index as compared to other indices based upon specific
interest rates may be affected by changes instituted by the FHLB of San
Francisco in the method used to calculate the Cost of Funds Index. To the extent
that the Cost of Funds Index may reflect interest changes on a more delayed
basis than other indices, in a period of rising interest rates, any increase may
produce a higher yield later than would be produced by such other indices, and
in a period of declining interest rates, the Cost of Funds Index may remain
higher than other market interest rates which may result in a higher level of
principal prepayments on mortgage loans which adjust in accordance with the Cost
of Funds Index than mortgage loans which adjust in accordance with other
indices.

LIBOR, the London interbank offered rate, is the interest rate that the most
creditworthy international banks dealing in US dollar-denominated deposits and
loans charge each other for large dollar-denominated loans. LIBOR is also
usually the base rate for large dollar-denominated loans in the international
market. LIBOR is generally quoted for loans having rate adjustments at one,
three, six or twelve month intervals.

Asset-Backed Securities. The Fund may invest in securities generally referred to
as asset-backed securities. Asset-backed securities are secured by and payable
from, or directly or indirectly represent undivided fractional interests in,
pools of consumer loans (unrelated to mortgage loans), trade receivables or
other types of loans held in a trust. Asset-backed securities may provide
periodic payments that consist of interest and/or principal payments.
Consequently, the life of an asset-backed security varies with the prepayment
and loss experience of the underlying assets. Payments of principal and interest
are typically supported by some form of credit enhancement, such as a letter of
credit, surety bond, limited guarantee or senior/subordination. The degree of
credit enhancement varies, but generally amounts to only a fraction of the
asset-backed security's par value until exhausted. If the credit enhancement is
exhausted, certificate-holders may experience losses or delays in payment if the
required payments of principal and interest are not made to the trust with
respect to the underlying loans. The value of the securities also may change
because of changes in the market's perception of creditworthiness of the
servicing agent for the loan pool, the originator of the loans or the financial
institution providing the credit enhancement. Asset-backed securities are
ultimately dependent upon payment of loans and receivables by individuals,
businesses and other borrowers, and the certificate-holder generally has no
recourse against the entity that originated the loans.

Asset-backed securities have structural characteristics similar to
mortgage-backed securities. However, the underlying assets are not first lien
mortgage loans or interests therein but include assets such as (but not limited
to) motor vehicle installment sale contracts, other installment sale contracts,
home equity loans, leases of various types of real and personal property,
receivables from revolving credit (credit card) agreements and trade
receivables. Such assets are securitized through the use of trusts or special
purpose corporations. Payments or distributions of principal and interest on
asset-backed securities may be guaranteed up to certain amounts and for a
certain time period by a letter of credit or a pool insurance policy issued by a
financial institution unaffiliated with the issuer, or other credit enhancements
may be present.

Asset-backed securities present certain additional risks that are not presented
by mortgage-backed securities. Primarily, these securities do not have the
benefit of the same type of security interest in the related collateral. Credit
card receivables are generally unsecured, and the debtors are entitled to the
protection of a number of state and federal consumer credit laws, many of which
give such debtors the right to avoid payment of certain amounts owed on the
credit cards, thereby reducing the balance due. Most issuers of automobile
receivables permit the servicer to retain possession of the underlying
obligations. If the servicer were to sell these obligations to another party,
there is a risk that the purchaser would acquire an interest superior to that of
the holders of the related automobile receivables. In addition, because of the
large number of vehicles involved in a typical issuance and technical
requirements under state laws, the trustee for the holders of the automobile
receivables may not have a proper security interest in all of the obligations
backing such receivables. Therefore, there is the possibility that recoveries on
repossessed collateral may not, in some cases, be available to support payments
on these securities.

The market for privately issued asset-backed securities is smaller and less
liquid than the market for US government mortgage-backed securities. The
asset-backed securities in which the Fund may invest are limited to those which
are readily marketable and rated investment grade by S&P or Moody's.

The yield characteristics of the asset-backed securities in which the Fund may
invest differ from those of traditional debt securities. Among the major
differences are that interest and principal payments are made more frequently on
asset-backed securities (usually monthly) and that principal may be prepaid at
any time because the underlying assets generally may be prepaid at any time. As
a result, if the Fund purchases these securities at a premium, a prepayment rate
that is faster than expected will reduce their yield, while a prepayment rate
that is slower than expected will have the opposite effect of increasing yield.
Conversely, if the Fund purchases these securities at a discount, faster than
expected prepayments will increase, while slower than expected prepayments will
reduce, the yield on these securities. Amounts available for reinvestment by the
Fund are likely to be greater during a period of declining interest rates and,
as a result, are likely to be reinvested at lower interest rates than during a
period of rising interest rates.

Mortgage-Backed Securities and Asset-Backed Securities -- Credit Support.
Mortgage-backed securities and asset-backed securities are often backed by a
pool of assets representing the obligations of a number of different parties. To
lessen the effect of failure by obligors on underlying assets to make payments,
such securities may contain elements of credit support. Such credit support
falls into two categories: (1) liquidity protection and (2) protection against
losses resulting from ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances, generally by the
entity administering the pool of assets, to ensure that the pass-through of
payments due on the underlying pool occurs in a timely fashion. Protection
against losses resulting from ultimate default enhances the likelihood of
ultimate payment of the obligations on at least a portion of the assets in the
pool. Such protection may be provided through guarantees, insurance policies or
letters of credit obtained by the issuer or sponsor from third parties; through
various means of structuring the transaction; or through a combination of such
approaches. The Fund will not usually pay any additional fees for such credit
support, although the existence of credit support may increase the price of a
security.

The ratings of mortgage-backed securities and asset-backed securities for which
third-party credit enhancement provides liquidity protection or protection
against losses from default are generally dependent upon the continued
creditworthiness of the provider of the credit enhancement. The ratings of such
securities could be subject to reduction in the event of deterioration in the
creditworthiness of the credit enhancement provider even in cases where the
delinquency and loss experience on the underlying pool of assets is better than
expected.

Examples of credit support arising out of the structure of the transaction
include "senior-subordinated securities" (multiple class securities with one or
more classes subordinate to other classes as to the payment of principal thereof
and interest thereon, with the result that defaults on the underlying assets are
borne first by the holders of the subordinated class), creation of "reserve
funds" (where cash or investments, sometimes funded from a portion of the
payments on the underlying assets, are held in reserve against future losses)
and "over-collateralization" (where the scheduled payments on, or the principal
amount of, the underlying assets exceed those required to make payment of the
securities and pay any servicing or other fees). The degree of credit support
provided for each issue is generally based on historical information with
respect to the level of credit risk associated with the underlying assets.
Delinquency or loss in excess of that which is anticipated could adversely
affect the return on an investment in such a security.

Securities of Non-US Issuers

General. Subject to its investment objective and policies, the Fund may invest
in securities of foreign issuers, including US dollar-denominated and non-US
dollar denominated foreign equity and fixed income securities and in
certificates of deposit issued by foreign banks and foreign branches of US
banks. While investments in securities of foreign issuers and non-US dollar
denominated securities may offer investment opportunities not available in the
United States, such investments also involve significant risks not typically
associated with investing in domestic securities. In many foreign countries,
there is less publicly available information about foreign issuers, and there is
less government regulation and supervision of foreign stock exchanges, brokers
and listed companies. Also in many foreign countries, companies are not subject
to uniform accounting, auditing, and financial reporting standards comparable to
those applicable to domestic issuers. Security trading practices and custody
arrangements abroad may offer less protection to the Fund's investments and
there may be difficulty in enforcing legal rights outside the United States.
Settlement of transactions in some foreign markets may be delayed or may be less
frequent than in the United States which could affect the liquidity of the
Fund's portfolio. Additionally, in some foreign countries, there is the
possibility of expropriation or confiscatory taxation, limitations on the
removal of securities, property, or other Fund assets, political or social
instability or diplomatic developments which could affect investments in foreign
securities.

With respect to certain countries in which capital markets are either less
developed or not easily accessed, investments by the Fund may be made through
investment in other registered investment companies that in turn are authorized
to invest in the securities of such countries. Investment in other registered
investment companies is generally limited in amount by the 1940 Act, will
involve the indirect payment of a portion of the expenses (including advisory
fees) of such other investment companies and may result in a duplication of fees
and expenses. See "Other Investment Companies."

Investments in American, European, Global and International Depository Receipts.
The Fund may invest in non-US securities in the form of American Depositary
Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global Depositary
Receipts ("GDRs") and International Depository Receipts ("IDRs") or other
similar securities representing ownership of securities of non-US issuers held
in trust by a bank or similar financial institution. ADRs are receipts typically
issued by a US bank or trust company which evidence ownership of underlying
securities issued by a foreign corporation. EDRs and IDRs are receipts issued in
Europe typically by non-US banking and trust companies that evidence ownership
of either foreign or US securities. GDRs are receipts issued by either a US or
non-US banking institution evidencing ownership of the underlying non-US
securities. Generally, ADRs, in registered form, are designed for use in US
securities markets and EDRs, GDRs and IDRs, in bearer form, are designed for use
in European and international securities markets. An ADR, EDR, GDR or IDR may be
denominated in a currency different from the currency in which the underlying
foreign security is denominated. ADRs, EDRs, GDRs and IDRs are alternatives to
the purchase of the underlying securities in their national markets and
currencies, but are subject to the same risks as the non-US securities to which
they relate.

Foreign Corporate Debt Securities. The Fund may invest in debt securities of
foreign companies. Investing in the securities of foreign companies involves
more risks than investing in securities of US companies. Their value is subject
to economic and political developments in the countries where the companies
operate and to changes in foreign currency values. Values may also be affected
by foreign tax laws, changes in foreign economic or monetary policies, exchange
control regulations and regulations involving prohibitions on the repatriation
of foreign currencies.

In addition, the relative performance of various countries' fixed income markets
historically has reflected wide variations relating to the unique
characteristics of each country's economy. Year-to-year fluctuations in certain
markets have been significant, and negative returns have been experienced in
various markets from time to time.

Foreign Government Debt Securities. The Fund may invest in foreign government
debt securities, which include debt obligations issued or guaranteed by
national, state or provincial governments or similar political subdivisions and
quasi-governmental and supranational entities (collectively, "sovereign debt
obligations"). Sovereign debt obligations, especially those of developing
countries, may involve a high degree of risk. The issuer of such an obligation
or the governmental authorities that control the repayment of the obligation may
be unable or unwilling to repay principal and interest when due and may require
renegotiation or rescheduling of debt payments. In addition, prospects for
repayment of principal and interest may depend on political as well as economic
factors.

Quasi-governmental and supranational entities include international
organizations designated or supported by governmental entities to promote
economic reconstruction or development and international banking institutions
and related government agencies. Examples include (but are not limited to) the
International Bank for Reconstruction and Development (the "World Bank"), the
Japanese Development Bank, the Asian Development Bank and the Inter-American
Development Bank. Foreign government securities also include mortgage-related
securities issued or guaranteed by national, state or provincial governmental
instrumentalities, including quasi-governmental agencies.

Brady Bonds. The Fund may invest in so-called "Brady Bonds," which have been
issued by Argentina, Brazil, Bulgaria, Costa Rica, Dominican Republic, Ecuador,
Jordan, Mexico, Nigeria, Panama, the Philippines, Poland, Uruguay and Venezuela
and which may be issued by other countries. Brady Bonds are issued as part of a
debt restructuring in which the bonds are issued in exchange for cash and
certain of the country's outstanding commercial bank loans. Brady Bonds may be
collateralized or uncollateralized, are issued in various currencies (primarily
the US dollar) and are actively traded in the OTC secondary market.

US dollar-denominated collateralized Brady Bonds, which may be fixed rate par
bonds or floating rate discount bonds, are collateralized in full as to
principal by US Treasury zero coupon bonds that have the same maturity as the
stated bonds. Interest payments on such bonds generally are collateralized by
cash or liquid securities in an amount that, in the case of fixed rate bonds, is
equal to at least one year of rolling interest payments or, in the case of
floating rate bonds, initially is equal to at least one year's rolling interest
payments based on the applicable interest rate at the time and is adjusted at
regular intervals thereafter.

Investors should recognize that, in light of the history of commercial bank loan
defaults by Latin American public and private entities, investments in Brady
Bonds may be viewed as speculative.

Investments in Emerging Markets. The Fund may invest, to varying degrees, in one
or more countries with emerging securities markets. These countries are
generally located in Latin America, Eastern Europe, the Middle East, Africa and
Asia. Political and economic structures in many of these countries may be
undergoing significant evolution and rapid development, and these countries may
lack the social, political and economic stability characteristic of more
developed countries. Certain of these countries may have in the past failed to
recognize private property rights and, at times, may have nationalized or
expropriated the assets of private companies. As a result, these risks,
including the risk of nationalization or expropriation of assets, may be
heightened. In addition, unanticipated political or social developments may
affect the value of the Fund's investments in these countries, as well as the
availability of additional investments in these countries. The small size and
inexperience of the securities markets in certain of these countries and the
limited volume of trading in securities in these countries may make the Fund's
investments in these countries illiquid and more volatile than investments in
most Western European countries, and the Fund may be required to establish
special custodial or other arrangements before making certain investments in
some of these countries.

Securities markets of emerging countries may also have less efficient clearance
and settlement procedures than US markets, making it difficult to conduct and
complete transactions. Delays in settlement could result in temporary periods
when a portion of the Fund's assets is uninvested and no return is earned
thereon. Inability to make intended security purchases could cause the Fund to
miss attractive investment opportunities. Inability to dispose of portfolio
securities could result either in losses to the Fund due to subsequent declines
in value of the portfolio security or, if the Fund has entered into a contract
to sell the security, could result in possible liability of the Fund to the
purchaser. In addition, transaction costs, including brokerage commissions and
dealer mark-ups, in emerging countries may be higher than in the US and other
developed securities markets. See "Illiquid Securities."

As legal systems in emerging countries develop, the Fund may be adversely
affected by new or amended laws and regulations. In circumstances where adequate
laws exist, it may not be possible to obtain swift and equitable enforcement of
the law. Furthermore, with respect to investments in certain emerging countries,
archaic legal systems may have an adverse impact on the Fund. For example, while
the potential liability of a shareholder in a US corporation with respect to
acts of the corporation is generally limited to the amount of the shareholder's
investment, the notion of limited liability is less clear in certain emerging
countries. Similarly, the rights of investors in emerging country companies may
be more limited than those of shareholders of US corporations.

In addition, there may be little financial or accounting information available
with respect to issuers located in certain of these countries, and it may be
difficult as a result to assess the value or prospects of an investment in these
countries. The laws of some foreign countries may limit the Fund's ability to
invest in securities of certain issuers located in those countries.

Region and Country Investing. The Fund may focus its investments in a particular
region and/or in one or more foreign countries. Focusing the Fund's investments
in a particular region or country will subject the Fund (to a greater extent
than if its investments in such region or country were more diversified) to the
risks of adverse securities markets, exchange rates and social, political or
economic developments which may occur in that particular region or country.

For purposes of the Fund's investment objectives, a company is considered to be
located in a particular country if it (1) is organized under the laws of that
country and has a principal place of business in that country or (2) derives 50%
or more of its total revenues from business in that country.

Currency Management

General. In connection with the Fund's investments denominated in foreign
currencies, the Advisor may choose to utilize a variety of currency management
(hedging) strategies. The Advisor seeks to take advantage of different yield,
risk and return characteristics that different currencies, currency
denominations and countries can provide to US investors. In doing so, the
Advisor will consider such factors as the outlook for currency relationships;
current and anticipated interest rates; levels of inflation within various
countries; prospects for relative economic growth; and government policies
influencing currency exchange rates and business conditions. Although the
Advisor may attempt to manage currency exchange rate risks, there is no
assurance that the Advisor will do so, or do so at an appropriate time or that
the Advisor will be able to predict exchange rates accurately.

Currency Exchange Transactions. Because the Fund may buy and sell securities
denominated in currencies other than the US dollar and receives interest,
dividends and sale proceeds in currencies other than the US dollar, the Fund
from time to time may enter into currency exchange transactions to convert to
and from different currencies and to convert foreign currencies to and from the
US dollar. The Fund either enters into these transactions on a spot (i.e., cash)
basis at the spot rate prevailing in the currency exchange market or uses
forward currency exchange contracts (discussed below) to purchase or sell
currencies. Neither spot transactions nor forward currency exchange contracts
eliminate fluctuations in the prices of the Fund's securities or in foreign
exchange rates, or prevent loss if the prices of these securities should
decline.

Currency Hedging Transactions. The Fund's currency hedging strategies may
include hedging involving either specific transactions or portfolio positions.
Transaction hedging is the purchase or sale of forward currency with respect to
specific receivables or payables of the Fund generally accruing in connection
with the purchase or sale of its portfolio securities. Position hedging is the
sale of forward currency with respect to portfolio security positions.

Proper currency hedging is important because a decline in the US dollar value of
a foreign currency in which the Fund's securities are denominated will reduce
the US dollar value of the securities, even if their value in the foreign
currency remains constant. The use of currency hedges does not eliminate
fluctuations in the underlying prices of the securities, but it does establish a
rate of exchange that can be achieved in the future. For example, in order to
protect against diminutions in the US dollar value of non-dollar denominated
securities it holds, the Fund may purchase foreign currency put options. If the
value of the foreign currency does decline, the Fund will have the right to sell
the currency for a fixed amount in dollars and will thereby offset, in whole or
in part, the adverse effect on the US dollar value of its securities that
otherwise would have resulted. Conversely, if a rise in the US dollar value of a
currency in which securities to be acquired are denominated is projected,
thereby potentially increasing the cost of the securities, the Fund may purchase
call options on the particular currency. The purchase of these options could
offset, at least partially, the effects of the adverse movements in exchange
rates. The benefit to the Fund derived from purchases of currency options, like
the benefit derived from other types of options, will be reduced by premiums and
other transaction costs.

Because transactions in currency exchange are generally conducted on a principal
basis, no fees or commissions are generally involved. Currency hedging involves
some of the same risks and considerations as other transactions with similar
instruments. Although currency hedges limit the risk of loss due to a decline in
the value of a hedged currency, at the same time, they also limit any potential
gain that might result should the value of the currency increase. If a
devaluation is generally anticipated, the Fund may not be able to contract to
sell a currency at a price above the devaluation level it anticipates.

Securities held by the Fund are generally denominated in the currency of the
foreign market in which the investment is made. However, securities held by the
Fund may be denominated in the currency of a country other than the country in
which the security's issuer is located.

Cross Hedging. At the discretion of the Advisor, the Fund may employ the
currency hedging strategy known as "cross-hedging" by using forward currency
contracts, currency options or a combination of both. When engaging in
cross-hedging, the Fund seeks to protect against a decline in the value of a
foreign currency in which certain of its portfolio securities are denominated by
selling that currency forward into a different foreign currency for the purpose
of diversifying the Fund's total currency exposure or gaining exposure to a
foreign currency that is expected to appreciate.

Forward Currency Exchange Contracts. A forward currency exchange contract is an
obligation by the Fund to purchase or sell a specific currency at a future date,
which may be any fixed number of days from the date of the contract. Forward
currency exchange contracts establish an exchange rate at a future date. These
contracts are transferable in the interbank market conducted directly between
currency traders (usually large commercial banks and brokerages) and their
customers. A forward currency exchange contract may not have a deposit
requirement and may be traded at a net price without commission. The Fund
maintains a segregated account of cash or liquid securities in an amount at
least equal to its obligations under each forward currency exchange contract.

The Fund may enter into foreign currency hedging transactions in an attempt to
protect against changes in currency exchange rates between the trade and
settlement dates of specific securities transactions or changes in currency
exchange rates that would adversely affect a portfolio position or an
anticipated investment position. Since consideration of the prospect for
currency parities will be incorporated into the Advisor's long-term investment
decisions, the Fund will not routinely enter into currency hedging transactions
with respect to security transactions; however, the Advisor believes that it is
important to have the flexibility to enter into currency hedging transactions
when it determines that the transactions would be in the Fund's best interest.
Although these transactions tend to minimize the risk of loss due to a decline
in the value of the hedged currency, at the same time they tend to limit any
potential gain that might be realized should the value of the hedged currency
increase. The precise matching of the forward contract amounts and the value of
the securities involved will not generally be possible because the future value
of such securities in foreign currencies will change as a consequence of market
movements in the value of such securities between the date the forward contract
is entered into and the date it matures. The projection of currency market
movements is extremely difficult, and the successful execution of a hedging
strategy is highly uncertain.

While these contracts are not presently regulated by the CFTC, the CFTC may in
the future assert authority to regulate forward contracts. In such event the
Fund's ability to utilize forward contracts may be restricted. Forward contracts
may reduce the potential gain from a positive change in the relationship between
the US dollar and foreign currencies. Unanticipated changes in currency prices
may result in poorer overall performance for the Fund than if it had not entered
into such contracts. The use of currency forward contracts may not eliminate
fluctuations in the underlying US dollar equivalent value of the prices of or
rates of return on the Fund's foreign currency denominated portfolio securities
and the use of such techniques will subject the Fund to certain risks.

The matching of the increase in value of a forward contract and the decline in
the US dollar equivalent value of the foreign currency denominated asset that is
the subject of the hedge generally will not be precise. In addition, the Fund
may not always be able to enter into currency forward contracts at attractive
prices, and this will limit the Fund's ability to use such contracts to hedge or
cross-hedge its assets. Also, with regard to the Fund's use of cross-hedges,
there can be no assurance that historical correlations between the movement of
certain foreign currencies relative to the US dollar will continue. Thus, at any
time poor correlation may exist between movements in the exchange rates of the
foreign currencies underlying the Fund's cross-hedges and the movements in the
exchange rates of the foreign currencies in which the Fund's assets that are the
subject of such cross-hedges are denominated.

The Fund will segregate cash or liquid securities in an amount equal to the
value of the Fund's total assets committed to the consummation of forward
currency contracts requiring the Fund to purchase foreign currencies or forward
contracts entered into for non-hedging purposes. If the value of the segregated
securities declines, additional cash or liquid securities will be segregated on
a daily basis so that the value of the assets will equal the amount of the
Fund's commitments with respect to such contracts. The segregated assets will be
marked-to-market on a daily basis.

The Fund may sell US dollars and buy a foreign currency forward in order to gain
exposure to a currency which is expected to appreciate against the US dollar.
This speculative strategy allows the Fund to benefit from currency appreciation
potential without requiring it to purchase a local fixed income instrument, for
which prospects may be relatively unattractive. It is the Advisor's intention
that the Fund's net US dollar currency exposure generally will not fall below
zero (i.e., that net short positions in the US dollar generally will not be
taken).

The Fund may also utilize forward foreign currency contracts to establish a
synthetic investment position designed to change the currency characteristics of
a particular security without the need to sell such security. Synthetic
investment positions will typically involve the purchase of US
dollar-denominated securities together with a forward contract to purchase the
currency to which the Fund seeks exposure and to sell US dollars. This may be
done because the range of highly liquid short-term instruments available in the
US may provide greater liquidity to the Fund than actual purchases of foreign
currency-denominated securities in addition to providing superior returns in
some cases. Depending on (a) the Fund's liquidity needs, (b) the relative yields
of securities denominated in different currencies and (c) spot and forward
currency rates, a significant portion of the Fund's assets may be invested in
synthetic investment positions, subject to compliance with the tax requirements
for qualification as a regulated investment company.

There is a risk in adopting a synthetic investment position. It is impossible to
forecast with absolute precision what the market value of a particular security
will be at any given time. If the value of the US dollar-denominated security is
not exactly matched with the Fund's obligation under a forward currency contract
on the date of maturity, the Fund may be exposed to some risk of loss from
fluctuations in the value of the US dollar. Although the Advisor will attempt to
hold such mismatching to a minimum, there can be no assurance that the Advisor
will be able to do so.

Options on Foreign Currencies. The Fund may write covered put and call options
and purchase put call options on foreign currencies for the purpose of
protecting against declines in the dollar value of portfolio securities and
against increases in the dollar cost of securities to be acquired. The Fund may
also use currency options to achieve a desired currency weighting in a
cost-effective manner. The Fund may use options on currencies to cross-hedge,
which involves writing or purchasing options on one currency to hedge against
changes in exchange rates for a different, but related currency. As with other
types of options, however, the writing of an option on foreign currency will
constitute only a partial hedge up to the amount of the premium received, and
the Fund could be required to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The purchase of an
option on foreign currency may be used to hedge against fluctuations in exchange
rates although, in the event of exchange rate movements adverse to the Fund's
position, it may forfeit the entire amount of the premium plus related
transaction costs. In addition the Fund may purchase call options on currency
when the Advisor anticipates that the currency will appreciate in value.

The Fund may also write options on foreign currencies for the same types of
hedging or currency management purposes. For example, where the Fund anticipates
a decline in the dollar value of foreign currency denominated securities due to
adverse fluctuations in exchange rates it could, instead of purchasing a put
option, write a call option on the relevant currency. If the expected decline
occurs, the options will most likely not be exercised, and the diminution in
value of portfolio securities will be offset by the amount of the premium
received.

Similarly, instead of purchasing a call option to hedge against an anticipated
increase in the dollar cost of securities to be acquired, the Fund could write a
put option on the relevant currency which, if rates move in the manner
projected, will expire unexercised and allow the Fund to hedge such increased
cost up to the amount of the premium. As in the case of other types of options,
however, the writing of a foreign currency option will constitute only a partial
hedge up to the amount of the premium, and only if rates move in the expected
direction. If this does not occur, the option may be exercised and the Fund
would be required to purchase or sell the underlying currency at a loss which
may not be offset by the amount of the premium. Through the writing of options
on foreign currencies, the Fund also may be required to forego all or a portion
of the benefits which might otherwise have been obtained from favorable
movements in exchange rates.

The Fund may write covered call options on foreign currencies. A call option
written on a foreign currency by the Fund is "covered" if the Fund owns the
underlying foreign currency covered by the call or has an absolute and immediate
right to acquire that foreign currency without additional cash consideration (or
for additional cash consideration identified on the Fund's books) upon
conversion or exchange of other foreign currency held in its portfolio. A call
option is also covered if the Fund has a call on the same foreign currency and
in the same principal amount as the call written where the exercise price of the
call held (a) is equal to or less than the exercise price of the call written or
(b) is greater than the exercise price of the call written if the difference is
segregated by the Fund in cash or liquid securities.

The Fund also may write call options on foreign currencies that are not covered
for cross-hedging purposes. A call option on a foreign currency is for
cross-hedging purposes if it is not covered, but is designed to provide a hedge
against a decline in the US dollar value of a security which the Fund owns or
has the right to acquire and which is denominated in the currency underlying the
option due to an adverse change in the exchange rate. In such circumstances, the
Fund collateralizes the option by segregating cash or liquid securities in an
amount not less than the value of the underlying foreign currency in US dollars
marked to market daily.

There is no assurance that a liquid secondary market will exist for any
particular option, or at any particular time. If the Fund is unable to effect a
closing purchase transaction with respect to covered options it has written, the
Fund will not be able to sell the underlying currency or dispose of assets held
in a segregated account until the options expire or are exercised. Similarly, if
the Fund is unable to effect a closing sale transaction with respect to options
it has purchased, it would have to exercise the options in order to realize any
profit and will incur transaction costs upon the purchase or sale of underlying
currency. The Fund pays brokerage commissions or spreads in connection with its
options transactions.

Certain options on foreign currencies are traded over-the-counter and involve
liquidity and credit risks which may not be present in the case of
exchange-traded currency options. In some circumstances, the Fund's ability to
terminate OTC options may be more limited than with exchange-traded options. It
is also possible that broker-dealers participating in OTC options transactions
will not fulfill their obligations. See "Illiquid Securities."

Additional Limitations and Risk Factors

In addition to the risks discussed above, the Fund's investments may be subject
to the following limitations and risk factors:

Additional Risks Related to Transactions in Options, Futures Contracts, Options
on Futures Contracts, Swaps and Forward Foreign Currency Exchange Contracts. The
Fund's active management techniques involve (1) liquidity risk (contractual
positions cannot be easily closed out in the event of market changes or
generally in the absence of a liquid secondary market), (2) correlation risk
(changes in the value of hedging positions may not match the securities market
and foreign currency fluctuations intended to be hedged), and (3) market risk
(an incorrect prediction of securities prices or exchange rates by the Advisor
may cause the Fund to perform worse than if such positions had not been taken).
In addition, the ability to terminate OTC derivatives is more limited than with
exchange traded derivatives and may involve the risk that the counterparty to
the option will not fulfill its obligations.

Asset Coverage. The Fund will comply with the segregation or coverage guidelines
established by the SEC and other applicable regulatory bodies with respect to
certain transactions, including (but not limited to) options written on
securities and indexes; currency, interest rate and security index futures
contracts and options on these futures contracts; forward currency contracts;
and swaps, caps, floors and collars. These guidelines may, in certain instances,
require segregation by the Fund of cash or liquid securities to the extent the
Fund's obligations with respect to these strategies are not otherwise covered
through ownership of the underlying security or financial instrument, by other
portfolio positions or by other means consistent with applicable regulatory
policies. Unless the transaction is covered, the segregated assets must at all
times equal or exceed the Fund's obligations with respect to these strategies.
Segregated assets cannot be sold or transferred unless equivalent assets are
substituted in their place or it is no longer necessary to segregate them. As a
result, there is a possibility that segregation of a large percentage of the
Fund's assets could impede portfolio management or the Fund's ability to meet
redemption requests or other current obligations.

For example, a call option written on securities may require the Fund to hold
the securities subject to the call (or securities convertible into the
securities without additional consideration) or to segregate assets (as
described above) sufficient to purchase and deliver the securities if the call
is exercised. A call option written on an index may require the Fund to own
portfolio securities that correlate with the index or to segregate assets (as
described above) equal to the excess of the index value over the exercise price
on a current basis. A put option written by the Fund may require the Fund to
segregate assets (as described above) equal to the exercise price. 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. If the Fund holds
a futures contract, the Fund could purchase a put option on the same futures
contract with a strike price as high or higher than the price of the contract
held. The Fund may enter into fully or partially offsetting transactions so that
its net position, coupled with any segregated assets (equal to any remaining
obligation), equals its net obligation. Asset coverage may be achieved by other
means when consistent with applicable regulatory policies.

The use of derivatives is a highly specialized activity which involves
investment techniques and risks that are different from those associated with
ordinary portfolio transactions. Gains and losses on these derivatives depend on
the Advisor's ability to predict the direction of stock prices, interest rates,
currency movements and other economic factors. The loss that may be incurred by
the Fund in entering into futures contracts, written options, forward currency
contracts and certain swaps is potentially unlimited. There is no assurance that
higher than anticipated trading activity or other unforeseen events might not,
at times, render certain facilities of an options clearing entity or other
entity performing the regulatory and liquidity functions of an options clearing
entity inadequate, and thereby result in the institution by an exchange of
special procedures which may interfere with the timely execution of customers'
orders. Most futures exchanges limit the amount of fluctuation permitted in a
futures contract's prices during a single trading day. Once the limit has been
reached no further trades may be made that day at a price beyond the limit. The
price limit will not limit potential losses, and may in fact prevent the prompt
liquidation of futures positions, ultimately resulting in further losses.
Options and futures traded on foreign exchanges generally are not regulated by
US authorities, and may offer less liquidity and less protection to the Fund in
the event of default by the other party to the contract.

Except as set forth above under "Derivative Securities: Futures Contracts and
Options on Futures Contracts," there is no limit on the percentage of the assets
of the Fund that may be at risk with respect to futures contracts and related
options or forward currency contracts. The Fund's transactions in options,
forward currency contracts, futures contracts, options on futures contracts and
swaps may be limited by the requirements for qualification of the Fund as a
regulated investment company for tax purposes. See "Taxes." There can be no
assurance that the use of these portfolio strategies will be successful.

Non-US Securities. The value of the Fund's investments may be adversely affected
by changes in political or social conditions, diplomatic relations, confiscatory
taxation, expropriation, nationalization, limitation on the removal of funds or
assets, or imposition of (or change in) exchange control or tax regulations in
those foreign countries. In addition, changes in government administrations or
economic or monetary policies in the United States or abroad could result in
appreciation or depreciation of portfolio securities and could favorably or
unfavorably affect the Fund's operations. Furthermore, the economies of
individual foreign nations may differ from the US economy, whether favorably or
unfavorably, in areas such as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payments position; it may also be more difficult to obtain and enforce a
judgment against a foreign issuer. In general, less information is publicly
available with respect to non-US issuers than is available with respect to US
companies. Most foreign companies are also not subject to the uniform accounting
and financial reporting requirements applicable to issuers in the United States.
Any foreign investments made by the Fund must be made in compliance with US and
foreign currency restrictions and tax laws restricting the amounts and types of
foreign investments.

Because non-US securities generally are denominated and pay dividends or
interest in foreign currencies, and the Fund may hold various foreign currencies
from time to time, the value of the net assets of the Fund as measured in US
dollars will be affected favorably or unfavorably by changes in exchange rates.
Generally, the Fund's currency exchange transactions will be conducted on a spot
(i.e., cash) basis at the spot rate prevailing in the currency exchange market.
The cost of the Fund's currency exchange transactions will generally be the
difference between the bid and offer spot rate of the currency being purchased
or sold. In order to protect against uncertainty in the level of future foreign
currency exchange rates, the Fund is authorized to enter into certain foreign
currency exchange transactions.

In addition, while the volume of transactions effected on foreign securities
exchanges has increased in recent years, in most cases it remains appreciably
below that of NYSE. Accordingly, the Fund's foreign investments may be less
liquid and their prices may be more volatile than comparable investments in
securities of US issuers. Moreover, the settlement periods for non-US
securities, which are often longer than those for securities of US issuers, may
affect portfolio liquidity. In buying and selling securities on foreign
exchanges, the Fund normally pays fixed commissions that are generally higher
than the negotiated commissions charged in the United States. In addition, there
is generally less government supervision and regulation of securities exchanges,
brokers and issuers in foreign countries than in the United States.

Emerging Markets. Investment in securities of issuers based in emerging markets
entails all of the risks of investing in securities of non-US issuers outlined
above but to a heightened degree. These heightened risks include: (1) greater
risks of expropriation, confiscatory taxation, nationalization, and less social,
political and economic stability; (2) the smaller size of the market for such
securities and a low or nonexistent volume of trading, resulting in lack of
liquidity and in price volatility; and (3) certain national policies which may
restrict the Fund's investment opportunities including restrictions on investing
in issuers or industries deemed sensitive to relevant national interests.

In addition to brokerage commissions, custodial services and other costs
relating to investment in emerging markets are generally more expensive than in
the United States. Such markets have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the Fund to make intended securities purchases due to settlement
problems could cause the Fund to miss attractive investment opportunities.
Inability to dispose of a security due to settlement problems could result
either in losses to the Fund due to subsequent declines in the value of the
security or, if the Fund has entered into a contract to sell the security, could
result in possible liability to the purchaser. See "Illiquid Securities."

Special Considerations Concerning the Pacific Basin. Many Asian countries may be
subject to a greater degree of social, political and economic instability than
is the case in the United States and European countries. Such instability may
result from (1) authoritarian governments or military involvement in political
and economic decision-making; (2) popular unrest associated with demands for
improved political, economic and social conditions; (3) internal insurgencies;
(4) hostile relations with neighboring countries; and (5) ethnic, religious and
racial disaffection.

The economies of most of the Asian countries are heavily dependent upon
international trade and are accordingly affected by protective trade barriers
and the economic conditions of their trading partners, principally, the United
States, Japan, China and the European Community. The enactment by the United
States or other principal trading partners of protectionist trade legislation,
reduction of foreign investment in the local economies and general declines in
the international securities markets could have a significant adverse effect
upon the securities markets of the Asian countries.

The securities markets in Asia are substantially smaller, less liquid and more
volatile than the major securities markets in the United States. A high
proportion of the shares of many issuers may be held by a limited number of
persons and financial institutions, which may limit the number of shares
available for investment by the Fund. Similarly, volume and liquidity in the
bond markets in Asia are less than in the United States and, at times, price
volatility can be greater than in the United States. A limited number of issuers
in Asian securities markets may represent a disproportionately large percentage
of market capitalization and trading value. The limited liquidity of securities
markets in Asia may also affect the Fund's ability to acquire or dispose of
securities at the price and time it wishes to do so. The Fund's inability to
dispose fully and promptly of positions in declining markets will cause the
Fund's net asset value to decline as the value of the unsold positions is marked
to lower prices. In addition, the Asian securities markets are susceptible to
being influenced by large investors trading significant blocks of securities.
Also, many stock markets are undergoing a period of growth and change which may
result in trading volatility and difficulties in the settlement and recording of
transactions, and in interpreting and applying the relevant law and regulations.
See "Illiquid Securities."

Furthermore, the Fund may invest in securities denominated in currencies of
Asian countries. Accordingly, changes in the value of these currencies against
the US dollar will result in corresponding changes in the US dollar value of the
Fund's assets denominated in those currencies.

Rating Services. The ratings of Moody's and S&P represent their opinions as to
the quality of the securities that they undertake to rate. It should be
emphasized, however, that ratings are relative and subjective and are not
absolute standards of quality. Although these ratings are an initial criterion
for selection of Fund investments, the Advisor also makes its own evaluation of
these securities, subject to review by the Board of Trustees. After purchase by
the Fund, an obligation may cease to be rated or its rating may be reduced below
the minimum required for purchase by the Fund. Neither event would require the
Fund to eliminate the obligation from its portfolio, but the Advisor will
consider such an event in its determination of whether the Fund should continue
to hold the obligation. A description of the ratings used herein and in the
Prospectus is set forth in the Appendix to this SAI.

Other Investments and Investment Practices

Illiquid Securities. Historically, illiquid securities have included securities
subject to contractual or legal restrictions on resale because they have not
been registered under the Securities Act of 1933, as amended (the "1933 Act"),
securities which are otherwise not readily marketable and repurchase agreements
having a maturity of longer than seven days. Securities which have not been
registered under the 1933 Act are referred to as private placements or
restricted securities and are purchased directly from the issuer or in the
secondary market. Investments in non-publicly traded securities (including Rule
144A Securities) may involve a high degree of business and financial risk and
may result in substantial losses. These securities may be less liquid than
publicly traded securities, and it may take longer to liquidate these positions
than would be the case for publicly traded securities. Companies whose
securities are not publicly traded may not be subject to the disclosure and
other investor protection requirements applicable to companies whose securities
are publicly traded. Limitations on resale may have an adverse effect on the
marketability of portfolio securities and a mutual fund might be unable to
dispose of restricted or other illiquid securities promptly or at reasonable
prices and might thereby experience difficulty satisfying redemptions within
seven days. An investment in illiquid securities is subject to the risk that,
should the Fund desire to sell any of these securities when a ready buyer is not
available at a price that is deemed to be representative of their value, the
value of the Fund's net assets could be adversely affected.

Mutual funds do not typically hold a significant amount of these restricted or
other illiquid securities because of the potential for delays on resale and
uncertainty in valuation. A mutual fund might also have to register such
restricted securities in order to dispose of them resulting in additional
expense and delay. Adverse market conditions could impede such a public offering
of securities.

A large institutional market has developed for certain securities that are not
registered under the 1933 Act, including repurchase agreements, commercial
paper, non-US securities and corporate bonds and notes. Institutional investors
depend on an efficient institutional market in which the unregistered security
can be readily resold or on an issuer's ability to honor a demand for repayment.
The fact that there are contractual or legal restrictions on resale of such
investments to the general public or to certain institutions may not be
indicative of their liquidity.

The SEC has adopted Rule 144A, which allows a broader institutional trading
market for securities otherwise subject to restriction on their resale to the
general public. Rule 144A establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. The Advisor anticipates that the market for certain
restricted securities such as institutional commercial paper will expand further
as a result of this regulation and the development of automated systems for the
trading, clearance and settlement of unregistered securities of domestic and
non-US issuers, such as the PORTAL System sponsored by the National Association
of Securities Dealers, Inc.

An investment in Rule 144A securities will be considered illiquid and therefore
subject to the Fund's limit on the purchase of illiquid securities unless the
Advisor determines that the Rule 144A securities are liquid. In reaching
liquidity decisions, the Advisor may consider, inter alia, the following
factors: (i) the unregistered nature of the security; (ii) the frequency of
trades and quotes for the security; (iii) the number of dealers wishing to
purchase or sell the security and the number of other potential purchasers; (iv)
dealer undertakings to make a market in the security and (v) the nature of the
security and the nature of the marketplace trades (e.g., the time needed to
dispose of the security, the method of soliciting offers and the mechanics of
the transfer).

Investing in Rule 144A securities could have the effect of increasing the level
of illiquidity in the Fund to the extent that qualified institutional buyers are
unavailable or uninterested in purchasing such securities from the Fund. The
Board has adopted guidelines and delegated to the Advisor the daily function of
determining and monitoring the liquidity of Rule 144A securities, although the
Board will retain ultimate responsibility for any liquidity determinations.

The Fund will not invest more than 15% of its net assets in illiquid securities,
which include repurchase agreements and time deposits maturing in more than
seven days and securities that are not readily marketable.

Impact of Large Redemptions and Purchases of Fund shares. From time to time,
shareholders of the Fund (which may include affiliated and/or non-affiliated
registered investment companies that invest in the Fund) may make relatively
large redemptions or purchases of Fund shares. These transactions may cause the
Fund to have to sell securities or invest additional cash, as the case may be.
While it is impossible to predict the overall impact of these transactions over
time, there could be adverse effects on the Fund's performance to the extent
that the Fund may be required to sell securities or invest cash at times when it
would not otherwise do so. These transactions could also accelerate the
realization of taxable income if sales of securities resulted in capital gains
or other income and could also increase transaction costs, which may impact the
Fund's expense ratio.

TBA Purchase Commitments. The Fund may enter into TBA purchase commitments to
purchase securities for a fixed price at a future date, typically not exceeding
45 days. TBA purchase commitments may be considered securities in themselves,
and involve a risk of loss if the value of the security to be purchased declines
prior to settlement date, which risk is in addition to the risk of decline in
the value of the Fund's other assets. Unsettled TBA purchase commitments are
valued at the current market value of the underlying securities.

When-Issued and Delayed Delivery Securities. The Fund may purchase securities on
a when-issued or delayed delivery basis. Delivery of and payment for these
securities can take place a month or more after the date of the purchase
commitment. The payment obligation and the interest rate that will be received
on when-issued and delayed-delivery securities are fixed at the time the buyer
enters into the commitment. Due to fluctuations in the value of securities
purchased or sold on a when-issued or delayed-delivery basis, the yields
obtained on such securities may be higher or lower than the yields available in
the market on the dates when the investments are actually delivered to the
buyers. When-issued securities may include securities purchased on a "when, as
and if issued" basis, under which the issuance of the security depends on the
occurrence of a subsequent event, such as approval of a merger, corporate
reorganization or debt restructuring. The value of such securities is subject to
market fluctuation during this period and no interest or income, as applicable,
accrues to the Fund until settlement takes place.

At the time the Fund makes the commitment to purchase securities on a
when-issued or delayed delivery basis, it will record the transaction, reflect
the value each day of such securities in determining its net asset value and, if
applicable, calculate the maturity for the purposes of average maturity from
that date. At the time of settlement a when-issued security may be valued at
less than the purchase price. To facilitate such acquisitions, the Fund
identifies on its books cash or liquid assets in an amount at least equal to
such commitments. It may be expected that the Fund's net assets will fluctuate
to a greater degree when it sets aside portfolio securities to cover such
purchase commitments than when it sets aside cash. On delivery dates for such
transactions, the Fund will meet its obligations from maturities or sales of the
segregated securities and/or from cash flow. If the Fund chooses to dispose of
the right to acquire a when-issued security prior to its acquisition, it could,
as with the disposition of any other portfolio obligation, incur a gain or loss
due to market fluctuation. When the Fund engages in when-issued or
delayed-delivery transactions, it relies on the other party to consummate the
trade. Failure of the seller to do so may result in the Fund's incurring a loss
or missing an opportunity to obtain a price considered to be advantageous.

Repurchase Agreements. The Fund may engage in repurchase agreement transactions
only with US or foreign banks having total assets of at least US$100 million (or
its foreign currency equivalent). Under the terms of a typical repurchase
agreement, the Fund would acquire any underlying security for a relatively short
period (usually not more than one week), subject to an obligation of the seller
to repurchase, and the Fund to resell, the obligation at an agreed price and
time, thereby determining the yield during the Fund's holding period. This
arrangement results in a fixed rate of return that is not subject to market
fluctuations during the Fund's holding period. The value of the underlying
securities will be at least equal at all times to the total amount of the
repurchase obligations, including interest. The Fund bears a risk of loss in the
event of default by or bankruptcy of the other party to a repurchase agreement.
The Fund may be delayed in, or prevented from, exercising its rights to dispose
of the collateralized securities. To the extent that, in the meantime, the value
of the securities repurchased had decreased or the value of the securities had
increased, the Fund could experience a loss. The Advisor reviews the
creditworthiness of those banks and dealers with which the Fund enters into
repurchase agreements and monitors on an ongoing basis the value of the
securities subject to repurchase agreements to ensure that it is maintained at
the required level. A repurchase agreement is considered to be a loan under the
1940 Act.

Reverse Repurchase Agreements. The Fund may borrow funds by, among other things,
agreeing to sell portfolio securities to financial institutions that meet the
standards described under "Repurchase Agreements" and to repurchase them at a
mutually agreed date and price (a "reverse repurchase agreement"). The Fund may
enter into reverse repurchase agreements with banks and domestic broker-dealers.
At the time the Fund enters into a reverse repurchase agreement it will
segregate cash or liquid securities having a value equal to the repurchase
price, including accrued interest. The segregated assets will be
marked-to-market daily and additional assets will be segregated on any day in
which the assets fall below the repurchase price (plus accrued interest). The
Fund's liquidity and ability to manage its assets might be affected when it sets
aside cash or portfolio securities to cover such commitments. Reverse repurchase
agreements involve the risk that the market value of the securities sold by the
Fund may decline below the repurchase price of those securities. In the event
the buyer of securities under a reverse repurchase agreement files for
bankruptcy or becomes insolvent, such buyer or its trustee or receiver may
receive an extension of time to determine whether to enforce the Fund's
obligation to repurchase the securities, and the Fund's use of the proceeds of
the reverse repurchase agreement may effectively be restricted pending such
decision. Reverse repurchase agreements are considered to be borrowings by the
Fund.

Mortgage Dollar Rolls. The Fund may enter into mortgage "dollar rolls" in which
the Fund sells securities for delivery in the current month and simultaneously
contracts to repurchase substantially similar, but not identical (same type,
coupon and maturity), securities on a specified future date. During the roll
period, the Fund forgoes principal and interest paid on the securities. The Fund
is compensated by the difference between the current sales price and the lower
forward price for the future purchase (often referred to as the "drop") or fee
income and by the interest earned on the cash proceeds of the initial sale. A
"covered roll" is a specific type of dollar roll for which there is an
offsetting cash position or a cash equivalent security position which matures on
or before the forward settlement date of the dollar roll transaction. The Fund
may enter into both covered and uncovered rolls. At the time the Fund enters
into a dollar roll transaction, it will segregate cash or liquid securities
having a value not less than the repurchase price (including accrued interest)
and will subsequently monitor the segregated assets to ensure that their value
is maintained.

Lending of Portfolio Securities. The Fund has the authority to lend up to 33
1/3% of the total value of its portfolio securities (taken at market value). 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. Payments received by the Fund in lieu of any dividends paid on the
loaned securities will not be treated as "qualified dividend income" for
purposes of determining what portion of the Fund's dividends received by
individuals may be taxed at the rates generally applicable to long-term capital
gains. See "Taxes".

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. 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).

Borrowing. The Fund may borrow for temporary or emergency purposes. This
borrowing may be unsecured. Among the forms of borrowing in which the Fund may
engage is entering into reverse repurchase agreements. The 1940 Act requires the
Fund to maintain continuous asset coverage (that is, total assets including
borrowings, less liabilities exclusive of borrowings) of 300% of the amount
borrowed. If the asset coverage should decline below 300% as a result of market
fluctuations or for other reasons, the Fund is required to sell some of its
portfolio securities within three days to reduce its borrowings and restore the
300% asset coverage, even though it may be disadvantageous from an investment
standpoint to sell securities at that time. Borrowing may exaggerate the effect
on net asset value of any increase or decrease in the market value of the
portfolio. Money borrowed will be subject to interest costs which may or may not
be recovered by appreciation of the securities purchased. The Fund also may be
required to maintain minimum average balances in connection with such borrowing
or to pay a commitment or other fee to maintain a line of credit; either of
these requirements would increase the cost of borrowing over the stated interest
rate. See "Investment Restrictions."

Short Sales. The Fund may engage in short sales with respect to securities that
it owns or has the right to obtain (for example, through conversion of a
convertible bond). These transactions, known as short sales "against the box,"
allow the Fund to hedge against price fluctuations by locking in a sale price
for securities it does not wish to sell immediately. In a short sale, the Fund
sells a borrowed security and has a corresponding obligation to the lender to
return the identical security. The seller does not immediately deliver the
securities sold and is said to have a short position in those securities until
delivery occurs. If the Fund engages in a short sale, the collateral for the
short position will be segregated.

The Fund does not intend to engage in short sales against the box for investment
purposes. The Fund may, however, make a short sale as a hedge, when it believes
that the price of a security may decline, causing a decline in the value of a
security owned by the Fund (or a security convertible or exchangeable for such
security). In such case, any future losses in the Fund's long position should be
offset by a gain in the short position and, conversely, any gain in the long
position should be reduced by a loss in the short position. The extent to which
such gains or losses are reduced will depend upon the amount of the security
sold short relative to the amount the Fund owns. There will be certain
additional transaction costs associated with short sales against the box, but
the Fund will endeavor to offset these costs with the income from the investment
of the cash proceeds of short sales.

Other Investment Companies. The Fund may invest in the aggregate no more than
10% of its total assets, calculated at the time of purchase, in the securities
of other US-registered investment companies. In addition, the Fund may not
invest more than 5% of its total assets in the securities of any one such
investment company or acquire more than 3% of the voting securities of any other
such investment company. The Fund will indirectly bear its proportionate share
of any management or other fees paid by investment companies in which it
invests, in addition to its own fees.

Temporary Defensive Investments. For temporary defensive purposes during periods
when the Advisor determines that conditions warrant, the Fund may invest up to
100% of its assets in cash and investment grade money market instruments,
including (but not limited to) securities issued or guaranteed by the US
government, its agencies or instrumentalities; certificates of deposit, time
deposits, and bankers' acceptances issued by banks or savings and loans
associations having net assets of at least $100 million as of the end of their
most recent fiscal year; commercial paper rated at the time of purchase at least
A-2 by S&P or P-2 by Moody's, or unrated commercial paper determined by the
Advisor to be of comparable quality; repurchase agreements involving any of the
foregoing; and, to the extent permitted by applicable law, shares of other
investment companies investing solely in money market instruments.

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 or 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 and
Cash Management QP Trust, or entities for the which the Advisor may act as
investment advisor now or in the future that operate as cash management
investment vehicles but 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 a fund in shares of the Central Funds will comply with Rule
2a-7 under the 1940 Act and will be in accordance with a fund's investment
policies and restrictions.

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.

Investment Policies

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.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------


                          INVESTMENT PRACTICE                                 DWS International Select Equity Fund
------------------------------------------------------------------------------------------------------------------------
KEY TO TABLE:

+   Permitted without stated limit

o   Permitted without stated limited, but not expected to be used to a significant extent

X   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
------------------------------------------------------------------------- ----------------------------------------------
<S>                                                                                           <C>
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 Bankers' 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
------------------------------------------------------------------------- ----------------------------------------------
Other Debt Obligations                                                                          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
------------------------------------------------------------------------- ----------------------------------------------
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
------------------------------------------------------------------------- ----------------------------------------------
Privately 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                                                                35%
------------------------------------------------------------------------- ----------------------------------------------
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%
------------------------------------------------------------------------- ----------------------------------------------
TBA Purchase Commitments                                                                        o
------------------------------------------------------------------------- ----------------------------------------------
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%
------------------------------------------------------------------------- ----------------------------------------------
</TABLE>

Portfolio Holdings

In addition to the public disclosure of Fund portfolio holdings through required
Securities and Exchange Commission ("SEC") quarterly filings, the Fund may make
its portfolio holdings information publicly available on the DWS Funds' Web site
as described in the Fund's prospectus. The Fund does not disseminate non-public
information about portfolio holdings except in accordance with policies and
procedures adopted by the Fund.


The Fund's procedures permit non-public portfolio holdings information to be
shared with Deutsche Asset Management and its affiliates (collectively "DeAM"),
subadvisors, if any, custodians, independent registered public accounting firms,
attorneys, officers and 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 certain third parties, such as
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 must
make a good faith determination in light of the facts then known that the Fund
has a legitimate business purpose for providing the information, that the
disclosure is in the best interest of the Fund, and that the recipient assents
or otherwise has a duty to keep the information confidential and to not trade
based on the information received while the information remains non-public. No
compensation is received by the Fund or DeAM for disclosing non-public holdings
information. Periodic reports regarding these procedures will be provided to the
Fund's Trustees.


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 identity
of the Fund's holdings could not be derived from such information.


Registered investment companies that are subadvised by the Advisor or its
affiliates may be subject to different portfolio holdings disclosure policies,
and neither the Advisor or its affiliated nor Trustees exercise control over
such policies. In addition, separate account clients of the Advisor or its
affiliates 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 the Advisor and its affiliates and some of the separate
accounts managed by the Advisor or its affiliates may substantially overlap with
the portfolio holdings of the Fund.

The Advisor or its affiliates 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 the Fund's
portfolio holdings information is made public, the Advisor and its affiliates
have 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, is the investment advisor for the Fund. Under
the supervision of the Board of Trustees of the Fund, with headquarters at 345
Park Avenue, New York, New York 10154, DIMA makes the Fund's investment
decisions, buys and sells securities for the Fund and conducts research that
leads to these purchase and sale decisions. The Advisor manages the Fund's daily
investment and business affairs subject to the policies established by the
Trust's Board of Trustees. DIMA and its predecessors have more than 80 years of
experience managing mutual funds. DIMA provides a full range of investment
advisory services to institutional and retail clients. The Fund's investment
advisor is also responsible for selecting brokers and dealers and for
negotiating brokerage commissions and dealer charges. On December 31, 2006,
Deutsche Asset Management, Inc. ("DAMI") merged into DIMA. Prior to December 31,
2006 DAMI was the investment advisor to the Fund. As a result of the merger,
DIMA is now the investment advisor to the Fund.


DeAM is the marketing name in the US for the asset management activities of
Deutsche Bank AG, DIMA, Deutsche Bank Trust Company Americas and DWS Trust
Company. DeAM is a global asset management organization that offers a wide range
of investing expertise and resources, including hundreds of portfolio managers
and analysts and an office network that reaches the world's major investment
centers. This well-resourced global investment platform brings together a wide
variety of experience and investment insight, across industries, regions, asset
classes and investing styles. DIMA is an indirect, wholly-owned subsidiary of
Deutsche Bank AG. Deutsche Bank AG is a major global banking institution that is
engaged in a wide range of financial services, including investment management,
mutual fund, retail, private and commercial banking, investment banking and
insurance. DWS Investments is part of Deutsche Bank's Asset Management division
and, within the US, represents the retail asset management activities of
Deutsche Bank AG, Deutsche Bank Trust Company Americas, Deutsche Investment
Management Americas Inc. and DWS Trust Company.


The Advisor provides investment counsel for many individuals and institutions,
including insurance companies, industrial corporations, and financial and
banking organizations, as well as providing investment advice to open- and
closed-end SEC registered funds.

The Fund is managed by a team of investment professionals, each of whom plays an
important role in the Fund's management process. Team members work together to
develop investment strategies and select securities for the Fund's portfolio.
This team works for the Advisor or its affiliates and is supported by a large
staff of economists, research analysts, traders and other investment
specialists. The Advisor or its affiliates believe(s) its team approach benefits
fund investors by bringing together many disciplines and leveraging its
extensive resources. Team members with primary responsibility for management of
the Fund, as well as team members who have other ongoing management
responsibilities for the Fund, are identified in the Fund's prospectus, as of
the date of the Fund's prospectus. Composition of the team may change over time,
and fund shareholders and investors will be notified of changes affecting
individuals with primary fund management responsibility.

Investment Management Agreement

The Board and the shareholders of the Fund approved an amended and restated
investment management agreement (the "Investment Management Agreement") between
the Fund and DIMA. The Investment Management Agreement became effective on
December 31, 2006 and was last approved by the Fund's Board on September 18,
2007. Pursuant to the Investment Management Agreement, the Advisor provides
continuing investment management of the assets of the Fund. In addition to the
investment management of the assets of the Fund, the Advisor determines the
investments to be made for the Fund, including what portion of its assets remain
uninvested in cash or cash equivalents, and with whom the orders for investments
are placed, consistent with the Fund's policies as stated in the Prospectuses
and SAIs, or as adopted by the Fund's Board. The Advisor will also monitor, to
the extent not monitored by the Fund's administrator or other agent, the Funds'
compliance with its investment and tax guidelines and other compliance policies.

Prior to June 1, 2006, the Trust, on behalf of the Fund, paid the Advisor the
monthly fee of 0.70% of average daily net assets. Effective June 1, 2006, under
the Investment Management Agreement, the Fund pays DIMA a monthly fee at an
annual rate of:

                  Assets Daily Net Assets                  Management Fee Rate
                  -----------------------                  -------------------

                    $ 0 to $1.5 billion                           0.700%
             Over $1.5 billion - $3.25 billion                    0.685%
              Over $3.25 billion - $5 billion                     0.670%
                      Over $5 billion                             0.655%

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
Investment Management Agreement (unless otherwise provided in the agreement or
as determined by the Board and to the extent permitted by applicable law), the
Advisor paid the compensation and expenses of all the Trustees, officers, and
executive employees of the Fund, including the Fund's share of payroll taxes,
who are affiliated persons of the Advisor.

The DIMA Agreement provides that the Fund is generally responsible for expenses
that include: fees payable to the Advisor; outside legal, accounting or auditing
expenses including with respect to expenses related to negotiation, acquisition
or distribution of portfolio investments; maintenance of books and records that
are maintained by the Fund, the Fund's custodian, or other agents of the Fund;
taxes and governmental fees; fees and expenses of the Fund's accounting agent,
custodian, sub-custodians, depositories, transfer agents, dividend reimbursing
agents and registrars; payments for portfolio pricing or valuation services to
pricing agents, accountants, bankers and other specialists, if any; brokerage
commissions or other costs of acquiring or disposing of any fund 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 DIMA Agreement allowed the Advisor to delegate any of its duties under the
Agreement to a sub-advisor, subject to a majority vote of the Board of Trustees,
including a majority of the Board of Trustees who are not interested persons of
the Trust, and, if required by applicable law, subject to a majority vote of the
Fund's shareholders.

The DIMA Agreement provides that the Advisor shall not be liable for any error
of judgment or mistake of law or for any loss suffered by the Fund in connection
with matters to which the Agreement relates, except a loss resulting from
willful malfeasance, bad faith or gross negligence on the part of the Advisor in
the performance of its duties or from reckless disregard by the Advisor of its
obligations and duties under the agreement. The Investment Management Agreement
may be terminated at any time, without payment of penalty, by either party or by
vote of a majority of the outstanding voting securities of the Fund on 60 days'
written notice.


From time to time, Deutsche Bank or an affiliate (collectively, "DB") may at its
sole discretion invest its own assets in shares of the Fund ("proprietary
investment") for such purposes it deems appropriate, including investments
designed to assist in the management of the Fund's portfolio. Any proprietary
investment may be hedged and, in that event, the return on the proprietary
investment, net of the effect of the hedge, would be expected to differ from the
return of the Fund. DB has no obligation to make any proprietary investments and
the amount of any proprietary investment this is made may or may not be
significant in comparison to the level of assets of the Fund. In the event that
a proprietary investment is made, except as otherwise required under the
Investment Company Act of 1940, DB would be permitted to redeem the investment
at such time that it deems appropriate provided; however, any such redemption
would be effected by DB in a manner designed to mitigate any adverse effects to
the Fund. DB may vote the shares associated with a proprietary investment, at
its option, either by "mirror" voting in the same proportion as the shares of
the Fund are voted by the other shareholders or by voting through an independent
third party.


In addition, the Board and shareholders approved a subadvisor approval policy
for the Fund (the "Sub-advisor Approval Policy"). The Sub-advisor Approval
Policy permits the Advisor, subject to the approval of the Board, including a
majority of its independent board members, to appoint and replace sub-advisors
and to amend sub-advisory contracts without obtaining shareholder approval.
Under the Sub-advisor Approval Policy, the Board, including its independent
board members, will continue to evaluate and approve all new sub-advisory
contracts between the Advisor and any subadvisor, as well as all changes to any
existing sub-advisory contract. The Fund cannot implement the Sub-advisor
Approval Policy without the SEC either adopting revisions to current rules (as
it proposed to do in October 2003) or granting the Fund exemptive relief from
existing rules. The Fund and the Advisor would be subject to certain conditions
imposed by the SEC (and certain conditions that may be imposed in the future
within either exemptive relief or a rule) to ensure that the interests of the
Fund and its shareholders are adequately protected whenever the Advisor acts
under the Sub-advisor Approval Policy, including any shareholder notice
requirements.

Through September 30, 2008, the Advisor has contractually agreed to waive all or
a portion of its fees and reimburse or pay operating expenses of the Fund to the
extent necessary to maintain the fund's total operating expenses at 1.84% for
Class R shares, excluding certain expenses such as extraordinary expenses,
taxes, brokerage and interest. Although there can be no assurance that the
current waiver/reimbursement arrangement will be maintained beyond September 30,
2008, the Advisor has committed to review the continuance of waiver/expense
reimbursement arrangements by September 30, 2008.

In addition, the Advisor has agreed to voluntarily waive a portion of its fees
and reimburse or pay operating expenses of the Fund so that total annual
operating expenses of the Fund will not exceed 1.50%, 2.25%, 2.25%, 0.92% and
1.75% for Class A, Class B, Class C, Institutional Class and Class R shares,
respectively, excluding certain expenses such as extraordinary expenses, taxes,
brokerage and interest. This voluntary waiver or reimbursement may be terminated
at any time at the option of Advisor.

The advisory fees incurred by the Fund for its last three fiscal years are shown
in the table below.

<TABLE>
<CAPTION>
Fund                                         Fiscal Year 2007     Fiscal Year 2006       Fiscal Year 2005
----                                         ----------------     ----------------       ----------------
<S>                                            <C>                  <C>                   <C>
DWS International Select Equity Fund           $1,738,985           $2,615,922            $7,729,533
</TABLE>

For the fiscal years ended October 31, 2007, 2006 and 2005, the Advisor waived
fees and/or reimbursed expenses of the Fund in the amounts of $206,366, 316,612
and $207,191, respectively.

Compensation of Portfolio Managers


Portfolio managers are eligible for total compensation comprised of base salary
and discretionary incentive compensation.

Base Salary - Base salary generally represents a smaller percentage of portfolio
managers' total compensation than discretionary incentive compensation. Base
salary is linked to job function, responsibilities and financial services
industry peer comparison through the use of extensive market data surveys.

Discretionary Incentive Compensation - Generally, discretionary incentive
compensation comprises a greater proportion of total compensation as a portfolio
manager's seniority and compensation levels increase. Discretionary incentive
compensation is determined based on an analysis of a number of factors,
including among other things, the performance of Deutsche Bank, the performance
of the Asset Management division, and the employee's individual contribution. In
evaluating individual contribution, management will consider a combination of
quantitative and qualitative factors. A portion of the portfolio manager's
discretionary incentive compensation may be delivered in long-term equity
programs (usually in the form of Deutsche Bank equity) (the "Equity Plan"). Top
performing portfolio managers may earn discretionary incentive compensation that
is a multiple of their base salary.

o        The quantitative analysis of a portfolio manager's individual
         performance is based on, among other factors, performance of all of the
         accounts managed by the portfolio manager (which includes the fund and
         any other accounts managed by the portfolio manager) over a one-,
         three-, and five-year period relative to the appropriate Morningstar
         and Lipper peer group universes and/or benchmark index(es) with respect
         to each account. Additionally, the portfolio manager's
         retail/institutional asset mix is weighted, as appropriate for
         evaluation purposes. Generally the benchmark index used is a benchmark
         index set forth in the fund's prospectus to which the fund's
         performance is compared. Additional or different appropriate peer group
         or benchmark indices may also be used. Primary weight is given to
         pre-tax portfolio performance over three-year and five-year time
         periods (adjusted as appropriate if the portfolio manager has served
         for less than five years) with lesser consideration given to portfolio
         performance over a one-year period. The increase or decrease in a
         fund's assets due to the purchase or sale of fund shares is not
         considered a material factor.

o        The qualitative analysis of a portfolio manager's individual
         performance is based on, among other things, the results of an annual
         management and internal peer review process, and management's
         assessment of overall portfolio manager contributions to investor
         relations, the investment process and overall performance (distinct
         from fund and other account performance). Other factors, including
         contributions made to the investment team, as well as adherence to
         Compliance Policies and Procedures, Risk Management procedures, the
         firm's Code of Ethics and "living the values" of the Advisor are also
         factors.

The quantitative analysis of a portfolio manager's performance is given more
weight in determining discretionary incentive compensation than the qualitative
portion.

Certain portfolio managers may also participate in the Equity Plan. The amount
of equity awarded under the long-term equity programs is generally based on the
individual's total compensation package and may comprise from 0% to 30% of the
total compensation award. As discretionary incentive compensation increases, the
percentage of compensation awarded in Deutsche Bank equity also increases.
Portfolio managers may receive a portion of their equity compensation in the
form of shares in the proprietary mutual funds that they manage or support.

Fund Ownership of Portfolio Managers

The following table shows the dollar range of shares owned beneficially and of
record by the Fund's portfolio manager in the Fund as well as in all DWS Funds
as a group (i.e., those funds advised by Deutsche Asset Management or its
affiliates), including investments by their immediate family members sharing the
same household and amounts invested through retirement and deferred compensation
plans. This information is provided as of the Fund's most recent fiscal year
end.

<TABLE>
<CAPTION>
                                                  Dollar Range of                    Dollar Range of All DWS
Name of Portfolio Manager                        Fund Shares Owned                      Fund Shares Owned
-------------------------                        -----------------                      -----------------
<S>                                                     <C>                                  <C>
Joseph Axtell                                    $10,001 - $50,000                     $100,001 - $500,000

Conflicts of Interest

In addition to managing the assets of the Fund, the Fund's portfolio manager may
have responsibility for managing other client accounts of the Advisor or its
affiliates. The tables below show, for the 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 the portfolio manager. Total assets attributed to each
portfolio manager in the tables below include total assets of each account
managed by them, although the manager may only manage a portion of such
account's assets. The tables also show the number of performance based fee
accounts, as well as the total assets of the accounts for which the advisory fee
is based on the performance of the account. This information is provided as of
the Fund's most recent fiscal year end.

Other SEC Registered Investment Companies Managed:


                                                                                 Number of
                                       Number of        Total Assets of         Investment          Total Assets of
                                      Registered          Registered         Company Accounts        Performance-
                                      Investment          Investment         with Performance-         Based Fee
Name of Portfolio Manager              Companies           Companies             Based Fee             Accounts
-------------------------              ---------           ---------             ---------             --------

Joseph Axtell                             14            $4,829,894,155               0                    $0

Other Pooled Investment Vehicles Managed:

                                                                               Number of Pooled
                                                                                 Investment
                                      Number of                                Vehicle Accounts    Total Assets of
                                       Pooled          Total Assets of              with             Performance-
                                     Investment       Pooled Investment         Performance-           Based Fee
Name of Portfolio Manager              Vehicles             Vehicles              Based Fee             Accounts
-------------------------              --------             --------              ---------             --------

Joseph Axtell                             1               $2,619,286                 0                    $0

Other Accounts Managed:

                                                                                  Number of
                                                                               Other Accounts        Total Assets of
                                     Number of                                      with             Performance-
                                        Other          Total Assets of          Performance-           Based Fee
Name of Portfolio Manager             Accounts          Other Accounts           Based Fee             Accounts
-------------------------             --------          --------------           ---------             --------

Joseph Axtell                             3              $173,461,041                0                    $0
</TABLE>

In addition to the accounts above, an investment professional may manage
accounts in a personal capacity that may include holdings that are similar to,
or the same as, those of the Fund. The Advisor has in place a Code of Ethics
that is designed to address conflicts of interest and that, among other things,
imposes restrictions on the ability of portfolio managers and other "access
persons" to invest in securities that may be recommended or traded in the Fund
and other client accounts.

Real, potential or apparent conflicts of interest may arise when a portfolio
manager has day-to-day portfolio management responsibilities with respect to
more than one fund or account, including the following:

o        Certain investments may be appropriate for the Fund and also for other
         clients advised by the Advisor, including other client accounts managed
         by the Fund's portfolio management team. Investment decisions for the
         Fund and other clients are made with a view to achieving their
         respective investment objectives and after consideration of such
         factors as their current holdings, availability of cash for investment
         and the size of their investments generally. A particular security may
         be bought or sold for only one client or in different amounts and at
         different times for more than one but less than all clients. Likewise,
         because clients of the Advisor may have differing investment
         strategies, a particular security may be bought for one or more clients
         when one or more other clients are selling the security. The investment
         results achieved for the Fund may differ from the results achieved for
         other clients of the Advisor. In addition, purchases or sales of the
         same security may be made for two or more clients on the same day. In
         such event, such transactions will be allocated among the clients in a
         manner believed by the Advisor to be most equitable to each client,
         generally utilizing a pro rata allocation methodology. In some cases,
         the allocation procedure could potentially have an adverse effect or
         positive effect on the price or amount of the securities purchased or
         sold by the Fund. Purchase and sale orders for the Fund may be combined
         with those of other clients of the Advisor in the interest of achieving
         the most favorable net results to the Fund and the other clients.

o        To the extent that a portfolio manager has responsibilities for
         managing multiple client accounts, a portfolio manager will need to
         divide time and attention among relevant accounts. The Advisor attempts
         to minimize these conflicts by aligning its portfolio management teams
         by investment strategy and by employing similar investment models
         across multiple client accounts.

o        In some cases, an apparent conflict may arise where the Advisor has an
         incentive, such as a performance-based fee, in managing one account and
         not with respect to other accounts it manages. The Advisor will not
         determine allocations based on whether it receives a performance-based
         fee from the client. Additionally, the Advisor has in place supervisory
         oversight processes to periodically monitor performance deviations for
         accounts with like strategies.

o        The Advisor and its affiliates and the investment team of the Funds 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 Board of Trustees of the Trust has adopted a Code of Ethics pursuant to Rule
17j-1 under the 1940 Act. The Trust's Code of Ethics permits access persons of
the Fund (Board members, officers of the Trust and employees of the Advisor), to
make personal securities transactions for their own accounts. This include
transactions in securities that may be purchased or held by the Fund, but
requires compliance with the Code's preclearance requirements, subject to
certain exceptions. In addition, the Trust's Code provides for trading blackout
periods that prohibit trading by personnel within periods of trading by the Fund
in the same security. The Trust's Code prohibits short-term trading profits,
prohibits personal investment in initial public offerings and requires prior
approval with respect to purchases of securities in private placements.


The Fund's advisor and its affiliates (including the Fund's Distributor, DIDI)
have each adopted a Code of Ethics pursuant to Rule 17j-1 under the 1940 Act
(the "Consolidated Code"). The Consolidated Code permits access persons to trade
in securities for their own accounts, subject to compliance with the
Consolidated Code's preclearance requirements, that may be purchased or held by
the Fund. In addition, the Consolidated Code also provides for trading "blackout
periods" that prohibit trading by personnel within periods of trading by the
Fund in the same security. The Consolidated Code also prohibits short-term
trading profits, and personal investment in initial public offerings and
requires prior approval with respect to purchases of securities in private
placements. 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 Code of Ethics may be
granted in particular circumstances after review by appropriate personnel.


Regulatory Matters and Legal Proceedings


On December 21, 2006, DeAM settled proceedings with the SEC and the New York
Attorney General on behalf of DAMI and DIMA, the investment advisors to many of
the DWS Investments funds, regarding allegations of improper trading of fund
shares at DeAM and at the legacy Scudder and Kemper organizations prior to their
acquisition by DeAM in April 2002. These regulators alleged that although the
prospectuses for certain funds in the regulators' view indicated that the funds
did not permit market timing, DAMI and DIMA breached their fiduciary duty to
those funds in that their efforts to limit trading activity in the funds were
not effective at certain times. The regulators also alleged that DAMI and DIMA
breached their fiduciary duty to certain funds by entering into certain market
timing arrangements with investors. These trading arrangements originated in
businesses that existed prior to the currently constituted DeAM organization,
which came together as a result of various mergers of the legacy Scudder, Kemper
and Deutsche fund groups, and all of the arrangements were terminated prior to
the start of the regulatory investigations that began in the summer of 2003. No
current DeAM employee approved these trading arrangements. Under the terms of
the settlements, DAMI and DIMA neither admitted nor denied any wrongdoing.


The terms of the SEC settlement, which identified improper trading in the legacy
Deutsche and Kemper mutual funds only, provide for payment of disgorgement in
the amount of $17.2 million. The terms of the settlement with the New York
Attorney General provide for payment of disgorgement in the amount of $102.3
million, which is inclusive of the amount payable under the SEC settlement, plus
a civil penalty in the amount of $20 million. The total amount payable by DeAM,
approximately $122.3 million, will be distributed to shareholders of the
affected funds in accordance with a distribution plan to be developed by a
distribution consultant. The funds' investment advisors do not believe these
amounts will have a material adverse financial impact on them or materially
affect their ability to perform under their investment management agreements
with the DWS funds. The above-described amounts are not material to Deutsche
Bank, and have already been reserved.

Among the terms of the settled orders, DeAM is subject to certain undertakings
regarding the conduct of its business in the future, including formation of a
Code of Ethics Oversight Committee to oversee all matters relating to issues
arising under the advisors' Code of Ethics; establishment of an Internal
Compliance Controls Committee having overall compliance oversight responsibility
of the advisors; engagement of an Independent Compliance Consultant to conduct a
comprehensive review of the advisors' supervisory compliance and other policies
and procedures designed to prevent and detect breaches of fiduciary duty,
breaches of the Code of Ethics and federal securities law violations by the
advisors and their employees; and commencing in 2008, the advisors shall undergo
a compliance review by an independent third party.

In addition, DeAM is subject to certain further undertakings relating to the
governance of the mutual funds, including that at least 75% of the members of
the Boards of Trustees/Directors overseeing the DWS Funds continue to be
independent of DeAM; the Chairmen of the DWS Funds' Boards of Trustees/Directors
continue to be independent of DeAM; DeAM maintain existing management fee
reductions for certain funds for a period of five years and not increase
management fees for these certain funds during this period; the funds retain a
senior officer (or independent consultants, as applicable) responsible for
assisting in the review of fee arrangements and monitoring compliance by the
funds and the investment advisors with securities laws, fiduciary duties, codes
of ethics and other compliance policies, the expense of which shall be borne by
DeAM; and periodic account statements, fund prospectuses and the mutual funds'
web site contain additional disclosure and/or tools that assist investors in
understanding the fees and costs associated with an investment in the funds and
the impact of fees and expenses on fund returns.

DeAM has also settled proceedings with the Illinois Secretary of State regarding
market timing matters. The terms of the Illinois settlement provide for investor
education contributions totaling approximately $4 million and a payment in the
amount of $2 million to the Securities Audit and Enforcement Fund.


On September 28, 2006, the SEC and the National Association of Securities
Dealers ("NASD") (now known as the Financial Industry Regulatory Authority, or
"FINRA") announced final agreements in which Deutsche Investment Management
Americas Inc. ("DIMA"), Deutsche Asset Management, Inc. ("DAMI") and DWS Scudder
Distributors, Inc. (now known as DWS Investments Distributors, Inc. ("DIDI"))
settled administrative proceedings regarding disclosure of brokerage allocation
practices in connection with sales of the DWS Funds' (now known as the DWS
Investments 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 DIDI'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 DWS Fund shares. These directed brokerage
practices were discontinued in October 2003.





Under the terms of the settlements, in which DIMA, DAMI and DIDI neither
admitted nor denied any of the regulators' findings, DIMA, DAMI and DIDI 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 DIDI 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-investments.com/regulatory_settlements.


The matters alleged in the regulatory settlements described above also serve as
the general basis of a number of private class action lawsuits involving the DWS
funds. These lawsuits name as defendants various persons, including certain DWS
funds, the funds' investment advisors and their affiliates, and certain
individuals, including in some cases fund Trustees/Directors, officers, and
other parties. Each DWS fund's investment advisor has agreed to indemnify the
applicable DWS funds in connection with these lawsuits, or other lawsuits or
regulatory actions that may be filed making similar allegations.

Based on currently available information, the funds' investment advisors believe
the likelihood that the pending lawsuits will have a material adverse financial
impact on a DWS fund is remote and such actions are not likely to materially
affect their ability to perform under their investment management agreements
with the DWS funds.

                             FUND SERVICE PROVIDERS

Administrator

DIMA, located at 345 Park Avenue, New York, New York 10154, serves as the Fund's
administrator. The Fund entered into an administrative services agreement with
the Advisor (the "Administrative Services Agreement"), pursuant to which 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. Under the Administrative Services
Agreement, DIMA, Inc. is obligated on a continuous basis to provide such
administrative services as the Board of the Fund reasonably deems necessary for
the proper administration of the Fund. DIMA, Inc. 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 For the fiscal year ended October 31,


Advisor will not be liable under t Administrative Services Agreemehe except for
willful misfeasance, bnt faith or negligence in tad performance of its duties or
frhe the reckless disregard by it of iom duties and obligations thereunder. ts

For all services provided under t Administrative Services Agreemenhe the Fund
pays the Advisor a fee t, 0.100% of the Fund's net assetof Prior to June 1,
2006, the Adviss. served as the Fund's administrator and received a fee for
serving or administrator of 0.30% of the Fundas average daily net assets and
pa's transfer agency fees out of iid Administration fee. For the fiscts year
ended October 31, 2005 and fal the period November 1, 2005 throuor May 31, 2006,
the Fund paid tgh Advisor $3,193,014 and $773,34he respectively. 3,

The following table sets forth the net administration fees that the Fund paid to
DIMA:

<TABLE>
<CAPTION>
                                                  2007               2006             2005
                                                  ----               ----             ----

<S>                                           <C>                <C>               <C>
DWS International Select Equity Fund          $248,426(1)        $773,343(2)       $3,193,014
</TABLE>


(1)      Of which $23,281 was unpaid at October 31, 2007.

(2)      For the period November 1, 2005 through June 30, 2006.


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


Pursuant to DeAM 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


Shares of the Fund are distributed by DWS Investments Distributors, Inc. ("DIDI"
or the "Distributor"). The Fund offers six classes of shares: Institutional
Class and Class A, B, C, R and S shares. Class S shares are offered in a
separate statement of additional information. General information on how to buy
shares of the Fund is set forth in "Buying and Selling Fund Shares" in the
Fund's Prospectuses. The following supplements that information.

The Trust, on behalf of the Fund, has entered into a distribution agreement (the
"Distribution Agreement") pursuant to which DIDI, 222 South Riverside Plaza,
Chicago, IL 60606 as agent, serves as principal underwriter for the continuous
offering of shares, including Institutional shares, of the Fund. DIDI, an
affiliate of the Advisor, is a wholly owned subsidiary of Deutsche Bank AG. DIDI
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. Class A, Class B and Class C shares of the Fund are subject to sales
loads and distribution fees. Class R shares of the Fund are subject to
distribution fees.


The Distribution Agreement will remain in effect for one year from its effective
date and will continue in effect thereafter only if such continuance is
specifically approved annually by the Trustees, including a majority of the
Trustees who are not parties to the Distribution Agreement or "interested
persons" of such parties. The Distribution Agreement with respect to Class A,
Class B, Class C and Class R shares of the Fund was most recently approved on
September 28, 2005 by a vote of the Trust's Board of Trustees, including a
majority of those Trustees who were not parties to the Distribution Agreement or
"interested persons" of any such parties. The Distribution Agreement is
terminable, as to the Fund, by vote of the Board of Trustees, or by the holders
of a majority of the outstanding shares of the Fund, at any time without penalty
on 60 days' written notice to the Distributor. The Distributor may terminate the
Distribution Agreement at any time without penalty on 60 days' written notice to
the Trust.

Class A, B, C and R Shares Only. In addition, with respect to Class A, Class B,
Class C and Class R shares of the Fund, these classes may enter into shareholder
servicing agreements with certain financial institutions to act as shareholder
servicing agents, pursuant to which the Distributor will allocate a portion of
its distribution fee as compensation for such financial institution's ongoing
shareholder services. The Fund may also enter into shareholder servicing
agreements pursuant to which the Advisor or its affiliates will provide
compensation out of its own resources for ongoing shareholder services.
Currently, banking laws and regulations do not prohibit a financial holding
company affiliate from acting as distributor or shareholder servicing agent or
in other capacities for investment companies. Should future legislative,
judicial or administrative action prohibit or restrict the activities of the
shareholder servicing agents in connection with the shareholder servicing
agreements, the Trust may be required to alter materially or discontinue its
arrangements with the shareholder servicing agents. Such financial institutions
may impose separate fees in connection with these services and investors should
review the Prospectuses and this SAI in conjunction with any such institution's
fee schedule.

As compensation for providing distribution and shareholder services, the
Distributor expects to allocate up to all of its fee to Participating Dealers
and Shareholder Servicing Agents. As compensation for providing distribution and
shareholder services as described above for the Class B, Class C and Class R
shares, the Distributor receives an annual fee, accrued daily and payable
monthly, equal to 0.75%, 0.75% and 0.25%. respectively, of their average daily
net assets. In addition, with respect to the Class B, Class C and Class R
shares, the Distributor receives a shareholder servicing fee at an annual rate
of 0.25% of their respective average daily net assets.
Pursuant to Rule 12b-1 under the 1940 Act, investment companies may pay
distribution expenses, directly or indirectly, only pursuant to a plan adopted
by the investment company's board of trustees and approved by its shareholders.
The Fund has adopted plans of distribution for its Class A, Class B, Class C and
Class R Shares (the "Plans"). Under each plan, the Fund pays a fee to the
Distributor for distribution and other shareholder servicing assistance as set
forth in the Distribution Agreement, and the Distributor is authorized to make
payments out of its fee to Participating Dealers and Shareholder Servicing
Agents. The Plans will remain in effect from year to year as long as
specifically approved (a) at least annually by the Board of Trustees and (b) by
the affirmative vote of a majority of the Independent Trustees, by votes cast in
person at a meeting called for such purpose.

In approving the Plans, the Trustees concluded, in the exercise of their
reasonable business judgment, that there was a reasonable likelihood that the
Plans would benefit the Fund and its shareholders. The Plans will be renewed
only if the Trustees make a similar determination in each subsequent year. The
Plans may not be amended to increase materially the fee to be paid pursuant to
the Distribution Agreement without the approval of the shareholders of the
applicable sales of the Fund. The Plans may be terminated at any time by the
vote of a majority of the Independent Trustees or by a vote of a majority of the
Fund's outstanding shares.

During the continuance of the Plans, the Trustees will be provided for their
review, at least quarterly, a written report concerning the payments made under
the Plans to the Distributor pursuant to the Distribution Agreement and to
participating dealers pursuant to any sub-distribution agreements. Such reports
shall be made by the persons authorized to make such payments. In addition,
during the continuance of the Plans, the selection and nomination of the
Independent Trustees will be committed to the discretion of the Independent
Trustees then in office.

Under the Plans, amounts allocated to participating dealers and shareholder
servicing agents may not exceed amounts payable to the Distributor under the
Plans. Payments under the Plans are made as described above regardless of the
Distributor's actual cost of providing distribution services and may be used to
pay the Distributor's overhead expenses. If the cost of providing distribution
services to the Class A and Class R shares is less than 0.25% of the classes'
respective average daily net assets for any period or if the cost of providing
distribution services to the Class B and Class C shares is less than 0.75% of
the classes' respective average daily net assets for any period, the unexpended
portion of the distribution fees may be retained by the Distributor. The Plans
do not provide for any charges to the Fund for excess amounts expended by the
Distributor and, if any of the Plans is terminated in accordance with its terms,
the obligation of the Fund to make payments to the Distributor pursuant to such
Plan will cease and the Fund will not be required to make any payments past the
date the Distribution Agreement terminates with respect to that class. In return
for payments received pursuant to the Plans, the Distributor pays the
shareholding servicing and distribution-related expenses of the Fund including
one or more of the following: advertising expenses; printing and mailing of
prospectuses to other than current shareholders; compensation to dealers and
sales personnel; and interest, carrying or other financing charges.

In accordance with the terms of the Plan, the officers of the Trust provide to
the Trust's Board of Trustees for their review periodically a written report of
services performed by and fees paid to each Service Organization under the
Service Agreements and Service Plan.

Shareholders of Class B of the Fund have recently approved an Amended and
Restated Rule 12b-1 Plan (the "Amended Plan" and, together with the Class A
Distribution Plan, the "Distribution Plans") for that class. Under the Amended
Plan, the Fund will pay a shareholder servicing fee at an annual rate of up to
0.25% of the average daily net assets of its Class C shares to its Distributor
in addition to a distribution fee at an annual rate of up to 0.75% of such
assets. Pursuant to the Amended Plan, shareholder and administrative services
are provided to the Fund on behalf of its Class B shareholders under the Fund's
Service Agreement with its Distributor. Because 12b-1 fees are paid out of Fund
assets on an ongoing basis, they will, over time, increase the cost of an
investment and may cost more than other types of sales charges.

Conflict of interest restrictions (including the Employee Retirement Income
Security Act of 1974 ("ERISA") may apply to a service organization's receipt of
compensation paid by the Fund in connection with the investment of fiduciary
assets in Investment shares of the Fund. Service organizations that are subject
to the jurisdiction of the SEC, the Department of Labor or state securities
commissions are urged to consult their own legal Advisors before investing
fiduciary assets in Investment shares and receiving service fees.

The Trust believes that fiduciaries of ERISA plans may properly receive fees
under a Plan if the plan fiduciary otherwise properly discharges its fiduciary
duties, including (if applicable) those under ERISA. Under ERISA, a plan
fiduciary, such as a trustee or investment manager, must meet the fiduciary
responsibility standards set forth in part 4 of Title I of ERISA. Those
standards are designed to help ensure that the fiduciary's decisions are made in
the best interests of the plan and are not colored by self-interest.

Section 403(c)(1) of ERISA provides, in part, that the assets of a plan shall be
held for the exclusive purpose of providing benefits to the plan's participants
and their beneficiaries and defraying reasonable expenses of administering the
plan. Section 404(a)(1) sets forth a similar requirement on how a plan fiduciary
must discharge his or her duties with respect to the plan, and provides further
that such fiduciary must act prudently and solely in the interests of the
participants and beneficiaries. These basic provisions are supplemented by the
per se prohibitions of certain classes of transactions set forth in Section 406
of ERISA.

Section 406(a)(1)(D) of ERISA prohibits a fiduciary of an ERISA plan from
causing that plan to engage in a transaction if he knows or should know that the
transaction would constitute a direct or indirect transfer to, or use by or for
the benefit of, a party in interest, of any assets of that plan. Section 3(14)
includes within the definition of "party in interest" with respect to a plan any
fiduciary with respect to that plan. Thus, Section 406(a)(1)(D) would not only
prohibit a fiduciary from causing the plan to engage in a transaction which
would benefit a third person who is a party in interest, but it would also
prohibit the fiduciary from similarly benefiting himself. In addition, Section
406(b)(1) specifically prohibits a fiduciary with respect to a plan from dealing
with the assets of that plan in his own interest or for his own account. Section
406(b)(3) supplements these provisions by prohibiting a plan fiduciary from
receiving any consideration for his own personal account from any party dealing
with the plan in connection with a transaction involving the assets of the plan.

In accordance with the foregoing, however, a fiduciary of an ERISA plan may
properly receive service fees under a Service Plan if the fees are used for the
exclusive purpose of providing benefits to the plan's participants and their
beneficiaries or for defraying reasonable expenses of administering the plan for
which the plan would otherwise be liable. See, e.g., Department of Labor ERISA
Technical Release No. 86-1 (stating a violation of ERISA would not occur where a
broker-dealer rebates commission dollars to a plan fiduciary who, in turn,
reduces its fees for which plan is otherwise responsible for paying). Thus, the
fiduciary duty issues involved in a plan fiduciary's receipt of the service fee
must be assessed on a case-by-case basis by the relevant plan fiduciary.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
                                               12b-1 Compensation to Underwriter for the
                                             Twelve-Month Period Ended September 30, 2007
------------------------------------------------------------------------------------------------

                                                 12b-1          12b-1
                                             Distribution    Shareholder      12b-1 Compensation
                                                 Fees       Services Fees       Paid to Firms
-------------------------------------------- -------------- --------------- -----------------------
<S>                        <C>                           <C>       <C>                     <C>
DWS International      Class A                          $0        $159,915                $200,410
Select Equity Fund
                       --------------------- -------------- --------------- -----------------------
                       Class B                     $80,826         $26,383                 $43,384
                       --------------------- -------------- --------------- -----------------------
                       Class C                    $118,015         $38,323                $169,486
                       --------------------- -------------- --------------- -----------------------
                       Class R                      $2,089          $1,053                  $3,330
                       --------------------- -------------- --------------- -----------------------
                       Institutional Class              $0              $0                      $0
                       --------------------- -------------- --------------- -----------------------


------------------------------------------------------------------------------------------------------------------
                                                        Other Expenses Paid by Underwriter for the
                                                       Twelve-Month Period Ended September 30, 2007
------------------------------------------------------------------------------------------------------------------

                                             Advertising,
                                                Sales,
                                              Literature
                                                 and                        Marketing
                                             Promotional     Prospectus     and Sales     Postage and     Imputed
                                              Materials       Printing       Expenses       Mailing      Interest
------------------------------------------- --------------- -------------- ------------- -------------- ------------
DWS International      Class A                    $114,464         $9,816       $24,993         $7,793           $0
Select Equity Fund
                       -------------------- --------------- -------------- ------------- -------------- ------------
                       Class B                      $4,294           $368          $930           $296       $4,999
                       -------------------- --------------- -------------- ------------- -------------- ------------
                       Class C                     $13,871         $1,241        $2,967           $932           $0
                       -------------------- --------------- -------------- ------------- -------------- ------------
                       Class R                      $3,606           $323          $876           $230           $0
                       -------------------- --------------- -------------- ------------- -------------- ------------
                       Institutional Class              $0             $0            $0             $0           $0
                       -------------------- --------------- -------------- ------------- -------------- ------------
</TABLE>

Custodian

Brown Brothers Harriman and Co. (the "Custodian"), 40 Water Street, Boston,
Massachusetts 02109, serves as the Fund'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


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 $3.60 per account
(as of 2007, indexed to inflation) plus an asset based fee of up to 0.25% of
average net assets. 1/12th of the annual service charge for each account is
charged and payable to the Transfer Agent each month. A fee is charged for any
account which at any time during the month had a share balance in the Fund.
Smaller fees are also charged for closed accounts for which information must be
retained on the Transfer Agent's system for up to 18 months after closing for
tax reporting purposes.

Certain out-of-pocket expenses incurred by the Transfer Agent, including
expenses of printing and mailing routine fund disclosure documents, costs of
record retention and transaction processing costs are reimbursed by the Fund or
are paid directly by the Fund. Certain additional out-of-pocket expenses,
including costs of computer hardware and software, third party record-keeping
and processing of proxy statements, may only be reimbursed by the Fund with the
prior approval of the Fund's Board.




For the fiscal year ended October 31, 2007, the amount charged to Classes A, B,
C, R and Institutional aggregated $146,242, $18,970, $24,072, $851 and $18,708,
respectively. For the fiscal year ended October 31, 2006, the amount charged to
Classes A, B, C, R and Institutional aggregated $70,746, $14,665, $10,229,
$2,648 and $43,353, respectively.


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


The Fund, or the Advisor (including any affiliate of the Advisor), or both, may
pay unaffiliated third parties for providing recordkeeping and other
administrative services with respect to accounts of participants in retirement
plans or other beneficial owners of Fund shares whose interests are generally
held in an omnibus account.

Legal Counsel


Vedder Price P.C., 222 North LaSalle Street, Chicago, Illinois 60601, serves as
legal counsel to the Fund.

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




Independent Registered Public Accounting Firm

PricewaterhouseCoopers LLP, 125 High Street, Boston, MA 02110, serves as the
Fund's independent registered public accounting firm.

                             PORTFOLIO TRANSACTIONS

The Advisor is generally responsible for placing the orders for the purchase and
sale of portfolio securities, including the allocation of brokerage. With
respect to those funds for which a sub-investment advisor manages the fund's
investments, references in this section to the "Advisor" should be read to mean
the Sub-Advisor, except as noted below.

The policy of the Advisor in placing orders for the purchase and sale of
securities for the Funds is to seek best execution, taking into account such
factors, among others, as price; commission (where applicable); the
broker-dealer's ability to ensure that securities will be delivered on
settlement date; the willingness of the broker-dealer to commit its capital and
purchase a thinly traded security for its own inventory; whether the
broker-dealer specializes in block orders or large program trades; the
broker-dealer's knowledge of the market and the security; the broker-dealer's
ability to maintain confidentiality; the broker-dealer's ability to provide
access to new issues; the broker-dealer's ability to provide support when
placing a difficult trade; the financial condition of the broker-dealer; and
whether the broker-dealer has the infrastructure and operational capabilities to
execute and settle the trade. The Advisor seeks to evaluate the overall
reasonableness of brokerage commissions with commissions charged on comparable
transactions and compares the brokerage commissions (if any) paid by the Funds
to reported commissions paid by others. The Advisor routinely reviews commission
rates, execution and settlement services performed and makes internal and
external comparisons.

Commission rates on transactions in equity securities on US securities exchanges
are subject to negotiation. Commission rates on transactions in equity
securities on foreign securities exchanges are generally fixed. Purchases and
sales of fixed-income securities and certain over-the-counter securities are
effected on a net basis, without the payment of brokerage commissions.
Transactions in fixed income and certain over-the-counter securities are
generally placed by the Advisor with the principal market makers for these
securities unless the Advisor reasonably believes more favorable results are
available elsewhere. Transactions with dealers serving as market makers reflect
the spread between the bid and asked prices. Purchases of underwritten issues
will include an underwriting fee paid to the underwriter. Money market
instruments are normally purchased in principal transactions directly from the
issuer or from an underwriter or market maker.

It is likely that the broker-dealers selected based on the considerations
described in this section will include firms that also sell shares of the Funds
to their customers. However, the Advisor does not consider sales of shares of
the Funds as a factor in the selection of broker-dealers to execute portfolio
transactions for the Funds and, accordingly, has implemented policies and
procedures reasonably designed to prevent its traders from considering sales of
shares of the Funds as a factor in the selection of broker-dealers to execute
portfolio transactions for the Funds.

The Advisor is permitted by Section 28(e) of the Securities Exchange Act of
1934, as amended ("1934 Act"), when placing portfolio transactions for a Fund,
to cause the Fund to pay brokerage commissions in excess of that which another
broker-dealer might charge for executing the same transaction in order to obtain
research and brokerage services if the Advisor determines that such commissions
are reasonable in relation to the overall services provided. The Advisor may
from time to time, in reliance on Section 28(e) of the 1934 Act, execute
portfolio transactions with broker-dealers that provide research and brokerage
services to the Advisor. Consistent with the Advisor's policy regarding best
execution, where more than one broker is believed to be capable of providing
best execution for a particular trade, the Advisor may take into consideration
the receipt of research and brokerage services in selecting the broker-dealer to
execute the trade. Although certain research and brokerage services from
broker-dealers may be useful to a Fund and to the Advisor, it is the opinion of
the Advisor that such information only supplements its own research effort since
the information must still be analyzed, weighed and reviewed by the Advisor's
staff. To the extent that research and brokerage services of value are received
by the Advisor, the Advisor may avoid expenses that it might otherwise incur.
Research and brokerage services received from a broker-dealer may be useful to
the Advisor and its affiliates in providing investment management services to
all or some of its clients, which includes a Fund. Services received from
broker-dealers that executed securities transactions for a Portfolio will not
necessarily be used by the Advisor specifically to service such Fund.

Research and brokerage services provided by broker-dealers may include, but are
not limited to, information on the economy, industries, groups of securities,
individual companies, statistical information, accounting and tax law
interpretations, political developments, legal developments affecting portfolio
securities, technical market action, pricing and appraisal services, credit
analysis, risk measurement analysis, performance analysis and measurement and
analysis of corporate responsibility issues. Research and brokerage services are
typically received in the form of written or electronic reports, access to
specialized financial publications, telephone contacts and personal meetings
with security analysts, but may also be provided in the form of access to
various computer software and meetings arranged with corporate and industry
representatives.

The Advisor may also select broker-dealers and obtain from them research and
brokerage services that are used in connection with executing trades provided
that such services are consistent with interpretations under Section 28(e) of
the 1934 Act. Typically, these services take the form of computer software
and/or electronic communication services used by the Advisor to facilitate
trading activity with those broker-dealers.

Research and brokerage services may include products obtained from third parties
if the Advisor determines that such product or service constitutes brokerage and
research as defined in Section 28(e) and interpretations thereunder. Currently,
it is the Advisor's policy that Sub-Advisors may not execute portfolio
transactions on behalf of the Funds to obtain third party research and brokerage
services. The Advisor may, in the future, change this policy. Regardless,
certain Sub-Advisors may, as matter of internal policy, limit or preclude third
party research and brokerage services.

The Advisor may use brokerage commissions to obtain certain brokerage products
or services that have a mixed use (i.e., it also serves a function that does not
relate to the investment decision-making process). In those circumstances, the
Advisor will make a good faith judgment to evaluate the various benefits and
uses to which it intends to put the mixed use product or service and will pay
for that portion of the mixed use product or service that it reasonably believes
does not constitute research and brokerage services with its own resources.

DIMA will monitor regulatory developments and market practice in the use of
client commissions to obtain research and brokerage services and may adjust its
portfolio transactions policies in response thereto.

Investment decisions for each Fund and for other investment accounts managed by
the Advisor are made independently of each other in light of differing
conditions. However, the same investment decision may be made for two or more of
such accounts. In such cases, simultaneous transactions are inevitable. To the
extent permitted by law, the Advisor may aggregate the securities to be sold or
purchased for a Fund with those to be sold or purchased for other accounts in
executing transactions. Purchases or sales are then averaged as to price and
commission and allocated as to amount in a manner deemed equitable to each
account. While in some cases this practice could have a detrimental effect on
the price paid or received by, or on the size of the position obtained or
disposed of for, the Fund, in other cases it is believed that the ability to
engage in volume transactions will be beneficial to the Fund.

DIMA and its affiliates and the Funds' management team manage other mutual funds
and separate accounts, some of which use short sales of securities as a part of
its investment strategy. The simultaneous management of long and short
portfolios creates potential conflicts of interest including the risk that short
sale activity could adversely affect the market value of the long positions (and
vice versa), the risk arising from sequential orders in long and short
positions, and the risks associated with receiving opposing orders at the same
time.

DIMA has adopted procedures that it believes are reasonably designed to mitigate
these potential conflicts of interest. Incorporated in the procedures are
specific guidelines developed to ensure fair and equitable treatment for all
clients. DIMA and the investment team have established monitoring procedures and
a protocol for supervisory reviews, as well as compliance oversight to ensure
that potential conflicts of interest relating to this type of activity are
properly addressed.

Deutsche Bank AG or one of its affiliates (or in the case of a Sub-Advisor, the
Sub-Advisor or one of its affiliates) may act as a broker for the Funds and
receive brokerage commissions or other transaction-related compensation from the
Funds in the purchase and sale of securities, options or futures contracts when,
in the judgment of the Advisor, and in accordance with procedures approved by
the Funds' Boards, the affiliated broker will be able to obtain a price and
execution at least as favorable as those obtained from other qualified brokers
and if, in the transaction, the affiliated broker charges the Funds a rate
consistent with that charged to comparable unaffiliated customers in similar
transactions.

For the fiscal years ended October 31, 2005, 2006 and 2007, the Fund paid
aggregate brokerage commissions of $3,945,557, $1,523,015 and $0, respectively.

Securities of Regular Broker Dealers. The Fund is required to identify any
securities of its "regular broker or dealers" (as such term is defined in the
1940 Act) that the Fund has acquired during the most recent year. As of October
31, 2007, the Fund did not hold any securities of its regular broker dealers.

The Fund did not pay any affiliated brokerage commissions for its most recent
fiscal year end.

Portfolio Turnover. Although the Fund does not intend to invest for the purpose
of seeking short-term profits, securities in the Fund will be sold whenever the
Advisor believes it is appropriate to do so in light of the investment
objectives of the Fund, without regard to the length of time a particular
security may have been held The Fund may sell securities held for a short time
in order to take advantage of what the Advisor believes to be temporary
disparities in normal yield relationships between securities. A high rate of
portfolio turnover (i.e., 100% or higher) will result in correspondingly higher
transaction costs to the Fund, particularly if the Fund's primary investments
are equity securities. A high rate of portfolio turnover will also increase the
likelihood of net short-term capital gains (distributions of which are taxable
to shareholders as ordinary income).

For the fiscal years ended October 31, 2007 and 2006, the Fund's portfolio
turnover rates were 119% and 140%, respectively.

                       PURCHASES AND REDEMPTIONS 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 DIDI of the order accompanied by
payment. Orders received by dealers or other financial services firms prior to
the determination of net asset value and received in good order by DIDI prior to
the determination of net asset value will be confirmed at a price based on the
net asset value next determined after receipt by DIDI ("trade date").


Certificates. Share certificates will not be issued. Share certificates now in a
shareholder's possession may be sent to the transfer agent for cancellation and
book-entry credit to such shareholder's account. Certain telephone and other
procedures require book-entry holdings. Shareholders with outstanding
certificates bear the risk of loss.


Use of Financial Services Firms. Investment dealers and other firms provide
varying arrangements for their clients to purchase and redeem the Fund's shares,
including higher minimum investments, and may assess transaction or other fees.
Firms may arrange with their clients for other investment or administrative
services. Such firms may independently establish and charge additional amounts
to their clients for such services. Firms also may hold the Fund's shares in
nominee or street name as agent for and on behalf of their customers. In such
instances, the Fund's transfer agent, DWS Investments Service Company ("DISC"),
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 DIDI, 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.


DIDI has adopted an Incentive Plan (the "Plan") covering wholesalers that are
regional vice presidents ("DWS Investments Wholesalers"). Generally, DWS
Investments Wholesalers market shares of the DWS funds to financial advisors,
who in turn may recommend that investors purchase shares of a DWS fund. The Plan
is an incentive program that combines a monthly incentive component with a
quarterly strategic bonus component. Under the Plan, DWS Investments 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 -- "Strategic," "Tactical" or "all other funds" -- taking into
consideration, among other things, the following criteria, where applicable:

o        The Fund's consistency with DWS Investments' branding and long-term
         strategy;
o        The Fund's competitive performance;
o        The Fund's Morningstar rating;
o        The length of time the Fund's Portfolio Managers have managed the
         Fund/Strategy;
o        Market size for the fund category;
o        The Fund's size, including sales and redemptions of the Fund's shares.

This information and other factors are presented to a committee comprised of
representatives from various groups within DWS Investments, 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
Strategic and Tactical categories represents management's judgment based on the
above criteria. In addition, management may consider a fund's profile over the
course of several review periods before making a change to its category
assignment. These category assignments will be posted quarterly to the DWS
funds' Web site at www.dws-investments.com, approximately one month after the
end of each quarter. DWS Investments Wholesalers receive the highest
compensation for Strategic funds, less for Tactical funds and the lowest for all
other funds. The level of compensation among these categories may differ
significantly.

The prospect of receiving, or the receipt of, additional compensation by a DWS
Investments Wholesaler under the Plan may provide an incentive to favor
marketing the Strategic or Tactical funds over all other funds. The Plan,
however, will not change the price that investors pay for shares of a fund. The
DWS Investments Compliance Department monitors DWS Investments Wholesaler sales
and other activity in an effort to detect unusual activity in the context of the
compensation structure under the Plan. However, investors may wish to take the
Plan and the product category of the fund into account when considering
purchasing a fund or evaluating any recommendations relating to fund shares.




Telephone and Electronic Transaction Procedures. Shareholders have various
telephone, Internet, wire and other electronic privileges available. The Fund or
its agents will not be liable for any losses, expenses or costs arising out of
fraudulent or unauthorized instructions pursuant to these privileges if the Fund
or its agents reasonably believe, based upon reasonable verification procedures,
that the instructions were genuine. Verification procedures include recording
instructions, requiring certain identifying information before acting upon
instructions and sending written confirmations. During periods when it is
difficult to contact the Shareholder Service Agent, it may be difficult to use
telephone, wire and other privileges.

QuickBuy and QuickSell. QuickBuy and QuickSell permits the transfer of money via
the Automated Clearing House System (minimum $50 and maximum $250,000) from or
to a shareholder's bank, savings and loan, or credit union account in connection
with the purchase or redemption of Fund shares. Shares purchased by check or
through QuickBuy and QuickSell or Direct Deposit may not be redeemed under this
privilege until such Shares have been owned for at least 10 calendar days.
QuickBuy and QuickSell cannot be used with passbook savings accounts or for
certain tax-deferred plans.




Dividend Payment Option. Investors may have dividends and distributions
automatically deposited to their predesignated bank account through DWS
Investments' Dividend Payment Option request form. Shareholders whose
predesignated checking account of record is with a member bank of Automated
Clearing House Network (ACH) can have income and capital gain distributions
automatically deposited to their personal bank account usually within three
business days after the Fund pays its distribution. A Dividend Payment Option
request form can be obtained by visiting our Web site at:
www.dws-investments.com or calling (800) 621-1048. Confirmation Statements will
be mailed to shareholders as notification that distributions have been
deposited.

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


o        Traditional, Roth and Education IRAs. This includes Savings Incentive
         Match Plan for Employees of Small Employers ("SIMPLE"), Simplified
         Employee Pension Plan ("SEP") IRA accounts and prototype documents.

o        403(b)(7) Custodial Accounts. This type of plan is available to
         employees of most non-profit organizations.

o        Prototype money purchase pension and profit-sharing plans may be
         adopted by employers.

Brochures describing these plans as well as model defined benefit plans, 457
plans, 401(k) plans, simple 401(k) plans and materials for establishing them are
available from the Shareholder Service Agent upon request. Additional fees and
transaction policies and procedures may apply to such plans. Investors should
consult with their own tax advisors before establishing a retirement plan.

Purchases

The Fund reserves the right to withdraw all or any part of the offering made by
its Prospectuses and to reject purchase orders for any reason. Also, from time
to time, the Fund may temporarily suspend the offering of any class of its
shares to new investors. During the period of such suspension, persons who are
already shareholders of such class of such Fund may be permitted to continue to
purchase additional shares of such class and to have dividends reinvested.

To help the government fight the funding of terrorism and money laundering
activities, federal law requires all financial institutions to obtain, verify
and record information that identifies each person who opens an account. For
more information, please see "Policies You Should Know About" in the Fund's
Prospectuses.


Financial Services Firms' Compensation. Banks and other financial services firms
may provide administrative services related to order placement and payment to
facilitate transactions in shares of the Fund for their clients, and DIDI may
pay them a transaction fee up to the level of the discount or commission
allowable or payable to dealers.





In addition to the discounts or commissions described herein and in the
Prospectuses, DIDI may pay or allow additional discounts, commissions or
promotional incentives, in the form of cash, to firms that sell shares of the
Fund. In some instances, such amounts may be offered only to certain firms that
sell or are expected to sell during specified time periods certain minimum
amounts of shares of the Fund, or other funds underwritten by DIDI.

Upon notice to all dealers, DIDI may re-allow to dealers up to the full
applicable Class A sales charge during periods and for transactions specified in
such notice and such re-allowances may be based upon attainment of minimum sales
levels. During periods when 90% or more of the sales charge is re-allowed, such
dealers may be deemed to be underwriters as that term is defined in the 1933
Act.

DIDI may at its discretion compensate investment dealers or other financial
services firms in connection with the sale of Class A shares of the Funds in
accordance with the Large Order NAV Purchase Privilege and one of the two
compensation schedules up to the following amounts:

<TABLE>
<CAPTION>

Compensation Schedule #1:                                                     Compensation Schedule #2:
Retail Sales and DWS Flex Plan(1)                                              DWS Retirement Plans(2)
---------------------------------                                              -----------------------

Amount of                              As a Percentage of Net     Amount of Shares      As a Percentage of Net
Shares Sold                                  Asset Value                Sold                  Asset Value
-----------                                  -----------                ----                  -----------
<S>                                              <C>                    <C>                    <C>
$250,000 to $5 million                          0.50%
Over $5 million                                 0.25%              Over $3 million           0.00% - 0.50%
Over $50 million                                0.25%                     --                        --
</TABLE>

(1)       For purposes of determining the appropriate commission percentage to
          be applied to a particular sale under the foregoing schedule, DIDI
          will consider the cumulative amount invested by the purchaser in a
          Fund and other Funds listed under "Special Features -- Class A Shares
          -- Combined Purchases," including purchases pursuant to the "Combined
          Purchases," "Letter of Intent" and "Cumulative Discount" features
          referred to above.

(2)       Compensation Schedule 2 applies to employer sponsored employee benefit
          plans using the OmniPlus subaccount record keeping system made
          available through ADP, Inc. under an alliance with DIDI and its
          affiliates.





DIDI compensates firms for sales of Class B shares at the time of sale at a
commission rate of up to 3.75% of the amount of Class B shares purchased. DIDI
is compensated by the Fund for services as distributor and principal underwriter
for Class B shares. Except as provided below, for sales of Class C shares.

Effective January 1, 2006, DIDI no longer advances the first year distribution
fee and service fee to firms for sales of Class C shares to employer sponsored
benefit plans using the OmniPlus subaccount record keeping system made available
through ADP, Inc. under an alliance with DIDI and it affiliates. DIDI is
compensated by the Fund for services as distributor and principal underwriter
for Class C shares.


Revenue Sharing


In light of recent regulatory developments, the Advisor, the Distributor and
their affiliates have undertaken to furnish certain additional information below
regarding the level of payments made by them to selected affiliated and
unaffiliated brokers, dealers, participating insurance companies or other
financial intermediaries ("financial advisors") in connection with the sale
and/or distribution of Fund shares or the retention and/or servicing of
investors and Fund shares ("revenue sharing").

The Advisor, the Distributor and/or their affiliates may pay additional
compensation, out of their own assets and not as an additional charge to each
Fund, to financial advisors in connection with the sale and/or distribution of
Fund shares or the retention and/or servicing of Fund investors and Fund shares.
Such revenue sharing payments are in addition to any distribution or service
fees payable under any Rule 12b-1 or service plan of any fund, any record
keeping/sub-transfer agency/networking fees payable by each Fund (generally
through the Distributor or an affiliate) and/or the Distributor to certain
financial advisors for performing such services and any sales charges,
commissions, non-cash compensation arrangements expressly permitted under
applicable rules of FINRA or other concessions described in the fee table or
elsewhere in the Prospectuses or the SAI as payable to all financial advisors.
For example, the Advisor, the Distributor and/or their affiliates may compensate
financial advisors for providing each Fund with "shelf space" or access to a
third party platform or fund offering list, or other marketing programs
including, without limitation, inclusion of each Fund on preferred or
recommended sales lists, mutual fund "supermarket" platforms and other formal
sales programs; granting the Distributor access to the financial advisor's sales
force; granting the Distributor access to the financial advisor's conferences
and meetings; assistance in training and educating the financial advisor's
personnel; and, obtaining other forms of marketing support. The level of revenue
sharing payments made to financial advisors may be a fixed fee or based upon one
or more of the following factors: gross sales, current assets and/or number of
accounts of each Fund attributable to the financial advisor, the particular fund
or fund type or other measures as agreed to by the Advisor, the Distributor
and/or their affiliates and the financial advisors or any combination thereof.
The amount of these payments is determined at the discretion of the Advisor, the
Distributor and/or their affiliates from time to time, may be substantial, and
may be different for different financial advisors based on, for example, the
nature of the services provided by the financial advisor.

The Advisor, the Distributor and/or their affiliates currently make revenue
sharing payments from their own assets in connection with the sale and/or
distribution of DWS Fund shares, or the retention and/or servicing of investors,
to financial advisors in amounts that generally range from .01% up to .50% of
assets of the Fund serviced and maintained by the financial advisor, .05% to
..25% of sales of the Fund attributable to the financial advisor, a flat fee of
$13,350 up to $500,000, or any combination thereof. These amounts are annual
figures typically paid on a quarterly basis and are subject to change at the
discretion of the Advisor, the Distributor and/or their affiliates. Receipt of,
or the prospect of receiving, this additional compensation, may influence your
financial advisor's recommendation of this Fund or of any particular share class
of the Fund. You should review your financial advisor's compensation disclosure
and/or talk to your financial advisor to obtain more information on how this
compensation may have influenced your financial advisor's recommendation of this
Fund.

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

As of the date hereof, each Fund has been advised that the Advisor, the
Distributor and their affiliates expect that the following firms will receive
revenue sharing payments at different points during the coming year as described
above:

Channel: Broker-Dealers and Financial Advisors
----------------------------------------------
AIG Advisors Group
Ameriprise
Cadaret, Grant & Co. Inc.
Capital Analyst, Incorporated
Citigroup Global Markets, Inc. (dba Smith Barney)
Commonwealth Equity Services, LLP (dba Commonwealth Financial Network)
Deutsche Bank Group
Ensemble Financial Services
First Allied Securities
First Clearing/Wachovia Securities
HD Vest Investment Securities, Inc.
ING Advisors Network
John Hancock Distributors LLC
LPL Financial
M.L. Stern & Co.
Meridien Financial Group
Merrill Lynch, Pierce, Fenner & Smith Inc.
Morgan Stanley
Oppenheimer & Co., Inc.
PlanMember Services
Raymond James & Associates
Raymond James Financial Services
RBC Dain Rauscher, Inc
Securities America, Inc.
UBS Financial Services
Wells Fargo Investments, LLC

Channel: Cash Product Platform
------------------------------
Allegheny Investments LTD
Bank of New York (Hare & Co.)
Brown Brothers Harriman
Brown Investment Advisory & Trust Company
Cadaret Grant & Co.
Chicago Mercantile Exchange
D.A. Davidson & Company
Deutsche Bank Group
Emmett A. Larkin Company
Fiduciary Trust Co. - International
First Southwest Company
J.P. Morgan Clearing Corp.
Legent Clearing LLC
Lincoln Investment Planning
LPL Financial
Mellon Financial Markets LLC
Mesirow Financial, Inc.
Penson Financial Services
Pershing Choice Platform
ProFunds Distributors, Inc.
Ridge Clearing & Outsourcing Solutions
Robert W. Baird & Co.
Romano Brothers and Company
SAMCO Capital Markets
Smith Moore & Company
Sungard Institutional Brokerage Inc.
Treasury Curve LLC
US Bancorp
UBS Financial Services
William Blair & Company

Channel: Third Party Insurance Platforms
----------------------------------------
Allstate Life Insurance Company of New York
Ameritas Life Insurance Group
Annuity Investors Life Insurance Company
Columbus Life Insurance Company
Commonwealth Annuity and Life Insurance Company
Companion Life Insurance Company
Connecticut General Life Insurance Company
Farmers New World Life Insurance Company
Fidelity Security Life Insurance Company
First Allmerica Financial Life Insurance Company
First Great West Life and Annuity Company
Genworth Life Insurance Company of New York
Genworth Life and Annuity Insurance Company
Great West Life and Annuity Insurance Company
Hartford Life Insurance Company
Integrity Life Insurance Company
John Hancock Life Insurance companies
Kemper Investors Life Insurance Company
Lincoln Benefit Life Insurance Company
Lincoln Life & Annuity Company of New York
Lincoln National Life Insurance Company
Massachusetts Mutual Life Insurance Group
MetLife Group
Minnesota Life Insurance Company
National Life Insurance Company
National Integrity Life Insurance Company
Nationwide Group
New York Life Insurance and Annuity Corporation
Phoenix Life Insurance Company
Protective Life Insurance
Provident Mutual Life Insurance
Prudential Insurance Company of America
Sun Life Group
Symetra Life Insurance Company
Transamerica Life Insurance Company
Union Central Life Insurance Company
United of Omaha Life Insurance Company
United Investors Life Insurance Company
Western Southern Life Assurance Company

Any additions, modifications or deletions to the financial advisors identified
above that have occurred since the date hereof are not reflected.

The Advisor, the Distributor or their affiliates may enter into additional
revenue sharing arrangements or change or discontinue existing arrangements with
financial advisors at any time without notice.

The prospect of receiving, or the receipt of additional compensation or
promotional incentives described above by financial advisors may provide such
financial advisors and/or their salespersons with an incentive to favor sales of
shares of the DWS funds or a particular DWS fund over sales of shares of mutual
funds (or non-mutual fund investments) with respect to which the financial
advisor does not receive additional compensation or promotional incentives, or
receives lower levels of additional compensation or promotional incentives.
Similarly, financial advisors may receive different compensation or incentives
that may influence their recommendation of any particular share class of the
Fund or of other funds. These payment arrangements, however, will not change the
price that an investor pays for Fund shares or the amount that the Fund receives
to invest on behalf of an investor and will not increase Fund expenses. You may
wish to take such payment arrangements into account when considering and
evaluating any recommendations relating to Fund shares and you should discuss
this matter with your financial advisor and review your financial advisor's
disclosures.

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




Class A Purchases. The public offering price of Class A shares for purchasers
choosing the initial sales charge alternative is the net asset value plus a
sales charge, as set forth below.

<TABLE>
<CAPTION>
                                                                  Sales Charge
                                                                  ------------
                                                                                           Allowed to Dealers
                                             As a Percentage       As a Percentage of     as a Percentage of
Amount of Purchase                          of Offering Price*     Net Asset Value**         Offering Price
------------------                          ------------------     -----------------         --------------
<S>                                                 <C>                   <C>                    <C>
Less than $50,000                                   5.75%                 6.10%                  5.20%
$50,000 but less than $100,000                      4.50                  4.71                   4.00
$100,000 but less than $250,000                     3.50                  3.63                   3.00
$250,000 but less than $500,000                     2.60                  2.67                   2.25
$500,000 but less than $1 million                   2.00                  2.04                   1.75
$1 million and over                                 0.00***               0.00***                0.00****
</TABLE>

*        The Offering Price includes the sales charge.

**       Rounded to the nearest one-hundredth percent.

***      Redemption of shares may be subject to a contingent deferred sales
         charge ad discussed below.


****     Commission is payable by DIDI as discussed below.

Class A Quantity Discounts. An investor or the investor's dealer or other
financial services firm must notify the Shareholder Service Agent or DIDI
whenever a quantity discount or reduced sales charge is applicable to a
purchase. In order to qualify for a lower sales charge, all orders from an
organized group will have to be placed through a single investment dealer or
other firm and identified as originating from a qualifying purchaser.


Combined Purchases. The Fund's Class A shares may be purchased at the rate
applicable to the sales charge discount bracket attained by combining same day
investments in Class A shares of any DWS Funds that bear a sales charge.


Letter of Intent. The reduced sales charges for Class A shares, as shown in the
prospectus, also apply to the aggregate amount of purchases of Class A shares of
DWS Funds that bear a sales charge made by any purchaser within a 24-month
period under a written Letter of Intent ("Letter") provided by DIDI. The Letter,
which imposes no obligation to purchase or sell additional Class A shares,
provides for a price adjustment depending upon the actual amount purchased
within such period. The Letter provides that the first purchase following
execution of the Letter must be at least 5% of the amount of the intended
purchase, and that 5% of the amount of the intended purchase normally will be
held in escrow in the form of shares pending completion of the intended
purchase. If the total investments under the Letter are less than the intended
amount and thereby qualify only for a higher sales charge than actually paid,
the appropriate number of escrowed shares are redeemed and the proceeds used
toward satisfaction of the obligation to pay the increased sales charge. The
Letter for an employer-sponsored employee benefit plan maintained on the
subaccount record keeping system available through ADP, Inc. under an alliance
with DIDI and its affiliates may have special provisions regarding payment of
any increased sales charge resulting from a failure to complete the intended
purchase under the Letter. A shareholder may include the value (at the maximum
offering price, which is determined by adding the maximum applicable sales load
charged to the net asset value) of all Class A shares of such DWS Funds held of
record as of the initial purchase date under the Letter as an "accumulation
credit" toward the completion of the Letter, but no price adjustment will be
made on such shares.


Class A Cumulative Discount. Class A shares of the Fund may also be purchased at
the rate applicable to the discount bracket attained by adding to the cost of
shares being purchased, the value of all Class A shares of DWS Funds that bear a
sales charge (computed at the maximum offering price at the time of the purchase
for which the discount is applicable) already owned by the investor or his or
her immediate family member.


For purposes of the Combined Purchases, Letter of Intent and Cumulative Discount
features described above, employer sponsored employee benefit plans using the
Flex subaccount record keeping system available through ADP, Inc. under an
alliance with DIDI and its affiliates may include: (a) Money Market Funds as
"DWS Funds", (b) all classes of shares of any DWS Fund and (c) the value of any
other plan investments, such as guaranteed investment contracts and employer
stock, maintained on such subaccount record keeping system. Once eligible plan
assets under this provision reach the $1,000,000 threshold, a later decline in
assets below the $1,000,000 threshold will not affect the plan's ability to
continue to purchase Class A shares at net asset value.


Class A NAV Sales. Class A shares may be sold at net asset value to:

(a)      a current or former director or trustee of Deutsche or DWS mutual
         funds;

(b)      an employee (including the employee's spouse or life partner and
         children or stepchildren age 21 or younger) of Deutsche Bank or its
         affiliates or of a subadvisor to any fund in the DWS family of funds or
         of a broker-dealer authorized to sell shares of the Fund or service
         agents of the Funds;


(c)      certain professionals who assist in the promotion of DWS mutual funds
         pursuant to personal services contracts with DIDI, for themselves or
         members of their families. DIDI in its discretion may compensate
         financial services firms for sales of Class A shares under this
         privilege at a commission rate of 0.50% of the amount of Class A shares
         purchased;


(d)      any trust, pension, profit-sharing or other benefit plan for only such
         persons listed under the preceding paragraphs (a) and (b);

(e)      persons who purchase such shares through bank trust departments that
         process such trades through an automated, integrated mutual fund
         clearing program provided by a third party clearing firm;


(f)      selected employees (including their spouses or life partners and
         children or stepchildren age 21 or younger) of banks and other
         financial services firms that provide administrative services related
         to order placement and payment to facilitate transactions in shares of
         the Fund for their clients pursuant to an agreement with DIDI or one of
         its affiliates. Only those employees of such banks and other firms who
         as part of their usual duties provide services related to transactions
         in Fund shares qualify;


(g)      unit investment trusts sponsored by Ranson & Associates, Inc. and
         unitholders of unit investment trusts sponsored by Ranson & Associates,
         Inc. or its predecessors through reinvestment programs described in the
         prospectuses of such trusts that have such programs;


(h)      through certain investment advisors registered under the Investment
         Advisers Act of 1940 and other financial services firms acting solely
         as agent for their clients, that adhere to certain standards
         established by DIDI, including a requirement that such shares be sold
         for the benefit of their clients participating in an investment
         advisory program or agency commission program under which such clients
         pay a fee to the investment advisor or other firm for portfolio
         management or agency brokerage services. Such shares are sold for
         investment purposes and on the condition that they will not be resold
         except through redemption or repurchase by the Fund;

(i)      employer sponsored employee benefit plans using the Flex subaccount
         recordkeeping system ("Flex Plans") made available through ADP under an
         alliance with DIDI and its affiliates, established prior to October 1,
         2003, provided that the Flex Plan is a participant-directed plan that
         has not less than 200 eligible employees;


(j)      investors investing $1 million or more, either as a lump sum or through
         the "Combined Purchases," "Letter of Intent" and "Cumulative Discount"
         features referred to above (collectively, the "Large Order NAV Purchase
         Privilege"). The Large Order NAV Purchase Privilege is not available if
         another net asset value purchase privilege is available;

(k)      defined contribution investment only plans with a minimum of $1,000,000
         in plan assets regardless of the amount allocated to the DWS funds;

In addition, Class A shares may be sold at net asset value in connection with:


(l)      the acquisition of the assets of or merger or consolidation with
         another investment company, or to shareholders in connection with the
         investment or reinvestment of income and capital gain dividends, and
         under other circumstances deemed appropriate by DIDI and consistent
         with regulatory requirements; and

(m)      a direct "roll over" of a distribution from a Flex Plan or from
         participants in employer sponsored employee benefit plans maintained on
         the OmniPlus subaccount record keeping system made available through
         ADP, Inc. under an alliance with DIDI and its affiliates into a DWS
         Investments IRA;


(n)      reinvestment of fund dividends and distributions;

(o)      exchanging an investment in Class A shares of another fund in the DWS
         family of funds for an investment in the fund.


Class A shares also may be purchased at net asset value in any amount by members
of the plaintiff class in the proceeding known as Howard and Audrey Tabankin, et
al. v. Kemper Short-Term Global Income Fund, et al., Case No. 93 C 5231 (N.D.
IL). This privilege is generally non-transferable and continues for the lifetime
of individual class members and for a ten-year period for non-individual class
members. To make a purchase at net asset value under this privilege, the
investor must, at the time of purchase, submit a written request that the
purchase be processed at net asset value pursuant to this privilege specifically
identifying the purchaser as a member of the "Tabankin Class." Shares purchased
under this privilege will be maintained in a separate account that includes only
shares purchased under this privilege. For more details concerning this
privilege, class members should refer to the Notice of (i) Proposed Settlement
with Defendants; and (ii) Hearing to Determine Fairness of Proposed Settlement,
dated August 31, 1995, issued in connection with the aforementioned court
proceeding. For sales of Fund shares at net asset value pursuant to this
privilege, DIDI may in its discretion pay investment dealers and other financial
services firms a concession, payable quarterly, at an annual rate of up to 0.25%
of net assets attributable to such shares maintained and serviced by the firm. A
firm becomes eligible for the concession based upon assets in accounts
attributable to shares purchased under this privilege in the month after the
month of purchase and the concession continues until terminated by DIDI. The
privilege of purchasing Class A shares of the Fund at net asset value under this
privilege is not available if another net asset value purchase privilege also
applies.


Class B Purchases. Class B shares of the Fund are offered at net asset value. No
initial sales charge is imposed. Class B shares sold without an initial sales
charge allow the full amount of the investor's purchase payment to be invested
in Class B shares for his or her account. Class B shares have a contingent
deferred sales charge of 4.00% that declines over time (for shares sold within
six years of purchase) and Rule 12b-1 fees, as described in the Fund's
Prospectus and SAI. Class B shares automatically convert to Class A shares after
six years.

Class C Purchases. Class C shares of the Fund are offered at net asset value. No
initial sales charge is imposed. Class C shares sold without an initial sales
charge will allow the full amount of the investor's purchase payment to be
invested in Class C shares for his or her account. Class C shares continue to be
subject to a contingent deferred sales charge of 1.00% (for shares sold within
one year of purchase) and Rule 12b-1 fees, as described in the Fund's Prospectus
and Statement of Additional Information.


Multi-Class Suitability. DIDI has established the following procedures regarding
the purchase of Class A, Class B and Class C shares. Orders to purchase Class B
shares of $100,000 or more and orders to purchase Class C shares of $500,000 or
more will be declined with the exception of orders received from firms acting
for clients whose shares will be held in an omnibus account and
employer-sponsored employee benefit plans using the Flex subaccount record
keeping system ("Flex System") maintained by ADP under an alliance with DIDI and
its affiliates ("DWS Investments Flex Plans").

The following provisions apply to DWS Investments Flex Plans.

a.       Class B Share DWS Investments Flex Plans. Class B shares have not been
         sold to DWS Investments Flex Plans that were established on the Flex
         System after October 1, 2003. Orders to purchase Class B shares for a
         DWS Investments Flex Plan established on the Flex System prior to
         October 1, 2003 that has regularly been purchasing Class B shares will
         be invested instead in Class A shares at net asset value when the
         combined subaccount value in DWS Funds or other eligible assets held by
         the plan is $100,000 or more. This provision will be imposed for the
         first purchase after eligible plan assets reach the $100,000 threshold.
         A later decline in assets below the $100,000 threshold will not affect
         the plan's ability to continue to purchase Class A shares at net asset
         value.

b.       Class C Share DWS Investments Flex Plans. Orders to purchase Class C
         shares for a DWS Investments Flex Plan, regardless of when such plan
         was established on the Flex System, will be invested instead in Class A
         shares at net asset value when the combined subaccount value in DWS
         Funds or other eligible assets held by the plan is $1,000,000 or more.
         This provision will be imposed for the first purchase after eligible
         plan assets reach the $1,000,000 threshold. A later decline in assets
         below the $1,000,000 threshold will not affect the plan's ability to
         continue to purchase Class A shares at net asset value.




The procedurves above do not reflect in any way the suitability of a particular
class of shares for a particular investor and should not be relied upon as such.
A suitability determination must be made by investors with the assistance of
their financial representative.

To sell shares in a retirement account, your request must be made in writing,
except for exchanges to other eligible funds in the DWS family of funds, which
can be requested by phone or in writing.


Institutional Class Purchases. Information on how to buy Institutional Class
shares is set forth in the section entitled "Buying and Selling Shares" in the
Fund's prospectus. The following supplements that information. The minimum
initial investment for Institutional Class shares is $1,000,000. The minimum
initial investment may be waived in certain circumstances. The minimum amounts
may be changed at any time in management's discretion.




Purchase of Class R Shares. Information on how to buy Class R shares is set
forth in the section entitled "Buying and Selling Shares" in the Fund's
Prospectus. There are no minimum investments for Class R shares. Class R shares
are subject to an annual distribution and shareholder servicing fee of 0.50%.
These minimum amounts may be changed at any time in management's discretion.


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 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 DISC.

Automatic Investment Plan. A shareholder may purchase shares of the Fund through
an automatic investment plan. Investments are made automatically (minimum $500
and maximum $250,000 for initial investments and a minimum of $50 and maximum
$250,000 for subsequent investments) from the shareholder's account at a bank,
savings and loan or credit union into the shareholder's Fund account.
Termination by a shareholder will become effective within thirty days after the
Shareholder Service Agent has received the request. The Fund may immediately
terminate a shareholder's automatic investment plan in the event that any item
is unpaid by the shareholder's financial institution.




Minimum Subsequent Investment Policies. For current shareholders of Class A, B
or C shares there is a $50 minimum investment requirement for subsequent
investments in the fund. There is no minimum subsequent investment requirement
in Class A shares for investments on behalf of participants in certain fee-based
and wrap programs offered through financial intermediaries approved by the
Advisor. There is no minimum subsequent investment required for Institutional
Class Shares.

Payroll Investment Plans. A shareholder may purchase shares through Payroll
Direct Deposit or Government Direct Deposit. Under these programs, all or a
portion of a shareholder's net pay or government check is invested each payment
period. A shareholder may terminate participation in these programs by giving
written notice to the 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.


It is our policy to offer purchase privileges to current or former directors or
trustees of the Deutsche or DWS Investments 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-adviser 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 Funds also reserve the right to waive the minimum account
balance requirement for employee and director accounts. Fees generally charged
to IRA accounts will be charged to accounts of employees and directors.


Consideration for Purchases of Shares. The Trust generally will not issue shares
of the Fund for consideration other than cash. At the Trust's sole discretion,
however, it may issue Fund shares for consideration other than cash in
connection with an acquisition of portfolio securities (other than municipal
debt securities issued by state political subdivisions or their agencies or
instrumentalities) or pursuant to a bona fide purchase of assets, merger or
other reorganization, provided the securities meet the investment objectives and
policies of the Fund and are acquired by the Fund for investment and not for
resale. An exchange of securities for fund shares will generally be a taxable
transaction to the shareholder.


Expedited Purchase Procedures for Existing Shareholders. Shareholders of other
DWS Funds who have submitted an account application and have certified a tax
identification number, clients having a regular investment counsel account with
the Advisor or its affiliates and members of their immediate families, officers
and employees of the Advisor or of any affiliated organization and their
immediate families, members of FINRA, and banks may open an account by wire by
calling (800) 621-1048 for instructions. The investor must send a duly completed
and signed application to the Fund promptly. A subsequent purchase order may be
placed by established shareholders (except by DWS Investments Individual
Retirement Account (IRA), DWS Simplified Profit Sharing and Money Purchase
Pension Plans, DWS Investments 401(k) and DWS Investments 403(b) Plan holders),
members of FINRA, and banks.


Redemptions

Redemption Fee. The Fund will impose a redemption fee of 2% of the total
redemption amount (calculated at net asset value, without regard to the effect
of any contingent deferred sales charge; any contingent deferred sales charge is
also assessed on the total redemption amount without regard to the assessment of
the 2% redemption fee) on all Fund shares redeemed or exchanged within 15 days
of buying them (either by purchase or exchange). The redemption fee is paid
directly to the Fund, and is designed to encourage long-term investment and to
offset transaction and other costs associated with short-term or excessive
trading. For purposes of determining whether the redemption fee applies, shares
held the longest time will be treated as being redeemed first and shares held
the shortest time will be treated as being redeemed last. The redemption fee is
applicable to Fund shares purchased either directly or through a financial
intermediary, such as a broker-dealer. Transactions through financial
intermediaries typically are placed with the Fund on an omnibus basis and
include both purchase and sale transactions placed on behalf of multiple
investors. These purchase and sale transactions are generally netted against one
another and placed on an aggregate basis; consequently the identities of the
individuals on whose behalf the transactions are placed generally are not known
to the Fund. For this reason, the Fund has undertaken to notify financial
intermediaries of their obligation to assess the redemption fee on customer
accounts and to collect and remit the proceeds to the Fund. However, due to
operational requirements, the intermediaries' methods for tracking and
calculating the fee may be inadequate or differ in some respects from the Fund.

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.

A distribution will be reinvested in shares of the same fund and class if the
distribution check is returned as undeliverable.

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 DIDI, 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 Prospectuses, signatures may need to be guaranteed by a
commercial bank, trust company, savings and loan association, federal savings
bank, member firm of a national securities exchange or other financial
institution permitted by SEC rule. Additional documentation may be required,
particularly from institutional and fiduciary account holders, such as
corporations, custodians (e.g., under the Uniform Transfers to Minors Act),
executors, administrators, trustees or guardians.

If the proceeds of the redemption (prior to the imposition of any contingent
deferred sales charge) are $100,000 or less and the proceeds are payable to the
shareholder of record at the address of record, normally a telephone request or
a written request by any one account holder without a signature guarantee is
sufficient for redemptions by individual or joint account holders, and trust,
executor and guardian account holders (excluding custodial accounts for gifts
and transfers to minors), provided the trustee, executor or guardian is named in
the account registration. Other institutional account holders and guardian
account holders of custodial accounts for gifts and transfers to minors may
exercise this special privilege of redeeming shares by telephone request or
written request without signature guarantee subject to the same conditions as
individual account holders, provided that this privilege has been pre-authorized
by the institutional account holder or guardian account holder by written
instruction to the Shareholder Service Agent with signatures guaranteed. This
privilege may not be used to redeem shares held in certificated form and may not
be used if the shareholder's account has had an address change within 15 days of
the redemption request.

Wires. Delivery of the proceeds of a wire redemption of $250,000 or more may be
delayed by the Fund for up to seven days if the Fund or the Shareholder Service
Agent deems it appropriate under then-current market conditions. The ability to
send wires is limited by the business hours and holidays of the firms involved.
The Fund is not responsible for the efficiency of the federal wire system or the
account holder's financial services firm or bank. The account holder is
responsible for any charges imposed by the account holder's firm or bank. To
change the designated account to receive wire redemption proceeds, send a
written request to the Fund Shareholder Service Agent with signatures guaranteed
as described above or contact the firm through which Fund shares were purchased.

Automatic Withdrawal Plan. The owner of $5,000 or more of a class of the Fund's
shares at the offering price (net asset value plus, in the case of Class A
shares, the initial sales charge) may provide for the payment from the owner's
account of any requested dollar amount to be paid to the owner or a designated
payee monthly, quarterly, semiannually or annually. The $5,000 minimum account
size is not applicable to IRAs. The minimum periodic payment is $50. The maximum
annual rate at which shares, subject to CDSC may be redeemed is 12% of the net
asset value of the account. Shares are redeemed so that the payee should receive
payment approximately on the first of the month. Investors using this Plan must
reinvest Fund distributions.

Non-retirement plan shareholders may establish an Automatic Withdrawal Plan (the
"Plan") to receive monthly, quarterly or periodic redemptions from his or her
account for any designated amount of $50 or more. Shareholders may designate
which day they want the automatic withdrawal to be processed. The check amounts
may be based on the redemption of a fixed dollar amount, fixed share amount,
percent of account value or declining balance. The Plan provides for income
dividends and capital gains distributions, if any, to be reinvested in
additional shares. Shares are then liquidated as necessary to provide for
withdrawal payments. Since the withdrawals are in amounts selected by the
investor and have no relationship to yield or income, payments received cannot
be considered as yield or income on the investment and the resulting
liquidations may deplete or possibly extinguish the initial investment and any
reinvested dividends and capital gains distributions. Any such requests must be
received by the Fund's transfer agent ten days prior to the date of the first
automatic withdrawal. An Automatic Withdrawal Plan may be terminated at any time
by the shareholder, the Trust or its agent on written notice, and will be
terminated when all Shares of the Fund under the Plan have been liquidated or
upon receipt by the Trust of notice of death of the shareholder.

The purchase of Class A shares while participating in a systematic withdrawal
plan will ordinarily be disadvantageous to the investor because the investor
will be paying a sales charge on the purchase of shares at the same time that
the investor is redeeming shares upon which a sales charge may have already been
paid. Therefore, the Fund will not knowingly permit additional investments of
less than $2,000 if the investor is at the same time making systematic
withdrawals.

Contingent Deferred Sales Charge (CDSC). The following example will illustrate
the operation of the CDSC. Assume that an investor makes a single purchase of
$10,000 of the Fund's Class B shares and that 16 months later the value of the
shares has grown by $1,000 through reinvested dividends and by an additional
$1,000 of share appreciation to a total of $12,000. If the investor were then to
redeem the entire $12,000 in share value, the CDSC would be payable only with
respect to $10,000 because neither the $1,000 of reinvested dividends nor the
$1,000 of share appreciation is subject to the charge. The charge would be at
the rate of 3.00% ($300) because it was in the second year after the purchase
was made.


The rate of the CDSC is determined by the length of the period of ownership.
Investments are tracked on a monthly basis. The period of ownership for this
purpose begins the first day of the month in which the order for the investment
is received. For example, an investment made in March of the year of investment
will be eligible for the second year's charge if redeemed on or after March of
the following year. In the event no specific order is requested when redeeming
shares subject to a CDSC, the redemption will be made first from shares
representing reinvested dividends and then from the earliest purchase of shares.
DIDI receives any CDSC directly. The charge will not be imposed upon redemption
of reinvested dividends or share appreciation.


The Class A CDSC will be waived in the event of:

(a)      redemptions by a participant-directed qualified retirement plan
         described in Code Section 401(a), a participant-directed non-qualified
         deferred compensation plan described in Code Section 457 or a
         participant-directed qualified retirement plan described in Code
         Section 403(b)(7) which is not sponsored by a K-12 school district;


(b)      redemptions by employer-sponsored employee benefit plans using the
         subaccount record keeping system made available through ADP, Inc. under
         an alliance with DIDI and its affiliates;


(c)      redemption of shares of a shareholder (including a registered joint
         owner) who has died or is disabled (under certain circumstances);

(d)      redemption of shares of a shareholder (including a registered joint
         owner) who after purchase of the shares being redeemed becomes totally
         disabled (as evidenced by a determination by the federal Social
         Security Administration);

(e)      redemptions under the Fund's Automatic Withdrawal Plan at a maximum of
         12% per year of the net asset value of the account;


(f)      redemptions of shares whose dealer of record at the time of the
         investment notifies DIDI that the dealer waives the discretionary
         commission applicable to such Large Order NAV Purchase; and


(g)      redemptions for certain loan advances, hardship provisions or returns
         of excess contributions from retirement plans.

The Class B CDSC will be waived for the circumstances set forth in items (c),
(d), (e) and (g) for Class A shares. In addition, this CDSC will be waived:

(h)      for redemptions made pursuant to any IRA systematic withdrawal based on
         the shareholder's life expectancy including, but not limited to,
         substantially equal periodic payments described in Internal Revenue
         Code Section 72(t)(2)(A)(iv) prior to age 59 1/2;


(i)      for redemptions to satisfy required minimum distributions after age 70
         1/2 from an IRA account (with the maximum amount subject to this waiver
         being based only upon the shareholder's DWS Investments IRA accounts);
         and

(j)      in connection with the following redemptions of shares held by employer
         sponsored employee benefit plans maintained on the subaccount record
         keeping system made available through ADP under an alliance with DIDI
         and its affiliates: (1) to satisfy participant loan advances (note that
         loan repayments constitute new purchases for purposes of the CDSC and
         the conversion privilege), (2) in connection with retirement
         distributions (limited at any one time to 12% of the total value of
         plan assets invested in the Fund), (3) in connection with distributions
         qualifying under the hardship provisions of the Internal Revenue Code,
         (4) representing returns of excess contributions to such plans and (5)
         in connection with direct "roll over" distributions from a Flex Plan
         into a DWS Investments IRA under the Class A net asset value purchase
         privilege.


The Class C CDSC will be waived for the circumstances set forth in items (b),
(c), (d), (e) and (g) for Class A shares and for the circumstances set forth in
items (h) and (i) for Class B shares. In addition, this CDSC will be waived for:

(k)      redemption of shares by an employer sponsored employee benefit plan
         that offers funds in addition to DWS Funds and whose dealer of record
         has waived the advance of the first year administrative service and
         distribution fees applicable to such shares and agrees to receive such
         fees quarterly; and

(l)      redemption of shares purchased through a dealer-sponsored asset
         allocation program maintained on an omnibus record-keeping system
         provided the dealer of record had waived the advance of the first year
         administrative services and distribution fees applicable to such shares
         and has agreed to receive such fees quarterly.

In-kind Redemptions. The Fund reserves the right to honor any request for
redemption or repurchase by making payment in whole or in part in 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 certain other DWS funds without imposition of a sales
charge, subject to the provisions below. For purposes of calculating any CDSC,
amounts exchanged retain their original cost and purchase date.

Shareholders who exchange their shares out of a DWS money market fund (not
including shares acquired by dividend reinvestment or by exchange from Class A
shares of another DWS fund) into Class A shares of certain other DWS funds, will
generally be subject to the applicable sales charge.

Certain DWS funds may not be available to shareholders on an exchange. To learn
more about which DWS funds may be available on exchange, please contact your
financial services firm or visit our Web site at: www.dws-investments.com or
call (800) 621-1048.

Shareholders may obtain prospectus(es) of the DWS fund they are exchanging into
from dealers, other firms or DIDI.




Automatic Exchange Plan (not applicable to Class R shares). 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.

Multi-Class Conversions. For purposes of conversion to Class A shares, shares
purchased through the reinvestment of dividends and other distributions paid
with respect to Class B shares in a shareholder's Fund account will be converted
to Class A shares on a pro rata basis.

                                    DIVIDENDS

The Fund intends to 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 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 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 distribute dividends from its net investment income, if any,
annually. The Fund intends to distribute net realized capital gains after
utilization of capital loss carryforwards, if any, in December to prevent
application of a federal excise tax. An additional distribution may be made, if
necessary.

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.

The level of income dividends per share (as a percentage of net asset value)
will be lower for Class B and Class C Shares than for Class A Shares primarily
as a result of the higher distribution services fee applicable to Class B and
Class C Shares. Distributions of capital gains, if any, will be paid in the same
amount for each class.

Income and capital gain dividends, 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 dividends in cash and
         long-term capital gain dividends in shares of the same class at net
         asset value; or

2.       To receive income and capital gain dividends 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 that Fund and
confirmations will be mailed to each shareholder. If a shareholder has chosen to
receive cash, a check will be sent. Distributions of 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.

Taxation of the Fund. 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)      The Fund must derive at least 90% of its gross income in each taxable
         year from dividends, interest, payments with respect to certain
         securities loans, and gains from the sale of stock, securities and
         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
         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 derives 90% of their income from interest, dividends,
         capital gains, and other traditionally 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 (including
         receivables), 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 the Fund
         owns 20% or more of the voting securitites 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. If the Fund fails to qualify as a regulated investment company for a
period greater than two taxable years, the Fund may be required to recognize any
net built-in gains with respect to certain of its assets (i.e., the excess of
the aggregate gains, including items of income, over aggregate losses that would
have been realized with respect to such assets if the Fund had been liquidated)
if it qualifies as a regulated investment company in a subsequent year.

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 0% 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. The US currently has a comprehensive
income tax treaty with the following countries: Australia, Austria, Bangladesh,
Barbados, Belgium, Canada, China, Cyprus, the Czech Republic, Denmark, Egypt,
Estonia, Finland, France, Germany, Greece, Hungary, Iceland, India, Indonesia,
Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Korea, Latvia, Lithuania,
Luxembourg, Mexico, Morocco, Netherlands, New Zealand, Norway, Pakistan, the
Philippines, Poland, Portugal, Romania, Russian Federation, Slovak Republic,
Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Thailand,
Trinidad and Tobago, Tunisia, Turkey, Ukraine, the United Kingdom, and
Venezuela. Also, dividends received by the Fund from a real estate investment
trust or another regulated investment company generally are qualified dividend
income only to the extent the dividend distributions are made out of qualified
dividend income received by such real estate investment trust or other regulated
investment company.

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. Any capital loss carryforwards and any post-October loss
deferrals to which the Fund is entitled are disclosed in the Fund's annual and
semi-annual reports to shareholders.

If an individual receives a regular dividend qualifying for the long-term
capital gains rates and such dividend constitutes an "extraordinary dividend,"
and the individual subsequently recognizes a loss on the sale or exchange of
stock in respect of which the extraordinary dividend was paid, then the loss
will be long-term capital loss to the extent of such extraordinary dividend. An
"extraordinary dividend" on common stock for this purpose is generally a
dividend (i) in an amount greater than or equal to 10% of the taxpayer's tax
basis (or trading value) in a share of stock, aggregating dividends with
ex-dividend dates within an 85-day period or (ii) in an amount greater than 20%
of the taxpayer's tax basis (or trading value) in a share of stock, aggregating
dividends with ex-dividend dates within a 365-day period.

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.

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 15 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. If a
shareholder incurs a sales charge in acquiring shares of the Fund, disposes of
those shares within 90 days and then acquires shares in a mutual fund for which
the otherwise applicable sales charge is reduced by reason of a reinvestment
right (e.g., an exchange privilege), the original sales charge will not be taken
into account in computing gain/loss on the original shares to the extent the
subsequent sales charge is reduced. Instead, the disregarded portion of the
original sales charge will be added to the tax basis of the newly acquired
shares. Furthermore, the same rule also applies to a disposition of the newly
acquired shares made within 90 days of the second acquisition. This provision
prevents a shareholder from immediately deducting the sales charge by shifting
his or her investment within a family of mutual funds.

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") 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."

Tax Effects of Certain Transactions. 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.

Certain types of income received by the Fund from 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 "unrelated business taxable income" ("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 by otherwise allowable deductions 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. In addition, 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). If a charitable remainder trust (as defined in Code Section 664)
realizes any UBTI for a taxable year, it will be subject to a 100% excise tax on
such UBTI.

The Fund's investment in so-called "section 1256 contracts," such as regulated
futures contracts, most foreign currency forward contracts traded in the
interbank market and options on most stock indices, are subject to special tax
rules. All section 1256 contracts held by the Fund at the end of its taxable
year are required to be marked to their market value, and any unrealized gain or
loss on those positions will be included in the Fund's income as if each
position had been sold for its fair market value at the end of the taxable year.
The resulting gain or loss will be combined with any gain or loss realized by
the Fund from positions in section 1256 contracts closed during the taxable
year. Provided such positions were held as capital assets and were not part of a
"hedging transaction" nor part of a "straddle," 60% of the resulting net gain or
loss will be treated as long-term capital gain or loss, and 40% of such net gain
or loss will be treated as short-term capital gain or loss, regardless of the
period of time the positions were actually held by the Fund.

In general, gain or loss on a short sale is recognized when the Fund closes the
sale by delivering the borrowed property to the lender, not when the borrowed
property is sold. Gain or loss from a short sale is generally considered as
capital gain or loss to the extent that the property used to close the short
sale constitutes a capital asset in the Fund's hands. Except with respect to
certain situations where the property used by the Fund to close a short sale has
a long-term holding period on the date of the short sale, special rules would
generally treat the gains on short sales as short-term capital gains. These
rules may also terminate the running of the holding period of "substantially
identical property" held by the Fund. Moreover, a loss on a short sale will be
treated as a long-term capital loss if, on the date of the short sale,
"substantially identical property" has been held by the Fund for more than one
year. In general, the Fund will not be permitted to deduct payments made to
reimburse the lender of securities for dividends paid on borrowed stock if the
short sale is closed on or before the 45th day after the short sale is entered
into.

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). With respect to certain
types of swaps, the Fund may be required to currently recognize income or loss
with respect to future payments on such swaps or may elect under certain
circumstances to mark such swaps to market annually for tax purposes as ordinary
income or loss. The tax treatment of many types of credit default swaps is
uncertain.

Other Tax Considerations. Under the backup withholding provisions of the Code,
redemption proceeds as well as distributions may be subject to federal income
tax withholding for certain shareholders, including those who fail to furnish
the Fund with their taxpayer identification numbers and certifications as to
their tax status. Certain shareholders are exempt from backup withholding.
Backup withholding is not an additional tax and any amount withheld may be
credited against a shareholder's US Federal income tax liability

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.

Taxation of Non-US Shareholders. Dividends paid by the Fund to non-US
shareholders are generally subject to withholding tax at a 30% rate or a reduced
rate specified by an applicable income tax treaty to the extent derived from
investment income and short-term capital gains. In order to obtain a reduced
rate of withholding, a non-US shareholder will be required to provide an IRS
Form W-8BEN certifying its entitlement to benefits under a treaty. The
withholding tax does not apply to regular dividends paid to a non-US shareholder
who provides a Form W-8ECI, certifying that the dividends are effectively
connected with the non-US shareholder's conduct of a trade or business within
the United States. Instead, the effectively connected dividends will be subject
to regular US income tax as if the non-US shareholder were a US shareholder. A
non-US corporation receiving effectively connected dividends may also be subject
to additional "branch profits tax" imposed at a rate of 30% (or a lower treaty
rate). A non-US shareholder who fails to provide an IRS Form W-8BEN or other
applicable form may be subject to backup withholding at the appropriate rate.

In general, United States federal withholding tax will not apply to any gain or
income realized by a non-US shareholder in respect of any distributions of net
long-term capital gains over net short-term capital losses, exempt-interest
dividends, or upon the sale or other disposition of shares of the Fund.

For taxable years beginning before January 1, 2008, properly-designated
dividends are generally exempt from United States federal withholding tax where
they (i) are paid in respect of the Fund's "qualified net interest income"
(generally, the Fund's US source interest income, other than certain contingent
interest and interest from obligations of a corporation or partnership in which
the Fund is at least a 10% shareholder, reduced by expenses that are allocable
to such income) or (ii) are paid in respect of the Fund's "qualified short-term
capital gains" (generally, the excess of the Fund's net short-term capital gain
over the Fund's long-term capital loss for such taxable year). However,
depending on its circumstances, the Fund may designate all, some or none of its
potentially eligible dividends as such qualified net interest income or as
qualified short-term capital gains, 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 non-US shareholder 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 designates the payment as qualified net interest income or qualified
short-term capital gain. Non-US shareholders should contact their intermediaries
with respect to the application of these rules to their accounts.

A distribution from the Fund to foreign shareholders who have held more than 5%
of the Fund at any time during the one-year period ending on the date of
distribution is treated as real property gain subject to 35% withholding tax and
treated as income effectively connected to a US trade or business with certain
tax filing requirements applicable, if such distribution is attributable to a
distribution received by the Fund from a REIT. Restrictions apply with respect
to wash sale and substitute payment transactions.

                                 NET ASSET VALUE

The net asset value of shares of the Fund is computed as of the close of regular
trading on the NYSE on each day the NYSE is open for trading (the "Value Time").
The NYSE 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 OTC market as of the Value Time. Lacking any sales, the
security is valued at the calculated mean between the most recent bid quotation
and the most recent asked quotation (the "Calculated Mean") on such exchange or
OTC market as of the Value Time. If it is not possible to determine the
Calculated Mean, the security is valued at the most recent bid quotation on such
exchange or OTC market as of the Value Time. In the case of certain foreign
exchanges or OTC markets, the closing price reported by the exchange or OTC
market (which may sometimes be referred to as the " official close" or the
"official closing price" or other similar term) will be considered the most
recent sale price.

Debt securities are valued as follows. Money market instruments purchased with
an original or remaining maturity of 60 days or less, maturing at par, are
valued at amortized cost. Other money market instruments are valued based on
information obtained from an approved pricing agent or, if such information is
not readily available, by using matrix pricing techniques (formula driven
calculations based primarily on current market yields). Bank loans are valued at
prices supplied by an pricing agent (which are intended to reflect the mean
between the bid and asked prices), if available, and otherwise at the mean of
the most recent bid and asked quotations or evaluated prices, as applicable,
based on quotations or evaluated prices obtained from one or more
broker-dealers. Privately placed debt securities, other than Rule 144A debt
securities, initially are valued at cost and thereafter based on all relevant
factors, including type of security, size of holding and restrictions on
disposition. Municipal debt securities are valued at prices supplied by an
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 NYSE. 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.


                           BOARD MEMBERS 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 person" (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


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth, Position                                                                   Number of Funds
 with the Trust and Length of     Business Experience and                                        in DWS Fund
 Time Served(1)                   Directorships During the Past 5 Years                          Complex Overseen
--------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>                                               <C>
Paul K. Freeman                   Consultant, World Bank/Inter-American Development Bank;               134
(1950)                            Governing Council of the Independent Directors Council
Chairperson since 2009, and       (governance, executive committees); formerly: Project Leader,
Board Member since 1993           International Institute for Applied Systems Analysis
                                  (1998-2001); Chief Executive Officer, The Eric Group, Inc.
                                  (environmental insurance) (1986-1998)
--------------------------------------------------------------------------------------------------------------------
John W. Ballantine (1946)         Retired; formerly: Executive Vice President and Chief Risk            134
Board Member since 1999           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
--------------------------------------------------------------------------------------------------------------------
 Henry P. Becton, Jr. (1943)      Vice Chair, WGBH Educational Foundation; Directorships:               134
 Board Member since               Association of Public Television Stations; Becton Dickinson
 1990                             and Company(2) (medical technology company); Belo
                                  Corporation(2) (media company); Boston Museum of Science;
                                  Public Radio International; PRX, The Public Radio Exchange;
                                  The PBS Foundation; former Directorships: American Public
                                  Television; Concord Academy; New England Aquarium; Mass.
                                  Corporation for Educational Telecommunications; Committee for
                                  Economic Development; Public Broadcasting Service
--------------------------------------------------------------------------------------------------------------------
Dawn-Marie Driscoll (1946)        President, Driscoll Associates (consulting firm); Executive           134
Board Member since 1987           Fellow, Center for Business Ethics, Bentley University;
                                  formerly: Partner, Palmer & Dodge (1988-1990); Vice President
                                  of Corporate Affairs and General Counsel, Filene's
                                  (1978-1988); Directorships: Trustee of 20 open-end mutual
                                  funds managed by Sun Capital Advisers, Inc. (since 2007);
                                  Director of ICI Mutual Insurance Company (since 2007);
                                  Advisory Board, Center for Business Ethics, Bentley
                                  University; Trustee, Southwest Florida Community Foundation
                                  (charitable organization); former Directorships: Investment
                                  Company Institute (audit, executive, nominating committees)
                                  and Independent Directors Council (governance, executive
                                  committees)
--------------------------------------------------------------------------------------------------------------------
Keith R. Fox (1954)               Managing General Partner, Exeter Capital Partners (a series           134
Board Member since                of private investment funds); Directorships: Progressive
1996                              Holding Corporation (kitchen goods importer and distributor);
                                  Box Top Media Inc. (advertising); The Kennel Shop (retailer)
--------------------------------------------------------------------------------------------------------------------
Kenneth C. Froewiss               Clinical Professor of Finance, NYU Stern School of Business           134
(1945)                            (1997-present); Member, Finance Committee, Association for
Board Member since                Asian Studies (2002-present); Director, Mitsui Sumitomo
2001                              Insurance Group (US) (2004-present); prior thereto, Managing
                                  Director, J.P. Morgan (investment banking firm) (until 1996)
--------------------------------------------------------------------------------------------------------------------
Richard J. Herring                Jacob Safra Professor of International Banking and Professor,         134
(1946)                            Finance Department, The Wharton School, University of
Board Member since                Pennsylvania (since July 1972); Co-Director, Wharton
1990                              Financial Institutions Center (since July 2000); Director,
                                  Japan Equity Fund, Inc. (since September 2007), Thai Capital
                                  Fund, Inc. (since September 2007), Singapore Fund, Inc.
                                  (since September 2007); formerly: Vice Dean and Director,
                                  Wharton Undergraduate Division (July 1995-June 2000);
                                  Director, Lauder Institute of International Management
                                  Studies (July 2000-June 2006)
--------------------------------------------------------------------------------------------------------------------
William McClayton (1944)          Managing Director, Diamond Management & Technology                    134
Board Member since 2004           Consultants, Inc. (global management consulting firm)
                                  (2001-present); Directorship: Board of Managers, YMCA of
                                  Metropolitan Chicago; formerly: Senior Partner, Arthur
                                  Andersen LLP (accounting) (1966-2001); Trustee, Ravinia
                                  Festival
--------------------------------------------------------------------------------------------------------------------
Rebecca W. Rimel                  President and Chief Executive Officer, The Pew Charitable             134
(1951)                            Trusts (charitable organization) (1994 to present); Trustee,
Board Member since                Thomas Jefferson Foundation (charitable organization) (1994
1995                              to present); Trustee, Executive Committee, Philadelphia
                                  Chamber of Commerce (2001 to 2007); Trustee, Pro Publica
                                  (2007-present) (charitable organization); formerly: Executive
                                  Vice President, The Glenmede Trust Company (investment trust
                                  and wealth management) (1983 to 2004); Board Member, Investor
                                  Education (charitable organization) (2004-2005); Director,
                                  Viasys Health Care(2) (January 2007-June 2007)
--------------------------------------------------------------------------------------------------------------------
William N. Searcy, Jr.            Private investor since October 2003; Trustee of 20 open-end           134
(1946)                            mutual funds managed by Sun Capital Advisers, Inc. (since
Board Member since                October 1998); formerly: Pension & Savings Trust Officer,
1993                              Sprint Corporation(2) (telecommunications) (November
                                  1989-September 2003)
--------------------------------------------------------------------------------------------------------------------
Jean Gleason Stromberg            Retired; formerly: Consultant (1997-2001); Director, US               134
(1943)                            Government Accountability Office (1996-1997); Partner,
Board Member since                Fulbright & Jaworski, L.L.P. (law firm) (1978-1996);
1997                              Directorships: The William and Flora Hewlett Foundation;
                                  Business Leadership Council, Wellesley College; former
                                  Directorships: Service Source, Inc., Mutual Fund Directors
                                  Forum (2002-2004), American Bar Retirement Association
                                  (funding vehicle for retirement plans) (1987-1990 and
                                  1994-1996)
--------------------------------------------------------------------------------------------------------------------
Robert H. Wadsworth (1940)        President, Robert H. Wadsworth & Associates, Inc. (consulting         137
Board Member since 1999           firm) (1983 to present); Director, The Phoenix Boys Choir
                                  Association
--------------------------------------------------------------------------------------------------------------------

Interested Board Member


--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth, Position                                                                   Number of Funds
 with the Trust and Length of     Business Experience and                                        in DWS Fund
 Time Served(1)                   Directorships During the Past 5 Years                          Complex Overseen
--------------------------------------------------------------------------------------------------------------------
 Axel Schwarzer(3)                Managing Director(4), Deutsche Asset Management; Head of              134
 (1958)                           Deutsche Asset Management Americas; CEO of DWS Investments;
 Board Member since               formerly: board member of DWS Investments, Germany
 2006                             (1999-2005); Head of Sales and Product Management for the
                                  Retail and Private Banking Division of Deutsche Bank in
                                  Germany (1997-1999); various strategic and operational
                                  positions for Deutsche Bank Germany Retail and Private
                                  Banking Division in the field of investment funds, tax driven
                                  instruments and asset management for corporates (1989-1996)
--------------------------------------------------------------------------------------------------------------------

Officers(5)


--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth, Position
 with the Trust and Length of     Business Experience and
 Time Served(6)                   Directorships During the Past 5 Years
--------------------------------------------------------------------------------------------------------------------
 Michael G. Clark(7) (1965)       Managing Director(4), Deutsche Asset Management (2006-present); President of
 President, 2006-present          DWS family of funds; Director, ICI Mutual Insurance Company (since
                                  October 2007); 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(8) (1962)          Director(4), Deutsche Asset Management
 Vice President and Secretary,
 1999-present
--------------------------------------------------------------------------------------------------------------------
 Paul H. Schubert(7) (1963)       Managing Director(4), Deutsche Asset Management (since July 2004); formerly:
 Chief Financial Officer,         Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family
 2004-present                     of Funds (1998-2004); Vice President and Director of Mutual Fund Finance at UBS
 Treasurer, 2005-present          Global Asset Management (1994-1998)
--------------------------------------------------------------------------------------------------------------------
 Caroline Pearson(8) (1962)       Managing Director(4), Deutsche Asset Management
 Assistant Secretary,
 1997-present
--------------------------------------------------------------------------------------------------------------------
 Rita Rubin(9) (1970)             Vice President and Counsel, Deutsche Asset Management (since October 2007);
 Assistant Secretary,             formerly, Vice President, Morgan Stanley Investment Management (2004-2007);
 2009-present                     Attorney, Shearman & Sterling LLP (2004); Vice President and Associate General
                                  Counsel, UBS Global Asset Management (2001-2004)
--------------------------------------------------------------------------------------------------------------------
 Paul Antosca(8)                  Director(4), Deutsche Asset Management (since 2006); formerly: Vice President,
 (1957)                           The Manufacturers Life Insurance Company (U.S.A.) (1990-2006)
 Assistant Treasurer,
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Jack Clark (8)                   Director(4), Deutsche Asset Management (since 2007); formerly: Vice President,
 (1967)                           State Street Corporation (2002-2007)
 Assistant Treasurer,
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Diane Kenneally(8)               Director(4), Deutsche Asset Management
 (1966)
 Assistant Treasurer,
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Jason Vazquez(9) (1972)          Vice President, Deutsche Asset Management (since 2006); formerly: AML
 Anti-Money Laundering            Operations Manager for Bear Stearns (2004-2006); Supervising Compliance
 Compliance Officer,              Principal and Operations Manager for AXA Financial (1999-2004)
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Robert Kloby(9) (1962)           Managing Director(4), Deutsche Asset Management (2004-present); formerly: Chief
 Chief Compliance Officer,        Compliance Officer/Chief Risk Officer, Robeco USA (2000-2004); Vice President,
 2006-present                     The Prudential Insurance Company of America (1988-2000); E.F. Hutton and
                                  Company (1984-1988)
--------------------------------------------------------------------------------------------------------------------
 J. Christopher Jackson(9)        Director(4), Deutsche Asset Management (2006-present); formerly: Director,
 (1951)                           Senior Vice President, General Counsel, and Assistant Secretary, Hansberger
 Chief Legal Officer,             Global Investors, Inc. (1996-2006); Director, National Society of Compliance
 2006-present                     Professionals (2002-2005) (2006-2009)
--------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)      The length of time served represents the year in which the Board Member
         joined the board of one or more DWS funds currently overseen by the
         Board.

(2)      A publicly held company with securities registered pursuant to Section
         12 of the Securities Exchange Act of 1934.

(3)      The mailing address of Axel Schwarzer is c/o Deutsche Investment
         Management Americas Inc., 345 Park Avenue, New York, New York 10154.
         Mr. Schwarzer is an interested Board Member by virtue of his positions
         with Deutsche Asset Management. As an interested person, Mr. Schwarzer
         receives no compensation from the Fund.

(4)      Executive title, not a board directorship.

(5)      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 Fund.

(6)      The length of time served represents the year in which the officer was
         first elected in such capacity for one or more DWS funds.

(7)      Address:  345 Park Avenue, New York, New York 10154.

(8)      Address: One Beacon Street, Boston, Massachusetts 02108.

(9)      Address:  280 Park Avenue, New York, New York 10017.

Certain officers hold similar positions for other investment companies for which
DIMA or an affiliate serves as the Advisor.

Officer's Role with Principal Underwriter:  DWS Investments Distributors, Inc.

 Paul H. Schubert:              Vice President
 Jason Vazquez:                 Vice President and AML Compliance Officer
 Caroline Pearson:              Secretary

Board Members' Responsibilities. The officers of the Trust manage its day-to-day
operations under the direction of the Board. The primary responsibility of the
Board is to represent the interests of the Fund and to provide oversight of the
management of the Fund.

Board Committees. The Board has established the following standing committees:
Audit Committee, Nominating and Governance Committee, Contract Committee, Equity
Oversight Committee, Fixed-Income and Quant Oversight Committee, Marketing and
Shareholder Services Committee, and Operations Committee. For each committee,
the Board has adopted a written charter setting forth each committee's
responsibilities. Each committee was reconstituted effective April 1, 2008.

Audit Committee: The Audit Committee, which consists entirely of Independent
Board Members, assists the Board in fulfilling its responsibility for oversight
of (1) the integrity of the financial statements, (2) the Fund's accounting and
financial reporting policies and procedures, (3) the Fund's compliance with
legal and regulatory requirements related to accounting and financial reporting
and (4) the qualifications, independence and performance of the independent
registered public accounting firm for the Fund. It also approves and recommends
to the Board the appointment, retention or termination of the independent
registered public accounting firm for the Fund, reviews the scope of audit and
internal controls, considers and reports to the Board on matters relating to the
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
William McClayton (Chair), Kenneth C. Froewiss (Vice Chair), John W. Ballantine,
Henry P. Becton, Jr., Keith R. Fox and William N. Searcy, Jr. During the
calendar year 2008, the Audit Committee of the Fund's Board held six (6)
meetings.

Nominating and Governance Committee: The Nominating and Governance Committee,
which consists entirely of Independent Board Members, recommends individuals for
membership on the Board, nominates officers, Board and committee chairs, vice
chairs and committee members, and oversees the operations of the Board. The
Nominating and Governance Committee also reviews recommendations by shareholders
for candidates for Board positions. Shareholders may recommend candidates for
Board positions by forwarding their correspondence by US mail or courier service
to Dawn-Marie Driscoll, P.O. Box 100176, Cape Coral, FL 33904. The members of
the Nominating and Governance Committee are Henry P. Becton, Jr. (Chair),
Rebecca W. Rimel (Vice Chair), Paul K. Freeman and William McClayton. During the
calendar year 2008, the Nominating and Governance Committee of the Fund's Board
held four (4) meetings.

Contract Committee: The Contract Committee, which consists entirely of
Independent Board Members, reviews at least annually, (a) the Fund's financial
arrangements with DIMA and its affiliates, and (b) the Fund's expense ratios.
The members of the Contract Committee are Robert H. Wadsworth (Chair), Keith R.
Fox (Vice Chair), Henry P. Becton, Jr., Richard J. Herring, William McClayton
and Jean Gleason Stromberg. During the calendar year 2008, the Contract Review
Committee of the Fund's Board held seven (7) meetings.

Equity Oversight Committee: The Equity Oversight Committee reviews the
investment operations of those funds that primarily invest in equity securities
(except for those funds managed by a quantitative investment team). The members
of the Equity Oversight Committee are John W. Ballantine (Chair), William
McClayton (Vice Chair), Henry P. Becton, Jr., Keith R. Fox, Richard J. Herring
and Rebecca W. Rimel. During the calendar year 2008, the Equity Oversight
Committee of the Fund's Board held five (5) meetings.

Fixed-Income and Quant Oversight Committee: The Fixed-Income and Quant Oversight
Committee reviews the investment operations of those funds that primarily invest
in fixed-income securities or are managed by a quantitative investment team. The
members of the Fixed-Income and Quant Oversight Committee are William N. Searcy,
Jr. (Chair), Jean Gleason Stromberg (Vice Chair), Dawn-Marie Driscoll, Kenneth
C. Froewiss and Robert H. Wadsworth. During the calendar year 2008, the
Fixed-Income Oversight Committee of the Fund's Board held five (5) meetings.

Marketing and Shareholder Services Committee: The Marketing and Shareholder
Services Committee reviews the Fund's marketing program, sales practices and
literature and shareholder services. The members of the Marketing and
Shareholder Services Committee are Richard J. Herring (Chair), Dawn-Marie
Driscoll (Vice Chair), Rebecca W. Rimel, Jean Gleason Stromberg and Robert H.
Wadsworth. During the calendar year 2008, the Marketing/Distribution/Shareholder
Service Committee of the Fund's Board held four (4) meetings.

The Operations Committee: The Operations Committee reviews the administrative
operations, legal affairs and general compliance matters of the Fund. The
Operations Committee reviews administrative matters related to the operations of
the Fund, policies and procedures relating to portfolio transactions, custody
arrangements, fidelity bond and insurance arrangements, valuation of Fund assets
and securities and such other tasks as the full Board deems necessary or
appropriate. The Operations Committee also oversees the valuation of the Fund's
securities and other assets and determines, as needed, the fair value of Fund
securities or other assets under certain circumstances as described in the
Fund's Valuation Procedures. The Operations Committee has appointed a Valuation
Sub-Committee, which may make determinations of fair value required when the
Operations Committee is not in session. The members of the Operations Committee
are Dawn-Marie Driscoll (Chair), John W. Ballantine (Vice Chair), Kenneth C.
Froewiss, Rebecca W. Rimel and William N. Searcy, Jr. The members of the
Valuation Sub-Committee are Kenneth C. Froewiss (Chair), John W. Ballantine,
Dawn-Marie Driscoll (Alternate), Rebecca W. Rimel (Alternate) and William N.
Searcy, Jr. (Alternate). During the calendar year 2008, the Operations Committee
held four (4) meetings and the Valuation Sub-Committee held [number of meetings
varies by fund] meetings.

Ad Hoc Committees. In addition to the standing committees described above, from
time to time the Board may also form ad hoc committees to consider specific
issues.

Remuneration. Each Independent Board Member receives compensation from the Fund
for his or her services, which includes retainer fees and specified amounts for
various committee services and for the Board Chairperson. 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.

Board Members who are officers, directors, employees or stockholders of Deutsche
Asset Management or its affiliates receive no direct compensation from the 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
Fund. The following tables show compensation from the Fund and aggregate
compensation from all of the funds in the DWS fund complex received by each
Independent Board Member during the calendar year 2008. Mr. Schwarzer is an
interested person of the Fund and received no compensation from the Fund or any
fund in the DWS fund complex during the relevant periods.

<TABLE>
<CAPTION>
                                        Aggregate Compensation           Total Compensation
                                    from DWS International Select           from Fund and
  Name of Board Member                       Equity Fund                 DWS Fund Complex(1)
  --------------------                       -----------                 -------------------
<S>                                               <C>                           <C>
  John W. Ballantine                              $424                          $237,500
  Henry P. Becton, Jr.(2)                         $620                          $246,000
  Dawn-Marie Driscoll(2)(3)                       $746                          $292,500
  Keith R. Fox(2)                                 $586                          $229,500
  Paul K. Freeman                                 $447                          $255,000
  Kenneth C. Froewiss                             $586                          $226,750
  Richard J. Herring(2)                           $620                          $240,000
  William McClayton(4)                            $438                          $257,500
  Rebecca W. Rimel(2)                             $586                          $233,500
  William N. Searcy, Jr.                          $620                          $238,000
  Jean Gleason Stromberg                          $586                          $225,500
  Robert H. Wadsworth                             $438                          $273,500

(1)      The DWS fund complex is composed of 136 funds as of December 31, 2008.

(2)      Aggregate compensation includes amounts paid to the Board Members for
         special meetings of ad hoc committees of the Board in connection with
         the consolidation of the DWS fund boards and various funds, meetings
         for considering fund expense simplification initiatives, and
         consideration of issues specific to the Fund's direct shareholders
         (i.e., those shareholders who did not purchase shares through financial
         intermediaries). Such amounts totaled $8,000 for Mr. Becton, $2,000 for
         Ms. Driscoll, $2,000 for Mr. Fox, $2,000 for Dr. Herring and $8,000 for
         Ms. Rimel. These meeting fees were borne by the funds.

(3)      Includes $70,000 in annual retainer fees received by Ms. Driscoll as
         Chairperson of DWS funds.

(4)      Includes $15,000 paid to Mr. McClayton for numerous special meetings of
         an ad hoc committee of the former Chicago Board in connection with
         board consolidation initiatives.

Board Member Ownership in the Fund

The following table shows the dollar range of equity securities beneficially
owned by each Board Member in the Fund and DWS fund complex as of December 31,
2008.

                                            Dollar Range of Beneficial            Aggregate Dollar Range of
                                                     Ownership               Ownership in all Funds Overseen by
                                               in DWS International                     Board Member
Board Member                                    Select Equity Fund               in the DWS Fund Complex(1)
------------                                    ------------------               --------------------------

Independent Board Member:
-------------------------

John W. Ballantine                                   [$/None]                              Over $100,000
Henry P. Becton, Jr.                                 [$/None]                              Over $100,000
Dawn-Marie Driscoll                                  [$/None]                              Over $100,000
Keith R. Fox                                         [$/None]                              Over $100,000
Paul K. Freeman                                      [$/None]                              Over $100,000
Kenneth C. Froewiss                                  [$/None]                              Over $100,000
Richard J. Herring                                   [$/None]                              Over $100,000
William McClayton                                    [$/None]                              Over $100,000
Rebecca W. Rimel                                     [$/None]                              Over $100,000
William N. Searcy, Jr.                               [$/None]                              Over $100,000
Jean Gleason Stromberg                               [$/None]                              Over $100,000
Robert H. Wadsworth                                  [$/None]                              Over $100,000

Interested Board Member:
------------------------

Axel Schwarzer                                       [$/None]                              Over $100,000

(1)      Securities beneficially owned as defined under the 1934 Act include
         direct and/or indirect ownership of securities where the Board Member's
         economic interest is tied to the securities, employment ownership and
         securities when the Board Member can exert voting power, and when the
         Board Member has authority to sell the securities. The dollar ranges
         are: None, $1-$10,000, $10,001-$50,000, $50,001-$100,000 and 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, 2008. Immediate family members 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).

                                                                                   Value of        Percent of
                                   Owner and                                     Securities on     Class on an
Independent                     Relationship to                     Title of     an Aggregate       Aggregate
Board Member                      Board Member         Company        Class          Basis            Basis
------------                      ------------         -------        -----          -----            -----

John W. Ballantine                                      None
Henry P. Becton, Jr.                                    None
Dawn-Marie Driscoll                                     None
Keith R. Fox                                            None
Paul K. Freeman                                         None
Kenneth C. Froewiss                                     None
Richard J. Herring                                      None
William McClayton                                       None
Rebecca W. Rimel                                        None
William N. Searcy, Jr.                                  None
Jean Gleason Stromberg                                  None
Robert H. Wadsworth                                     None
</TABLE>

Securities Beneficially Owned

As of [Date within 30 days of filing], 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 [Date within 30 days of filing], no
person owned of record or beneficially 5% or more of any class of the Fund's
outstanding shares, except as noted below.





Agreement to Indemnify Independent Trustees for Certain Expenses


In connection with litigation or regulatory action related to possible improper
market timing or other improper trading activity or possible improper marketing
and sales activity in certain DWS Funds (the "Affected Funds"), DIMA has agreed
to indemnify and hold harmless the Affected Funds ("Fund Indemnification
Agreement") against any and all loss, damage, liability and expense, arising
from market timing or marketing and sales matters alleged in any enforcement
actions brought by governmental authorities involving or potentially affecting
the Affected Funds or DIMA ("Enforcement Actions") or that are the basis for
private actions brought by shareholders of the Affected Funds against the
Affected Funds, their directors 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 Affected
Funds and in light of the rebuttable presumption generally afforded to
independent directors/trustees of investment companies that they have not
engaged in disabling conduct, DIMA has also agreed, subject to applicable law
and regulation, to indemnify certain (or, with respect to certain Affected
Funds, all) of the Independent Trustees of the Affected Funds, 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 Affected Funds' Board determines that the
Independent Trustees ultimately would not be entitled to indemnification or (2)
for any liability of the Independent Trustees to the Funds 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 director or trustee of the Affected Funds as
determined in a final adjudication in such action or proceeding. The estimated
amount of any expenses that may be advanced to the Independent Trustees or
indemnity that may be payable under the indemnity agreements is currently
unknown. These agreements by DIMA will survive the termination of the investment
management agreements between DIMA and the Affected Funds.




                               TRUST ORGANIZATION

The Fund is a series of DWS Advisor Funds (the "Trust"). 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"). 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. The
Trust's name was changed to DWS Advisor Funds effective February 6, 2006. The
Board of Trustees of the Trust is responsible for the overall management and
supervision of the affairs of the Trust. The Declaration of Trust authorizes the
Board of Trustees to create a separate investment series or portfolios of
shares. On or about July 10, 2006, International Select Equity Predecessor Fund
transferred all its assets and liabilities from DWS Investments Trust, a
Delaware statutory trust, into a new series of the Trust, under the same fund
name. The Trust offers shares of beneficial interest of separate series, par
value $0.001 per share. The shares of the other series of the Trust are offered
through separate prospectuses and statements of additional information. No
series of shares has any preference over any other series. The trust also
reserves the right to issue more than one class of shares of the Fund. 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 a Fund, 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 Advisor votes proxies pursuant to the proxy
voting policy and guidelines set forth in Appendix A to this SAI).

You may obtain information about how a fund voted proxies related to its
portfolio securities during the 12-month period ended June 30 by visiting the
Securities and Exchange Commission's Web site at www.sec.gov or by visiting our
Web site at: www.dws-investments.com (click on "proxy voting" at the bottom of
the page).




                              FINANCIAL STATEMENTS


International Select Equity Predecessor Fund's audited financial statements, for
the classes of shares it makes available, for the year ended October 31, 2008
are included in, and incorporated by reference into, this Statement of
Additional Information from the Annual Report to Shareholders of the Fund in
reliance upon the reports of PricewaterhouseCoopers LLP, the Fund's independent
registered public accounting firm, as experts in accounting and auditing. The
Board of Trustees of International Select Equity Predecessor Fund approved a
1.82569632-for-1 stock split of the Class R shares of International Select
Equity Predecessor Fund, a 1.81761006-for-1 stock split of the Institutional
Class shares of International Select Equity Predecessor Fund, a 1.79424978-for-1
stock split of the Investment Class shares of International Select Equity
Predecessor Fund and a 1.80772686-for-1 stock split of the Premier Class shares
of International Select Equity Predecessor Fund which was effective November 11,
2005. The share and per share data presented in the financial statements
incorporated by reference into this Statement of Additional Information have not
been restated for this split.


The financial statements, including the portfolio of investments together with
the notes to financial statements in the Annual Report to the Shareholders of
the Fund for the year ended October 31, 2007, are incorporated herein by
reference and are hereby deemed to be a part of this Statement of Additional
Information.



                             ADDITIONAL INFORMATION

The CUSIP numbers for each class of the Fund are:

DWS International Select Equity Fund     Institutional Class:       23339E103
                                         Class A Shares:            23339E400
                                         Class B Shares:            23339E509
                                         Class C Shares:            23339E608
                                         Class R Shares:            23339E806

The Fund has a fiscal year end of October 31.


                      APPENDIX A -- PROXY VOTING GUIDELINES

       Deutsche Asset Management ("AM") Proxy Voting Policy and Guidelines


I.       INTRODUCTION

AM has adopted and implemented the following policies and procedures, which it
believes are reasonably designed to ensure that proxies are voted in the best
economic interest of clients, in accordance with its fiduciary duties and local
regulation. These Proxy Voting Policies, Procedures and Guidelines shall apply
to all accounts managed by US domiciled advisers and to all US client accounts
managed by non US regional offices. Non US regional offices are required to
maintain procedures and to vote proxies as may be required by law on behalf of
their non US clients. In addition, AM's proxy policies reflect the fiduciary
standards and responsibilities for ERISA accounts.

The attached guidelines represent a set of global recommendations that were
determined by the Global Proxy Voting Sub-Committee ("the GPVSC"). These
guidelines were developed to provide AM with a comprehensive list of
recommendations that represent how AM will generally vote proxies for its
clients. The recommendations derived from the application of these guidelines
are not intended to influence the various AM legal entities either directly or
indirectly by parent or affiliated companies. In addition, the organizational
structures and documents of the various AM legal entities allows, where
necessary or appropriate, the execution by individual AM subsidiaries of the
proxy voting rights independently of any DB parent or affiliated company. This
applies in particular to non U.S. fund management companies. The individuals
that make proxy voting decisions are also free to act independently, subject to
the normal and customary supervision by the management/boards of these AM legal
entities.


II.      AM'S PROXY VOTING RESPONSIBILITIES

Proxy votes are the property of AM's advisory clients.(1) As such, AM's
authority and responsibility to vote such proxies depend upon its contractual
relationships with its clients. AM has delegated responsibility for effecting
its advisory clients' proxy votes to Institutional Shareholder Services ("ISS"),
an independent third-party proxy voting specialist. ISS votes AM's advisory
clients' proxies in accordance with AM's proxy guidelines or AM's specific
instructions. Where a client has given specific instructions as to how a proxy
should be voted, AM will notify ISS to carry out those instructions. Where no
specific instruction exists, AM will follow the procedures in voting the proxies
set forth in this document. Certain Taft-Hartley clients may direct AM to have
ISS vote their proxies in accordance with Taft Hartley voting Guidelines

_____________________

(1)      For purposes of these Policies and Procedures, "clients" refers to
         persons or entities: for which AM serves as investment adviser or
         sub-adviser; for which AM votes proxies; and that have an economic or
         beneficial ownership interest in the portfolio securities of issuers
         soliciting such proxies.

Clients may in certain instances contract with their custodial agent and notify
AM that they wish to engage in securities lending transactions. In such cases,
it is the responsibility of the custodian to deduct the number of shares that
are on loan so that they do not get voted twice.


III.     POLICIES

1.       Proxy voting activities are conducted in the best economic interest of
         clients

AM has adopted the following policies and procedures to ensure that proxies are
voted in accordance with the best economic interest of its clients, as
determined by AM in good faith after appropriate review.

2.       The Global Proxy Voting Sub-Committee

The Global Proxy Voting Sub-Committee (the "GPVSC") is an internal working group
established by the applicable AM's Investment Risk Oversight Committee pursuant
to a written charter. The GPVSC is responsible for overseeing AM's proxy voting
activities, including:

(i)    adopting, monitoring and updating guidelines, attached as Exhibit A (the
       "Guidelines"), that provide how AM will generally vote proxies pertaining
       to a comprehensive list of common proxy voting matters;

(ii)   voting proxies where (A) the issues are not covered by specific client
       instruction or the Guidelines; (B) the Guidelines specify that the issues
       are to be determined on a case-by-case basis; or (C) where an exception
       to the Guidelines may be in the best economic interest of AM's clients;
       and

(iii)  monitoring the Proxy Vendor Oversight's proxy voting activities (see
       below).

AM's Proxy Vendor Oversight, a function of AM's Operations Group, is responsible
for coordinating with ISS to administer AM's proxy voting process and for voting
proxies in accordance with any specific client instructions or, if there are
none, the Guidelines, and overseeing ISS' proxy responsibilities in this regard.

3.       Availability of Proxy Voting Policies and Procedures and proxy voting
         record

Copies of these Policies and Procedures, as they may be updated from time to
time, are made available to clients as required by law and otherwise at AM's
discretion. Clients may also obtain information on how their proxies were voted
by AM as required by law and otherwise at AM's discretion; however, AM must not
selectively disclose its investment company clients' proxy voting records. The
Proxy Vendor Oversight will make proxy voting reports available to advisory
clients upon request. The investment companies' proxy voting records will be
disclosed to shareholders by means of publicly-available annual filings of each
company's proxy voting record for 12-month periods ended June 30 (see
"Recordkeeping" below), if so required by relevant law.


IV.      PROCEDURES

The key aspects of AM's proxy voting process are as follows:

1.       The GPVSC's Proxy Voting Guidelines

The Guidelines set forth the GPVSC's standard voting positions on a
comprehensive list of common proxy voting matters. The GPVSC has developed, and
continues to update the Guidelines based on consideration of current corporate
governance principles, industry standards, client feedback, and the impact of
the matter on issuers and the value of the investments.

The GPVSC will review the Guidelines as necessary to support the best economic
interests of AM's clients and, in any event, at least annually. The GPVSC will
make changes to the Guidelines, whether as a result of the annual review or
otherwise, taking solely into account the best economic interests of clients.
Before changing the Guidelines, the GPVSC will thoroughly review and evaluate
the proposed change and the reasons therefore, and the GPVSC Chair will ask
GPVSC members whether anyone outside of the AM organization (but within Deutsche
Bank and its affiliates) or any entity that identifies itself as a AM advisory
client has requested or attempted to influence the proposed change and whether
any member has a conflict of interest with respect to the proposed change. If
any such matter is reported to the GPVSC Chair, the Chair will promptly notify
the Conflicts of Interest Management Sub-Committee (see below) and will defer
the approval, if possible. Lastly, the GPVSC will fully document its rationale
for approving any change to the Guidelines.

The Guidelines may reflect a voting position that differs from the actual
practices of the public company(ies) within the Deutsche Bank organization or of
the investment companies for which AM or an affiliate serves as investment
adviser or sponsor. Investment companies, particularly closed-end investment
companies, are different from traditional operating companies. These differences
may call for differences in voting positions on the same matter. Further, the
manner in which AM votes investment company proxies may differ from proposals
for which a AM-advised or sponsored investment company solicits proxies from its
shareholders. As reflected in the Guidelines, proxies solicited by closed-end
(and open-end) investment companies are generally voted in accordance with the
pre-determined guidelines of ISS. See Section IV.3.B.

Funds ("Underlying Funds") in which Topiary Fund Management Fund of Funds (each,
a "Fund") invest, may from time to time seek to revise their investment terms
(i.e. liquidity, fees, etc.) or investment structure. In such event, the
Underlying Funds may require approval/consent from its investors to effect the
relevant changes. Topiary Fund Management has adopted Proxy Voting Procedures
which outline the process for these approvals.

2.       Specific proxy voting decisions made by the GPVSC

The Proxy Vendor Oversight will refer to the GPVSC all proxy proposals (i) that
are not covered by specific client instructions or the Guidelines; or (ii) that,
according to the Guidelines, should be evaluated and voted on a case-by-case
basis.

Additionally, if, the Proxy Vendor Oversight, the GPVSC Chair or any member of
the GPVSC, a portfolio manager, a research analyst or a sub-adviser believes
that voting a particular proxy in accordance with the Guidelines may not be in
the best economic interests of clients, that individual may bring the matter to
the attention of the GPVSC Chair and/or the Proxy Vendor Oversight.(2)

_____________________

(2)      The Proxy Vendor Oversight generally monitors upcoming proxy
         solicitations for heightened attention from the press or the industry
         and for novel or unusual proposals or circumstances, which may prompt
         the Proxy Vendor Oversight to bring the solicitation to the attention
         of the GPVSC Chair. AM portfolio managers, AM research analysts and
         sub-advisers also may bring a particular proxy vote to the attention of
         the GPVSC Chair, as a result of their ongoing monitoring of portfolio
         securities held by advisory clients and/or their review of the periodic
         proxy voting record reports that the GPVSC Chair distributes to AM
         portfolio managers and AM research analysts.

If the Proxy Vendor Oversight refers a proxy proposal to the GPVSC or the GPVSC
determines that voting a particular proxy in accordance with the Guidelines is
not in the best economic interests of clients, the GPVSC will evaluate and vote
the proxy, subject to the procedures below regarding conflicts.

The GPVSC endeavors to hold meetings to decide how to vote particular proxies
sufficiently before the voting deadline so that the procedures below regarding
conflicts can be completed before the GPVSC's voting determination.

3.       Certain proxy votes may not be cast

In some cases, the GPVSC may determine that it is in the best economic interests
of its clients not to vote certain proxies. If the conditions below are met with
regard to a proxy proposal, AM will abstain from voting:

o        Neither the Guidelines nor specific client instructions cover an issue;

o        ISS does not make a recommendation on the issue;

o        The GPVSC cannot convene on the proxy proposal at issue to make a
         determination as to what would be in the client's best interest. (This
         could happen, for example, if the Conflicts of Interest Management
         Sub-committee found that there was a material conflict or if despite
         all best efforts being made, the GPVSC quorum requirement could not be
         met).

In addition, it is AM's policy not to vote proxies of issuers subject to laws of
those jurisdictions that impose restrictions upon selling shares after proxies
are voted, in order to preserve liquidity. In other cases, it may not be
possible to vote certain proxies, despite good faith efforts to do so. For
example, some jurisdictions do not provide adequate notice to shareholders so
that proxies may be voted on a timely basis. Voting rights on securities that
have been loaned to third-parties transfer to those third-parties, with loan
termination often being the only way to attempt to vote proxies on the loaned
securities. Lastly, the GPVSC may determine that the costs to the client(s)
associated with voting a particular proxy or group of proxies outweighs the
economic benefits expected from voting the proxy or group of proxies.

The Proxy Vendor Oversight will coordinate with the GPVSC Chair regarding any
specific proxies and any categories of proxies that will not or cannot be voted.
The reasons for not voting any proxy shall be documented.

4.       Conflict of Interest Procedures

A. Procedures to Address Conflicts of Interest and Improper Influence

Overriding Principle. In the limited circumstances where the GPVSC votes
proxies,(3) the GPVSC will vote those proxies in accordance with what it, in
good faith, determines to be the best economic interests of AM's clients.(4)

_____________________

(3)      As mentioned above, the GPVSC votes proxies (i) where neither a
         specific client instruction nor a Guideline directs how the proxy
         should be voted, (ii) where the Guidelines specify that an issue is to
         be determined on a case by case basis or (iii) where voting in
         accordance with the Guidelines may not be in the best economic
         interests of clients.

(4)      The Proxy Vendor Oversight, who serves as the non-voting secretary of
         the GPVSC, may receive routine calls from proxy solicitors and other
         parties interested in a particular proxy vote. Any contact that
         attempts to exert improper pressure or influence shall be reported to
         the Conflicts of Interest Management Sub-Committee.

Independence of the GPVSC. As a matter of Compliance policy, the GPVSC and the
Proxy Vendor Oversight are structured to be independent from other parts of
Deutsche Bank. Members of the GPVSC and the employee responsible for Proxy
Vendor Oversight are employees of AM. As such, they may not be subject to the
supervision or control of any employees of Deutsche Bank Corporate and
Investment Banking division ("CIB"). Their compensation cannot be based upon
their contribution to any business activity outside of AM without prior approval
of Legal and Compliance. They can have no contact with employees of Deutsche
Bank outside of the Private Client and Asset Management division ("PCAM")
regarding specific clients, business matters or initiatives without the prior
approval of Legal and Compliance. They furthermore may not discuss proxy votes
with any person outside of AM (and within AM only on a need to know basis).

Conflict Review Procedures. There will be a committee (the "Conflicts of
Interest Management Sub-Committee") established within AM that will monitor for
potential material conflicts of interest in connection with proxy proposals that
are to be evaluated by the GPVSC. Promptly upon a determination that a vote
shall be presented to the GPVSC, the GPVSC Chair shall notify the Conflicts of
Interest Management Sub-Committee. The Conflicts of Interest Management
Sub-Committee shall promptly collect and review any information deemed
reasonably appropriate to evaluate, in its reasonable judgment, if AM or any
person participating in the proxy voting process has, or has the appearance of,
a material conflict of interest. For the purposes of this policy, a conflict of
interest shall be considered "material" to the extent that a reasonable person
could expect the conflict to influence, or appear to influence, the GPVSC's
decision on the particular vote at issue. GPVSC should provide the Conflicts of
Interest Management Sub-Committee a reasonable amount of time (no less than 24
hours) to perform all necessary and appropriate reviews. To the extent that a
conflicts review can not be sufficiently completed by the Conflicts of Interest
Management Sub-Committee the proxies will be voted in accordance with the
standard guidelines.

The information considered by the Conflicts of Interest Management Sub-Committee
may include without limitation information regarding (i) AM client
relationships; (ii) any relevant personal conflict known by the Conflicts of
Interest Management Sub-Committee or brought to the attention of that
sub-committee; (iii) and any communications with members of the GPVSC (or anyone
participating or providing information to the GPVSC) and any person outside of
the AM organization (but within Deutsche Bank and its affiliates) or any entity
that identifies itself as a AM advisory client regarding the vote at issue. In
the context of any determination, the Conflicts of Interest Management
Sub-Committee may consult with, and shall be entitled to rely upon, all
applicable outside experts, including legal counsel.

Upon completion of the investigation, the Conflicts of Interest Management
Sub-Committee will document its findings and conclusions. If the Conflicts of
Interest Management Sub-Committee determines that (i) AM has a material conflict
of interest that would prevent it from deciding how to vote the proxies
concerned without further client consent or (ii) certain individuals should be
recused from participating in the proxy vote at issue, the Conflicts of Interest
Management Sub-Committee will so inform the GPVSC chair.

If notified that AM has a material conflict of interest as described above, the
GPVSC chair will obtain instructions as to how the proxies should be voted
either from (i) if time permits, the effected clients, or (ii) in accordance
with the standard guidelines. If notified that certain individuals should be
recused from the proxy vote at issue, the GPVSC Chair shall do so in accordance
with the procedures set forth below.

Note: Any AM employee who becomes aware of a potential, material conflict of
interest in respect of any proxy vote to be made on behalf of clients shall
notify Compliance. Compliance shall call a meeting of the conflict review
committee to evaluate such conflict and determine a recommended course of
action.

Procedures to be followed by the GPVSC. At the beginning of any discussion
regarding how to vote any proxy, the GPVSC Chair (or his or her delegate) will
inquire as to whether any GPVSC member (whether voting or ex officio) or any
person participating in the proxy voting process has a personal conflict of
interest or has actual knowledge of an actual or apparent conflict that has not
been reported to the Conflicts of Interest Management Sub-Committee.

The GPVSC Chair also will inquire of these same parties whether they have actual
knowledge regarding whether any director, officer or employee outside of the AM
organization (but within Deutsche Bank and its affiliates) or any entity that
identifies itself as a AM advisory client, has: (i) requested that AM, the Proxy
Vendor Oversight (or any member thereof) or a GPVSC member vote a particular
proxy in a certain manner; (ii) attempted to influence AM, the Proxy Vendor
Oversight (or any member thereof), a GPVSC member or any other person in
connection with proxy voting activities; or (iii) otherwise communicated with a
GPVSC member or any other person participating or providing information to the
GPVSC regarding the particular proxy vote at issue, and which incident has not
yet been reported to the Conflicts of Interest Management Sub- Committee.

If any such incidents are reported to the GPVSC Chair, the Chair will promptly
notify the Conflicts of Interest Management Sub-Committee and, if possible, will
delay the vote until the Conflicts of Interest Management Sub-Committee can
complete the conflicts report. If a delay is not possible, the Conflicts of
Interest Management Sub-Committee will instruct the GPVSC whether anyone should
be recused from the proxy voting process, or whether AM should vote the proxy in
accordance with the standard guidelines, seek instructions as to how to vote the
proxy at issue from ISS or, if time permits, the effected clients. These
inquiries and discussions will be properly reflected in the GPVSC's minutes.

Duty to Report. Any AM employee, including any GPVSC member (whether voting or
ex officio), that is aware of any actual or apparent conflict of interest
relevant to, or any attempt by any person outside of the AM organization (but
within Deutsche Bank and its affiliates) or any entity that identifies itself as
a AM advisory client to influence, how AM votes its proxies has a duty to
disclose the existence of the situation to the GPVSC Chair (or his or her
designee) and the details of the matter to the Conflicts of Interest Management
Sub-Committee. In the case of any person participating in the deliberations on a
specific vote, such disclosure should be made before engaging in any activities
or participating in any discussion pertaining to that vote.

Recusal of Members. The GPVSC will recuse from participating in a specific proxy
vote any GPVSC members (whether voting or ex officio) and/or any other person
who (i) are personally involved in a material conflict of interest; or (ii) who,
as determined by the Conflicts of Interest Management Sub-Committee, have actual
knowledge of a circumstance or fact that could effect their independent
judgment, in respect of such vote. The GPVSC will also exclude from
consideration the views of any person (whether requested or volunteered) if the
GPVSC or any member thereof knows, or if the Conflicts of Interest Management
Sub-Committee has determined, that such other person has a material conflict of
interest with respect to the particular proxy, or has attempted to influence the
vote in any manner prohibited by these policies.

If, after excluding all relevant GPVSC voting members pursuant to the paragraph
above, there are three or more GPVSC voting members remaining, those remaining
GPVSC members will determine how to vote the proxy in accordance with these
Policies and Procedures. If there are fewer than three GPVSC voting members
remaining, the GPVSC Chair will vote the proxy in accordance with the standard
guidelines, will obtain instructions as to how to have the proxy voted from, if
time permits, the effected clients and otherwise from ISS.

B.       Investment Companies and Affiliated Public Companies

Investment Companies. As reflected in the Guidelines, all proxies solicited by
open-end and closed-end investment companies are voted in accordance with the
pre-determined guidelines of ISS, unless the investment company client directs
AM to vote differently on a specific proxy or specific categories of proxies.
However, regarding investment companies for which AM or an affiliate serves as
investment adviser or principal underwriter, such proxies are voted in the same
proportion as the vote of all other shareholders (i.e., "mirror" or "echo"
voting). Master fund proxies solicited from feeder funds are voted in accordance
with applicable provisions of Section 12 of the Investment Company Act of 1940.

Subject to participation agreements with certain Exchange Traded Funds ("ETF")
issuers that have received exemptive orders from the U.S. Securities and
Exchange Commission allowing investing DWS funds to exceed the limits set forth
in Section 12(d)(1)(A) and (B) of the Investment Company Act of 1940, DeAM will
echo vote proxies for ETFs in which Deutsche Bank holds more than 25% of
outstanding voting shares globally when required to do so by participation
agreements and SEC orders.

Affiliated Public Companies. For proxies solicited by non-investment company
issuers of or within the Deutsche Bank organization, e.g., Deutsche bank itself,
these proxies will be voted in the same proportion as the vote of other
shareholders (i.e., "mirror" or "echo" voting).

Note: With respect to the QP Trust (not registered under the Investment Company
Act of 1940), the Fund is not required to engage in echo voting and the
investment adviser will use these Guidelines, and may determine, with respect to
the QP Trust, to vote contrary to the positions in the Guidelines, consistent
with the Fund's best interest.

C.       Other Procedures That Limit Conflicts of Interest

AM and other entities in the Deutsche Bank organization have adopted a number of
policies, procedures and internal controls that are designed to avoid various
conflicts of interest, including those that may arise in connection with proxy
voting, including:

o        Deutsche Bank Americas Restricted Activities Policy. This policy
         provides for, among other things, independence of AM employees from
         CIB, and information barriers between AM and other affiliates.
         Specifically, no AM employee may be subject to the supervision or
         control of any employee of CIB. No AM employee shall have his or her
         compensation based upon his or her contribution to any business
         activity within the Bank outside of the business of AM, without the
         prior approval of Legal or Compliance. Further, no employee of CIB
         shall have any input into the compensation of a AM employee without the
         prior approval of Legal or Compliance. Under the information barriers
         section of this policy, as a general rule, AM employees who are
         associated with the investment process should have no contact with
         employees of Deutsche Bank or its affiliates, outside of PCAM,
         regarding specific clients, business matters, or initiatives. Further,
         under no circumstances should proxy votes be discussed with any
         Deutsche Bank employee outside of AM (and should only be discussed on a
         need-to-know basis within AM).

Other relevant internal policies include the Deutsche Bank Americas Code of
Professional Conduct, the Deutsche Asset Management Information Sharing
Procedures, the Deutsche Asset Management Code of Ethics, the Sarbanes-Oxley
Senior Officer Code of Ethics, and the Deutsche Bank Group Code of Conduct. The
GPVSC expects that these policies, procedures and internal controls will greatly
reduce the chance that the GPVSC (or, its members) would be involved in, aware
of or influenced by, an actual or apparent conflict of interest.


V.       RECORDKEEPING

At a minimum, the following types of records must be properly maintained and
readily accessible in order to evidence compliance with this policy.

o        AM will maintain a record of each vote cast by AM that includes among
         other things, company name, meeting date, proposals presented, vote
         cast and shares voted.

o        The Proxy Vendor Oversight maintains records for each of the proxy
         ballots it votes. Specifically, the records include, but are not
         limited to:

         -        The proxy statement (and any additional solicitation
                  materials) and relevant portions of annual statements.

         -        Any additional information considered in the voting process
                  that may be obtained from an issuing company, its agents or
                  proxy research firms.

         -        Analyst worksheets created for stock option plan and share
                  increase analyses.

         -        Proxy Edge print-screen of actual vote election.

o        AM will retain these Policies and Procedures and the Guidelines; will
         maintain records of client requests for proxy voting information; and
         will retain any documents the Proxy Vendor Oversight or the GPVSC
         prepared that were material to making a voting decision or that
         memorialized the basis for a proxy voting decision.

o        The GPVSC also will create and maintain appropriate records documenting
         its compliance with these Policies and Procedures, including records of
         its deliberations and decisions regarding conflicts of interest and
         their resolution.

o        With respect to AM's investment company clients, ISS will create and
         maintain records of each company's proxy voting record for 12-month
         periods ended June 30. AM will compile the following information for
         each matter relating to a portfolio security considered at any
         shareholder meeting held during the period covered by the report and
         with respect to which the company was entitled to vote:

         -        The name of the issuer of the portfolio security;

         -        The exchange ticker symbol of the portfolio security (if
                  symbol is available through reasonably practicable means);

         -        The Council on Uniform Securities Identification Procedures
                  number for the portfolio security (if the number is available
                  through reasonably practicable means);

         -        The shareholder meeting date;

         -        A brief identification of the matter voted on;

         -        Whether the matter was proposed by the issuer or by a security
                  holder;

         -        Whether the company cast its vote on the matter;

         -        How the company cast its vote (e.g., for or against proposal,
                  or abstain; for or withhold regarding election of directors);
                  and

         -        Whether the company cast its vote for or against management.

Note: This list is intended to provide guidance only in terms of the records
that must be maintained in accordance with this policy. In addition, please note
that records must be maintained in accordance with the applicable AM Records
Management Policy.

With respect to electronically stored records, "properly maintained" is defined
as complete, authentic (unalterable) usable and backed-up. At a minimum, records
should be retained for a period of not less than six years (or longer, if
necessary to comply with applicable regulatory requirements), the first three
years in an appropriate AM office.


VI.      THE GPVSC'S OVERSIGHT ROLE

In addition to adopting the Guidelines and making proxy voting decisions on
matters referred to it as set forth above, the GPVSC will monitor the proxy
voting process by reviewing summary proxy information presented by ISS. The
GPVSC will use this review process to determine, among other things, whether any
changes should be made to the Guidelines. This review will take place at least
quarterly and will be documented in the GPVSC's minutes.


Attachment A - Global Proxy Voting Guidelines







                            Deutsche Asset Management

                         Global Proxy Voting Guidelines



                             As Amended October 2008


                                [GRAPHIC OMITTED]
Table of contents

I        Board Of Directors And Executives

         A        Election Of Directors

         B        Classified Boards Of Directors

         C        Board And Committee Independence

         D        Liability And Indemnification Of Directors

         E        Qualifications Of Directors

         F        Removal Of Directors And Filling Of Vacancies

         G        Proposals To Fix The Size Of The Board

         H        Proposals to Restrict Chief Executive Officer's Service on

                  Multiple Boards

         I        Proposals to Restrict Supervisory Board Members Service on

                  Multiple Boards

         J        Proposals to Establish Audit Committees

II       Capital Structure

         A        Authorization Of Additional Shares

         B        Authorization Of "Blank Check" Preferred Stock

         C        Stock Splits/Reverse Stock Splits

         D        Dual Class/Supervoting Stock

         E        Large Block Issuance

         F        Recapitalization Into A Single Class Of Stock

         G        Share Repurchases

         H        Reductions In Par Value

III      Corporate Governance Issues

         A        Confidential Voting

         B        Cumulative Voting

         C        Supermajority Voting Requirements

         D        Shareholder Right To Vote

IV       Compensation

         A        Establishment of a Remuneration Committee

         B        Executive And Director Stock Option Plans

         C        Employee Stock Option/Purchase Plans

         D        Golden Parachutes

         E        Proposals To Limit Benefits Or Executive Compensation

         F        Option Expensing

         G        Management board election and motion

         H        Remuneration (variable pay)

         I        Long-term incentive plans

         J        Shareholder Proposals Concerning "Pay For Superior
                  Performance"

         K        Executive Compensation Advisory

V        Anti-Takeover Related Issues

         A        Shareholder Rights Plans ("Poison Pills")

         B        Reincorporation

         C        Fair-Price Proposals

         D        Exemption From State Takeover Laws

         E        Non-Financial Effects Of Takeover Bids

VI       Mergers & Acquisitions

VII      Social & Political Issues

         A        Labor & Human Rights

         B        Diversity & Equality

         C        Health & Safety

         D        Government/Military

         E        Tobacco

VIII     Environmental Issues

IX       Miscellaneous Items

         A        Ratification Of Auditors

         B        Limitation Of Non-Audit Services Provided By Independent
                  Auditor

         C        Audit Firm Rotation

         D        Transaction Of Other Business

         E        Motions To Adjourn The Meeting

         F        Bundled Proposals

         G        Change Of Company Name

         H        Proposals Related To The Annual Meeting

         I        Reimbursement Of Expenses Incurred From Candidate Nomination

         J        Investment Company Proxies

         K        International Proxy Voting


These Guidelines may reflect a voting position that differs from the actual
practices of the public company (ies) within the Deutsche Bank organization or
of the investment companies for which AM or an affiliate serves as investment
adviser or sponsor.

NOTE: Because of the unique structure and regulatory scheme applicable to
closed-end investment companies, the voting guidelines (particularly those
related to governance issues) generally will be inapplicable to holdings of
closed-end investment companies. As a result, determinations on the appropriate
voting recommendation for closed-end investment company shares will be made on a
case-by-case basis.


I.       Board of Directors and Executives

A.       Election of Directors

Routine: AM Policy is to vote "for" the uncontested election of directors. Votes
for a director in an uncontested election will be withheld in cases where a
director has shown an inability to perform his/her duties in the best interests
of the shareholders.

Proxy contest: In a proxy contest involving election of directors, a
case-by-case voting decision will be made based upon analysis of the issues
involved and the merits of the incumbent and dissident slates of directors. AM
will incorporate the decisions of a third party proxy research vendor,
currently, Institutional Shareholder Services ("ISS") subject to review by the
Proxy Voting Sub-Committee (GPVSC) as set forth in the AM's Proxy Voting
Policies and Procedures.

Rationale: The large majority of corporate directors fulfill their fiduciary
obligation and in most cases support for management's nominees is warranted. As
the issues relevant to a contested election differ in each instance, those cases
must be addressed as they arise.

B.       Classified Boards of Directors

AM policy is to vote against proposals to classify the board and for proposals
to repeal classified boards and elect directors annually.

Rationale: Directors should be held accountable on an annual basis. By
entrenching the incumbent board, a classified board may be used as an
anti-takeover device to the detriment of the shareholders in a hostile take-over
situation.

C.       Board and Committee Independence

AM policy is to vote:

1.       "For" proposals that require that a certain percentage (majority up to
         66 2/3%) of members of a board of directors be comprised of independent
         or unaffiliated directors.

2.       "For" proposals that require all members of a company's compensation,
         audit, nominating, or other similar committees be comprised of
         independent or unaffiliated directors.

3.       "Against" shareholder proposals to require the addition of special
         interest, or constituency, representatives to boards of directors.

4.       "For" separation of the Chairman and CEO positions.

5.       "Against" proposals that require a company to appoint a Chairman who is
         an independent director.

Rationale: Board independence is a cornerstone of effective governance and
accountability. A board that is sufficiently independent from management assures
that shareholders' interests are adequately represented. However, the Chairman
of the board must have sufficient involvement in and experience with the
operations of the company to perform the functions required of that position and
lead the company.

No director qualifies as 'independent' unless the board of directors
affirmatively determines that the director has no material relationship with the
listed company (either directly or as a partner, shareholder or officer of an
organization that has a relationship with the company).

Whether a director is in fact not "independent" will depend on the laws and
regulations of the primary market for the security and the exchanges, if any, on
which the security trades.

D.       Liability and Indemnification of Directors

AM policy is to vote "for" management proposals to limit directors' liability
and to broaden the indemnification of directors, unless broader indemnification
or limitations on directors' liability would effect shareholders' interests in
pending litigation.

Rationale: While shareholders want directors and officers to be responsible for
their actions, it is not in the best interests of the shareholders for them to
be to risk averse. If the risk of personal liability is too great, companies may
not be able to find capable directors willing to serve. We support expanding
coverage only for actions taken in good faith and not for serious violations of
fiduciary obligation or negligence.

E.       Qualifications of Directors

AM policy is to follow management's recommended vote on either management or
shareholder proposals that set retirement ages for directors or require specific
levels of stock ownership by directors.

Rationale: As a general rule, the board of directors, and not the shareholders,
is most qualified to establish qualification policies.

F.       Removal of Directors and Filling of Vacancies

AM policy is to vote "against" proposals that include provisions that directors
may be removed only for cause or proposals that include provisions that only
continuing directors may fill board vacancies.

Rationale: Differing state statutes permit removal of directors with or without
cause. Removal of directors for cause usually requires proof of self-dealing,
fraud or misappropriation of corporate assets, limiting shareholders' ability to
remove directors except under extreme circumstances. Removal without cause
requires no such showing.

Allowing only incumbent directors to fill vacancies can serve as an
anti-takeover device, precluding shareholders from filling the board until the
next regular election.

G.       Proposals to Fix the Size of the Board

AM policy is to vote:

1.       "For" proposals to fix the size of the board unless: (a) no specific
         reason for the proposed change is given; or (b) the proposal is part of
         a package of takeover defenses.

2.       "Against" proposals allowing management to fix the size of the board
         without shareholder approval.

Rationale: Absent danger of anti-takeover use, companies should be granted a
reasonable amount of flexibility in fixing the size of its board.

H.       Proposals to Restrict Chief Executive Officer's Service on Multiple
         Boards

AM policy is to vote "For" proposals to restrict a Chief Executive Officer from
serving on more than three outside boards of directors.

Rationale: Chief Executive Officer must have sufficient time to ensure that
shareholders' interests are represented adequately.

Note: A director's service on multiple closed-end fund boards within a fund
complex are treated as service on a single Board for the purpose of the proxy
voting guidelines.

I.       Proposals to Restrict Supervisory Board Members Service on Multiple
         Boards (For FFT Securities)

AM policy is to vote "for" proposals to restrict a Supervisory Board Member from
serving on more than five supervisory boards.

Rationale: We consider a strong, independent and knowledgeable supervisory board
as important counter-balance to executive management to ensure that the
interests of shareholders are fully reflected by the company.

Full information should be disclosed in the annual reports and accounts to allow
all shareholders to judge the success of the supervisory board controlling their
company.

Supervisory Board Member must have sufficient time to ensure that shareholders'
interests are represented adequately.

Note: A director's service on multiple closed-end fund boards within a fund
complex are treated as service on a single Board for the purpose of the proxy
voting guidelines.

J.       Proposals to Establish Audit Committees (For FFT and U.S. Securities)
         AM policy is to vote "for" proposals that require the establishment of
         audit committees.

Rationale: The audit committee should deal with accounting and risk management
related questions, verifies the independence of the auditor with due regard to
possible conflicts of interest. It also should determine the procedure of the
audit process.


II.      Capital Structure

A.       Authorization of Additional Shares (For U.S. Securities)

AM policy is to vote "for" proposals to increase the authorization of existing
classes of stock that do not exceed a 3:1 ratio of shares authorized to shares
outstanding for a large cap company, and do not exceed a 4:1 ratio of shares
authorized to shares outstanding for a small-midcap company (companies having a
market capitalization under one billion U.S. dollars.).

Rationale: While companies need an adequate number of shares in order to carry
on business, increases requested for general financial flexibility must be
limited to protect shareholders from their potential use as an anti-takeover
device. Requested increases for specifically designated, reasonable business
purposes (stock split, merger, etc.) will be considered in light of those
purposes and the number of shares required.

B.       Authorization of "Blank Check" Preferred Stock (For U.S. Securities)

AM policy is to vote:

1.   "Against" proposals to create blank check preferred stock or to increase
     the number of authorized shares of blank check preferred stock unless the
     company expressly states that the stock will not be used for anti-takeover
     purposes and will not be issued without shareholder approval.

2.   "For" proposals mandating shareholder approval of blank check stock
     placement.

Rationale: Shareholders should be permitted to monitor the issuance of classes
of preferred stock in which the board of directors is given unfettered
discretion to set voting, dividend, conversion and other rights for the shares
issued.

C.       Stock Splits/Reverse Stock Splits

AM policy is to vote "for" stock splits if a legitimate business purpose is set
forth and the split is in the shareholders' best interests. A vote is cast "for"
a reverse stock split only if the number of shares authorized is reduced in the
same proportion as the reverse split or if the effective increase in authorized
shares (relative to outstanding shares) complies with the proxy guidelines for
common stock increases (see, Section II.A, above.)

Rationale: Generally, stock splits do not detrimentally effect shareholders.
Reverse stock splits, however, may have the same result as an increase in
authorized shares and should be analyzed accordingly.

D.       Dual Class/Supervoting Stock

AM policy is to vote "against" proposals to create or authorize additional
shares of super-voting stock or stock with unequal voting rights.

Rationale: The "one share, one vote" principal ensures that no shareholder
maintains a voting interest exceeding their equity interest in the company.

E.       Large Block Issuance (For U.S. Securities)

AM policy is to address large block issuances of stock on a case-by-case basis,
incorporating the recommendation of an independent third party proxy research
firm (currently ISS) subject to review by the GPVSC as set forth in AM's Proxy
Policies and Procedures.

Additionally, AM supports proposals requiring shareholder approval of large
block issuances.

Rationale: Stock issuances must be reviewed in light of the business
circumstances leading to the request and the potential impact on shareholder
value.

F.       Recapitalization into a Single Class of Stock

AM policy is to vote "for" recapitalization plans to provide for a single class
of common stock, provided the terms are fair, with no class of stock being
unduly disadvantaged.

Rationale: Consolidation of multiple classes of stock is a business decision
that may be left to the board and/management if there is no adverse effect on
shareholders.

G.       Share Repurchases

AM policy is to vote "for" share repurchase plans provided all shareholders are
able to participate on equal terms.

Rationale: Buybacks are generally considered beneficial to shareholders because
they tend to increase returns to the remaining shareholders.

H.       Reductions in Par Value

AM policy is to vote "for" proposals to reduce par value, provided a legitimate
business purpose is stated (e.g., the reduction of corporate tax
responsibility.)

Rationale: Usually, adjustments to par value are a routine financial decision
with no substantial impact on shareholders.


III.     Corporate Governance Issues

A.       Confidential Voting

AM policy is to vote "for" proposals to provide for confidential voting and
independent tabulation of voting results and to vote "against" proposals to
repeal such provisions.

Rationale: Confidential voting protects the privacy rights of all shareholders.
This is particularly important for employee-shareholders or shareholders with
business or other affiliations with the company, who may be vulnerable to
coercion or retaliation when opposing management. Confidential voting does not
interfere with the ability of corporations to communicate with all shareholders,
nor does it prohibit shareholders from making their views known directly to
management.

B.       Cumulative Voting (For U.S. Securities)

AM policy is to vote "against" shareholder proposals requesting cumulative
voting and "for"management proposals to eliminate it. The protections afforded
shareholders by cumulative voting are not necessary when a company has a history
of good performance and does not have a concentrated ownership interest.
Accordingly, a vote is cast "against" cumulative voting and "for" proposals to
eliminate it if:

a)       The company has a five year return on investment greater than the
         relevant industry index,

b)       All directors and executive officers as a group beneficially own less
         than 10% of the outstanding stock, and

c)       No shareholder (or voting block) beneficially owns 15% or more of the
         company.

Thus, failure of any one of the three criteria results in a vote for cumulative
voting in accordance with the general policy.

Rationale: Cumulative voting is a tool that should be used to ensure that
holders of a significant number of shares may have board representation;
however, the presence of other safeguards may make their use unnecessary.

C.       Supermajority Voting Requirements

AM policy is to vote "against" management proposals to require a supermajority
vote to amend the charter or bylaws and to vote "for" shareholder proposals to
modify or rescind existing supermajority requirements.

*Exception made when company holds a controlling position and seeks to lower
threshold to maintain control and/or make changes to corporate by-laws.

Rationale: Supermajority voting provisions violate the democratic principle that
a simple majority should carry the vote. Setting supermajority requirements may
make it difficult or impossible for shareholders to remove egregious by-law or
charter provisions. Occasionally, a company with a significant insider held
position might attempt to lower a supermajority threshold to make it easier for
management to approve provisions that may be detrimental to shareholders. In
that case, it may not be in the shareholders interests to lower the
supermajority provision.

D.       Shareholder Right to Vote

AM policy is to vote "against" proposals that restrict the right of shareholders
to call special meetings, amend the bylaws, or act by written consent. Policy is
to vote "for" proposals that remove such restrictions.

Rationale: Any reasonable means whereby shareholders can make their views known
to management or effect the governance process should be supported.


IV.      Compensation

Annual Incentive Plans or Bonus Plans are often submitted to shareholders for
approval. These plans typically award cash to executives based on company
performance. Deutsche Bank believes that the responsibility for executive
compensation decisions rest with the board of directors and/or the compensation
committee, and its policy is not to second-guess the board's award of cash
compensation amounts to executives unless a particular award or series of awards
is deemed excessive. If stock options are awarded as part of these bonus or
incentive plans, the provisions must meet Deutsche Bank's criteria regarding
stock option plans, or similar stock-based incentive compensation schemes, as
set forth below.

A.       Establishment of a Remuneration Committee (For FFT Securities)

AM policy is to vote "for" proposals that require the establishment of a
remuneration committee.

Rationale: Corporations should disclose in each annual report or proxy statement
their policies on remuneration. Essential details regarding executive
remuneration including share options, long-term incentive plans and bonuses,
should be disclosed in the annual report, so that investors can judge whether
corporate pay policies and practices meet the standard.

The remuneration committee shall not comprise any board members and should be
sensitive to the wider scene on executive pay. It should ensure that
performance-based elements of executive pay are designed to align the interests
of shareholders.

B.       Executive and Director Stock Option Plans

AM policy is to vote "for" stock option plans that meet the following criteria:

(1)      The resulting dilution of existing shares is less than (a) 15 percent
         of outstanding shares for large capital corporations or (b) 20 percent
         of outstanding shares for small-mid capital companies (companies having
         a market capitalization under one billion U.S. dollars.)

(2)      The transfer of equity resulting from granting options at less than FMV
         is no greater than 3% of the over-all market capitalization of large
         capital corporations, or 5% of market cap for small-mid capital
         companies.

(3)      The plan does not contain express repricing provisions and, in the
         absence of an express statement that options will not be repriced; the
         company does not have a history of repricing options.

(4)      The plan does not grant options on super-voting stock.

AM will support performance-based option proposals as long as a) they do not
mandate that all options granted by the company must be performance based, and
b) only certain high-level executives are subject to receive the performance
based options.

AM will support proposals to eliminate the payment of outside director pensions.

Rationale: Determining the cost to the company and to shareholders of
stock-based incentive plans raises significant issues not encountered with
cash-based compensation plans. These include the potential dilution of existing
shareholders' voting power, the transfer of equity out of the company resulting
from the grant and execution of options at less than FMV and the authority to
reprice or replace underwater options. Our stock option plan analysis model
seeks to allow reasonable levels of flexibility for a company yet still protect
shareholders from the negative impact of excessive stock compensation.
Acknowledging that small mid-capital corporations often rely more heavily on
stock option plans as their main source of executive compensation and may not be
able to compete with their large capital competitors with cash compensation, we
provide slightly more flexibility for those companies.

C.       Employee Stock Option/Purchase Plans

AM policy is to vote for employee stock purchase plans (ESPP's) when the plan
complies with Internal Revenue Code 423, allowing non-management employees to
purchase stock at 85% of FMV.

AM policy is to vote "for" employee stock option plans (ESOPs) provided they
meet the standards for stock option plans in general. However, when computing
dilution and transfer of equity, ESOPs are considered independently from
executive and director option plans.

Rationale: ESOPs and ESPP's encourage rank-and-file employees to acquire an
ownership stake in the companies they work for and have been shown to promote
employee loyalty and improve productivity.

D.       Golden Parachutes

AM policy is to vote "for" proposals to require shareholder approval of golden
parachutes and for proposals that would limit golden parachutes to no more than
three times base compensation. Policy is to vote "against" more restrictive
shareholder proposals to limit golden parachutes.

Rationale: In setting a reasonable limitation, AM considers that an effective
parachute should be less attractive than continued employment and that the IRS
has opined that amounts greater than three times annual salary, are excessive.

E.       Proposals to Limit Benefits or Executive Compensation

AM policy is to vote "against"

1.   Proposals to limit benefits, pensions or compensation and

2.   Proposals that request or require disclosure of executive compensation
     greater than the disclosure required by Securities and Exchange Commission
     (SEC) regulations.

Rationale: Levels of compensation and benefits are generally considered to be
day-to-day operations of the company, and are best left unrestricted by
arbitrary limitations proposed by shareholders.

F.       Option Expensing

AM policy is to support proposals requesting companies to expense stock options.

Rationale: Although companies can choose to expense options voluntarily, the
Financial Accounting Standards Board (FASB) does not yet require it, instead
allowing companies to disclose the theoretical value of options as a footnote.
Because the expensing of stock options lowers earnings, most companies elect not
to do so. Given the fact that options have become an integral component of
compensation and their exercise results in a transfer of shareholder value, AM
agrees that their value should not be ignored and treated as "no cost"
compensation. The expensing of stock options would promote more modest and
appropriate use of stock options in executive compensation plans and present a
more accurate picture of company operational earnings.

G.        Management board election and motion (For FFT Securities)

AM policy is to vote "against":

o        the election of board members with positions on either remuneration or
         audit committees;

o        the election of supervisory board members with too many supervisory
         board mandates;

o        "automatic" election of former board members into the supervisory
         board.

Rationale: Management as an entity, and each of its members, are responsible for
all actions of the company, and are - subject to applicable laws and regulations
- accountable to the shareholders as a whole for their actions.

Sufficient information should be disclosed in the annual company report and
account to allow shareholders to judge the success of the company.

H.       Remuneration (variable pay): (For FFT Securities)

Executive remuneration for Management Board

AM policy is to vote "for" remuneration for Management Board that is transparent
and linked to results.

Rationale: Executive compensation should motivate management and align the
interests of management with the shareholders. The focus should be on criteria
that prevent excessive remuneration; but enable the company to hire and retain
first-class professionals.

Shareholder interests are normally best served when management is remunerated to
optimise long-term returns. Criteria should include suitable measurements like
return on capital employed or economic value added.

Interests should generally also be correctly aligned when management own shares
in the company - even more so if these shares represent a substantial portion of
their own wealth.

Its disclosure shall differentiate between fixed pay, variable (performance
related) pay and long-term incentives, including stock option plans with
valuation ranges as well as pension and any other significant arrangements.

Executive remuneration for Supervisory Board

AM policy is to vote "for" remuneration for Supervisory Board that is at least
50% in fixed form.

Rationale: It would normally be preferable if performance linked compensation
were not based on dividend payments, but linked to suitable result based
parameters. Consulting and procurement services should also be published in the
company report.

I.       Long-term incentive plans (For FFT Securities)

AM policy is to vote "for" long-term incentive plans for members of a management
board that reward for above average company performance.

Rationale: Incentive plans will normally be supported if they:

o        directly align the interests of members of management boards with those
         of shareholders;

o        establish challenging performance criteria to reward only above average
         performance;

o        measure performance by total shareholder return in relation to the
         market or a range of comparable companies;

o        are long-term in nature and encourage long-term ownership of the shares
         once exercised through minimum holding periods;

o        do not allow a repricing of the exercise price in stock option plans.

J.       Shareholder Proposals Concerning "Pay for Superior Performance"

AM policy is to address pay for superior performance proposals on a case-by-case
basis, incorporating the recommendation of an independent third party proxy
research firm (currently ISS) subject to review by the GPVSC as set forth in
AM's Proxy Policies and Procedures.

Rationale: While AM agrees that compensation issues are better left to the
discretion of management, they appreciate the need to monitor for excessive
compensation practices on a case by case basis. If, after a review of the ISS
metrics, AM is comfortable with ISS's applying this calculation and will vote
according to their recommendation.

K.       Executive Compensation Advisory

AM policy is to follow management's recommended vote on shareholder proposals to
propose an advisory resolution seeking to ratify the compensation of the
company's named executive officers (NEOs) on an annual basis.

Rationale: AM believes that controls exist within senior management and
corporate compensation committees, ensuring fair compensation to executives.
This might allow shareholders to require approval for all levels of management's
compensation.

V.       Anti-Takeover Related Issues

A.       Shareholder Rights Plans ("Poison Pills")

AM policy is to vote "for" proposals to require shareholder ratification of
poison pills or that request boards to redeem poison pills, and to vote
"against" the adoption of poison pills if they are submitted for shareholder
ratification.

Rationale: Poison pills are the most prevalent form of corporate takeover
defenses and can be (and usually are) adopted without shareholder review or
consent. The potential cost of poison pills to shareholders during an attempted
takeover outweighs the benefits.

B.       Reincorporation

AM policy is to examine reincorporation proposals on a case-by-case basis. The
voting decision is based on: (1) differences in state law between the existing
state of incorporation and the proposed state of incorporation; and (2)
differences between the existing and the proposed charter/bylaws/articles of
incorporation and their effect on shareholder rights. If changes resulting from
the proposed reincorporation violate the corporate governance principles set
forth in these guidelines, the reincorporation will be deemed contrary to
shareholder's interests and a vote cast "against."

Rationale: Reincorporations can be properly analyzed only by looking at the
advantages and disadvantages to their shareholders. Care must be taken that
anti-takeover protection is not the sole or primary result of a proposed change.

C.       Fair-Price Proposals

AM policy is to vote "for" management fair-price proposals, provided that: (1)
the proposal applies only to two-tier offers; (2) the proposal sets an objective
fair-price test based on the highest price that the acquirer has paid for a
company's shares; (3) the supermajority requirement for bids that fail the
fair-price test is no higher than two-thirds of the outstanding shares; (4) the
proposal contains no other anti-takeover provisions or provisions that restrict
shareholders rights.

A vote is cast for shareholder proposals that would modify or repeal existing
fair-price requirements that do not meet these standards.

Rationale: While fair price provisions may be used as anti-takeover devices, if
adequate provisions are included, they provide some protection to shareholders
who have some say in their application and the ability to reject those
protections if desired.

D.       Exemption from state takeover laws

AM policy is to vote "for" shareholder proposals to opt out of state takeover
laws and to vote "against" management proposals requesting to opt out of state
takeover laws.

Rationale: Control share statutes, enacted at the state level, may harm
long-term share value by entrenching management. They also unfairly deny certain
shares their inherent voting rights.

E.       Non-financial Effects of Takeover Bids

Policy is to vote "against" shareholder proposals to require consideration of
non-financial effects of merger or acquisition proposals.

Rationale: Non-financial effects may often be subjective and are secondary to
AM's stated purpose of acting in its client's best economic interest.


VI.      Mergers & Acquisitions

Evaluation of mergers, acquisitions and other special corporate transactions
(i.e., takeovers, spin-offs, sales of assets, reorganizations, restructurings
and recapitalizations) are performed on a case-by-case basis incorporating
information from an independent proxy research source (currently ISS.)
Additional resources including portfolio management and research analysts may be
considered as set forth in AM's Policies and Procedures.


VII.     Social, Environmental & Political Issues

Social and environmental issues are becoming increasingly important to corporate
success. We incorporate social and environmental considerations into both our
investment decisions and our proxy voting decisions - particularly if the
financial performance of the company could be impacted.

With increasing frequency, shareholder proposals are submitted relating to
social and political responsibility issues. Almost universally, the company
management will recommend a vote "against" these proposals. These types of
proposals cover an extremely wide range of issues. Many of the issues tend to be
controversial and are subject to more than one reasonable, yet opposing, theory
of support. More so than with other types of proxy proposals, social and
political responsibility issues may not have a connection to the economic and
corporate governance principles effecting shareholders' interests. AM's policy
regarding social and political responsibility issues, as with any other issue,
is designed to protect our client shareholders' economic interests.

Occasionally, a distinction is made between a shareholder proposal requesting
direct action on behalf of the board and a request for a report on (or
disclosure of) some information. In order to avoid unduly burdening any company
with reporting requirements, AM's policy is to vote against shareholder
proposals that demand additional disclosure or reporting than is required by the
Securities and Exchange Commission unless it appears there is a legitimate issue
and the company has not adequately addressed shareholders' concerns.

A.       Labor & Human Rights

AM policy is to vote "against" adopting global codes of conduct or workplace
standards exceeding those mandated by law.

Rationale: Additional requirements beyond those mandated by law are deemed
unnecessary and potentially burdensome to companies

B.       Diversity & Equality

1.       AM policy is to vote "against" shareholder proposals to force equal
         employment opportunity, affirmative action or board diversity.

Rationale: Compliance with State and Federal legislation along with information
made available through filings with the EEOC provides sufficient assurance that
companies act responsibly and make information public.

2.       AM policy is also to vote "against" proposals to adopt the Mac Bride
         Principles. The Mac Bride Principles promote fair employment,
         specifically regarding religious discrimination.

Rationale: Compliance with the Fair Employment Act of 1989 makes adoption of the
Mac Bride Principles redundant. Their adoption could potentially lead to charges
of reverse discrimination.

C.       Health & Safety

1.       AM policy is to vote "against" adopting a pharmaceutical price
         restraint policy or reporting pricing policy changes.

Rationale: Pricing is an integral part of business for pharmaceutical companies
and should not be dictated by shareholders (particularly pursuant to an
arbitrary formula.) Disclosing pricing policies may also jeopardize a company's
competitive position in the marketplace.

2.       AM policy is to vote "against" shareholder proposals to control the use
         or labeling of and reporting on genetically engineered products.

Rationale: Additional requirements beyond those mandated by law are deemed
unnecessary and potentially burdensome to companies.

D.       Government/Military

1.       AM policy is to vote against shareholder proposals regarding the
         production or sale of military arms or nuclear or space-based weapons,
         including proposals seeking to dictate a company's interaction with a
         particular foreign country or agency.

Rationale: Generally, management is in a better position to determine what
products or industries a company can and should participate in. Regulation of
the production or distribution of military supplies is, or should be, a matter
of government policy.

2.       AM policy is to vote "against" shareholder proposals regarding
         political contributions and donations.

Rationale: The Board of Directors and Management, not shareholders, should
evaluate and determine the recipients of any contributions made by the company.

3.       AM policy is to vote "against" shareholder proposals regarding
         charitable contributions and donations.

Rationale: The Board of Directors and Management, not shareholders, should
evaluate and determine the recipients of any contributions made by the company.

E.       Tobacco

1.       AM policy is to vote "against" shareholder proposals requesting
         additional standards or reporting requirements for tobacco companies as
         well as "against" requesting companies to report on the intentional
         manipulation of nicotine content.

Rationale: Where a tobacco company's actions meet the requirements of legal and
industry standards, imposing additional burdens may detrimentally effect a
company's ability to compete. The disclosure of nicotine content information
could affect the company's rights in any pending or future litigation.

2.       Shareholder requests to spin-off or restructure tobacco businesses will
         be opposed.

Rationale: These decisions are more appropriately left to the Board and
management, and not to shareholder mandate.


VIII.    Environmental Issues

AM policy is to follow management's recommended vote on CERES Principles or
other similar environmental mandates (e.g., those relating to Greenhouse gas
emissions or the use of nuclear power).

Rationale: Environmental issues are extensively regulated by outside agencies
and compliance with additional requirements often involves significant cost to
companies.


IX.      Miscellaneous Items

A.       Ratification of Auditors

AM policy is to vote "for" a) the management recommended selection of auditors
and b) proposals to require shareholder approval of auditors.

Rationale: Absent evidence that auditors have not performed their duties
adequately, support for management's nomination is warranted.

B.       Limitation of non-audit services provided by independent auditor

AM policy is to support proposals limiting non-audit fees to 50% of the
aggregate annual fees earned by the firm retained as a company's independent
auditor.

Rationale: In the wake of financial reporting problems and alleged audit
failures at a number of companies, AM supports the general principle that
companies should retain separate firms for audit and consulting services to
avoid potential conflicts of interest. However, given the protections afforded
by the recently enacted Sarbanes-Oxley Act of 2002 (which requires Audit
Committee pre-approval for non-audit services and prohibits auditors from
providing specific types of services), and the fact that some non-audit services
are legitimate audit-related services, complete separation of audit and
consulting fees may not be warranted. A reasonable limitation is appropriate to
help ensure auditor independence and it is reasonable to expect that audit fees
exceed non-audit fees.

C.       Audit firm rotation

AM policy is to support proposals seeking audit firm rotation unless the
rotation period sought is less than five years.

Rationale: While the Sarbanes-Oxley Act mandates that the lead audit partner be
switched every five years, AM believes that rotation of the actual audit firm
would provide an even stronger system of checks and balances on the audit
function.

D.       Transaction of Other Business

AM policy is to vote against "transaction of other business" proposals.

Rationale: This is a routine item to allow shareholders to raise other issues
and discuss them at the meeting. As the nature of these issues may not be
disclosed prior to the meeting, we recommend a vote against these proposals.
This protects shareholders voting by proxy (and not physically present at a
meeting) from having action taken at the meeting that they did not receive
proper notification of or sufficient opportunity to consider.

E.       Motions to Adjourn the Meeting

AM Policy is to vote against proposals to adjourn the meeting.

Rationale: Management may seek authority to adjourn the meeting if a favorable
outcome is not secured. Shareholders should already have had enough information
to make a decision. Once votes have been cast, there is no justification for
management to continue spending time and money to press shareholders for
support.

F.       Bundled Proposals

AM policy is to vote against bundled proposals if any bundled issue would
require a vote against it if proposed individually.

Rationale: Shareholders should not be forced to "take the good with the bad" in
cases where the proposals could reasonably have been submitted separately.

G.       Change of Company Name

AM policy is to support management on proposals to change the company name.

Rationale: This is generally considered a business decision for a company.

H.       Proposals Related to the Annual Meeting

AM Policy is to vote in favor of management for proposals related to the conduct
of the annual meeting (meeting time, place, etc.)

Rationale: These are considered routine administrative proposals.

I.       Reimbursement of Expenses Incurred from Candidate Nomination

AM policy is to follow management's recommended vote on shareholder proposals
related to the amending of company bylaws to provide for the reimbursement of
reasonable expenses incurred in connection with nominating one or more
candidates in a contested election of directors to the corporation's board of
directors.

Rationale: Corporations should not be liable for costs associated with
shareholder proposals for directors.

J.       Investment Company Proxies

Proxies solicited by investment companies are voted in accordance with the
recommendations of an independent third party, currently ISS. However, regarding
investment companies for which AM or an affiliate serves as investment adviser
or principal underwriter, such proxies are voted in the same proportion as the
vote of all other shareholders. Proxies solicited by master funds from feeder
funds will be voted in accordance with applicable provisions of Section 12 of
the Investment Company Act of 1940.

Investment companies, particularly closed-end investment companies, are
different from traditional operating companies. These differences may call for
differences in voting positions on the same matter. For example, AM could vote
"for" staggered boards of closed-end investment companies, although AM generally
votes "against" staggered boards for operating companies. Further, the manner in
which AM votes investment company proxies may differ from proposals for which a
AM-advised investment company solicits proxies from its shareholders. As
reflected in the Guidelines, proxies solicited by closed-end (and open-end)
investment companies are voted in accordance with the pre-determined guidelines
of an independent third-party.

Subject to participation agreements with certain Exchange Traded Funds ("ETF")
issuers that have received exemptive orders from the U.S. Securities and
Exchange Commission allowing investing DWS funds to exceed the limits set forth
in Section 12(d)(1)(A) and (B) of the Investment Company Act of 1940, DeAM will
echo vote proxies for ETFs in which Deutsche Bank holds more than 25% of
outstanding voting shares globally when required to do so by participation
agreements and SEC orders.

Note: With respect to the QP Trust (not registered under the Investment Company
Act of 1940), the Fund is not required to engage in echo voting and the
investment adviser will use these Guidelines, and may determine, with respect to
the QP Trust, to vote contrary to the positions in the Guidelines, consistent
with the Fund's best interest.


K.       International Proxy Voting

The above guidelines pertain to issuers organized in the United States, Canada
and Germany. Proxies solicited by other issuers are voted in accordance with
international guidelines or the recommendation of ISS and in accordance with
applicable law and regulation.


--------------------------------------------------------------------------------
IMPORTANT: The information contained herein is the property of Deutsche Bank
Group and may not be copied, used or disclosed in whole or in part, stored in a
retrieval system or transmitted in any form or by any means (electronic,
mechanical, reprographic, recording or otherwise) without the prior written
permission of Deutsche Bank Group.
--------------------------------------------------------------------------------



                      APPENDIX B -- RATINGS OF INVESTMENTS


Moody's Investors Service, Inc.'s Short-Term Debt Ratings

Moody's short-term debt ratings are opinions of the ability of issuers to repay
punctually promissory obligations not having an original maturity in excess of
one year.

Issuers rated Prime-1 or P-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 or P-1
repayment ability will often be evidenced by many of the following
characteristics:

Leading market positions in well established industries.

High rates of return on Fund employed.

Conservative capitalization structure with moderate reliance on debt and ample
asset protection.

Broad margins in earnings coverage of fixed financial charges and high internal
cash generation.

Well established access to a range of financial markets and assured sources of
alternate liquidity.

Issuers rated Prime-2 or P-2 (or supporting institutions) have a strong ability
for repayment of senior short-term debt obligations. This will normally be
evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

Standard & Poor's Division of The McGraw-Hill Companies, Inc. ("Standard &
Poor's") Corporate Bond Ratings

Investment Grade

AAA: Debt rated AAA has the highest rating assigned by S&P's to a debt
obligation. 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 bonds 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.

Speculative Grade

Debt rated BB, B, CCC, CC, and C is regarded as having predominantly speculative
characteristics with respect to capacity to pay interest and repay principal. BB
indicates the least degree of speculation and C the highest. While such debt
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major exposures to adverse conditions.

BB: Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.

B: Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal.

The B rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BB or BB- rating.

CCC: Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal.

The CCC rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied B or B- rating.

CC: The rating CC is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC debt rating.

C: The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.

C1: The Rating C1 is reserved for income bonds on which no interest is being
paid.

D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

NY: Bonds may lack a S&P's rating because no public rating has been requested,
because there is insufficient information on which to base a rating, or because
S&P's does not rate a particular type of obligation as a matter of policy.

Standard & Poor's  Commercial Paper Ratings

A: S&P's commercial paper rating is a current assessment of the likelihood of
timely payment of debt considered short-term in the relevant market.

A-1: This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus (+) sign designation.

A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".

A-3: Issues carrying this designation have adequate capacity for timely payment.
They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.

Fitch Investors Service, Inc. Short-Term Ratings

Investment Grade

AAA: Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free US Treasury debt.

AA+, AA, and AA-: High credit quality. Protection factors are strong. Risk is
modest but may vary slightly from time to time because of economic conditions.

A+, A, and A-: Protection factors are average but adequate. However, risk
factors are more variable and greater in periods of economic stress.

BBB+, BBB, and BBB-: Below average protection factors but still considered
sufficient for prudent investment. Considerable variability in risk during
economic cycles.

High Yield Grade

BB+, BB, and BB-: Below investment grade but deemed likely to meet obligations
when due. Present or prospective financial protection factors fluctuate
according to industry conditions or company fortunes. Overall quality may move
up or down frequently within this category.

B+, B, and B-: Below investment grade and possessing risk that obligations will
not be met when due. Financial protection factors will fluctuate widely
according to economic cycles, industry conditions and/or company fortunes.
Potential exists for frequent changes in the rating within this category or into
a higher or lower rating grade.

CCC: Well below investment grade securities. Considerable uncertainty exists as
to timely payment of principal interest or preferred dividends. Protection
factors are narrow and risk can be substantial with unfavorable
economic/industry conditions, and/or with unfavorable company developments.

Preferred stocks are rated on the same scale as bonds but the preferred rating
gives weight to its more junior position in the capital structure. Structured
financings are also rated on this scale.



DWS ADVISOR FUNDS
345 Park Avenue
New York, NY 10154

INVESTMENT ADVISOR
Deutsche Investment Management Amercias Inc.
345 Park Avenue
New York, NY 10154

ADMINISTRATOR
Deutsche Investment Management Americas Inc.
345 Park Avenue
New York, NY 10154


DISTRIBUTOR
DWS Investments Distributors, Inc.
222 South Riverside Plaza
Chicago, IL  60606


CUSTODIAN
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109


TRANSFER AGENT
DWS Investments Service Company
222 South Riverside Plaza
Chicago, IL 60606


INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP
125 High Street
Boston, MA  02110

LEGAL COUNSEL
Willkie Farr & Gallagher LLP
787 Seventh Ave.
New York, NY  10019

SERVICE INFORMATION

Existing accounts, new accounts, Prospectuses, the SAI, applications, service
forms, telephone exchanges, share price and performance -- (800) 621-1048.

No person has been authorized to give any information or to make any
representations not contained in this SAI or in the Prospectuses in connection
with the offering made by each 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. Each Prospectus does not constitute an offering
by the Fund 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) 621-1048 to determine availability in your state.



<PAGE>

                                DWS ADVISOR FUNDS

                    DWS Diversified International Equity Fund
                 (formerly DWS International Select Equity Fund)
                                     Class S








                       STATEMENT OF ADDITIONAL INFORMATION


                                  March 1, 2009

This Statement of Additional Information is not a prospectus and should be read
in conjunction with the prospectus dated March 1, 2009, as amended from time to
time, for DWS International Select Equity Fund (the "Fund"), a series of DWS
Advisor Funds (the "Trust"), copies of which may be obtained without charge by
contacting DWS Investments Distributors, Inc., 222 South Riverside Plaza,
Chicago, Illinois 60606, 1-800-621-1148, or from the firm from which this
Statement of Additional Information was obtained and are available along with
other materials on the Securities and Exchange Commission's Internet Web site
(http://www.sec.gov).

Portions of the Annual Reports to Shareholders of the Fund, dated October 31,
2008, are incorporated herein by reference, as specified herein. A copy of the
Fund's Annual Report may be obtained without charge from Shareholder Services by
calling (800) 728-3337.


This Statement of Additional Information ("SAI") is incorporated by reference
into the prospectus.




                                TABLE OF CONTENTS
                                                                           Page
                                                                           ----

INVESTMENT RESTRICTIONS......................................................1

INVESTMENT POLICIES AND TECHNIQUES...........................................2

MANAGEMENT OF THE FUND......................................................40
   Investment Advisor.......................................................40

FUND SERVICE PROVIDERS......................................................51
   Administrator............................................................51
   Distributor..............................................................52
   Custodian................................................................52
   Transfer Agent...........................................................53
   Legal Counsel............................................................53
   Independent Registered Public Accounting Firm............................54

PORTFOLIO TRANSACTIONS......................................................54

PURCHASES AND REDEMPTIONS OF SHARES.........................................56

DIVIDENDS...................................................................70

TAXES.......................................................................71

NET ASSET VALUE.............................................................76

BOARD MEMBERS AND OFFICERS..................................................77

TRUST ORGANIZATION..........................................................96

PROXY VOTING GUIDELINES.....................................................97

FINANCIAL STATEMENTS........................................................98

ADDITIONAL INFORMATION......................................................99

APPENDIX A -- PROXY VOTING GUIDELINES.......................................100

APPENDIX B -- RATINGS OF INVESTMENTS........................................127



                             INVESTMENT RESTRICTIONS

Except as otherwise indicated, the Fund's investment objective and policies are
not fundamental and may be changed without a vote of shareholders. There can be
no assurance that the Fund's objective will be met.

Any investment restrictions herein which involve a maximum percentage of
securities or assets shall not be considered to be violated unless an excess
over the percentage occurs immediately after and is caused by an acquisition or
encumbrance of securities or assets of, or borrowings by, the Fund.

The Fund has elected to be classified as an open-end management investment
company. A diversified Fund may not, with respect to 75% of total assets, invest
more than 5% of total assets in the securities of a single issuer (other than US
government securities or securities of investment companies) or invest in more
than 10% of the outstanding voting securities of such issuer.

Fundamental Investment Restrictions

(1)      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.

(2)      The Fund may not borrow money,  except as permitted under the 1940 Act,
         as amended,  and as  interpreted  or modified by  regulatory  authority
         having jurisdiction, from time to time.

(3)      The Fund may not engage in the business of underwriting securities
         issues by others, except to the extent that a Fund may be deemed to be
         the 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 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.

(6)      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.

(7)      The Fund may not concentrate its investments in a particular  industry,
         as that term is used in the 1940 Act, as amended, and as interpreted or
         modified by  regulatory  authority  having  jurisdiction,  from time to
         time.

(8)      The Fund has elected to be treated as a diversified investment company,
         as that term is used in 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 a meeting, if
the holders of more than 50% of the outstanding voting securities of the Fund
are present or represented by proxy, or (2) more than 50% of the outstanding
voting securities of the Fund.

Non-Fundamental Investment Restrictions

In addition to the fundamental policies mentioned above, the Board of Trustees
of the Trust has adopted the following non-fundamental policies that may be
changed or amended by action of the Board of Trustees without shareholder
approval.

The Fund may not:

(a)      Participate on a joint-and-several basis in any securities trading
         account. The "bunching" of orders for the sale or purchase of
         marketable portfolio securities with other accounts under the
         management of the Advisor to save commissions or to average prices
         among them is not deemed to result in a securities trading account.

(b)      Purchase securities of other investment companies,  except as permitted
         by the 1940 Act and the rules, regulations and any applicable exemptive
         order issued thereunder.

(c)      Invest for the purpose of exercising control over or management of any
         company.

(d)      Purchase any security, including any repurchase agreement maturing in
         more than seven days, which is illiquid, if more than 15% of the net
         assets of the Fund, taken at market value, would be invested in such
         securities.

(e)      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 staff of the SEC has taken the position that fixed time deposits maturing in
more than seven days that cannot be traded on a secondary market and
participation interests in loans are illiquid. Until such time (if any) as this
position changes, the Trust, on behalf of the Fund, will include such
investments in determining compliance with the 15% limitation on investments in
illiquid securities. Restricted securities (including commercial paper issued
pursuant to Section 4(2) of the 1933 Act) which the Advisor has determined are
readily marketable will not be deemed to be illiquid for purposes of such
restriction.

To meet federal income tax requirements for qualification as a regulated
investment company, the Fund must, among other things, limit its investments so
that at the close of each quarter of its taxable year (1) no more than 25% of
the value of its total assets is invested in the securities (other than
securities of the US Government or a regulated investment company) of a single
issuer or two or more issuers which the Fund controls 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, and (2) at least 50% of the value
of its total assets is represented by cash, cash items (including receivables),
US Government securities, securities of other regulated investment companies and
other securities of any issuer that does not represent more than 5% of the value
of the Fund's total assets and not more than 10% of the issuer's outstanding
voting securities.

"Value" for the purposes of the foregoing investment restrictions means the
market value used in determining the Fund's net asset value.

                       INVESTMENT POLICIES AND TECHNIQUES

Investment Techniques

Descriptions in this Statement of Additional Information of a particular
investment practice or technique in which the Fund may engage are meant to
describe the spectrum of investments that Deutsche Investment Management
Americas Inc. (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.

Equity Securities

General. The Fund may invest in equity securities listed on any domestic or
non-US securities exchange or traded in the over-the-counter (or "OTC") market
as well as certain restricted or unlisted securities. As used herein, "equity
securities" include common stock, preferred stock, trust or limited partnership
interests, rights and warrants (to subscribe to or purchase such securities) and
convertible securities (consisting of debt securities or preferred stock that
may be converted into common stock or that carry the right to purchase common
stock).

Common Stocks. Common stocks, the most familiar type of equity securities,
represent an equity (i.e., ownership) interest in a corporation. They may or may
not pay dividends or carry voting rights. Common stock occupies the most junior
position in a company's capital structure. Although equity securities have a
history of long-term growth in value, their prices fluctuate based on changes in
a company's financial condition, as well as changes in overall market and
economic conditions. This affects the value of the shares of the Fund, and thus
the value of your investment. Smaller companies are especially sensitive to
these factors.

Warrants. The Fund may invest in warrants. Warrants are securities that give the
holder the right but not the obligation to buy a specified number of shares of
common stock at a specified price, which is often higher than the market price
at the time of issuance, for a specified period (or in perpetuity). Warrants may
be issued in units with other securities or separately, and may be freely
transferable and traded on exchanges. Investing in warrants can provide a
greater potential for profit or loss than an equivalent investment in the
underlying security, and, thus is a speculative investment. At the time of
issue, the cost of a warrant is substantially less than the cost of the
underlying security itself, and price movements in the underlying security are
generally magnified in the price movements of the warrant. This leveraging
effect enables the investor to gain exposure to the underlying security with a
relatively low capital investment. This leveraging increases an investor's risk,
however, in the event of a decline in the value of the underlying security and
can result in a complete loss of the amount invested in the warrant.

While the market value of a warrant tends to be more volatile than that of the
securities underlying the warrant, changes in the market value of a warrant may
not necessarily correlate with that of the underlying security. A warrant ceases
to have value if it is not exercised prior to the expiration date, if any, to
which the warrant is subject.

The purchase of warrants involves a risk that the Fund could lose the purchase
value of a warrant if the right to subscribe to additional shares is not
exercised prior to the warrant's expiration. Also, the purchase of warrants
involves the risk that the effective price paid for the warrant added to the
subscription price of the related security may exceed the value of the
subscribed security's market price such as when there is no movement in the
level of the underlying security. The value of a warrant may decline because of
a decline in the value of the underlying security, the passage of time, changes
in interest rates or in the dividend or other policies of the company whose
equity underlies the warrant or a change in the perception as to the future
price of the underlying security, or any combination thereof. Also, warrants do
not entitle the holder to dividends or voting rights with respect to the
underlying securities and do not represent any rights in the assets of the
issuing company.

Preferred Stock. The Fund may invest in preferred stock. Preferred stock has a
preference (i.e., ranks higher) in liquidation (and generally dividends) over
common stock but is subordinated (i.e., ranks lower) in liquidation to fixed
income securities. Dividends on preferred stock may be cumulative, and in such
cases, all cumulative dividends usually must be paid prior to dividend payments
to common stockholders. Because of this preference, preferred stocks generally
entail less risk than common stocks. As a general rule the market value of
preferred stocks with fixed dividend rates and no conversion rights moves
inversely with interest rates and perceived credit risk, with the price
determined by the dividend rate. Some preferred stocks are convertible into
other securities (e.g., common stock) at a fixed price and ratio or upon the
occurrence of certain events. The market price of convertible preferred stocks
generally reflects an element of conversion value. Because many preferred stocks
lack a fixed maturity date, these securities generally fluctuate substantially
in value when interest rates change; such fluctuations often exceed those of
long-term bonds of the same issuer. Some preferred stocks pay an adjustable
dividend that may be based on an index, formula, auction procedure or other
dividend rate reset mechanism. In the absence of credit deterioration,
adjustable rate preferred stocks tend to have more stable market values than
fixed rate preferred stocks.

All preferred stocks are also subject to the same types of credit risks as
corporate bonds. In addition, because preferred stock is subordinate to debt
securities and other obligations of an issuer, deterioration in the credit
rating of the issuer will cause greater changes in the value of a preferred
stock than in a more senior debt security with similar yield characteristics.
Preferred stocks may be rated by the Standard & Poor's Division of The
McGraw-Hill Companies, Inc. ("S&P") and Moody's Investors Service, Inc.
("Moody's") although there is no minimum rating which a preferred stock must
have to be an eligible investment for the Fund.

Convertible Securities. The Fund may invest in convertible securities. A
convertible security is a bond or preferred stock which may be converted at a
stated price within a specific period of time into a specified number of shares
of common stock of the same or different issuer. Convertible securities are
senior to common stock in a corporation's capital structure, but are generally
subordinate to non-convertible debt securities. While providing a fixed income
stream, generally higher in yield than in the income derived from a common stock
but lower than that afforded by a non-convertible debt security, a convertible
security also affords an investor the opportunity, through its conversion
feature, to participate in the capital appreciation of common stock into which
it is convertible.

The terms of any convertible security determine its ranking in a company's
capital structure. In the case of subordinated convertible debentures, the
holders' claims on assets and earnings are subordinated to the claims of other
creditors, and are senior to the claims of preferred and common shareholders. In
the case of convertible preferred stock, the holders' claims on assets and
earnings are subordinated to the claims of all creditors and are senior to the
claims of common shareholders.

In general, the market value of a convertible security is the greater of its
investment value (its value as a fixed income security) or its conversion value
(the value of the underlying shares of common stock if the security is
converted). Because a convertible security is a fixed income security, its
market value generally increases when interest rates decline and generally
decreases when interest rates rise; however, the price of a convertible security
also generally increases as the market value of the underlying stock increases,
and generally decreases as the market value of the underlying stock declines.
Investments in convertible securities generally entail less risk than
investments in the common stock of the same issuer.

Medium-Capitalization, Small-Capitalization and Micro-Capitalization Stocks

The Fund may invest in lesser-known companies with medium-, small- and
micro-market capitalizations. Such companies frequently offer greater growth
potential than larger, more mature, better-known companies. Investments in such
companies involve considerations that are not applicable to investing in
securities of established, larger capitalization issuers including reduced and
less reliable information about the issuer, less stringent financial disclosure
requirements and higher brokerage commissions and fees and greater market risk
in general.

In addition, investing in the securities of these companies also involves the
possibility of greater portfolio price volatility. Among the reasons for the
greater price volatility of such companies are the less certain growth prospects
of medium and smaller firms, the greater illiquidity in the markets for the
stocks of such companies and the greater sensitivity of such companies to
changing economic conditions in their respective geographic region.

For example, securities of these companies involve higher investment risk than
that normally associated with larger firms due to the greater business risks of
small size and limited product lines, markets, distribution channels and
financial and managerial resources. Therefore such securities may be subject to
more abrupt or erratic market movements than securities of larger, more
established companies or the market averages in general.

In addition, many medium-, small- and micro-market capitalization companies in
which the Fund may invest are not well-known to the investing public, do not
have significant institutional ownership and are followed by relatively few
securities analysts. As a result, it may be difficult to obtain reliable
information and financial data on such companies and the securities of smaller
capitalization companies may not be readily marketable, making it difficult to
dispose of shares when desirable. Also, the securities of smaller capitalization
companies traded on the OTC market may have fewer market makers, wider spreads
between their quoted bid and asked prices and lower trading volumes, resulting
in comparatively greater price volatility and less liquidity than exists for
securities of larger capitalization companies.

An additional risk of investing in smaller emerging companies is that smaller
issuers may face increased difficulty in obtaining the capital necessary to
continue operations and thus may go into bankruptcy, which could result in a
complete loss of an investment. Furthermore, when the economy enters into
recession there tends to be a "flight to quality" which exacerbates the
increased risk and greater price volatility normally associated with smaller
capitalization companies.

All of these risks are heightened for micro-capitalization companies.

Fixed Income Securities and Money Market Instruments

General. The Fund may invest in a broad range of domestic and foreign fixed
income (debt) securities. Fixed income securities, including (but not limited
to) bonds, are used by issuers to borrow money from investors. The issuer pays
the investor a fixed or variable rate of interest, and must repay the amount
borrowed at maturity. Some debt securities, such as zero coupon bonds, do not
pay current interest, but are purchased at a discount from their face values.

The value of fixed income securities in the Fund's portfolio generally varies
inversely with changes in interest rates. Prices of fixed income securities with
longer effective maturities are more sensitive to interest rate changes than
those with shorter effective maturities.

In periods of declining interest rates, the yield (the income generated over a
stated period of time) of the Fund that invests in fixed income securities may
tend to be higher than prevailing market rates, and in periods of rising
interest rates, the yield of the Fund may tend to be lower. Also, when interest
rates are falling, the inflow of net new money to the Fund from the continuous
sale of its shares will likely be invested in portfolio instruments producing
lower yields than the balance of the Fund's portfolio, thereby reducing the
yield of the Fund. In periods of rising interest rates, the opposite can be
true. To the extent it invests in fixed income securities, the net asset value
of the Fund can generally be expected to change as general levels of interest
rates fluctuate.

Fixed-Income Security Risk. Fixed income securities generally expose the Fund to
four types of risk: (1) interest rate risk (the potential for fluctuations in
bond prices due to changing interest rates); (2) income risk (the potential for
a decline in the Fund's income due to falling market interest rates); (3) credit
risk (the possibility that a bond issuer will fail to make timely payments of
either interest or principal to the Fund); (4) prepayment risk or call risk (the
likelihood that, during a period of falling interest rates, securities with high
stated interest rates will be prepaid, or "called" prior to maturity, requiring
the Fund to invest the proceeds at generally lower interest rates); and (5)
extension risk (the likelihood that as interest rates increase, slower than
expected principal payments may extend the average life of fixed income
securities, which will have the effect of locking in a below-market interest
rate, increasing the security's duration and reducing the value of the
security).


Impact of Sub-Prime Mortgage Market. The Fund may invest in mortgage-backed,
asset-backed and other fixed-income securities whose value and liquidity may be
adversely affected by the critical downturn in the sub-prime mortgage lending
market in the US. Sub-prime loans, which, have higher interest rates, are made
to borrowers with low credit ratings or other factors that increase the risk of
default. Concerns about widespread defaults on sub-prime loans have also created
heightened volatility and turmoil in the general credit markets. As a result,
the Fund's investments in certain fixed-income securities may decline in value,
their market value may be more difficult to determine, and the Fund may have
more difficulty disposing of them.



Short-Term Instruments. When the Fund experiences large cash inflows, for
example, through the sale of securities or of its shares and attractive
investments are unavailable in sufficient quantities, the Fund may hold
short-term investments (or shares of a money market mutual fund) for a limited
time pending availability of such investments. In addition, when in the
Advisor's opinion, it is advisable to adopt a temporary defensive position
because of unusual and adverse market or other conditions, up to 100% of the
Fund's assets may be invested in such short-term instruments.

Short-term instruments consist of foreign and domestic: (1) short-term
obligations of sovereign governments, their agencies, instrumentalities,
authorities or political subdivisions; (2) other investment grade short-term
debt securities; (3) commercial paper; (4) bank obligations, including
negotiable certificates of deposit, time deposits and banker's acceptances; and
(5) repurchase agreements. At the time the Fund invests in commercial paper,
bank obligations or repurchase agreements, the issuer or the issuer's parent
must have outstanding debt, commercial paper or bank obligations rated
investment grade; or , if no such ratings are available, the instrument must be
deemed to be of comparable quality in the opinion of the Advisor. These
instruments may be denominated in US dollars or in foreign currencies.

Obligations of Banks and Other Financial Institutions. The Fund may invest in US
dollar-denominated fixed rate or variable rate obligations of US or foreign
financial institutions, including banks, only when the Advisor determines that
the credit risk with respect to the instrument is minimal. Obligations of
domestic and foreign financial institutions in which the Fund may invest include
(but are not limited to) certificates of deposit, bankers' acceptances, bank
time deposits, commercial paper, and other instruments issued or supported by
the credit of US or foreign financial institutions, including banks.

For purposes of the Fund's investment policies with respect to bank obligations,
the assets of a bank will be deemed to include the assets of its domestic and
foreign branches. Obligations of foreign branches of US banks and foreign banks
may be general obligations of the parent bank in addition to the issuing bank or
may be limited by the terms of a specific obligation and by government
regulation. If the Advisor deems the instruments to present minimal credit risk,
the Fund may invest in obligations of foreign banks or foreign branches of US
banks, which include banks located in the United Kingdom, Grand Cayman Island,
Nassau, Japan and Canada.

Investments in these obligations may entail risks that are different from those
of investments in obligations of US domestic banks because of differences in
political, regulatory and economic systems and conditions. These risks include
future political and economic developments, currency blockage, the possible
imposition of withholding taxes on interest payments, possible seizure or
nationalization of foreign deposits, difficulty or inability of pursuing legal
remedies and obtaining judgments in foreign courts, possible establishment of
exchange controls or the adoption of other foreign governmental restrictions
that might affect adversely the payment of principal and interest on bank
obligations. Foreign branches of US banks and foreign banks may also be subject
to less stringent reserve requirements and to different accounting, auditing,
reporting and record keeping standards that those applicable to domestic
branches of US banks.

Certificates of Deposit and Bankers' Acceptances. The Fund may invest in
certificates of deposit and bankers' acceptances. Certificates of deposit are
receipts issued by a depository institution in exchange for the deposit of
funds. The issuer agrees to pay the amount deposited plus interest to the bearer
of the receipt on the date specified on the certificate. The certificate usually
can be traded in the secondary market prior to maturity.

Bankers' acceptances typically arise from short-term credit arrangements
designed to enable businesses to obtain Fund to finance commercial transactions.
Generally, an acceptance is a time draft drawn on a bank by an exporter or an
importer to obtain a stated amount of funds to pay for specific merchandise. The
draft is then "accepted" by a bank that, in effect, unconditionally guarantees
to pay the face value of the instrument on its maturity date. The acceptance may
then be held by the accepting bank as an earning asset or it may be sold in the
secondary market at the going rate of discount for a specific maturity. Although
maturities for acceptances can be as long as 270 days, most acceptances have
maturities of six months or less.

Commercial Paper. The Fund may invest in commercial paper. The Fund may invest
in fixed rate or variable rate commercial paper, issued by US or foreign
entities. Commercial paper consists of short-term (usually up to one year)
unsecured promissory notes issued by US or foreign corporations in order to
finance their current operations. Any commercial paper issued by a foreign
entity corporation and purchased by the Fund must be US dollar-denominated and
must not be subject to foreign withholding tax at the time of purchase.

Commercial paper when purchased by the Fund must be rated in the highest
short-term rating category by any two Nationally Recognized Statistical Rating
Organizations ("NRSROs") (or one NRSRO if that NRSRO is the only such NRSRO
which rates such security) or, if not so rated, must be determined by the
Advisor to be of comparable quality. Investing in foreign commercial paper
generally involves risks similar to those described above relating to
obligations of foreign banks or foreign branches and subsidiaries of US and
foreign banks.

Variable Rate Master Demand Notes. The Fund may also invest in variable rate
master demand notes. A variable value master demand note (which is a type of
commercial paper) represents a direct borrowing arrangement involving
periodically fluctuating rates of interest under a letter agreement between a
commercial paper issuer and an institutional lender pursuant to which the lender
may determine to invest varying amounts.

For a description of commercial paper ratings, see the Appendix to this SAI.

US Government Securities. The Fund may invest in obligations issued or
guaranteed by the US government which include: (1) direct obligations of the US
Treasury and (2) obligations issued by US government agencies and
instrumentalities. Included among direct obligations of the US are Treasury
Bills, Treasury Notes and Treasury Bonds, which differ in terms of their
interest rates, maturities and dates of issuance. Treasury Bills have maturities
of less than one year, Treasury Notes have maturities of one to 10 years and
Treasury Bonds generally have maturities of greater than 10 years at the date of
issuance. Included among the obligations issued by agencies and
instrumentalities of the US are: instruments that are supported by the full
faith and credit of the US (such as certificates issued by the Government
National Mortgage Association ("GNMA" or "Ginnie Mae")); instruments that are
supported by the right of the issuer to borrow from the US Treasury (such as
securities of Federal Home Loan Banks); and instruments that are supported by
the credit of the instrumentality (such as Federal National Mortgage Association
("FNMA" or "Fannie Mae") and Federal Home Loan Mortgage Corporation ("FHLMC" or
"Freddie Mac")).

Other US government securities the Fund may invest in include (but are not
limited to) securities issued or guaranteed by the Federal Housing
Administration, Farmers Home Loan Administration, Export-Import Bank of the US,
Small Business Administration, General Services Administration, Central Bank for
Cooperatives, Federal Farm Credit Banks, Federal Intermediate Credit Banks,
Federal Land Banks, Maritime Administration, Tennessee Valley Authority,
District of Columbia Armory Board and Student Loan Marketing Association.
Because the US government is not obligated by law to provide support to an
instrumentality it sponsors, the Fund will invest in obligations issued by such
an instrumentality only if the Advisor determines that the credit risk with
respect to the instrumentality does not make its securities unsuitable for
investment by the Fund.

The Fund may also invest in separately traded principal and interest component
of securities guaranteed or issued by the US government or its agencies,
instrumentalities or sponsored enterprises if such components trade
independently under the Separate Trading of Registered Interest and Principal of
Securities program ("STRIPS") or any similar program sponsored by the US
government.
STRIPS are sold as zero coupon securities.  See "Zero Coupon Securities."

Custodial Receipts. The Fund may invest in custodial receipts which are
interests in separately traded interest and principal component parts of US
government securities that are issued by banks or brokerage firms and are
created by depositing US government securities into a special account at a
custodian bank. The custodian holds the interest and principal payments for the
benefit of the registered owners of the certificates or receipts. The custodian
arranges for the issuance of the certificates or receipts evidencing ownership
and maintains the register. Custodial receipts include Treasury Receipts
("TRs"), Treasury Investment Growth Receipts ("TIGRs"), and Certificates of
Accrual on Treasury Securities ("CATS"). TIGRs and CATS are interests in private
proprietary accounts while TRs and STRIPS are interests in accounts sponsored by
the US Treasury. Receipts are sold as zero coupon securities.
See "Zero Coupon Securities and Deferred Interest Bonds."

The Fund may acquire US government securities and their unmatured interest
coupons that have been separated ("stripped") by their holder, typically a
custodian bank or investment brokerage firm. Having separated the interest
coupons from the underlying principal of the US government securities, the
holder will resell the stripped securities in custodial receipt programs with a
number of different names, including TIGRs, and CATS. The stripped coupons are
sold separately from the underlying principal, which is usually sold at a deep
discount because the buyer receives only the right to receive a future fixed
payment on the security and does not receive any rights to periodic interest
(cash) payments. The underlying US Treasury bonds and notes themselves are
generally held in book-entry form at a Federal Reserve Bank. Counsel to the
underwriters of these certificates or other evidences of ownership of US
Treasury securities have stated that, in their opinion, purchasers of the
stripped securities most likely will be deemed the beneficial holders of the
underlying US government securities for federal tax and securities purposes. In
the case of CATS and TIGRS, the Internal Revenue Service ( the "IRS") has
reached this conclusion for the purpose of applying the tax diversification
requirements applicable to regulated investment companies such as the Fund. CATS
and TIGRS are not considered US government securities by the staff of the SEC.
Further, the IRS conclusion noted above is contained only in a general counsel
memorandum, which is an internal document of no precedential value or binding
effect, and a private letter ruling, which also may not be relied upon by the
Fund. The Trust is not aware of any binding legislative, judicial or
administrative authority on this issue.

Zero Coupon Securities and Deferred Interest Bonds. The Fund may invest in zero
coupon securities and deferred interest bonds. Zero coupon and deferred interest
bonds are debt obligations which are issued at a significant discount from face
value. The original discount approximates the total amount of interest the bonds
will accrue and compound over the period until maturity or the first interest
accrual date at a rate of interest reflecting the market rate of the security at
the time of issuance. Zero coupon securities are redeemed at face value at their
maturity date without interim cash payments of interest or principal. The amount
of this discount is accrued over the life of the security, and the accrual
constitutes the income earned on the security for both accounting and tax
purposes. Because of these features, the market prices of zero coupon securities
are generally more volatile than the market prices of securities that have
similar maturity but that pay interest periodically.

While zero coupon bonds do not require the periodic payment of interest,
deferred interest bonds generally provide for a period of delay before the
regular payment of interest begins. Although this period of delay is different
for each deferred interest bond, a typical period is approximately one-third of
the bond's term to maturity. Such investments benefit the issuer by mitigating
its initial need for cash to meet debt service, but some also provide a higher
rate of return to attract investors who are willing to defer receipt of such
cash.

The Fund will accrue income on such investments for tax and accounting purposes,
as required, which is distributable to shareholders and which, because no cash
is generally received at the time of accrual, may require the liquidation of
other portfolio securities to satisfy the Fund's distribution obligations. See
"Taxes."

Inverse Floating Rate Securities. The Fund may invest up to 5% of its net assets
in inverse floating rate securities ("inverse floaters"). The interest rate on
an inverse floater resets in the opposite direction from the market rate of
interest to which the inverse floater is indexed. An inverse floater may be
considered to be leveraged to the extent that its interest rate varies by a
magnitude that exceeds the magnitude of the change in the index rate of
interest. The higher degree of leverage inherent in inverse floaters is
associated with greater volatility in their market values. See "Illiquid
Securities."

Yields and Ratings. The yields on certain obligations in which the Fund may
invest (such as commercial paper and bank obligations) are dependent on a
variety of factors, including the ratings of the issue. The ratings of S&P,
Moody's and other recognized rating organizations represent their respective
opinions as to the quality of the obligations they undertake to rate. Ratings,
however, are general and are not absolute standards of quality or value.
Consequently, obligations with the same rating, maturity and interest rate may
have different market prices. See the Appendix for a description of the ratings
provided by recognized statistical ratings organizations.

Lower-Rated Debt Securities ("Junk Bonds" or "High Yield Debt Securities"). The
Fund may invest in debt securities rated in the fifth and sixth long-term rating
categories by S&P, Moody's and Duff & Phelps Credit Rating Company, or
comparably rated by another NRSRO, or if not rated by an NRSRO, of comparable
quality as determined by the Advisor in its sole discretion.

These securities, often referred to as Junk Bonds or High Yield Debt Securities,
are considered speculative and, while generally offering greater income than
investments in higher quality securities, involve greater risk of loss of
principal and income, including the possibility of default or bankruptcy of the
issuers of such securities, and have greater price volatility, especially during
periods of economic uncertainty or change. These lower quality bonds tend to be
affected by economic changes and short-term corporate and industry developments,
as well as public perception of those changes and developments, to a greater
extent than higher quality securities, which react primarily to fluctuations in
the general level of interest rates.

In addition, the market for lower-rated debt securities may be thinner and less
active than that for higher rated debt securities, which can adversely affect
the prices at which the former are sold. If market quotations are not available,
lower-rated debt securities will be valued in accordance with procedures
established by the Board of Trustees, including the use of outside pricing
services. Judgment plays a greater role in valuing high-yield corporate debt
securities than is the case for securities for which more external sources for
quotations and last sale information are available. Adverse publicity and
changing investor perception may also affect the availability of outside pricing
services to value lower-rated debt securities and the Fund's ability to dispose
of these securities. In addition, such securities generally present a higher
degree of credit risk. Issuers of lower-rated debt securities are often highly
leveraged and may not have more traditional methods of financing available to
them so that their ability to service their obligations during an economic
downturn or during sustained periods of rising interest rates may be impaired.
The risk of loss due to default by such issuers is significantly greater because
below investment grade securities generally are unsecured and frequently are
subordinated to the prior payment of senior indebtedness.

Since the risk of default is higher for lower-rated debt securities, the
Advisor's research and credit analysis are an especially important part of
managing securities of this type held by the Fund. In considering investments
for the Fund, the Advisor will attempt to identify those issuers of high
yielding debt securities whose financial conditions are adequate to meet future
obligations, have improved or are expected to improve in the future. The
Advisor's analysis focuses on relative values based on such factors as interest
on dividend coverage, asset coverage, earnings prospects and the experience and
managerial strength of the issuer.

While the market for high yield corporate debt securities has been in existence
for many years and has weathered previous economic downturns, past experience
may not provide an accurate indication of future performance of the high yield
bond market, especially during periods of economic recession.

The Fund may choose, at its expense or in conjunction with others, to pursue
litigation or otherwise exercise its rights as a security holder to seek to
protect the interest of security holders if it determines this to be in the
interest of the Fund.

Rating Downgrades. Subsequent to its purchase by the Fund, a rated security may
cease to be rated or its rating may be reduced below the minimum rating required
for purchase by the Fund. The Advisor will consider such an event in determining
whether the Fund should continue to hold the security in accordance with the
interests of the Fund and applicable regulations of the SEC. The Fund will not
continue to hold fixed income securities that have been downgraded below
investment grade if more than 5% of the Fund's net assets would consist of such
securities.

Registered Loans. The Fund may invest in loan obligations issued or guaranteed
by sovereign governments or their agencies and instrumentalities. The ownership
of these loans is registered in the books of an agent bank and/or the borrower,
and transfers of ownership are effected by assignment agreements. Documentation
for these assignments includes a signed notice of assignment, which is sent to
the agent and/or borrower for registration shortly after the execution of the
assignment agreement. Prior to the notice of assignment being registered with
the agent and/or borrower, the borrower or its agent will make any payments of
principal and interest to the last registered owner.

Given the volume of secondary market trading in registered loans, the agent
and/or borrower's books may be out of date, making it difficult for the Fund to
establish independently whether the seller of a registered loan is the owner of
the loan. Generally, registered loans trade in the secondary market with
interest (i.e., the right to accrued but unpaid interest is transferred to
purchasers).

Other Debt Obligations. The Fund may invest in deposits, bonds, notes and
debentures and other debt obligations that at the time of purchase have, or are
comparable in priority and security to other securities of such issuer which
have, outstanding short-term obligations meeting the above short-term rating
requirements, or if there are no such short-term ratings, are determined by the
Advisor to be of comparable quality.

Derivative Securities

General. The Fund may invest in various instruments that are commonly known as
"derivatives." Generally, a derivative is a financial arrangement, the value of
which is based on, or "derived" from, a traditional security, asset or market
index. Some "derivatives" such as mortgage-related and other asset-backed
securities are in many respects like any other investment, although they may be
more volatile and/or less liquid than more traditional debt securities. There
are, in fact, many different types of derivatives and many different ways to use
them. For example, the Fund may use futures and options as a low-cost method of
gaining exposure to a particular securities market without investing directly in
those securities, for speculative purposes, and for traditional hedging purposes
to attempt to protect the Fund from exposure to changing interest rates,
securities prices or currency exchange rates and for cash management or other
investment purposes.

There is a range of risks associated with those uses. The use of derivatives may
result in leverage, which tends to magnify the effects of an instrument's price
changes as market conditions change. Leverage involves the use of a small amount
of money to control a large amount of financial assets, and can in some
circumstances, lead to significant losses. The Fund will limit the leverage
created by its use of derivatives for investment purposes by "covering" such
positions as required by the Commission. The Advisor may use derivatives in
circumstances where the Advisor believes they offer an economical means of
gaining exposure to a particular asset class. Derivatives will not be used to
increase portfolio risk above the level that could be achieved using only
traditional investment securities or to acquire exposure to changes in the value
of assets or indexes that by themselves could not be purchased for the Fund. The
use of derivatives for non-hedging purposes may be considered speculative.

The Fund's investment in options, futures or forward contracts, swaps and
similar strategies (collectively, "derivatives") depends on the Advisor's
judgment as to the potential risks and rewards of different types of strategies.
Derivatives can be volatile investments and may not perform as expected. If the
Advisor applies a hedge at an inappropriate time or judges price trends
incorrectly, derivative strategies may lower the Fund's return. The Fund could
also experience losses if the prices of its derivative positions were poorly
correlated with its other investments, or if it could not close out its
positions because of an illiquid secondary market. Options and futures traded on
foreign exchanges generally are not regulated by US authorities, and may offer
less liquidity and less protection to the Fund in the event of default by the
other party to the contract.

Derivative Securities:  Options

Options on Securities. The Fund may purchase and write (sell) put and call
options on securities. A call option gives the purchaser of the option the right
to buy, and obligates the writer to sell, the underlying security at the
exercise price at any time during the option period. Similarly, a put option
gives the purchaser of the option the right to sell, and obligates the writer to
buy, the underlying security at the exercise price at any time during the option
period.

The Fund may write (sell) covered call and put options to a limited extent on
its portfolio securities ("covered options") in an attempt to increase income
through the premiums it receives for writing the option(s). However, in return
for the premium, the Fund may forgo the benefits of appreciation on securities
sold or may pay more than the market price on securities acquired pursuant to
call and put options written by the Fund. All options written by the Fund are
"covered."

A call option written by the Fund is "covered" if the Fund owns the underlying
security covered by the call or has an absolute and immediate right to acquire
that security without additional cash consideration (or for additional cash
consideration held in a segregated account) upon conversion or exchange of other
securities held in its portfolio. A call option is also covered if the Fund
holds a call option on the same security and in the same principal amount as the
written call option where the exercise price of the call option so held (a) is
equal to or less than the exercise price of the written call option or (b) is
greater than the exercise price of the written call option if the difference is
segregated by the Fund in cash or liquid securities.

When the Fund writes a covered call option, it gives the purchaser of the option
the right to buy the underlying security at the price specified in the option
(the "exercise price") by exercising the option at any time during the option
period. If the option expires unexercised, the Fund will realize income in an
amount equal to the premium received for writing the option. If the option is
exercised, a decision over which the Fund has no control, the Fund must sell the
underlying security to the option holder at the exercise price. By writing a
covered call option, the Fund forgoes, in exchange for the premium less the
commission ("net premium"), the opportunity to profit during the option period
from an increase in the market value of the underlying security above the
exercise price. In addition, the Fund may continue to hold a security which
might otherwise have been sold to protect against depreciation in the market
price of the security.

A put option written by the Fund is "covered" when, among other things, cash or
liquid securities are placed in a segregated account to fulfill the obligations
undertaken. When the Fund writes a covered put option, it gives the purchaser of
the option the right to sell the underlying security to the Fund at the
specified exercise price at any time during the option period. If the option
expires unexercised, the Fund will realize income in the amount of the net
premium received for writing the option. If the put option is exercised, a
decision over which the Fund has no control, the Fund must purchase the
underlying security from the option holder at the exercise price. By writing a
covered put option, the Fund, in exchange for the net premium received, accepts
the risk of a decline in the market value of the underlying security below the
exercise price.

The Fund may terminate its obligation as the writer of a call or put option by
purchasing an option with the same exercise price and expiration date as the
option previously written. This transaction is called a "closing purchase
transaction." The Fund will realize a profit or loss on a closing purchase
transaction if the amount paid to purchase an option is less or more, as the
case may be, than the amount received from the sale thereof. To close out a
position as a purchaser of an option, the Fund may enter into a "closing sale
transaction" which involves liquidating the Fund's position by selling the
option previously purchased. Where the Fund cannot effect a closing purchase
transaction, it may be forced to incur brokerage commissions or dealer spreads
in selling securities it receives or it may be forced to hold underlying
securities until an option is exercised or expires.

The current market value of a traded option is the last sale price or, in the
absence of a sale, the mean between the closing bid and asked price. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, the Fund will realize a gain (or loss if the cost
of a closing purchase transaction exceeds the premium received when the option
was sold), and the deferred credit related to such option will be eliminated. If
a call option is exercised, the Fund will realize a gain or loss from the sale
of the underlying security and the proceeds of the sale will be increased by the
premium originally received.

The Fund may also purchase call and put options on any securities in which they
may invest. The Fund would normally purchase a call option in anticipation of an
increase in the market value of such securities. The purchase of a call option
would entitle the Fund, in exchange for the premium paid, to purchase a security
at a specified price during the option period. The Fund would ordinarily have a
gain if the value of the securities increased above the exercise price
sufficiently to cover the premium and would have a loss if the value of the
securities remained at or below the exercise price during the option period.

The Fund would normally purchase put options in anticipation of a decline in the
market value of securities in its portfolio ("protective puts") or securities of
the type in which it is permitted to invest. The purchase of a put option would
entitle the Fund, in exchange for the premium paid, to sell a security, which
may or may not be held by the Fund at a specified price during the option
period. The purchase of protective puts is designed merely to offset or hedge
against a decline in the market value of the Fund. Put options also may be
purchased by the Fund for the purpose of affirmatively benefiting from a decline
in the price of securities that the Fund does not own. The Fund would ordinarily
recognize a gain if the value of the securities decreased below the exercise
price sufficiently to cover the premium and would recognize a loss if the value
of the securities remained at or above the exercise price. Gains and losses on
the purchase of protective put options would tend to be offset by countervailing
changes in the value of underlying portfolio securities.

The hours of trading for options on securities may not conform to the hours
during which the underlying securities are traded. To the extent that the option
markets close before the markets for the underlying securities, significant
price and rate movements can take place in the underlying securities markets
that cannot be reflected in the option markets. It is impossible to predict the
volume of trading that may exist in such options, and there can be no assurance
that viable exchange markets will develop or continue.

The Fund may enter into closing transactions in order to offset an open option
position prior to exercise or expiration by selling an option it has purchased
or by entering into an offsetting option. If the Fund cannot effect closing
transactions, it may have to retain a security in its portfolio it would
otherwise sell or deliver a security it would otherwise retain. The Fund may
purchase and sell options traded on recognized foreign exchanges. The Fund may
also purchase and sell options traded on US exchanges and, to the extent
permitted by law, options traded over-the-counter.

The Fund may also engage in options transactions in the OTC market with
broker-dealers who make markets in these options. The Fund will engage in OTC
options only with broker-dealers deemed by the Advisor to be creditworthy. The
ability to terminate OTC option positions is more limited than with
exchange-traded option positions because the predominant market is the issuing
broker rather than an exchange, and may involve the risk that broker-dealers
participating in such transactions will not fulfill their obligations. To reduce
this risk, the Fund will purchase such options only from a counter party
approved for these purposes by the Advisor. The Advisor will monitor the
creditworthiness of dealers with whom the Fund enters into such options
transactions.

Options on Securities Indices. The Fund may also purchase and write
exchange-listed and OTC put and call options on securities indices. A securities
index measures the movement of a certain group of securities by assigning
relative values to the securities included in the index, fluctuating with
changes in the market values of the securities included in the index. Some
securities index options are based on a broad market index, such as the NYSE
Composite Index, or a narrower market index such as the Standard & Poor's 100.
Indices may also be based on a particular industry or market segment.

Options on securities indices are similar to options on securities except that
(1) the expiration cycles of securities index options are monthly, while those
of securities options are currently quarterly, and (2) the delivery requirements
are different. Instead of giving the right to take or make delivery of
securities at a specified price, an option on a securities index gives the
holder the right to receive a cash "exercise settlement amount" equal to (a) the
amount, if any, by which the fixed exercise price of the option exceeds (in the
case of a put) or is less than (in the case of a call) the closing value of the
underlying index on the date of exercise, multiplied by (b) a fixed "index
multiplier." Receipt of this cash amount will depend upon the closing level of
the securities index upon which the option is based being greater than, in the
case of a call, or less than, in the case of a put, the exercise price of the
index and the exercise price of the option times a specified multiple. The
writer of the option is obligated, in return for the premium received, to make
delivery of this amount. Securities index options may be offset by entering into
closing transactions as described above for securities options.

As discussed in "Options on Securities," the Fund would normally purchase a call
option in anticipation of an increase in the market value of the relevant index.
The purchase of a call option would entitle the Fund, in exchange for the
premium paid, to receive upon exercise a cash payment based on the level of the
index on the exercise date. The Fund would ordinarily have a gain if the value
of the index increased above the exercise price sufficiently to cover the
premium and would have a loss if the value of the index remained at or below the
exercise price during the option period.

As discussed in "Options on Securities," the Fund would normally purchase
"protective puts" in anticipation of a decline in the market value of the
relevant index. The purchase of a put option would entitle the Fund, in exchange
for the premium paid, to receive upon exercise a cash payment based on the level
of the index on the exercise date. The purchase of protective puts is generally
designed to offset or hedge against a decline in the market value of the index.
The Fund would ordinarily recognize a gain if the value of the index decreased
below the exercise price sufficiently to cover the premium and would recognize a
loss if the value of the index remained at or above the exercise price. Gains
and losses on the purchase of protective put options would tend to be offset by
countervailing changes in the value of the index.

Because the value of an index option depends upon movements in the level of the
index rather than the price of a particular security, whether the Fund will
realize a gain or loss from the purchase or writing of options on an index
depends upon movements in the level of securities prices in the securities
market generally or, in the case of certain indices, in an industry or market
segment, rather than movements in the price of a particular security.
Accordingly, successful use by the Fund of options on securities indices will be
subject to the Advisor's ability to predict correctly movements in the direction
of the securities market generally or of a particular industry. This requires
different skills and techniques than predicting changes in the price of
individual securities.

Options on securities indices entail risks in addition to the risks of options
on securities. The absence of a liquid secondary market to close out options
positions on securities indices may be more likely to occur, although the Fund
generally will only purchase or write such an option if the Advisor believes the
option can be closed out. Use of options on securities indices also entails the
risk that trading in such options may be interrupted if trading in certain
securities included in the index is interrupted. The Fund will not purchase such
options unless the Advisor believes the market is sufficiently developed such
that the risk of trading in such options is no greater than the risk of trading
in options on securities.

Price movements in the Fund's portfolio may not correlate precisely with
movements in the level of an index and, therefore, the use of options on indices
cannot serve as a complete hedge. Because options on securities indices require
settlement in cash, the Advisor may be forced to liquidate portfolio securities
to meet settlement obligations. The Fund's activities in index options may also
be restricted by the requirements of the Code for qualification as a regulated
investment company.

In addition, the hours of trading for options on the securities indices may not
conform to the hours during which the underlying securities are traded. To the
extent that the option markets close before the markets for the underlying
securities, significant price and rate movements can take place in the
underlying securities markets that cannot be reflected in the option markets. It
is impossible to predict the volume of trading that may exist in such options,
and there can be no assurance that viable exchange markets will develop or
continue.

Options on Non-US Securities Indices. The Fund may purchase and write put and
call options on foreign securities indices listed on domestic and foreign
securities exchanges. The Fund will write call options only if they are
"covered." The Fund may also purchase and write OTC options on foreign
securities indices.

The Fund may, to the extent allowed by federal and state securities laws, invest
in options on non-US securities indices instead of investing directly in
individual non-US securities. The Fund may also use foreign securities index
options for bona fide hedging and non-hedging purposes.

Yield Curve Options. The Fund may enter into options on the yield spread or
yield differential between two securities. These options are referred to as
yield curve options. In contrast to other types of options, a yield curve option
is based on the difference between the yields of designated securities, rather
than the prices of the individual securities, and is settled through cash
payments. Accordingly, a yield curve option is profitable to the holder if this
differential widens (in the case of a call) or narrows (in the case of a put),
regardless of whether the yields of the underlying securities increase or
decrease.

Spreadlocks. The Fund may enter into spreadlocks. A spreadlock is a form of swap
contract which is an exchange of a one-time cash payment between the Fund and
another party which is based on a specific financial index. A spreadlock allows
an interest rate swap user to lock in the forward differential between the
interest rate swap rate and the yield of the government bond underlying the
swap. Essentially, a spreadlock allows the investor to buy or sell the spread
forward by entering into a forward contract on the swap spread (i.e., the spread
between the government yield and the swap rate (or yield)) for a given maturity.
The price of a spreadlock is determined by the yield spread between a forward
starting fixed/floating swap and a forward transaction in a government bond. The
value of the swap is adjusted daily and the change in value is recorded as
unrealized appreciation or depreciation up until the agreement matures at which
time the cash payment, based on the value of the swap on the maturity date, is
exchanged between the two parties.

Derivative Securities:  Futures Contracts and Options on Futures Contracts

General. The Fund may enter into futures contracts on securities, securities
indices, foreign currencies and interest rates, and purchase and write (sell)
options thereon which are traded on exchanges designated by the Commodity
Futures Trading Commission (the "CFTC") or, if consistent with CFTC regulations,
on foreign exchanges. These futures contracts are standardized contracts for the
future delivery of, among other things, a commodity, a non-US currency, an
interest rate sensitive security or, in the case of index futures contracts or
certain other futures contracts, a cash settlement with reference to a specified
multiplier times the change in the index. 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.

The Fund will engage in futures and related options transactions only for bona
fide hedging or other non-hedging purposes as permitted by CFTC regulations
which permit principals of an investment company registered under the Investment
Company Act of 1940 ("1940 Act") to engage in such transactions without
registering as commodity pool operators. The Fund may, for example, enter into
futures contracts and options on futures contracts on securities, securities
indices and currencies to manage its exposure to changing interest rates,
security prices and currency exchange rates or as an efficient means of managing
allocations between asset classes. All futures contracts entered into by the
Fund is traded on US exchanges or boards of trade that are licensed and
regulated by the CFTC or on foreign exchanges approved by the CFTC. The Fund
will determine that the price fluctuations in the futures contracts and options
on futures used for hedging purposes are substantially related to price
fluctuations in securities or instruments held by the Fund or securities or
instruments which they expect to purchase. 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 ("CEA").

The Fund's futures transactions may be entered into for traditional hedging
purposes -- i.e., futures contracts will be sold to protect against a decline in
the price of securities (or the currency in which they are denominated) that the
Fund owns or futures contracts will be purchased to protect the Fund against an
increase in the price of securities (or the currency in which they are
denominated) that the Fund intends to purchase. As evidence of this hedging
intent, the Fund expects that, on 75% or more of the occasions on which it takes
a long futures or option position (involving the purchase of futures contracts),
the Fund will have purchased, or will be in the process of purchasing,
equivalent amounts of related securities (or assets denominated in the related
currency) in the cash market at the time when the futures or option position is
closed out. However, in particular cases, when it is economically advantageous
for the Fund to do so, a long futures position may be terminated or an option
may expire without the corresponding purchase of securities or other assets. The
Fund may not invest more than 25% of its total assets in purchased protective
put options.

The successful use of futures contracts and options thereon draws upon the
Advisor's skill and experience with respect to such instruments and are subject
to special risk considerations. A liquid secondary market for any futures or
options contract may not be available when a futures or options position is
sought to be closed. In addition, there may be an imperfect correlation between
movements in the securities or currency in the Fund. Successful use of futures
or options contracts is further dependent on the Advisor's ability to predict
correctly movements in the securities or foreign currency markets and no
assurance can be given that its judgment will be correct.

Futures Contracts. Futures contracts are contracts to purchase or sell a fixed
amount of an underlying instrument, commodity or index at a fixed time and place
in the future. US futures contracts have been designed by exchanges which have
been designated "contract markets" by the CFTC, and must be executed through a
futures commission merchant, or brokerage firm, which is a member of the
relevant contract market. Futures contracts trade on a number of exchange
markets, and, through their clearing corporations, the exchanges guarantee
performance of the contracts as between the clearing members of the exchange.
The Fund may enter into contracts for the purchase or sale for future delivery
of fixed-income or equity securities, foreign currencies, or financial indices
including any index of US or foreign securities, US government securities,
foreign government securities, or corporate debt securities. Futures contracts
on foreign currencies may be used for speculative purposes or to hedge the value
of securities that are denominated in foreign currencies.

At the same time a futures contract is entered into, the Fund must allocate cash
or liquid securities as a good faith deposit to maintain the position ("initial
margin"). Daily thereafter, the futures contract is valued and the payment of
"variation margin" may be required, since each day the Fund would provide or
receive cash that reflects any decline or increase in the contract's value.

Although futures contracts (other than those that settle in cash, such as index
futures) by their terms call for the actual delivery or acquisition of the
instrument underlying the contract, in most cases the contractual obligation is
fulfilled by offset before the date of the contract without having to make or
take delivery of the instrument underlying the contract. The offsetting of a
contractual obligation is accomplished by entering into an opposite position in
an identical futures contract on the commodities exchange on which the futures
contract was entered into (or a linked exchange) calling for delivery in the
same month. Such a transaction, which is effected through a member of an
exchange, cancels the obligation to make or take delivery of the instrument
underlying the contract. Since all transactions in the futures market are made,
offset or fulfilled through a clearinghouse associated with the exchange on
which the contracts are traded, the Fund will incur brokerage fees when it
enters into futures contracts.

One purpose of the acquisition or sale of a futures contract, in cases where the
Fund holds or intends to acquire fixed-income or equity securities, is to
attempt to protect the Fund from fluctuations in interest or foreign exchange
rates or in securities prices without actually buying or selling fixed-income or
equity securities or foreign currencies. For example, if interest rates were
expected to increase (which thus would cause the prices of debt securities to
decline), the Fund might enter into futures contracts for the sale of debt
securities. Such a sale would have much the same effect as selling an equivalent
value of the debt securities owned by the Fund. If interest rates did increase,
the value of the debt security in the Fund would decline, but the value of the
futures contracts to the Fund would increase at approximately the same rate,
thereby keeping the net asset value of the Fund from declining as much as it
otherwise would have. The Fund could accomplish similar results by selling debt
securities and investing in bonds with short maturities when interest rates are
expected to increase. However, since the futures market is more liquid than the
cash market, the use of futures contracts as an investment technique allows the
Fund to maintain a defensive position without having to sell its portfolio
securities.

Similarly, when it is expected that interest rates may decline (thus increasing
the value of debt securities), futures contracts may be purchased to attempt to
hedge against anticipated purchases of debt securities at higher prices. Since
the fluctuations in the value of futures contracts should be similar to those of
debt securities, the Fund could take advantage of the anticipated rise in the
value of debt securities without actually buying them until the market had
stabilized. At that time, the futures contracts could be liquidated and the Fund
could then buy debt securities on the cash market. The segregated assets
maintained to cover the Fund's obligations with respect to such futures
contracts will consist of cash or liquid securities in an amount equal to the
difference between the fluctuating market value of such futures contracts and
the aggregate value of the initial and variation margin payments made by the
Fund with respect to such futures contracts.

The ordinary spreads between prices in the cash and futures market, due to
differences in the nature of those markets, are subject to distortions. First,
all participants in the futures market are subject to initial and variation
margin requirements. Rather than meeting additional variation margin
requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, the liquidity of the futures market depends on most
participants entering into offsetting transactions rather than making or taking
delivery. To the extent that many participants decide to make or take delivery,
liquidity in the futures market could be reduced, thus producing distortion.
Third, from the point of view of speculators, the margin requirements in the
futures market are less onerous than margin requirements in the securities
market. Therefore, increased participation by speculators in the futures market
may cause temporary price distortions. Due to the possibility of distortion, a
correct forecast of securities price, general interest rate or currency exchange
rate trends by the Advisor may still not result in a successful transaction.

In addition, futures contracts entail significant risks. Although the Advisor
believes that use of such contracts will benefit the Fund, if the Advisor's
investment judgment about the general direction of securities prices, currency
rates, interest rates or an index is incorrect, the Fund's overall performance
would be poorer than if it had not entered into any such contract. For example,
if the Fund has hedged against the possibility of an increase in interest rates
or a decrease in an index which would adversely affect the value of securities
held in its portfolio and interest rates decrease or securities prices increase
instead, the Fund will lose part or all of the benefit of the increased value of
its securities which it has hedged because it will have offsetting losses in its
futures positions. In addition, in such situations, if the Fund has insufficient
cash, it may have to sell securities from its portfolio to meet daily variation
margin requirements. Such sales of securities may be, but will not necessarily
be, at increased prices which reflect the rising market. The Fund may have to
sell securities at a time when it may be disadvantageous to do so.

Futures contracts (and options thereon) are valued at the most recent settlement
price, if available, on the exchange on which they are traded most extensively.
With the exception of S&P 500 and NASDAQ 100 futures contracts, closing
settlement times are prior to the close of trading on The New York Stock
Exchange, Inc. ("NYSE"). For S&P 500 and NASDAQ 100 futures contracts, closing
settlement prices are normally available at approximately 4:20 Eastern time. If
no settlement is available, the last traded price on such exchange will be used.

Futures Contracts on Securities Indices. The Fund may also enter into futures
contracts providing for the making and acceptance of a cash settlement based
upon changes in the value of an index of US or non-US securities. Index futures
may be used for speculative purposes, as a low-cost method of gaining exposure
to a particular securities market without investing directly in those securities
or to hedge against anticipated future changes in general market prices which
otherwise might either adversely affect the value of securities held by the Fund
or adversely affect the prices of securities which are intended to be purchased
at a later date for the Fund or as an efficient means of managing allocation
between asset classes. An index futures contract may also be entered into to
close out or offset an existing futures position.

When used for hedging purposes, each transaction in futures contracts on a
securities index involves the establishment of a position which, the Advisor
believes, will move in a direction opposite to that of the investment being
hedged. If these hedging transactions are successful, the futures positions
taken for the Fund will rise in value by an amount which approximately offsets
the decline in value of the portion of the Fund's investments that are being
hedged. Should general market prices move in an unexpected manner, the full
anticipated benefits of futures contracts may not be achieved or a loss may be
realized.

Options on Futures Contracts (Including Futures Contracts on Securities
Indices). The Fund may purchase and write (sell) options on futures contracts
for speculative or hedging purposes. For example, as with the purchase of
futures contracts, when the Fund is not fully invested, it may purchase a call
option on an interest rate sensitive futures contract to hedge against a
potential price increase on debt securities due to declining interest rates.

The purchase of a call option on a futures contract is similar in some respects
to the purchase of a call option on an index or individual security. Depending
on the pricing of the option compared to either the price of the futures
contract upon which it is based or the price of the underlying debt securities,
it may or may not be less risky than ownership of the futures contract or
underlying debt securities.

The writing of a call option on a futures contract may constitute a partial
hedge against declining prices of the underlying portfolio securities which are
the same as or correlate with the security or foreign currency futures contract
that is deliverable upon exercise of the option on that futures contract. If the
futures price at expiration of the option is below the exercise price specified
in the option, the Fund will retain the full amount of the net premium (the
premium received for writing the option less any commission), which provides a
partial hedge against any decline that may have occurred in the Fund's holdings.

The writing of a put option on an index futures contract may constitute a
partial hedge against increasing prices of the underlying securities or foreign
currency that are deliverable upon exercise of the futures contract. If the
futures price at expiration of the option is higher than the exercise price, the
Fund will retain the full amount of the option net premium, which provides a
partial hedge against any increase in the price of securities that the Fund
intends to purchase.

If a put or call option the Fund has written is exercised, the Fund will incur a
loss that will be reduced by the amount of the net premium it receives.
Depending on the degree of correlation between changes in the value of its
portfolio securities and changes in the value of its futures positions, the
Fund's losses from existing options on futures may to some extent be reduced or
increased by changes in the value of portfolio securities.

The purchase of a call or put option on a futures contract with respect to an
index is similar in some respects to the purchase of a call or protective put
option on an index. For example, the Fund may purchase a put option on an index
futures contract to hedge against the risk of declining securities values.

The amount of risk the Fund assumes when it purchases an option on an index
futures contract is the premium paid for the option plus related transaction
costs. In addition to the correlation risks discussed above, the purchase of
such an option also entails the risk that changes in the value of the underlying
futures contract will not be fully reflected in the value of the option
purchased.

Derivative Securities:  Swap Agreements

General. The Fund may enter into swaps relating to indices, currencies, interest
rates, equity and debt interests without limit. A swap transaction is an
agreement between the Fund and a counter party to act in accordance with the
terms of the swap contract. Interest rate swaps involve the exchange by the Fund
with another party of their respective commitments to pay or receive interest,
such as an exchange of fixed rate payments for floating rate payments. Mortgage
swaps are similar to interest rate swaps in that they represent commitments to
pay and receive interest. The notional principal amount, however, is tied to a
reference pool or pools of mortgages. Index swaps involve the exchange by the
Fund with another party of the respective amounts payable with respect to a
notional principal amount related to one or more indexes. Currency swaps involve
the exchange of cash flows on a notional amount of two or more currencies based
on their relative future values. An equity swap is an agreement to exchange
streams of payments computed by reference to a notional amount based on the
performance of a basket of stocks or a single stock. The purchase of an interest
rate cap entitles the purchaser, to the extent that a specified index exceeds a
predetermined interest rate, to receive payment of interest on a notional
principal amount from the party selling such interest rate cap. The purchase of
an interest rate floor entitles the purchaser, to the extent that a specified
index falls below a predetermined interest rate, to receive payments of interest
on a notional principal amount from the party selling the interest rate floor.
An interest rate collar is the combination of a cap and a floor that preserves a
certain return within a predetermined range of interest rates.

The Fund may enter into these transactions to preserve a return or spread on a
particular investment or portion of its assets, 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 may also use such transactions for speculative purposes, such as
to obtain the price performance of a security without actually purchasing the
security in circumstances, for example, where the subject security is illiquid,
is unavailable for direct investment or available only on less attractive terms.
Swaps have special risks associated including possible default by the
counterpart to the transaction, illiquidity and, where swaps are used as hedges,
the risk that the use of a swap could result in losses greater than if the swap
had not been employed. See "Illiquid Securities."

The Fund will usually enter into swaps on a net basis (i.e. the two payment
streams are netted out in a cash settlement on the payment date or dates
specified in the agreement, with the Fund receiving or paying, as the case may
be, only the net amount of the two payments). Swaps do not involve the delivery
of securities, other underlying assets or principal. Accordingly, the risk of
loss with respect to swaps is limited to the net amount of payments that the
Fund is contractually obligated to make or receive. If the counter party to a
swap defaults, the Fund's risk of loss consists of the net amount of payments
that the Fund is contractually entitled to receive. Where swaps are entered into
for good faith hedging purposes, the Advisor believes such obligations do not
constitute senior securities under the 1940 Act and, accordingly, will not treat
them as being subject to the Fund's borrowing restrictions. Where swaps are
entered into for other than hedging purposes, the Fund will segregate an amount
of cash or other liquid securities having a value equal to the accrued excess of
its obligations over entitlements with respect to each swap on a daily basis.

Whether the use of swap agreements will be successful in furthering its
investment objective will depend on the Advisor's ability to correctly predict
whether certain types of investments are likely to produce greater returns than
other investments. Certain swap agreements may be considered to be illiquid
because they are two party contracts and because they may have terms of greater
than seven days. Moreover, the Fund bears the risk of loss of the amount
expected to be received under a swap agreement in the event of the default or
bankruptcy of a swap agreement counter party. In addition, the Fund will enter
into swap agreements only with counter parties that would be eligible for
consideration as repurchase agreement counter parties under the Fund's
repurchase agreement guidelines. Certain restrictions imposed on the Fund by the
Code may limit the Fund's ability to use swap agreements. The swaps market is a
relatively new market and is largely unregulated. It is possible that
developments in the swaps market, including potential government regulation,
could adversely affect the Fund's ability to terminate existing swap agreements
or to realize amounts to be received under such agreements.

Certain swap agreements are exempt from most provisions of the CEA and,
therefore, are not regulated as futures or commodity option transactions under
the CEA, pursuant to regulations approved by the CFTC effective February 22,
1993. To qualify for this exemption, a swap agreement must be entered into by
eligible participants, which includes the following, provided the participant's
total assets exceed established levels: a bank or trust company, savings
association or credit union, insurance company, investment company subject to
regulation under the 1940 Act, commodity pool, corporation, partnership,
proprietorship, organization, trust or other entity, employee benefit plan,
governmental entity, broker-dealer, futures commission merchant, natural person,
or regulated foreign person. To be eligible, natural persons and most other
entities must have total assets exceeding $10 million; commodity pools and
employee benefit plans must have asset exceeding $5 million. In addition, an
eligible swap transaction must meet three conditions. First, the swap agreement
may not be part of a fungible class of agreements that are standardized as to
their material economic terms. Second, the creditworthiness of parties with
actual or potential obligations under the swap agreement must be a material
consideration in entering into or determining the terms of the swap agreement,
including pricing, cost or credit enhancement terms. Third, swap agreements may
not be entered into and traded on or through a multilateral transaction
execution facility.

This exemption is not exclusive, and participants may continue to rely on
existing exclusions for swaps, such as the Policy Statement issued in July 1989
which recognized a "safe harbor" for swap transactions from regulation as
futures or commodity option transactions under the CEA or its regulations. The
Policy Statement applies to swap transactions settled in cash that: (1) have
individually tailored terms; (2) lack exchange style offset and the use of a
clearing organization or margin system; (3) are undertaken in conjunction with a
line of business; and (4) are not marketed to the public.

The Fund will not enter into any swap, cap or floor transaction unless the
unsecured commercial paper, senior debt or the claims-paying ability of the
other party thereto is considered to be investment grade by the Advisor. If
there is a default by the other party to such a transaction, the Fund will have
contractual remedies pursuant to the agreements related to the transaction. The
swap market has grown substantially in recent years with a large number of banks
and investment banking firms acting both as principals and as agents utilizing
standardized swap documentation. As a result, the swap market has become
relatively liquid in comparison with the markets for other similar instruments
which are traded in the interbank market. See "Illiquid Securities."
Restrictions adopted by the CFTC may in the future restrict the Fund's ability
to enter into swap transactions.

Derivative Securities:  Hedging Strategies

Hedging Strategies. The Fund may use certain strategies designed to adjust the
overall risk of its investment portfolio. These "hedging" strategies involve
derivative contracts, including (but not limited to) futures contracts and
exchange-traded put and call options on such futures contracts. New financial
products and risk management techniques continue to be developed and may be used
if consistent with the Fund's investment objectives and policies. Among other
purposes, these hedging strategies may be used to effectively maintain a desired
portfolio duration or to protect against market risk.

The Fund might not use any hedging strategies, and there can be no assurance
that any strategy used will succeed. If the Advisor is incorrect in its judgment
on market values, interest rates, currency rates or other economic factors in
using a hedging strategy, the Fund may have lower net income and a net loss on
the investment. Each of these strategies involves certain risks, which include:

o        the  fact  that  the  skills  needed  to use  hedging  instruments  are
         different from those needed to select securities for the Fund;

o        the  possibility  of  imperfect  correlation,  or even no  correlation,
         between the price movements of hedging  instruments and price movements
         of the securities or currencies being hedged;

o        possible  constraints  placed on the Fund's ability to purchase or sell
         portfolio  investments  at  advantageous  times due to the need for the
         Fund to maintain "cover" or to segregate securities; and

o        the possibility  that the Fund will be unable to close out or liquidate
         its hedged position.

A hedge is designed to offset a loss in a portfolio position with a gain in the
hedged position; at the same time, however, a properly correlated hedge will
result in a gain in the portfolio position being offset by a loss in the hedged
position. As a result, the use of derivative transactions for hedging purposes
could limit any potential gain from an increase in the value of the position
hedged. With respect to futures contracts, since the value of portfolio
securities will generally far exceed the value of the futures contracts sold by
the Fund, an increase in the value of the futures contracts could only mitigate,
but not totally offset, the decline in the value of the Fund's assets.

In hedging transactions based on an index, whether the Fund will realize a gain
or loss depends upon movements in the level of securities prices in the
securities market generally or, in the case of certain indexes, in an industry
or market segment, rather than movements in the price of a particular security.
The risk of imperfect correlation increases as the composition of the Fund's
portfolio varies from the composition of the index. In an effort to compensate
for imperfect correlation of relative movements in the hedged position and the
hedge, the Fund's hedge positions may be in a greater or lesser dollar amount
than the dollar amount of the hedged position. Such "over hedging" or "under
hedging" may adversely affect the Fund's net investment results if market
movements are not as anticipated when the hedge is established.

Securities index futures transactions may be subject to additional correlation
risks. First, all participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting additional margin
deposit requirements, investors may close futures contracts through offsetting
transactions which would distort the normal relationship between the securities
index and futures markets. Secondly, from the point of view of speculators, the
deposit requirements in the futures market are less onerous than margin
requirements in the securities market. Therefore, increased participation by
speculators in the futures market also may cause temporary price distortions.
Because of the possibility of price distortions in the futures market and the
imperfect correlation between movements in a securities index and movements in
the price of securities index futures, a correct forecast of general market
trends by the Advisor still may not result in a successful hedging transaction.

To the extent that the Fund engages in the strategies described above, the Fund
may experience losses greater than if these strategies had not been utilized. In
addition to the risks described above, these instruments may be illiquid and/or
subject to trading limits, and the Fund may be unable to close out a position
without incurring substantial losses, if at all. The Fund is also subject to the
risk of a default by a counterparty to an off-exchange transaction. See
"Illiquid Securities."

Mortgage-Backed and Asset-Backed Securities

General Characteristics. The Fund may invest in mortgage-backed securities. A
mortgage-backed security consists of a pool of mortgage loans evidenced by
promissory notes secured by first mortgages or first deeds of trust or other
similar security instruments creating a first lien on owner occupied and
non-owner occupied one-unit to four-unit residential properties, multifamily
(i.e., five or more) properties, agriculture properties, commercial properties
and mixed use properties.

The investment characteristics of adjustable and fixed rate mortgage-backed
securities differ from those of traditional fixed-income securities. The major
differences include the payment of interest and principal on mortgage-backed
securities on a more frequent (usually monthly) schedule, and the possibility
that principal may be prepaid at any time due to prepayments on the underlying
mortgage loans or other assets. These differences can result in significantly
greater price and yield volatility than is the case with traditional
fixed-income securities. As a result, if the Fund purchases mortgage-backed
securities at a premium, a faster than expected prepayment rate will decrease
both the market value and the yield to maturity from those which were
anticipated. A prepayment rate that is slower than expected will have the
opposite effect of increasing yield to maturity and market value. Conversely, if
the Fund purchases mortgage-backed securities at a discount, faster than
expected prepayments will increase, while slower than expected prepayments will
decrease yield to maturity and market values. To the extent that the Fund
invests in mortgage-backed securities, the Advisor may seek to manage these
potential risks by investing in a variety of mortgage-backed securities and by
using certain hedging techniques.

Government Guaranteed Mortgage-Backed Securities. The Fund's investments in
mortgage-backed securities may include securities issued or guaranteed by the US
government or one of its agencies, authorities, instrumentalities or sponsored
enterprises, such as Ginnie Mae, Fannie Mae and Freddie Mac. There are several
types of guaranteed mortgage-backed securities currently available, including
guaranteed mortgage pass-through certificates and multiple class securities,
which include guaranteed Real Estate Mortgage Investment Conduit Certificates
("REMIC Certificates"), collateralized mortgage obligations and stripped
mortgage-backed securities. The Fund are permitted to invest in other types of
mortgage-backed securities that may be available in the future to the extent
consistent with the Fund's investment policies and objectives.

Ginnie Mae Certificates. Ginnie Mae is a wholly owned corporate instrumentality
of the United States within the Department of Housing and Urban Development. The
National Housing Act of 1934, as amended (the "Housing Act"), authorizes Ginnie
Mae to guarantee the timely payment of the principal of and interest on
certificates that are based on and backed by a pool of mortgage loans insured by
the Federal Housing Administration under the Housing Act, or Title V of the
Housing Act of 1949 ("FHA Loans"), or guaranteed by the Department of Veterans
Affairs under the Servicemen's Readjustment Act of 1944, as amended ("VA
Loans"), or by pools of other eligible mortgage loans. The Housing Act provides
that the full faith and credit of the US government is pledged to the payment of
all amounts that may be required to be paid under any Ginnie Mae guaranty. In
order to meet its obligations under such guaranty, Ginnie Mae is authorized to
borrow from the US Treasury with no limitations as to amount.

The Ginnie Mae Certificates in which the Fund may invest will represent a pro
rata interest in one or more pools of the following types of mortgage loans: (1)
fixed-rate level payment mortgage loans; (2) fixed-rate graduated payment
mortgage loans; (3) fixed-rate growing equity mortgage loans; (4) fixed-rate
mortgage loans secured by manufactured (mobile) homes; (5) mortgage loans on
multifamily residential properties under construction; (6) mortgage loans on
completed multifamily projects; (7) fixed-rate mortgage loans as to which
escrowed Fund are used to reduce the borrower's monthly payments during the
early years of the mortgage loans ("buy down" mortgage loans); (8) mortgage
loans that provide for adjustments in payments based on periodic changes in
interest rates or in other payment terms of the mortgage loans; and (9)
mortgage-backed serial notes.

Fannie Mae Certificates. Fannie Mae is a federally chartered and privately owned
corporation organized and existing under the Federal National Mortgage
Association Charter Act of 1938. The obligations of Fannie Mae are not backed by
the full faith and credit of the US government. Each Fannie Mae Certificate will
represent a pro rata interest in one or more pools of FHA Loans, VA Loans or
conventional mortgage loans (i.e., mortgage loans that are not insured or
guaranteed by any governmental agency) of the following types: (1) fixed-rate
level payment mortgage loans; (2) fixed-rate growing equity mortgage loans; (3)
fixed-rate graduated payment mortgage loans; (4) variable rate mortgage loans;
(5) other adjustable rate mortgage loans; and (6) fixed-rate and adjustable
mortgage loans secured by multifamily projects.

Freddie Mac Certificates. Freddie Mac is a corporate instrumentality of the
United States created pursuant to the Emergency Home Finance Act of 1970, as
amended (the "FHLMC Act"). The obligations of Freddie Mac are obligations solely
of Freddie Mac and are not backed by the full faith and credit of the US
government. Freddie Mac Certificates represent a pro rata interest in a group of
mortgage loans (a "Freddie Mac Certificate group") purchased by Freddie Mac. The
mortgage loans underlying the Freddie Mac Certificates will consist of
fixed-rate or adjustable rate mortgage loans with original terms to maturity of
between ten and thirty years, substantially all of which are secured by first
liens on one- to four-family residential properties or multifamily projects.
Each mortgage loan must meet the applicable standards set forth in the FHLMC
Act. A Freddie Mac Certificate group may include whole loans, participating
interests in whole loans and undivided interests in whole loans and
participations comprising another Freddie Mac Certificate group.

Multiple Class Mortgage-Backed Securities (Collateralized Mortgage Obligations
and REMIC Certificates). The Fund may invest in multiple class mortgage-backed
securities including collateralized mortgage obligations ("CMOs") and REMIC
Certificates. These securities may be issued by US government agencies and
instrumentalities such as Fannie Mae or Freddie Mac or by trusts formed by
private originators of, or investors in, mortgage loans, including savings and
loan associations, mortgage bankers, commercial banks, insurance companies,
investment banks and special purpose subsidiaries of the foregoing. In general,
CMOs are debt obligations of a legal entity that are collateralized by a pool of
mortgage loans or mortgage-backed securities the payments on which are used to
make payments on the CMOs or multiple class mortgage-backed securities. REMIC
Certificates represent beneficial ownership interests in a REMIC trust,
generally consisting of mortgage loans or Fannie Mae, Freddie Mac or Ginnie Mae
guaranteed mortgage-backed securities (the "Mortgage Assets"). The obligations
of Fannie Mae or Freddie Mac under their respective guaranty of the REMIC
Certificates are obligations solely of Fannie Mae or Freddie Mac, respectively.
Although investors may purchase beneficial interests in REMICs, which are known
as "regular" interests or "residual" interests, the Fund does not intend to
purchase such residual interests in REMICs.

Fannie Mae REMIC Certificates are issued and guaranteed as to timely
distribution of principal and interest by Fannie Mae. In addition, Fannie Mae
will be obligated to distribute the principal balance of each class of REMIC
Certificates in full, whether or not sufficient Fund are otherwise available.

Freddie Mac guarantees the timely payment of interest on Freddie Mac REMIC
Certificates and also guarantees the payment of principal as payments are
required to be made on the underlying mortgage participation certificates
("PCs"). PCs represent undivided interests in specified level payment,
residential mortgages or participation therein purchased by Freddie Mac and
placed in a PC pool. With respect to principal payments on PCs, Freddie Mac
generally guarantees ultimate collection of all principal of the related
mortgage loans without offset or deduction. Freddie Mac also guarantees timely
payment of principal of certain PCs.

CMOs and REMIC Certificates are issued in multiple classes. Each class of CMOs
or REMIC Certificates, often referred to as a "tranche," is issued at a specific
adjustable or fixed interest rate and must be fully retired no later than its
final distribution date. Principal prepayments on the underlying mortgage loans
or the mortgaged assets underlying the CMOs or REMIC Certificates may cause some
or all of the classes of CMOs or REMIC Certificates to be retired substantially
earlier than their final distribution dates. Generally, interest is paid or
accrues on all classes of CMOs or REMIC Certificates on a monthly basis.

The principal of and interest on the mortgaged assets may be allocated among the
several tranches in various ways. In certain structures (known as "sequential
pay" CMOs or REMIC Certificates), payments of principal, including any principal
prepayments, on the Mortgage Assets generally are applied to the classes of CMOs
or REMIC Certificates in the order of their respective final distribution dates.
Thus, no payment of principal will be made on any class of sequential pay CMOs
or REMIC Certificates until all other classes having an earlier final
distribution date have been paid in full. Additional structures of CMOs and
REMIC Certificates include, among others, "parallel pay" CMOs and REMIC
Certificates. Parallel pay CMOs or REMIC Certificates are those which are
structured to apply principal payments and prepayments of the mortgaged assets
to two or more classes concurrently on a proportionate or disproportionate
basis. These simultaneous payments are taken into account in calculating the
final distribution date of each class.

A wide variety of REMIC Certificates may be issued in parallel pay or sequential
pay structures. These securities include accrual certificates (also known as
"Z-Bonds"), which only accrue interest at a specified rate until all other
certificates having an earlier final distribution date have been retired and are
converted thereafter to an interest-paying security, and planned amortization
class ("PAC") certificates, which are parallel pay REMIC Certificates that
generally require that specified amounts or principal be applied on each payment
date to one or more classes or REMIC Certificates (the "PAC Certificates"), even
though all other principal payments and prepayments of the Mortgage Assets are
then required to be applied to one or more other classes of the PAC
Certificates. The scheduled principal payments for the PAC Certificates
generally have the highest priority on each payment date after interest due has
been paid to all classes entitled to receive interest currently. Shortfalls, if
any, are added to the amount payable on the next payment date. The PAC
Certificate payment schedule is taken into account in calculating the final
distribution date of each class of PAC. In order to create PAC tranches, one or
more tranches generally must be created that absorb most of the volatility in
the underlying mortgage assets. These tranches tend to have market prices and
yields that are much more volatile than other PAC classes.

Privately Issued Mortgage-Backed Securities. The Fund may also invest in
mortgage-backed securities issued by trusts or other entities formed or
sponsored by private originators of and institutional investors in mortgage
loans and other foreign or domestic non-governmental entities (or representing
custodial arrangements administered by such institutions). These private
originators and institutions include domestic and foreign savings and loan
associations, mortgage bankers, commercial banks, insurance companies,
investment banks and special purpose subsidiaries of the foregoing. Privately
issued mortgage-backed securities are generally backed by pools of conventional
(i.e., non-government guaranteed or insured) mortgage loans. Since such
mortgage-backed securities are not guaranteed by an entity having the credit
standing of Ginnie Mae, Fannie Mae or Freddie Mac, in order to receive a high
quality rating, they normally are structured with one or more types of "credit
enhancement." Such credit enhancements fall generally into two categories; (1)
liquidity protection and (2) protection against losses resulting after default
by a borrower and liquidation of the collateral. Liquidity protection refers to
the providing of cash advances to holders of mortgage-backed securities when a
borrower on an underlying mortgage fails to make its monthly payment on time.

Protection against losses resulting after default and liquidation is designed to
cover losses resulting when, for example, the proceeds of a foreclosure sale are
insufficient to cover the outstanding amount on the mortgage. Such protection
may be provided through guarantees, insurance policies or letters of credit,
through various means of structuring the transaction or through a combination of
such approaches.

Mortgage Pass-Through Securities. The Fund may invest in mortgage pass-through
securities, which are fixed or adjustable rate mortgage-backed securities that
provide for monthly payments that are a "pass-through" of the monthly interest
and principal payments (including any prepayments) made by the individual
borrowers on the pooled mortgage loans, net of any fees or other amounts paid to
any guarantor, administrator and/or servicers of the underlying mortgage loans.

Stripped Mortgage-Backed Securities. The Fund may purchase stripped
mortgage-backed securities ("SMBS"), which are derivative multi-class mortgage
securities. The market value of the class consisting entirely of principal
payments generally is unusually volatile in response to changes in interest
rates. The yields on a class of SMBS that receives all or most of the interest
from the mortgaged assets are generally higher than prevailing market yields on
other mortgage-backed securities because their cash flow patterns are more
volatile and there is a greater risk that the initial investment will not be
fully recouped. See "Illiquid Securities."

In accordance with a requirement imposed by the staff of the Commission, the
Advisor will consider privately issued fixed rate IOs and POs to be illiquid
securities for purposes of the Fund's limitation on investments in illiquid
securities. Unless the Advisor determines that a particular government-issued
fixed rate IO or PO is liquid, it will also consider these IOs and POs to be
illiquid.

Adjustable Rate Mortgages-Interest Rate Indices. Adjustable rate mortgages in
which the Fund invests may be adjusted on the basis of one of several indices.
The One Year Treasury Index is the figure derived from the average weekly quoted
yield on US Treasury Securities adjusted to a constant maturity of one year. The
Cost of Funds Index reflects the monthly weighted average cost of funds of
savings and loan associations and savings banks whose home offices are located
in Arizona, California and Nevada (the "FHLB Eleventh District") that are member
institutions of the Federal Home Loan Bank of San Francisco (the "FHLB of San
Francisco"), as computed from statistics tabulated and published by the FHLB of
San Francisco. The FHLB of San Francisco normally announces the Cost of Funds
Index on the last working day of the month following the month in which the cost
of funds was incurred.

A number of factors affect the performance of the Cost of Funds Index and may
cause the Cost of Funds Index to move in a manner different from indices based
upon specific interest rates, such as the One Year Treasury Index. Because of
the various origination dates and maturities of the liabilities of members of
the FHLB Eleventh District upon which the Cost of Funds Index is based, among
other things, at any time the Cost of Funds Index may not reflect the average
prevailing market interest rates on new liabilities of similar maturities. There
can be no assurance that the Cost of Funds Index will necessarily move in the
same direction or at the same rate as prevailing interest rates, since as longer
term deposits or borrowings mature and are renewed at market interest rates, the
Cost of Funds Index will rise or fall depending upon the differential between
the prior and the new rates on such deposits and borrowings. In addition,
dislocations in the thrift industry in recent years have caused and may continue
to cause the cost of funds of thrift institutions to change for reasons
unrelated to changes in general interest rate levels. Furthermore, any movement
in the Cost of Funds Index as compared to other indices based upon specific
interest rates may be affected by changes instituted by the FHLB of San
Francisco in the method used to calculate the Cost of Funds Index. To the extent
that the Cost of Funds Index may reflect interest changes on a more delayed
basis than other indices, in a period of rising interest rates, any increase may
produce a higher yield later than would be produced by such other indices, and
in a period of declining interest rates, the Cost of Funds Index may remain
higher than other market interest rates which may result in a higher level of
principal prepayments on mortgage loans which adjust in accordance with the Cost
of Funds Index than mortgage loans which adjust in accordance with other
indices.

LIBOR, the London interbank offered rate, is the interest rate that the most
creditworthy international banks dealing in US dollar-denominated deposits and
loans charge each other for large dollar-denominated loans. LIBOR is also
usually the base rate for large dollar-denominated loans in the international
market. LIBOR is generally quoted for loans having rate adjustments at one,
three, six or twelve month intervals.

Asset-Backed Securities. The Fund may invest in securities generally referred to
as asset-backed securities. Asset-backed securities are secured by and payable
from, or directly or indirectly represent undivided fractional interests in,
pools of consumer loans (unrelated to mortgage loans), trade receivables or
other types of loans held in a trust. Asset-backed securities may provide
periodic payments that consist of interest and/or principal payments.
Consequently, the life of an asset-backed security varies with the prepayment
and loss experience of the underlying assets. Payments of principal and interest
are typically supported by some form of credit enhancement, such as a letter of
credit, surety bond, limited guarantee or senior/subordination. The degree of
credit enhancement varies, but generally amounts to only a fraction of the
asset-backed security's par value until exhausted. If the credit enhancement is
exhausted, certificate-holders may experience losses or delays in payment if the
required payments of principal and interest are not made to the trust with
respect to the underlying loans. The value of the securities also may change
because of changes in the market's perception of creditworthiness of the
servicing agent for the loan pool, the originator of the loans or the financial
institution providing the credit enhancement. Asset-backed securities are
ultimately dependent upon payment of loans and receivables by individuals,
businesses and other borrowers, and the certificate-holder generally has no
recourse against the entity that originated the loans.

Asset-backed securities have structural characteristics similar to
mortgage-backed securities. However, the underlying assets are not first lien
mortgage loans or interests therein but include assets such as (but not limited
to) motor vehicle installment sale contracts, other installment sale contracts,
home equity loans, leases of various types of real and personal property,
receivables from revolving credit (credit card) agreements and trade
receivables. Such assets are securitized through the use of trusts or special
purpose corporations. Payments or distributions of principal and interest on
asset-backed securities may be guaranteed up to certain amounts and for a
certain time period by a letter of credit or a pool insurance policy issued by a
financial institution unaffiliated with the issuer, or other credit enhancements
may be present.

Asset-backed securities present certain additional risks that are not presented
by mortgage-backed securities. Primarily, these securities do not have the
benefit of the same type of security interest in the related collateral. Credit
card receivables are generally unsecured, and the debtors are entitled to the
protection of a number of state and federal consumer credit laws, many of which
give such debtors the right to avoid payment of certain amounts owed on the
credit cards, thereby reducing the balance due. Most issuers of automobile
receivables permit the servicer to retain possession of the underlying
obligations. If the servicer were to sell these obligations to another party,
there is a risk that the purchaser would acquire an interest superior to that of
the holders of the related automobile receivables. In addition, because of the
large number of vehicles involved in a typical issuance and technical
requirements under state laws, the trustee for the holders of the automobile
receivables may not have a proper security interest in all of the obligations
backing such receivables. Therefore, there is the possibility that recoveries on
repossessed collateral may not, in some cases, be available to support payments
on these securities.

The market for privately issued asset-backed securities is smaller and less
liquid than the market for US government mortgage-backed securities. The
asset-backed securities in which the Fund may invest are limited to those which
are readily marketable and rated investment grade by S&P or Moody's.

The yield characteristics of the asset-backed securities in which the Fund may
invest differ from those of traditional debt securities. Among the major
differences are that interest and principal payments are made more frequently on
asset-backed securities (usually monthly) and that principal may be prepaid at
any time because the underlying assets generally may be prepaid at any time. As
a result, if the Fund purchases these securities at a premium, a prepayment rate
that is faster than expected will reduce their yield, while a prepayment rate
that is slower than expected will have the opposite effect of increasing yield.
Conversely, if the Fund purchases these securities at a discount, faster than
expected prepayments will increase, while slower than expected prepayments will
reduce, the yield on these securities. Amounts available for reinvestment by the
Fund are likely to be greater during a period of declining interest rates and,
as a result, are likely to be reinvested at lower interest rates than during a
period of rising interest rates.

Mortgage-Backed Securities and Asset-Backed Securities -- Types of Credit
Support. Mortgage-backed securities and asset-backed securities are often backed
by a pool of assets representing the obligations of a number of different
parties. To lessen the effect of failure by obligors on underlying assets to
make payments, such securities may contain elements of credit support. Such
credit support falls into two categories: (1) liquidity protection and (2)
protection against losses resulting from ultimate default by an obligor on the
underlying assets. Liquidity protection refers to the provision of advances,
generally by the entity administering the pool of assets, to ensure that the
pass-through of payments due on the underlying pool occurs in a timely fashion.
Protection against losses resulting from ultimate default enhances the
likelihood of ultimate payment of the obligations on at least a portion of the
assets in the pool. Such protection may be provided through guarantees,
insurance policies or letters of credit obtained by the issuer or sponsor from
third parties; through various means of structuring the transaction; or through
a combination of such approaches. The Fund will not usually pay any additional
fees for such credit support, although the existence of credit support may
increase the price of a security.

The ratings of mortgage-backed securities and asset-backed securities for which
third-party credit enhancement provides liquidity protection or protection
against losses from default are generally dependent upon the continued
creditworthiness of the provider of the credit enhancement. The ratings of such
securities could be subject to reduction in the event of deterioration in the
creditworthiness of the credit enhancement provider even in cases where the
delinquency and loss experience on the underlying pool of assets is better than
expected.

Examples of credit support arising out of the structure of the transaction
include "senior-subordinated securities" (multiple class securities with one or
more classes subordinate to other classes as to the payment of principal thereof
and interest thereon, with the result that defaults on the underlying assets are
borne first by the holders of the subordinated class), creation of "reserve
funds" (where cash or investments, sometimes funded from a portion of the
payments on the underlying assets, are held in reserve against future losses)
and "over-collateralization" (where the scheduled payments on, or the principal
amount of, the underlying assets exceed those required to make payment of the
securities and pay any servicing or other fees). The degree of credit support
provided for each issue is generally based on historical information with
respect to the level of credit risk associated with the underlying assets.
Delinquency or loss in excess of that which is anticipated could adversely
affect the return on an investment in such a security.

Securities of Non-US Issuers

General. Subject to its investment objective and policies, the Fund may invest
in securities of foreign issuers, including US dollar-denominated and non-US
dollar denominated foreign equity and fixed income securities and in
certificates of deposit issued by foreign banks and foreign branches of US
banks. While investments in securities of foreign issuers and non-US dollar
denominated securities may offer investment opportunities not available in the
United States, such investments also involve significant risks not typically
associated with investing in domestic securities. In many foreign countries,
there is less publicly available information about foreign issuers, and there is
less government regulation and supervision of foreign stock exchanges, brokers
and listed companies. Also in many foreign countries, companies are not subject
to uniform accounting, auditing, and financial reporting standards comparable to
those applicable to domestic issuers. Security trading practices and custody
arrangements abroad may offer less protection to the Fund's investments and
there may be difficulty in enforcing legal rights outside the United States.
Settlement of transactions in some foreign markets may be delayed or may be less
frequent than in the United States which could affect the liquidity of the
Fund's portfolio. Additionally, in some foreign countries, there is the
possibility of expropriation or confiscatory taxation, limitations on the
removal of securities, property, or other Fund assets, political or social
instability or diplomatic developments which could affect investments in foreign
securities.

With respect to certain countries in which capital markets are either less
developed or not easily accessed, investments by the Fund may be made through
investment in other registered investment companies that in turn are authorized
to invest in the securities of such countries. Investment in other registered
investment companies is generally limited in amount by the 1940 Act, will
involve the indirect payment of a portion of the expenses (including advisory
fees) of such other investment companies and may result in a duplication of fees
and expenses. See "Other Investment Companies."

Investments in American, European, Global and International Depository Receipts.
The Fund may invest in non-US securities in the form of American Depositary
Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global Depositary
Receipts ("GDRs") and International Depository Receipts ("IDRs") or other
similar securities representing ownership of securities of non-US issuers held
in trust by a bank or similar financial institution. ADRs are receipts typically
issued by a US bank or trust company which evidence ownership of underlying
securities issued by a foreign corporation. EDRs and IDRs are receipts issued in
Europe typically by non-US banking and trust companies that evidence ownership
of either foreign or US securities. GDRs are receipts issued by either a US or
non-US banking institution evidencing ownership of the underlying non-US
securities. Generally, ADRs, in registered form, are designed for use in US
securities markets and EDRs, GDRs and IDRs, in bearer form, are designed for use
in European and international securities markets. An ADR, EDR, GDR or IDR may be
denominated in a currency different from the currency in which the underlying
foreign security is denominated. ADRs, EDRs, GDRs and IDRs are alternatives to
the purchase of the underlying securities in their national markets and
currencies, but are subject to the same risks as the non-US securities to which
they relate.

Foreign Corporate Debt Securities. The Fund may invest in debt securities of
foreign companies. Investing in the securities of foreign companies involves
more risks than investing in securities of US companies. Their value is subject
to economic and political developments in the countries where the companies
operate and to changes in foreign currency values. Values may also be affected
by foreign tax laws, changes in foreign economic or monetary policies, exchange
control regulations and regulations involving prohibitions on the repatriation
of foreign currencies.

In addition, the relative performance of various countries' fixed income markets
historically has reflected wide variations relating to the unique
characteristics of each country's economy. Year-to-year fluctuations in certain
markets have been significant, and negative returns have been experienced in
various markets from time to time.

Foreign Government Debt Securities. The Fund may invest in foreign government
debt securities, which include debt obligations issued or guaranteed by
national, state or provincial governments or similar political subdivisions and
quasi-governmental and supranational entities (collectively, "sovereign debt
obligations"). Sovereign debt obligations, especially those of developing
countries, may involve a high degree of risk. The issuer of such an obligation
or the governmental authorities that control the repayment of the obligation may
be unable or unwilling to repay principal and interest when due and may require
renegotiation or rescheduling of debt payments. In addition, prospects for
repayment of principal and interest may depend on political as well as economic
factors.

Quasi-governmental and supranational entities include international
organizations designated or supported by governmental entities to promote
economic reconstruction or development and international banking institutions
and related government agencies. Examples include (but are not limited to) the
International Bank for Reconstruction and Development (the "World Bank"), the
Japanese Development Bank, the Asian Development Bank and the Inter-American
Development Bank. Foreign government securities also include mortgage-related
securities issued or guaranteed by national, state or provincial governmental
instrumentalities, including quasi-governmental agencies.

Brady Bonds. The Fund may invest in so-called "Brady Bonds," which have been
issued by Argentina, Brazil, Bulgaria, Costa Rica, Dominican Republic, Ecuador,
Jordan, Mexico, Nigeria, Panama, the Philippines, Poland, Uruguay and Venezuela
and which may be issued by other countries. Brady Bonds are issued as part of a
debt restructuring in which the bonds are issued in exchange for cash and
certain of the country's outstanding commercial bank loans. Brady Bonds may be
collateralized or uncollateralized, are issued in various currencies (primarily
the US dollar) and are actively traded in the OTC secondary market.

US dollar-denominated collateralized Brady Bonds, which may be fixed rate par
bonds or floating rate discount bonds, are collateralized in full as to
principal by US Treasury zero coupon bonds that have the same maturity as the
stated bonds. Interest payments on such bonds generally are collateralized by
cash or liquid securities in an amount that, in the case of fixed rate bonds, is
equal to at least one year of rolling interest payments or, in the case of
floating rate bonds, initially is equal to at least one year's rolling interest
payments based on the applicable interest rate at the time and is adjusted at
regular intervals thereafter.

Investors should recognize that, in light of the history of commercial bank loan
defaults by Latin American public and private entities, investments in Brady
Bonds may be viewed as speculative.

Investments in Emerging Markets. The Fund may invest, to varying degrees, in one
or more countries with emerging securities markets. These countries are
generally located in Latin America, Eastern Europe, the Middle East, Africa and
Asia. Political and economic structures in many of these countries may be
undergoing significant evolution and rapid development, and these countries may
lack the social, political and economic stability characteristic of more
developed countries. Certain of these countries may have in the past failed to
recognize private property rights and, at times, may have nationalized or
expropriated the assets of private companies. As a result, these risks,
including the risk of nationalization or expropriation of assets, may be
heightened. In addition, unanticipated political or social developments may
affect the value of the Fund's investments in these countries, as well as the
availability of additional investments in these countries. The small size and
inexperience of the securities markets in certain of these countries and the
limited volume of trading in securities in these countries may make the Fund's
investments in these countries illiquid and more volatile than investments in
most Western European countries, and the Fund may be required to establish
special custodial or other arrangements before making certain investments in
some of these countries.

Securities markets of emerging countries may also have less efficient clearance
and settlement procedures than US markets, making it difficult to conduct and
complete transactions. Delays in settlement could result in temporary periods
when a portion of the Fund's assets is uninvested and no return is earned
thereon. Inability to make intended security purchases could cause the Fund to
miss attractive investment opportunities. Inability to dispose of portfolio
securities could result either in losses to the Fund due to subsequent declines
in value of the portfolio security or, if the Fund has entered into a contract
to sell the security, could result in possible liability of the Fund to the
purchaser. In addition, transaction costs, including brokerage commissions and
dealer mark-ups, in emerging countries may be higher than in the US and other
developed securities markets. See "Illiquid Securities."

As legal systems in emerging countries develop, the Fund may be adversely
affected by new or amended laws and regulations. In circumstances where adequate
laws exist, it may not be possible to obtain swift and equitable enforcement of
the law. Furthermore, with respect to investments in certain emerging countries,
archaic legal systems may have an adverse impact on the Fund. For example, while
the potential liability of a shareholder in a US corporation with respect to
acts of the corporation is generally limited to the amount of the shareholder's
investment, the notion of limited liability is less clear in certain emerging
countries. Similarly, the rights of investors in emerging country companies may
be more limited than those of shareholders of US corporations.

In addition, there may be little financial or accounting information available
with respect to issuers located in certain of these countries, and it may be
difficult as a result to assess the value or prospects of an investment in these
countries. The laws of some foreign countries may limit the Fund's ability to
invest in securities of certain issuers located in those countries.

Region and Country Investing. The Fund may focus its investments in a particular
region and/or in one or more foreign countries. Focusing the Fund's investments
in a particular region or country will subject the Fund (to a greater extent
than if its investments in such region or country were more diversified) to the
risks of adverse securities markets, exchange rates and social, political or
economic developments which may occur in that particular region or country.

For purposes of the Fund's investment objectives, a company is considered to be
located in a particular country if it (1) is organized under the laws of that
country and has a principal place of business in that country or (2) derives 50%
or more of its total revenues from business in that country.

Currency Management

General. In connection with the Fund's investments denominated in foreign
currencies, the Advisor may choose to utilize a variety of currency management
(hedging) strategies. The Advisor seeks to take advantage of different yield,
risk and return characteristics that different currencies, currency
denominations and countries can provide to US investors. In doing so, the
Advisor will consider such factors as the outlook for currency relationships;
current and anticipated interest rates; levels of inflation within various
countries; prospects for relative economic growth; and government policies
influencing currency exchange rates and business conditions. Although the
Advisor may attempt to manage currency exchange rate risks, there is no
assurance that the Advisor will do so, or do so at an appropriate time or that
the Advisor will be able to predict exchange rates accurately.

Currency Exchange Transactions. Because the Fund may buy and sell securities
denominated in currencies other than the US dollar and receives interest,
dividends and sale proceeds in currencies other than the US dollar, the Fund
from time to time may enter into currency exchange transactions to convert to
and from different currencies and to convert foreign currencies to and from the
US dollar. The Fund either enters into these transactions on a spot (i.e., cash)
basis at the spot rate prevailing in the currency exchange market or uses
forward currency exchange contracts (discussed below) to purchase or sell
currencies. Neither spot transactions nor forward currency exchange contracts
eliminate fluctuations in the prices of the Fund's securities or in foreign
exchange rates, or prevent loss if the prices of these securities should
decline.

Currency Hedging Transactions. The Fund's currency hedging strategies may
include hedging involving either specific transactions or portfolio positions.
Transaction hedging is the purchase or sale of forward currency with respect to
specific receivables or payables of the Fund generally accruing in connection
with the purchase or sale of its portfolio securities. Position hedging is the
sale of forward currency with respect to portfolio security positions.

Proper currency hedging is important because a decline in the US dollar value of
a foreign currency in which the Fund's securities are denominated will reduce
the US dollar value of the securities, even if their value in the foreign
currency remains constant. The use of currency hedges does not eliminate
fluctuations in the underlying prices of the securities, but it does establish a
rate of exchange that can be achieved in the future. For example, in order to
protect against diminutions in the US dollar value of non-dollar denominated
securities it holds, the Fund may purchase foreign currency put options. If the
value of the foreign currency does decline, the Fund will have the right to sell
the currency for a fixed amount in dollars and will thereby offset, in whole or
in part, the adverse effect on the US dollar value of its securities that
otherwise would have resulted. Conversely, if a rise in the US dollar value of a
currency in which securities to be acquired are denominated is projected,
thereby potentially increasing the cost of the securities, the Fund may purchase
call options on the particular currency. The purchase of these options could
offset, at least partially, the effects of the adverse movements in exchange
rates. The benefit to the Fund derived from purchases of currency options, like
the benefit derived from other types of options, will be reduced by premiums and
other transaction costs.

Because transactions in currency exchange are generally conducted on a principal
basis, no fees or commissions are generally involved. Currency hedging involves
some of the same risks and considerations as other transactions with similar
instruments. Although currency hedges limit the risk of loss due to a decline in
the value of a hedged currency, at the same time, they also limit any potential
gain that might result should the value of the currency increase. If a
devaluation is generally anticipated, the Fund may not be able to contract to
sell a currency at a price above the devaluation level it anticipates.

Securities held by the Fund are generally denominated in the currency of the
foreign market in which the investment is made. However, securities held by the
Fund may be denominated in the currency of a country other than the country in
which the security's issuer is located.

Cross Hedging. At the discretion of the Advisor, the Fund may employ the
currency hedging strategy known as "cross-hedging" by using forward currency
contracts, currency options or a combination of both. When engaging in
cross-hedging, the Fund seeks to protect against a decline in the value of a
foreign currency in which certain of its portfolio securities are denominated by
selling that currency forward into a different foreign currency for the purpose
of diversifying the Fund's total currency exposure or gaining exposure to a
foreign currency that is expected to appreciate.

Forward Currency Exchange Contracts. A forward currency exchange contract is an
obligation by the Fund to purchase or sell a specific currency at a future date,
which may be any fixed number of days from the date of the contract. Forward
currency exchange contracts establish an exchange rate at a future date. These
contracts are transferable in the interbank market conducted directly between
currency traders (usually large commercial banks and brokerages) and their
customers. A forward currency exchange contract may not have a deposit
requirement and may be traded at a net price without commission. The Fund
maintains a segregated account of cash or liquid securities in an amount at
least equal to its obligations under each forward currency exchange contract.

The Fund may enter into foreign currency hedging transactions in an attempt to
protect against changes in currency exchange rates between the trade and
settlement dates of specific securities transactions or changes in currency
exchange rates that would adversely affect a portfolio position or an
anticipated investment position. Since consideration of the prospect for
currency parities will be incorporated into the Advisor's long-term investment
decisions, the Fund will not routinely enter into currency hedging transactions
with respect to security transactions; however, the Advisor believes that it is
important to have the flexibility to enter into currency hedging transactions
when it determines that the transactions would be in the Fund's best interest.
Although these transactions tend to minimize the risk of loss due to a decline
in the value of the hedged currency, at the same time they tend to limit any
potential gain that might be realized should the value of the hedged currency
increase. The precise matching of the forward contract amounts and the value of
the securities involved will not generally be possible because the future value
of such securities in foreign currencies will change as a consequence of market
movements in the value of such securities between the date the forward contract
is entered into and the date it matures. The projection of currency market
movements is extremely difficult, and the successful execution of a hedging
strategy is highly uncertain.

While these contracts are not presently regulated by the CFTC, the CFTC may in
the future assert authority to regulate forward contracts. In such event the
Fund's ability to utilize forward contracts may be restricted. Forward contracts
may reduce the potential gain from a positive change in the relationship between
the US dollar and foreign currencies. Unanticipated changes in currency prices
may result in poorer overall performance for the Fund than if it had not entered
into such contracts. The use of currency forward contracts may not eliminate
fluctuations in the underlying US dollar equivalent value of the prices of or
rates of return on the Fund's foreign currency denominated portfolio securities
and the use of such techniques will subject the Fund to certain risks.

The matching of the increase in value of a forward contract and the decline in
the US dollar equivalent value of the foreign currency denominated asset that is
the subject of the hedge generally will not be precise. In addition, the Fund
may not always be able to enter into currency forward contracts at attractive
prices, and this will limit the Fund's ability to use such contracts to hedge or
cross-hedge its assets. Also, with regard to the Fund's use of cross-hedges,
there can be no assurance that historical correlations between the movement of
certain foreign currencies relative to the US dollar will continue. Thus, at any
time poor correlation may exist between movements in the exchange rates of the
foreign currencies underlying the Fund's cross-hedges and the movements in the
exchange rates of the foreign currencies in which the Fund's assets that are the
subject of such cross-hedges are denominated.

The Fund will segregate cash or liquid securities in an amount equal to the
value of the Fund's total assets committed to the consummation of forward
currency contracts requiring the Fund to purchase foreign currencies or forward
contracts entered into for non-hedging purposes. If the value of the segregated
securities declines, additional cash or liquid securities will be segregated on
a daily basis so that the value of the assets will equal the amount of the
Fund's commitments with respect to such contracts. The segregated assets will be
marked-to-market on a daily basis.

The Fund may sell US dollars and buy a foreign currency forward in order to gain
exposure to a currency which is expected to appreciate against the US dollar.
This speculative strategy allows the Fund to benefit from currency appreciation
potential without requiring it to purchase a local fixed income instrument, for
which prospects may be relatively unattractive. It is the Advisor's intention
that the Fund's net US dollar currency exposure generally will not fall below
zero (i.e., that net short positions in the US dollar generally will not be
taken).

The Fund may also utilize forward foreign currency contracts to establish a
synthetic investment position designed to change the currency characteristics of
a particular security without the need to sell such security. Synthetic
investment positions will typically involve the purchase of US
dollar-denominated securities together with a forward contract to purchase the
currency to which the Fund seeks exposure and to sell US dollars. This may be
done because the range of highly liquid short-term instruments available in the
US may provide greater liquidity to the Fund than actual purchases of foreign
currency-denominated securities in addition to providing superior returns in
some cases. Depending on (a) the Fund's liquidity needs, (b) the relative yields
of securities denominated in different currencies and (c) spot and forward
currency rates, a significant portion of the Fund's assets may be invested in
synthetic investment positions, subject to compliance with the tax requirements
for qualification as a regulated investment company.

There is a risk in adopting a synthetic investment position. It is impossible to
forecast with absolute precision what the market value of a particular security
will be at any given time. If the value of the US dollar-denominated security is
not exactly matched with the Fund's obligation under a forward currency contract
on the date of maturity, the Fund may be exposed to some risk of loss from
fluctuations in the value of the US dollar. Although the Advisor will attempt to
hold such mismatching to a minimum, there can be no assurance that the Advisor
will be able to do so.

Options on Foreign Currencies. The Fund may write covered put and call options
and purchase put call options on foreign currencies for the purpose of
protecting against declines in the dollar value of portfolio securities and
against increases in the dollar cost of securities to be acquired. The Fund may
also use currency options to achieve a desired currency weighting in a
cost-effective manner. The Fund may use options on currencies to cross-hedge,
which involves writing or purchasing options on one currency to hedge against
changes in exchange rates for a different, but related currency. As with other
types of options, however, the writing of an option on foreign currency will
constitute only a partial hedge up to the amount of the premium received, and
the Fund could be required to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The purchase of an
option on foreign currency may be used to hedge against fluctuations in exchange
rates although, in the event of exchange rate movements adverse to the Fund's
position, it may forfeit the entire amount of the premium plus related
transaction costs. In addition the Fund may purchase call options on currency
when the Advisor anticipates that the currency will appreciate in value.

The Fund may also write options on foreign currencies for the same types of
hedging or currency management purposes. For example, where the Fund anticipates
a decline in the dollar value of foreign currency denominated securities due to
adverse fluctuations in exchange rates it could, instead of purchasing a put
option, write a call option on the relevant currency. If the expected decline
occurs, the options will most likely not be exercised, and the diminution in
value of portfolio securities will be offset by the amount of the premium
received.

Similarly, instead of purchasing a call option to hedge against an anticipated
increase in the dollar cost of securities to be acquired, the Fund could write a
put option on the relevant currency which, if rates move in the manner
projected, will expire unexercised and allow the Fund to hedge such increased
cost up to the amount of the premium. As in the case of other types of options,
however, the writing of a foreign currency option will constitute only a partial
hedge up to the amount of the premium, and only if rates move in the expected
direction. If this does not occur, the option may be exercised and the Fund
would be required to purchase or sell the underlying currency at a loss which
may not be offset by the amount of the premium. Through the writing of options
on foreign currencies, the Fund also may be required to forego all or a portion
of the benefits which might otherwise have been obtained from favorable
movements in exchange rates.

The Fund may write covered call options on foreign currencies. A call option
written on a foreign currency by the Fund is "covered" if the Fund owns the
underlying foreign currency covered by the call or has an absolute and immediate
right to acquire that foreign currency without additional cash consideration (or
for additional cash consideration identified on the Fund's books) upon
conversion or exchange of other foreign currency held in its portfolio. A call
option is also covered if the Fund has a call on the same foreign currency and
in the same principal amount as the call written where the exercise price of the
call held (a) is equal to or less than the exercise price of the call written or
(b) is greater than the exercise price of the call written if the difference is
segregated by the Fund in cash or liquid securities.

The Fund also may write call options on foreign currencies that are not covered
for cross-hedging purposes. A call option on a foreign currency is for
cross-hedging purposes if it is not covered, but is designed to provide a hedge
against a decline in the US dollar value of a security which the Fund owns or
has the right to acquire and which is denominated in the currency underlying the
option due to an adverse change in the exchange rate. In such circumstances, the
Fund collateralizes the option by segregating cash or liquid securities in an
amount not less than the value of the underlying foreign currency in US dollars
marked to market daily.

There is no assurance that a liquid secondary market will exist for any
particular option, or at any particular time. If the Fund is unable to effect a
closing purchase transaction with respect to covered options it has written, the
Fund will not be able to sell the underlying currency or dispose of assets held
in a segregated account until the options expire or are exercised. Similarly, if
the Fund is unable to effect a closing sale transaction with respect to options
it has purchased, it would have to exercise the options in order to realize any
profit and will incur transaction costs upon the purchase or sale of underlying
currency. The Fund pays brokerage commissions or spreads in connection with its
options transactions.

Certain options on foreign currencies are traded over-the-counter and involve
liquidity and credit risks which may not be present in the case of
exchange-traded currency options. In some circumstances, the Fund's ability to
terminate OTC options may be more limited than with exchange-traded options. It
is also possible that broker-dealers participating in OTC options transactions
will not fulfill their obligations. See "Illiquid Securities."

Additional Limitations and Risk Factors

In addition to the risks discussed above, the Fund's investments may be subject
to the following limitations and risk factors:

Additional Risks Related to Transactions in Options, Futures Contracts, Options
on Futures Contracts, Swaps and Forward Foreign Currency Exchange Contracts. The
Fund's active management techniques involve (1) liquidity risk (contractual
positions cannot be easily closed out in the event of market changes or
generally in the absence of a liquid secondary market), (2) correlation risk
(changes in the value of hedging positions may not match the securities market
and foreign currency fluctuations intended to be hedged), and (3) market risk
(an incorrect prediction of securities prices or exchange rates by the Advisor
may cause the Fund to perform worse than if such positions had not been taken).
In addition, the ability to terminate OTC derivatives is more limited than with
exchange traded derivatives and may involve the risk that the counterparty to
the option will not fulfill its obligations.

Asset Coverage. The Fund will comply with the segregation or coverage guidelines
established by the SEC and other applicable regulatory bodies with respect to
certain transactions, including (but not limited to) options written on
securities and indexes; currency, interest rate and security index futures
contracts and options on these futures contracts; forward currency contracts;
and swaps, caps, floors and collars. These guidelines may, in certain instances,
require segregation by the Fund of cash or liquid securities to the extent the
Fund's obligations with respect to these strategies are not otherwise covered
through ownership of the underlying security or financial instrument, by other
portfolio positions or by other means consistent with applicable regulatory
policies. Unless the transaction is covered, the segregated assets must at all
times equal or exceed the Fund's obligations with respect to these strategies.
Segregated assets cannot be sold or transferred unless equivalent assets are
substituted in their place or it is no longer necessary to segregate them. As a
result, there is a possibility that segregation of a large percentage of the
Fund's assets could impede portfolio management or the Fund's ability to meet
redemption requests or other current obligations.

For example, a call option written on securities may require the Fund to hold
the securities subject to the call (or securities convertible into the
securities without additional consideration) or to segregate assets (as
described above) sufficient to purchase and deliver the securities if the call
is exercised. A call option written on an index may require the Fund to own
portfolio securities that correlate with the index or to segregate assets (as
described above) equal to the excess of the index value over the exercise price
on a current basis. A put option written by the Fund may require the Fund to
segregate assets (as described above) equal to the exercise price. 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. If the Fund holds
a futures contract, the Fund could purchase a put option on the same futures
contract with a strike price as high or higher than the price of the contract
held. The Fund may enter into fully or partially offsetting transactions so that
its net position, coupled with any segregated assets (equal to any remaining
obligation), equals its net obligation. Asset coverage may be achieved by other
means when consistent with applicable regulatory policies.

The use of derivatives is a highly specialized activity which involves
investment techniques and risks that are different from those associated with
ordinary portfolio transactions. Gains and losses on these derivatives depend on
the Advisor's ability to predict the direction of stock prices, interest rates,
currency movements and other economic factors. The loss that may be incurred by
the Fund in entering into futures contracts, written options, forward currency
contracts and certain swaps is potentially unlimited. There is no assurance that
higher than anticipated trading activity or other unforeseen events might not,
at times, render certain facilities of an options clearing entity or other
entity performing the regulatory and liquidity functions of an options clearing
entity inadequate, and thereby result in the institution by an exchange of
special procedures which may interfere with the timely execution of customers'
orders. Most futures exchanges limit the amount of fluctuation permitted in a
futures contract's prices during a single trading day. Once the limit has been
reached no further trades may be made that day at a price beyond the limit. The
price limit will not limit potential losses, and may in fact prevent the prompt
liquidation of futures positions, ultimately resulting in further losses.
Options and futures traded on foreign exchanges generally are not regulated by
US authorities, and may offer less liquidity and less protection to the Fund in
the event of default by the other party to the contract.

Except as set forth above under "Derivative Securities: Futures Contracts and
Options on Futures Contracts," there is no limit on the percentage of the assets
of the Fund that may be at risk with respect to futures contracts and related
options or forward currency contracts. The Fund's transactions in options,
forward currency contracts, futures contracts, options on futures contracts and
swaps may be limited by the requirements for qualification of the Fund as a
regulated investment company for tax purposes. See "Taxes." There can be no
assurance that the use of these portfolio strategies will be successful.

Non-US Securities. The value of the Fund's investments may be adversely affected
by changes in political or social conditions, diplomatic relations, confiscatory
taxation, expropriation, nationalization, limitation on the removal of funds or
assets, or imposition of (or change in) exchange control or tax regulations in
those foreign countries. In addition, changes in government administrations or
economic or monetary policies in the United States or abroad could result in
appreciation or depreciation of portfolio securities and could favorably or
unfavorably affect the Fund's operations. Furthermore, the economies of
individual foreign nations may differ from the US economy, whether favorably or
unfavorably, in areas such as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payments position; it may also be more difficult to obtain and enforce a
judgment against a foreign issuer. In general, less information is publicly
available with respect to non-US issuers than is available with respect to US
companies. Most foreign companies are also not subject to the uniform accounting
and financial reporting requirements applicable to issuers in the United States.
Any foreign investments made by the Fund must be made in compliance with US and
foreign currency restrictions and tax laws restricting the amounts and types of
foreign investments.

Because non-US securities generally are denominated and pay dividends or
interest in foreign currencies, and the Fund may hold various foreign currencies
from time to time, the value of the net assets of the Fund as measured in US
dollars will be affected favorably or unfavorably by changes in exchange rates.
Generally, the Fund's currency exchange transactions will be conducted on a spot
(i.e., cash) basis at the spot rate prevailing in the currency exchange market.
The cost of the Fund's currency exchange transactions will generally be the
difference between the bid and offer spot rate of the currency being purchased
or sold. In order to protect against uncertainty in the level of future foreign
currency exchange rates, the Fund is authorized to enter into certain foreign
currency exchange transactions.

In addition, while the volume of transactions effected on foreign securities
exchanges has increased in recent years, in most cases it remains appreciably
below that of NYSE. Accordingly, the Fund's foreign investments may be less
liquid and their prices may be more volatile than comparable investments in
securities of US issuers. Moreover, the settlement periods for non-US
securities, which are often longer than those for securities of US issuers, may
affect portfolio liquidity. In buying and selling securities on foreign
exchanges, the Fund normally pays fixed commissions that are generally higher
than the negotiated commissions charged in the United States. In addition, there
is generally less government supervision and regulation of securities exchanges,
brokers and issuers in foreign countries than in the United States.

Emerging Markets. Investment in securities of issuers based in emerging markets
entails all of the risks of investing in securities of non-US issuers outlined
above but to a heightened degree. These heightened risks include: (1) greater
risks of expropriation, confiscatory taxation, nationalization, and less social,
political and economic stability; (2) the smaller size of the market for such
securities and a low or nonexistent volume of trading, resulting in lack of
liquidity and in price volatility; and (3) certain national policies which may
restrict the Fund's investment opportunities including restrictions on investing
in issuers or industries deemed sensitive to relevant national interests.

In addition to brokerage commissions, custodial services and other costs
relating to investment in emerging markets are generally more expensive than in
the United States. Such markets have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the Fund to make intended securities purchases due to settlement
problems could cause the Fund to miss attractive investment opportunities.
Inability to dispose of a security due to settlement problems could result
either in losses to the Fund due to subsequent declines in the value of the
security or, if the Fund has entered into a contract to sell the security, could
result in possible liability to the purchaser. See "Illiquid Securities."

Special Considerations Concerning the Pacific Basin. Many Asian countries may be
subject to a greater degree of social, political and economic instability than
is the case in the United States and European countries. Such instability may
result from (1) authoritarian governments or military involvement in political
and economic decision-making; (2) popular unrest associated with demands for
improved political, economic and social conditions; (3) internal insurgencies;
(4) hostile relations with neighboring countries; and (5) ethnic, religious and
racial disaffection.

The economies of most of the Asian countries are heavily dependent upon
international trade and are accordingly affected by protective trade barriers
and the economic conditions of their trading partners, principally, the United
States, Japan, China and the European Community. The enactment by the United
States or other principal trading partners of protectionist trade legislation,
reduction of foreign investment in the local economies and general declines in
the international securities markets could have a significant adverse effect
upon the securities markets of the Asian countries.

The securities markets in Asia are substantially smaller, less liquid and more
volatile than the major securities markets in the United States. A high
proportion of the shares of many issuers may be held by a limited number of
persons and financial institutions, which may limit the number of shares
available for investment by the Fund. Similarly, volume and liquidity in the
bond markets in Asia are less than in the United States and, at times, price
volatility can be greater than in the United States. A limited number of issuers
in Asian securities markets may represent a disproportionately large percentage
of market capitalization and trading value. The limited liquidity of securities
markets in Asia may also affect the Fund's ability to acquire or dispose of
securities at the price and time it wishes to do so. The Fund's inability to
dispose fully and promptly of positions in declining markets will cause the
Fund's net asset value to decline as the value of the unsold positions is marked
to lower prices. In addition, the Asian securities markets are susceptible to
being influenced by large investors trading significant blocks of securities.
Also, many stock markets are undergoing a period of growth and change which may
result in trading volatility and difficulties in the settlement and recording of
transactions, and in interpreting and applying the relevant law and regulations.
See "Illiquid Securities."

Furthermore, the Fund may invest in securities denominated in currencies of
Asian countries. Accordingly, changes in the value of these currencies against
the US dollar will result in corresponding changes in the US dollar value of the
Fund's assets denominated in those currencies.

Rating Services. The ratings of Moody's and S&P represent their opinions as to
the quality of the securities that they undertake to rate. It should be
emphasized, however, that ratings are relative and subjective and are not
absolute standards of quality. Although these ratings are an initial criterion
for selection of Fund investments, the Advisor also makes its own evaluation of
these securities, subject to review by the Board of Trustees. After purchase by
the Fund, an obligation may cease to be rated or its rating may be reduced below
the minimum required for purchase by the Fund. Neither event would require the
Fund to eliminate the obligation from its portfolio, but the Advisor will
consider such an event in its determination of whether the Fund should continue
to hold the obligation. A description of the ratings used herein and in the
Prospectus is set forth in the Appendix to this SAI.

Other Investments and Investment Practices

Illiquid Securities. Historically, illiquid securities have included securities
subject to contractual or legal restrictions on resale because they have not
been registered under the Securities Act of 1933, as amended (the "1933 Act"),
securities which are otherwise not readily marketable and repurchase agreements
having a maturity of longer than seven days. Securities which have not been
registered under the 1933 Act are referred to as private placements or
restricted securities and are purchased directly from the issuer or in the
secondary market. Investments in non-publicly traded securities (including Rule
144A Securities) may involve a high degree of business and financial risk and
may result in substantial losses. These securities may be less liquid than
publicly traded securities, and it may take longer to liquidate these positions
than would be the case for publicly traded securities. Companies whose
securities are not publicly traded may not be subject to the disclosure and
other investor protection requirements applicable to companies whose securities
are publicly traded. Limitations on resale may have an adverse effect on the
marketability of portfolio securities and a mutual fund might be unable to
dispose of restricted or other illiquid securities promptly or at reasonable
prices and might thereby experience difficulty satisfying redemptions within
seven days. An investment in illiquid securities is subject to the risk that,
should the Fund desire to sell any of these securities when a ready buyer is not
available at a price that is deemed to be representative of their value, the
value of the Fund's net assets could be adversely affected.

Mutual funds do not typically hold a significant amount of these restricted or
other illiquid securities because of the potential for delays on resale and
uncertainty in valuation. A mutual fund might also have to register such
restricted securities in order to dispose of them resulting in additional
expense and delay. Adverse market conditions could impede such a public offering
of securities.

A large institutional market has developed for certain securities that are not
registered under the 1933 Act, including repurchase agreements, commercial
paper, non-US securities and corporate bonds and notes. Institutional investors
depend on an efficient institutional market in which the unregistered security
can be readily resold or on an issuer's ability to honor a demand for repayment.
The fact that there are contractual or legal restrictions on resale of such
investments to the general public or to certain institutions may not be
indicative of their liquidity.

The SEC has adopted Rule 144A, which allows a broader institutional trading
market for securities otherwise subject to restriction on their resale to the
general public. Rule 144A establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. The Advisor anticipates that the market for certain
restricted securities such as institutional commercial paper will expand further
as a result of this regulation and the development of automated systems for the
trading, clearance and settlement of unregistered securities of domestic and
non-US issuers, such as the PORTAL System sponsored by the National Association
of Securities Dealers, Inc.

An investment in Rule 144A Securities will be considered illiquid and therefore
subject to the Fund's limit on the purchase of illiquid securities unless the
Advisor determines that the Rule 144A Securities are liquid. In reaching
liquidity decisions, the Advisor may consider, inter alia, the following
factors: (i) the unregistered nature of the security; (ii) the frequency of
trades and quotes for the security; (iii) the number of dealers wishing to
purchase or sell the security and the number of other potential purchasers; (iv)
dealer undertakings to make a market in the security and (v) the nature of the
security and the nature of the marketplace trades (e.g., the time needed to
dispose of the security, the method of soliciting offers and the mechanics of
the transfer).

Investing in Rule 144A Securities could have the effect of increasing the level
of illiquidity in the Fund to the extent that qualified institutional buyers are
unavailable or uninterested in purchasing such securities from the Fund. The
Board has adopted guidelines and delegated to the Advisor the daily function of
determining and monitoring the liquidity of Rule 144A Securities, although the
Board will retain ultimate responsibility for any liquidity determinations.

The Fund will not invest more than 15% of its net assets in illiquid securities,
which include repurchase agreements and time deposits maturing in more than
seven days and securities that are not readily marketable.

Impact of Large Redemptions and Purchases of Fund shares. From time to time,
shareholders of the Fund (which may include affiliated and/or non-affiliated
registered investment companies that invest in the Fund) may make relatively
large redemptions or purchases of Fund shares. These transactions may cause the
Fund to have to sell securities or invest additional cash, as the case may be.
While it is impossible to predict the overall impact of these transactions over
time, there could be adverse effects on the Fund's performance to the extent
that the Fund may be required to sell securities or invest cash at times when it
would not otherwise do so. These transactions could also accelerate the
realization of taxable income if sales of securities resulted in capital gains
or other income and could also increase transaction costs, which may impact the
Fund's expense ratio.

TBA Purchase Commitments. The Fund may enter into TBA purchase commitments to
purchase securities for a fixed price at a future date, typically not exceeding
45 days. TBA purchase commitments may be considered securities in themselves,
and involve a risk of loss if the value of the security to be purchased declines
prior to settlement date, which risk is in addition to the risk of decline in
the value of the Fund's other assets. Unsettled TBA purchase commitments are
valued at the current market value of the underlying securities.

When-Issued and Delayed Delivery Securities. The Fund may purchase securities on
a when-issued or delayed delivery basis. Delivery of and payment for these
securities can take place a month or more after the date of the purchase
commitment. The payment obligation and the interest rate that will be received
on when-issued and delayed-delivery securities are fixed at the time the buyer
enters into the commitment. Due to fluctuations in the value of securities
purchased or sold on a when-issued or delayed-delivery basis, the yields
obtained on such securities may be higher or lower than the yields available in
the market on the dates when the investments are actually delivered to the
buyers. When-issued securities may include securities purchased on a "when, as
and if issued" basis, under which the issuance of the security depends on the
occurrence of a subsequent event, such as approval of a merger, corporate
reorganization or debt restructuring. The value of such securities is subject to
market fluctuation during this period and no interest or income, as applicable,
accrues to the Fund until settlement takes place.

At the time the Fund makes the commitment to purchase securities on a
when-issued or delayed delivery basis, it will record the transaction, reflect
the value each day of such securities in determining its net asset value and, if
applicable, calculate the maturity for the purposes of average maturity from
that date. At the time of settlement a when-issued security may be valued at
less than the purchase price. To facilitate such acquisitions, the Fund
identifies on its books cash or liquid assets in an amount at least equal to
such commitments. It may be expected that the Fund's net assets will fluctuate
to a greater degree when it sets aside portfolio securities to cover such
purchase commitments than when it sets aside cash. On delivery dates for such
transactions, the Fund will meet its obligations from maturities or sales of the
segregated securities and/or from cash flow. If the Fund chooses to dispose of
the right to acquire a when-issued security prior to its acquisition, it could,
as with the disposition of any other portfolio obligation, incur a gain or loss
due to market fluctuation. When the Fund engages in when-issued or
delayed-delivery transactions, it relies on the other party to consummate the
trade. Failure of the seller to do so may result in the Fund's incurring a loss
or missing an opportunity to obtain a price considered to be advantageous.

Repurchase Agreements. The Fund may engage in repurchase agreement transactions
only with US or foreign banks having total assets of at least US$100 million (or
its foreign currency equivalent). Under the terms of a typical repurchase
agreement, the Fund would acquire any underlying security for a relatively short
period (usually not more than one week), subject to an obligation of the seller
to repurchase, and the Fund to resell, the obligation at an agreed price and
time, thereby determining the yield during the Fund's holding period. This
arrangement results in a fixed rate of return that is not subject to market
fluctuations during the Fund's holding period. The value of the underlying
securities will be at least equal at all times to the total amount of the
repurchase obligations, including interest. The Fund bears a risk of loss in the
event of default by or bankruptcy of the other party to a repurchase agreement.
The Fund may be delayed in, or prevented from, exercising its rights to dispose
of the collateralized securities. To the extent that, in the meantime, the value
of the securities repurchased had decreased or the value of the securities had
increased, the Fund could experience a loss. The Advisor reviews the
creditworthiness of those banks and dealers with which the Fund enters into
repurchase agreements and monitors on an ongoing basis the value of the
securities subject to repurchase agreements to ensure that it is maintained at
the required level. A repurchase agreement is considered to be a loan under the
1940 Act.

Reverse Repurchase Agreements. The Fund may borrow funds by, among other things,
agreeing to sell portfolio securities to financial institutions that meet the
standards described under "Repurchase Agreements" and to repurchase them at a
mutually agreed date and price (a "reverse repurchase agreement"). The Fund may
enter into reverse repurchase agreements with banks and domestic broker-dealers.
At the time the Fund enters into a reverse repurchase agreement it will
segregate cash or liquid securities having a value equal to the repurchase
price, including accrued interest. The segregated assets will be
marked-to-market daily and additional assets will be segregated on any day in
which the assets fall below the repurchase price (plus accrued interest). The
Fund's liquidity and ability to manage its assets might be affected when it sets
aside cash or portfolio securities to cover such commitments. Reverse repurchase
agreements involve the risk that the market value of the securities sold by the
Fund may decline below the repurchase price of those securities. In the event
the buyer of securities under a reverse repurchase agreement files for
bankruptcy or becomes insolvent, such buyer or its trustee or receiver may
receive an extension of time to determine whether to enforce the Fund's
obligation to repurchase the securities, and the Fund's use of the proceeds of
the reverse repurchase agreement may effectively be restricted pending such
decision. Reverse repurchase agreements are considered to be borrowings by the
Fund.

Mortgage Dollar Rolls. The Fund may enter into mortgage "dollar rolls" in which
the Fund sells securities for delivery in the current month and simultaneously
contracts to repurchase substantially similar, but not identical (same type,
coupon and maturity), securities on a specified future date. During the roll
period, the Fund forgoes principal and interest paid on the securities. The Fund
is compensated by the difference between the current sales price and the lower
forward price for the future purchase (often referred to as the "drop") or fee
income and by the interest earned on the cash proceeds of the initial sale. A
"covered roll" is a specific type of dollar roll for which there is an
offsetting cash position or a cash equivalent security position which matures on
or before the forward settlement date of the dollar roll transaction. The Fund
may enter into both covered and uncovered rolls. At the time the Fund enters
into a dollar roll transaction, it will segregate cash or liquid securities
having a value not less than the repurchase price (including accrued interest)
and will subsequently monitor the segregated assets to ensure that their value
is maintained.


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, among other things, 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. The Fund will bear any losses incurred from the investment of the
collateral it receives. 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.

The Fund may pay negotiated fees in connection with loaned securities, pursuant
to written contracts. 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).



Borrowing. The Fund may borrow for temporary or emergency purposes. This
borrowing may be unsecured. Among the forms of borrowing in which the Fund may
engage is entering into reverse repurchase agreements. The 1940 Act requires the
Fund to maintain continuous asset coverage (that is, total assets including
borrowings, less liabilities exclusive of borrowings) of 300% of the amount
borrowed. If the asset coverage should decline below 300% as a result of market
fluctuations or for other reasons, the Fund is required to sell some of its
portfolio securities within three days to reduce its borrowings and restore the
300% asset coverage, even though it may be disadvantageous from an investment
standpoint to sell securities at that time. Borrowing may exaggerate the effect
on net asset value of any increase or decrease in the market value of the
portfolio. Money borrowed will be subject to interest costs which may or may not
be recovered by appreciation of the securities purchased. The Fund also may be
required to maintain minimum average balances in connection with such borrowing
or to pay a commitment or other fee to maintain a line of credit; either of
these requirements would increase the cost of borrowing over the stated interest
rate. See "Investment Restrictions."

Short Sales. The Fund may engage in short sales with respect to securities that
it owns or has the right to obtain (for example, through conversion of a
convertible bond). These transactions, known as short sales "against the box,"
allow the Fund to hedge against price fluctuations by locking in a sale price
for securities it does not wish to sell immediately. In a short sale, the Fund
sells a borrowed security and has a corresponding obligation to the lender to
return the identical security. The seller does not immediately deliver the
securities sold and is said to have a short position in those securities until
delivery occurs. If the Fund engages in a short sale, the collateral for the
short position will be segregated.

The Fund does not intend to engage in short sales against the box for investment
purposes. The Fund may, however, make a short sale as a hedge, when it believes
that the price of a security may decline, causing a decline in the value of a
security owned by the Fund (or a security convertible or exchangeable for such
security). In such case, any future losses in the Fund's long position should be
offset by a gain in the short position and, conversely, any gain in the long
position should be reduced by a loss in the short position. The extent to which
such gains or losses are reduced will depend upon the amount of the security
sold short relative to the amount the Fund owns. There will be certain
additional transaction costs associated with short sales against the box, but
the Fund will endeavor to offset these costs with the income from the investment
of the cash proceeds of short sales.

Other Investment Companies. The Fund may invest in the aggregate no more than
10% of its total assets, calculated at the time of purchase, in the securities
of other US-registered investment companies. In addition, the Fund may not
invest more than 5% of its total assets in the securities of any one such
investment company or acquire more than 3% of the voting securities of any other
such investment company. The Fund will indirectly bear its proportionate share
of any management or other fees paid by investment companies in which it
invests, in addition to its own fees.

Temporary Defensive Investments. For temporary defensive purposes during periods
when the Advisor determines that conditions warrant, the Fund may invest up to
100% of its assets in cash and investment grade money market instruments,
including (but not limited to) securities issued or guaranteed by the US
government, its agencies or instrumentalities; certificates of deposit, time
deposits, and bankers' acceptances issued by banks or savings and loans
associations having net assets of at least $100 million as of the end of their
most recent fiscal year; commercial paper rated at the time of purchase at least
A-2 by S&P or P-2 by Moody's, or unrated commercial paper determined by the
Advisor to be of comparable quality; repurchase agreements involving any of the
foregoing; and, to the extent permitted by applicable law, shares of other
investment companies investing solely in money market instruments.

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 or 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 and
Cash Management QP Trust, or entities for the which the Advisor may act as
investment advisor now or in the future that operate as cash management
investment vehicles but 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 a fund in shares of the Central Funds will comply with Rule
2a-7 under the 1940 Act and will be in accordance with a fund's investment
policies and restrictions.

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.

Investment Policies

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.

<TABLE>
<CAPTION>
------------------------------------------------------------------------- ----------------------------------------------


                          INVESTMENT PRACTICE                                 DWS International Select Equity Fund
------------------------------------------------------------------------------------------------------------------------
KEY TO TABLE:
+   Permitted without stated limit
o   Permitted without stated limited, but not expected to be used to a significant
extent
X   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
------------------------------------------------------------------------- ----------------------------------------------
<S>                                                                                            <C>
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 Bankers' Acceptances                                               20%
------------------------------------------------------------------------- ----------------------------------------------
Commercial Paper                                                                               20%
------------------------------------------------------------------------- ----------------------------------------------
Variable Rate Master Demand Notes                                                               o
------------------------------------------------------------------------- ----------------------------------------------
U.S. 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
------------------------------------------------------------------------- ----------------------------------------------
Other Debt Obligations                                                                          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
------------------------------------------------------------------------- ----------------------------------------------
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
------------------------------------------------------------------------- ----------------------------------------------
Privately 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-U.S. 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                                                                35%
------------------------------------------------------------------------- ----------------------------------------------
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%
------------------------------------------------------------------------- ----------------------------------------------
TBA Purchase Commitments                                                                        o
------------------------------------------------------------------------- ----------------------------------------------
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%
------------------------------------------------------------------------- ----------------------------------------------
</TABLE>


Portfolio Holdings

In addition to the public disclosure of Fund portfolio holdings through required
Securities and Exchange Commission ("SEC") quarterly filings, the Fund may make
its portfolio holdings information publicly available on the DWS Funds' Web site
as described in the Fund's prospectus. The Fund does not disseminate non-public
information about portfolio holdings except in accordance with policies and
procedures adopted by the Fund.


The Fund's procedures permit non-public portfolio holdings information to be
shared with Deutsche Asset Management and its affiliates (collectively "DeAM"),
subadvisors, if any, custodians, independent registered public accounting firms,
attorneys, officers and 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 certain third parties, such as
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 must
make a good faith determination in light of the facts then known that the Fund
has a legitimate business purpose for providing the information, that the
disclosure is in the best interest of the Fund, and that the recipient assents
or otherwise has a duty to keep the information confidential and to not trade
based on the information received while the information remains non-public. No
compensation is received by the Fund or DeAM for disclosing non-public holdings
information. Periodic reports regarding these procedures will be provided to the
Fund's Trustees.


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 identity
of the Fund's holdings could not be derived from such information.


Registered investment companies that are subadvised by the Advisor or its
affiliates may be subject to different portfolio holdings disclosure policies,
and neither the Advisor or its affiliated nor Trustees exercise control over
such policies. In addition, separate account clients of the Advisor or its
affiliates 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 the Advisor and its affiliates and some of the separate
accounts managed by the Advisor or its affiliates may substantially overlap with
the portfolio holdings of the Fund.

The Advisor or its affiliates 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 the Fund's
portfolio holdings information is made public, the Advisor and its affiliates
have 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, is the investment advisor for the Fund. Under
the supervision of the Board of Trustees of the Fund, with headquarters at 345
Park Avenue, New York, New York 10154, DIMA makes the Fund's investment
decisions, buys and sells securities for the Fund and conducts research that
leads to these purchase and sale decisions. The Advisor manages the Fund's daily
investment and business affairs subject to the policies established by the
Trust's Board of Trustees. DIMA and its predecessors have more than 80 years of
experience managing mutual funds. DIMA provides a full range of investment
advisory services to institutional and retail clients. The Fund's investment
advisor is also responsible for selecting brokers and dealers and for
negotiating brokerage commissions and dealer charges. On December 31, 2006,
Deutsche Asset Management, Inc. ("DAMI'') merged into DIMA. Prior to December
31, 2006 DAMI was the investment advisor to the Fund. As a result of the merger,
DIMA is now the investment advisor to the Fund.


DeAM is the marketing name in the US for the asset management activities of
Deutsche Bank AG, DIMA, Deutsche Bank Trust Company Americas and DWS Trust
Company. DeAM is a global asset management organization that offers a wide range
of investing expertise and resources, including hundreds of portfolio managers
and analysts and an office network that reaches the world's major investment
centers. This well-resourced global investment platform brings together a wide
variety of experience and investment insight, across industries, regions, asset
classes and investing styles. DIMA is an indirect, wholly-owned subsidiary of
Deutsche Bank AG. Deutsche Bank AG is a major global banking institution that is
engaged in a wide range of financial services, including investment management,
mutual fund, retail, private and commercial banking, investment banking and
insurance. DWS Investments is part of Deutsche Bank's Asset Management division
and, within the US, represents the retail asset management activities of
Deutsche Bank AG, Deutsche Bank Trust Company Americas, Deutsche Investment
Management Americas Inc. and DWS Trust Company.


The Advisor provides investment counsel for many individuals and institutions,
including insurance companies, industrial corporations, and financial and
banking organizations, as well as providing investment advice to open- and
closed-end SEC registered funds.

The Fund is managed by a team of investment professionals, each of whom plays an
important role in the Fund's management process. Team members work together to
develop investment strategies and select securities for the Fund's portfolio.
This team works for the Advisor or its affiliates and is supported by a large
staff of economists, research analysts, traders and other investment
specialists. The Advisor or its affiliates believe(s) its team approach benefits
fund investors by bringing together many disciplines and leveraging its
extensive resources. Team members with primary responsibility for management of
the Fund, as well as team members who have other ongoing management
responsibilities for the Fund, are identified in the Fund's prospectus, as of
the date of the Fund's prospectus. Composition of the team may change over time,
and fund shareholders and investors will be notified of changes affecting
individuals with primary fund management responsibility.

Investment Management Agreement

The Board and the shareholders of the Fund approved an amended and restated
investment management agreement (the "Investment Management Agreement") between
the Fund and DIMA. The Investment Management Agreement became effective on
December 31, 2006 and was last approved by the Fund's Board on September 18,
2007. Pursuant to the Investment Management Agreement, the Advisor provides
continuing investment management of the assets of the Fund. In addition to the
investment management of the assets of the Fund, the Advisor determines the
investments to be made for the Fund, including what portion of its assets remain
uninvested in cash or cash equivalents, and with whom the orders for investments
are placed, consistent with the Fund's policies as stated in the Prospectuses
and SAIs, or as adopted by the Fund's Board. The Advisor will also monitor, to
the extent not monitored by the Fund's administrator or other agent, the Funds'
compliance with its investment and tax guidelines and other compliance policies.

Prior to June 1, 2006, the Trust, on behalf of the Fund, paid the Advisor the
monthly fee of 0.70% of average daily net assets. Effective June 1, 2006, under
the Investment Management Agreement, the Fund pays DIMA a monthly fee at an
annual rate of:

                Assets Daily Net Assets                 Management Fee Rate
                -----------------------                 -------------------

                     $0 - $1.5 billion                          0.700%
             Over $1.5 billion- $3.25 billion                   0.685%
              Over $3.25 billion - $5 billion                   0.670%
                      Over $5 billion                           0.655%

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
Investment Management Agreement (unless otherwise provided in the agreement or
as determined by the Board and to the extent permitted by applicable law), the
Advisor pays the compensation and expenses of all the Trustees, officers, and
executive employees of the Fund, including the Fund's share of payroll taxes,
who are affiliated persons of the Advisor.

The DIMA Agreement provided that the Fund was generally responsible for expenses
that include: fees payable to the Advisor; outside legal, accounting or auditing
expenses including with respect to expenses related to negotiation, acquisition
or distribution of portfolio investments; maintenance of books and records that
are maintained by the Fund, the Fund's custodian, or other agents of the Fund;
taxes and governmental fees; fees and expenses of the Fund's accounting agent,
custodian, sub-custodians, depositories, transfer agents, dividend reimbursing
agents and registrars; payments for portfolio pricing or valuation services to
pricing agents, accountants, bankers and other specialists, if any; brokerage
commissions or other costs of acquiring or disposing of any fund 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.

DIMA Agreement allows the Advisor to delegate any of its duties under the
Agreement to a sub-advisor, subject to a majority vote of the Board of Trustees,
including a majority of the Board of Trustees who are not interested persons of
the Trust, and, if required by applicable law, subject to a majority vote of the
Fund's shareholders.

The DIMA 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 DIMA Agreement may be terminated
at any time, without payment of penalty, by either party or by vote of a
majority of the outstanding voting securities of the Fund on 60 days' written
notice.


From time to time, Deutsche Bank or an affiliate (collectively, "DB") may at its
sole discretion invest its own assets in shares of the Fund ("proprietary
investment") for such purposes it deems appropriate, including investments
designed to assist in the management of the Fund's portfolio. Any proprietary
investment may be hedged and, in that event, the return on the proprietary
investment, net of the effect of the hedge, would be expected to differ from the
return of the Fund. DB has no obligation to make any proprietary investments and
the amount of any proprietary investment this is made may or may not be
significant in comparison to the level of assets of the Fund. In the event that
a proprietary investment is made, except as otherwise required under the
Investment Company Act of 1940, DB would be permitted to redeem the investment
at such time that it deems appropriate provided; however, any such redemption
would be effected by DB in a manner designed to mitigate any adverse effects to
the Fund. DB may vote the shares associated with a proprietary investment, at
its option, either by "mirror" voting in the same proportion as the shares of
the Fund are voted by the other shareholders or by voting through an independent
third party.


In addition, the Board and shareholders approved a subadvisor approval policy
for the Fund (the "Sub-advisor Approval Policy"). The Sub-advisor Approval
Policy permits the Advisor, subject to the approval of the Board, including a
majority of its independent board members, to appoint and replace sub-advisors
and to amend sub-advisory contracts without obtaining shareholder approval.
Under the Sub-advisor Approval Policy, the Board, including its independent
board members, will continue to evaluate and approve all new sub-advisory
contracts between the Advisor and any subadvisor, as well as all changes to any
existing sub-advisory contract. The Fund cannot implement the Sub-advisor
Approval Policy without the SEC either adopting revisions to current rules (as
it proposed to do in October 2003) or granting the Fund exemptive relief from
existing rules. The Fund and the Advisor would be subject to certain conditions
imposed by the SEC (and certain conditions that may be imposed in the future
within either exemptive relief or a rule) to ensure that the interests of the
Fund and its shareholders are adequately protected whenever the Advisor acts
under the Sub-advisor Approval Policy, including any shareholder notice
requirements.

The Advisor has agreed to voluntarily waive a portion of its fees and reimburse
or pay operating expenses of the Fund so that total annual operating expenses of
the Fund will not exceed 0.97% for Class S shares, excluding certain expenses
such as extraordinary expenses, taxes, brokerage and interest. This voluntary
waiver or reimbursement may be terminated at any time at the option of the
Advisor. The advisory fees incurred by the Fund for its last three fiscal years
are shown in the table below.


<TABLE>
<CAPTION>
Fund                                            Fiscal Year 2007     Fiscal Year 2006      Fiscal Year 2005
----                                            ----------------     ----------------      ----------------

<S>                                                <C>                 <C>                    <C>
DWS International Select Equity Fund               $1,738,985          $2,615,922             $7,729,533

</TABLE>

For the fiscal years ended October 31, 2007, 2006 and 2005, the Advisor waived
fees and/or reimbursed expenses of the Fund in the amounts of $206,366, 316,612
and $207,191, respectively.

Compensation of Portfolio Managers


Portfolio managers are eligible for total compensation comprised of base salary
and discretionary incentive compensation.

Base Salary - Base salary generally represents a smaller percentage of portfolio
managers' total compensation than discretionary incentive compensation. Base
salary is linked to job function, responsibilities and financial services
industry peer comparison through the use of extensive market data surveys.

Discretionary Incentive Compensation - Generally, discretionary incentive
compensation comprises a greater proportion of total compensation as a portfolio
manager's seniority and compensation levels increase. Discretionary incentive
compensation is determined based on an analysis of a number of factors,
including among other things, the performance of Deutsche Bank, the performance
of the Asset Management division, and the employee's individual contribution. In
evaluating individual contribution, management will consider a combination of
quantitative and qualitative factors. A portion of the portfolio manager's
discretionary incentive compensation may be delivered in long-term equity
programs (usually in the form of Deutsche Bank equity) (the "Equity Plan"). Top
performing portfolio managers may earn discretionary incentive compensation that
is a multiple of their base salary.

o        The  quantitative   analysis  of  a  portfolio   manager's   individual
         performance is based on, among other factors, performance of all of the
         accounts managed by the portfolio  manager (which includes the fund and
         any other  accounts  managed  by the  portfolio  manager)  over a one-,
         three-,  and five-year  period relative to the appropriate  Morningstar
         and Lipper peer group universes and/or benchmark index(es) with respect
         to   each    account.    Additionally,    the    portfolio    manager's
         retail/institutional   asset  mix  is  weighted,   as  appropriate  for
         evaluation purposes.  Generally the benchmark index used is a benchmark
         index  set  forth  in  the  fund's   prospectus  to  which  the  fund's
         performance is compared. Additional or different appropriate peer group
         or  benchmark  indices  may also be used.  Primary  weight  is given to
         pre-tax  portfolio  performance  over  three-year  and  five-year  time
         periods  (adjusted as appropriate  if the portfolio  manager has served
         for less than five years) with lesser  consideration given to portfolio
         performance  over a one-year  period.  The  increase  or  decrease in a
         fund's  assets  due to the  purchase  or  sale of  fund  shares  is not
         considered a material factor.

o        The   qualitative   analysis  of  a  portfolio   manager's   individual
         performance  is based on, among other things,  the results of an annual
         management  and  internal  peer  review   process,   and   management's
         assessment  of overall  portfolio  manager  contributions  to  investor
         relations,  the investment  process and overall  performance  (distinct
         from fund and other  account  performance).  Other  factors,  including
         contributions  made to the  investment  team,  as well as  adherence to
         Compliance  Policies and Procedures,  Risk Management  procedures,  the
         firm's  Code of Ethics and  "living the values" of the Advisor are also
         factors.

The quantitative analysis of a portfolio manager's performance is given more
weight in determining discretionary incentive compensation than the qualitative
portion.

Certain portfolio managers may also participate in the Equity Plan. The amount
of equity awarded under the long-term equity programs is generally based on the
individual's total compensation package and may comprise from 0% to 30% of the
total compensation award. As discretionary incentive compensation increases, the
percentage of compensation awarded in Deutsche Bank equity also increases.
Portfolio managers may receive a portion of their equity compensation in the
form of shares in the proprietary mutual funds that they manage or support.

Fund Ownership of Portfolio Managers

The following table shows the dollar range of shares owned beneficially and of
record by the Fund's portfolio manager in the Fund as well as in all DWS Funds
as a group (i.e., those funds advised by Deutsche Asset Management or its
affiliates), including investments by their immediate family members sharing the
same household and amounts invested through retirement and deferred compensation
plans. This information is provided as of the Fund's most recent fiscal year
end.

<TABLE>
<CAPTION>
                                                 Dollar Range of                    Dollar Range of All DWS
Name of Portfolio Manager                       Fund Shares Owned                      Fund Shares Owned
-------------------------                       -----------------                      -----------------

<S>                                             <C>                                       <C>
Joseph Axtell                                   $10,001 - $50,000                     $100,001 - $500,000

Conflicts of Interest

In addition to managing the assets of the Fund, the Fund's portfolio manager may
have responsibility for managing other client accounts of the Advisor or its
affiliates. The tables below show, for the 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 the portfolio manager. Total assets attributed to each
portfolio manager in the tables below include total assets of each account
managed by them, although the manager may only manage a portion of such
account's assets. The tables also show the number of performance based fee
accounts, as well as the total assets of the accounts for which the advisory fee
is based on the performance of the account. This information is provided as of
the Fund's most recent fiscal year end.

Other SEC Registered Investment Companies Managed:

                                                                                 Number of
                                       Number of        Total Assets of         Investment          Total Assets of
                                      Registered          Registered         Company Accounts        Performance-
                                      Investment          Investment         with Performance-         Based Fee
Name of Portfolio Manager              Companies           Companies             Based Fee             Accounts
-------------------------              ---------           ---------             ---------             --------

Joseph Axtell                             14            $4,829,894,155               0                    $0

Other Pooled Investment Vehicles Managed:

                                                                              Number of Pooled
                                                                                 Investment
                                      Number of                               Vehicle Accounts      Total Assets of
                                       Pooled          Total Assets of              with             Performance-
                                     Investment       Pooled Investment         Performance-           Based Fee
Name of Portfolio Manager             Vehicles             Vehicles              Based Fee             Accounts
-------------------------             --------             --------              ---------             --------

Joseph Axtell                             1               $2,619,286                 0                    $0

Other Accounts Managed:

                                                                                 Number of
                                                                               Other Accounts       Total Assets of
                                      Number of                                     with             Performance-
                                        Other          Total Assets of          Performance-           Based Fee
Name of Portfolio Manager             Accounts          Other Accounts           Based Fee             Accounts
-------------------------             --------          --------------           ---------             --------

Joseph Axtell                             3              $173,461,041                0                    $0
</TABLE>

In addition to the accounts above, an investment professional may manage
accounts in a personal capacity that may include holdings that are similar to,
or the same as, those of the Fund. The Advisor has in place a Code of Ethics
that is designed to address conflicts of interest and that, among other things,
imposes restrictions on the ability of portfolio managers and other "access
persons" to invest in securities that may be recommended or traded in the Fund
and other client accounts.

Real, potential or apparent conflicts of interest may arise when a portfolio
manager has day-to-day portfolio management responsibilities with respect to
more than one fund or account, including the following:

o        Certain  investments may be appropriate for the Fund and also for other
         clients advised by the Advisor, including other client accounts managed
         by the Fund's portfolio  management team.  Investment decisions for the
         Fund  and  other  clients  are  made  with a view  to  achieving  their
         respective  investment  objectives  and  after  consideration  of  such
         factors as their current holdings,  availability of cash for investment
         and the size of their investments  generally. A particular security may
         be bought or sold for only one client or in  different  amounts  and at
         different times for more than one but less than all clients.  Likewise,
         because   clients  of  the  Advisor  may  have   differing   investment
         strategies, a particular security may be bought for one or more clients
         when one or more other clients are selling the security. The investment
         results  achieved for the Fund may differ from the results achieved for
         other  clients of the Advisor.  In addition,  purchases or sales of the
         same  security  may be made for two or more clients on the same day. In
         such event,  such transactions will be allocated among the clients in a
         manner  believed by the Advisor to be most  equitable  to each  client,
         generally utilizing a pro rata allocation  methodology.  In some cases,
         the allocation  procedure could  potentially  have an adverse effect or
         positive  effect on the price or amount of the securities  purchased or
         sold by the Fund. Purchase and sale orders for the Fund may be combined
         with those of other clients of the Advisor in the interest of achieving
         the most favorable net results to the Fund and the other clients.

o        To the  extent  that  a  portfolio  manager  has  responsibilities  for
         managing  multiple client  accounts,  a portfolio  manager will need to
         divide time and attention among relevant accounts. The Advisor attempts
         to minimize these conflicts by aligning its portfolio  management teams
         by  investment  strategy and by  employing  similar  investment  models
         across multiple client accounts.

o        In some cases, an apparent conflict may arise where the Advisor has an
         incentive, such as a performance-based fee, in managing one account and
         not with respect to other accounts it manages. The Advisor will not
         determine allocations based on whether it receives a performance-based
         fee from the client. Additionally, the Advisor has in place supervisory
         oversight processes to periodically monitor performance deviations for
         accounts with like strategies.

o        The Advisor and its affiliates and the investment team of the Funds 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 Board of Trustees of the Trust has adopted a Code of Ethics pursuant to Rule
17j-1 under the 1940 Act. The Trust's Code of Ethics permits access persons of
the Fund (Board members, officers of the Trust and employees of the Advisor), to
make personal securities transactions for their own accounts. This include
transactions in securities that may be purchased or held by the Fund, but
requires compliance with the Code's preclearance requirements, subject to
certain exceptions. In addition, the Trust's Code provides for trading blackout
periods that prohibit trading by personnel within periods of trading by the Fund
in the same security. The Trust's Code prohibits short term trading profits,
prohibits personal investment in initial public offerings and requires prior
approval with respect to purchases of securities in private placements.


The Fund's advisor and its affiliates (including the Fund's Distributor, DIDI)
have each adopted a Code of Ethics pursuant to Rule 17j-1 under the 1940 Act
(the "Consolidated Code"). The Consolidated Code permits access persons to trade
in securities for their own accounts, subject to compliance with the
Consolidated Code's preclearance requirements, that may be purchased or held by
the Fund. In addition, the Consolidated Code also provides for trading "blackout
periods" that prohibit trading by personnel within periods of trading by the
Fund in the same security. The Consolidated Code also prohibits short term
trading profits, and personal investment in initial public offerings and
requires prior approval with respect to purchases of securities in private
placements. 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 Code of Ethics may be
granted in particular circumstances after review by appropriate personnel.


Regulatory Matters and Legal Proceedings


On December 21, 2006, DeAM settled proceedings with the SEC and the New York
Attorney General on behalf of DAMI and DIMA, the investment advisors to many of
the DWS Investments funds, regarding allegations of improper trading of fund
shares at DeAM and at the legacy Scudder and Kemper organizations prior to their
acquisition by DeAM in April 2002. These regulators alleged that although the
prospectuses for certain funds in the regulators' view indicated that the funds
did not permit market timing, DAMI and DIMA breached their fiduciary duty to
those funds in that their efforts to limit trading activity in the funds were
not effective at certain times. The regulators also alleged that DAMI and DIMA
breached their fiduciary duty to certain funds by entering into certain market
timing arrangements with investors. These trading arrangements originated in
businesses that existed prior to the currently constituted DeAM organization,
which came together as a result of various mergers of the legacy Scudder, Kemper
and Deutsche fund groups, and all of the arrangements were terminated prior to
the start of the regulatory investigations that began in the summer of 2003. No
current DeAM employee approved these trading arrangements. Under the terms of
the settlements, DAMI and DIMA neither admitted nor denied any wrongdoing.


The terms of the SEC settlement, which identified improper trading in the legacy
Deutsche and Kemper mutual funds only, provide for payment of disgorgement in
the amount of $17.2 million. The terms of the settlement with the New York
Attorney General provide for payment of disgorgement in the amount of $102.3
million, which is inclusive of the amount payable under the SEC settlement, plus
a civil penalty in the amount of $20 million. The total amount payable by DeAM,
approximately $122.3 million, will be distributed to shareholders of the
affected funds in accordance with a distribution plan to be developed by a
distribution consultant. The funds' investment advisors do not believe these
amounts will have a material adverse financial impact on them or materially
affect their ability to perform under their investment management agreements
with the DWS funds. The above-described amounts are not material to Deutsche
Bank, and have already been reserved.

Among the terms of the settled orders, DeAM is subject to certain undertakings
regarding the conduct of its business in the future, including formation of a
Code of Ethics Oversight Committee to oversee all matters relating to issues
arising under the advisors' Code of Ethics; establishment of an Internal
Compliance Controls Committee having overall compliance oversight responsibility
of the advisors; engagement of an Independent Compliance Consultant to conduct a
comprehensive review of the advisors' supervisory compliance and other policies
and procedures designed to prevent and detect breaches of fiduciary duty,
breaches of the Code of Ethics and federal securities law violations by the
advisors and their employees; and commencing in 2008, the advisors shall undergo
a compliance review by an independent third party.

In addition, DeAM is subject to certain further undertakings relating to the
governance of the mutual funds, including that at least 75% of the members of
the Boards of Trustees/Directors overseeing the DWS Funds continue to be
independent of DeAM; the Chairmen of the DWS Funds' Boards of Trustees/Directors
continue to be independent of DeAM; DeAM maintain existing management fee
reductions for certain funds for a period of five years and not increase
management fees for these certain funds during this period; the funds retain a
senior officer (or independent consultants, as applicable) responsible for
assisting in the review of fee arrangements and monitoring compliance by the
funds and the investment advisors with securities laws, fiduciary duties, codes
of ethics and other compliance policies, the expense of which shall be borne by
DeAM; and periodic account statements, fund prospectuses and the mutual funds'
web site contain additional disclosure and/or tools that assist investors in
understanding the fees and costs associated with an investment in the funds and
the impact of fees and expenses on fund returns.

DeAM has also settled proceedings with the Illinois Secretary of State regarding
market timing matters. The terms of the Illinois settlement provide for investor
education contributions totaling approximately $4 million and a payment in the
amount of $2 million to the Securities Audit and Enforcement Fund.


On September 28, 2006, the SEC and the National Association of Securities
Dealers ("NASD") (now known as the Financial Industry Regulatory Authority, or
"FINRA") announced final agreements in which Deutsche Investment Management
Americas Inc. ("DIMA"), Deutsche Asset Management, Inc. ("DAMI") and DWS Scudder
Distributors, Inc. (now known as DWS Investments Distributors, Inc. ("DIDI"))
settled administrative proceedings regarding disclosure of brokerage allocation
practices in connection with sales of the DWS Funds' (now known as the DWS
Investments 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 DIDI'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 DWS Fund shares. These directed brokerage
practices were discontinued in October 2003.




Under the terms of the settlements, in which DIMA, DAMI and DIDI neither
admitted nor denied any of the regulators' findings, DIMA, DAMI and DIDI 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 DIDI 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-investments.com/regulatory_settlements.


The matters alleged in the regulatory settlements described above also serve as
the general basis of a number of private class action lawsuits involving the DWS
funds. These lawsuits name as defendants various persons, including certain DWS
funds, the funds' investment advisors and their affiliates, and certain
individuals, including in some cases fund Trustees/Directors, officers, and
other parties. Each DWS fund's investment advisor has agreed to indemnify the
applicable DWS funds in connection with these lawsuits, or other lawsuits or
regulatory actions that may be filed making similar allegations.

Based on currently available information, the funds' investment advisors believe
the likelihood that the pending lawsuits will have a material adverse financial
impact on a DWS fund is remote and such actions are not likely to materially
affect their ability to perform under their investment management agreements
with the DWS funds.

                             FUND SERVICE PROVIDERS

Administrator

DIMA, located at 345 Park Avenue, New York, New York 10154, serves as the Fund's
administrator. The Fund entered into an administrative services agreement with
DIMA (the "Administrative Services Agreement"), pursuant to which 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.

Under the Administrative Services Agreement, DIMA is obligated on a continuous
basis to provide such administrative services as the Board 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 all services provided under the Administrative Services Agreement, the Fund
pays the Advisor a fee of 0.100% of the Fund's net assets. Prior to June 1,
2006, the Advisor served as the Fund's administrator and received a fee for
serving as administrator of 0.30% of the Fund's average daily net assets and
paid transfer agency fees out of its Administration fee. For the fiscal year
ended October 31, 2005 and for the period November 1, 2005 through May 31, 2006,
the Fund paid the Advisor $3,193,014 and $773,343, respectively.

The following table sets forth the net administration fees that the Fund paid to
DIMA:

<TABLE>
<CAPTION>
                                                        For the fiscal year ended October 31,
                                                  2007                 2006                   2005
                                                  ----                 ----                   ----

<S>                                        <C>                 <C>                    <C>
DWS International Select Equity Fund       $248,426            $773,343*              $3,193,014
</TABLE>

(1)      Of which $23,281 was unpaid at October 31, 2007.

(2) For the period November 1, 2005 through June 30, 2006.


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


Pursuant to DeAM 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
DIDI, 222 South Riverside Plaza, Chicago, IL 60606 as agent, serves as principal
underwriter for the continuous offering of shares of the Fund. DIDI, an
affiliate of the Advisor, is a wholly owned subsidiary of Deutsche Bank AG. DIDI
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.


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 Prospectuses and any amendments and
supplements thereto; the registration and qualification of shares for sale in
the various states, including registering the Fund as a broker or dealer in
various states, as required; the fees and expenses of preparing, printing and
mailing prospectuses annually to existing shareholders (see below for expenses
relating to prospectuses paid by the Distributor); notices, proxy statements,
reports or other communications to shareholders of the Fund; the cost of
printing and mailing confirmations of purchases of shares and any prospectuses
accompanying such confirmations; any issuance taxes and/or any initial transfer
taxes; a portion of shareholder toll-free telephone charges and expenses of
shareholder service representatives; the cost of wiring funds for share
purchases and redemptions (unless paid by the shareholder who initiates the
transaction); the cost of printing and postage of business reply envelopes; and
a portion of the cost of computer terminals used by both the Fund and the
Distributor.

The Distributor will pay for printing and distributing prospectuses or reports
prepared for its use in connection with the offering of the Fund's shares to the
public and preparing, printing and mailing any other literature or advertising
in connection with the offering of shares of the fund to the public. The
Distributor will pay all fees and expenses in connection with its qualification
and registration as a broker or dealer under federal and state laws, a portion
of the cost of toll-free telephone service and expenses of shareholder service
representatives, a portion of the cost of computer terminals, and expenses of
any activity which is primarily intended to result in the sale of shares issued
by the fund, unless a Rule 12b-1 Plan is in effect which provides that the Fund
shall bear some or all of such expenses.

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 Fund'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


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 $3.60 per account
(as of 2007, indexed to inflation) plus an asset based fee of up to 0.25% of
average net assets. 1/12th of the annual service charge for each account is
charged and payable to the Transfer Agent each month. A fee is charged for any
account which at any time during the month had a share balance in the Fund.
Smaller fees are also charged for closed accounts for which information must be
retained on the Transfer Agent's system for up to 18 months after closing for
tax reporting purposes.

Certain out-of-pocket expenses incurred by the Transfer Agent, including
expenses of printing and mailing routine fund disclosure documents, costs of
record retention and transaction processing costs are reimbursed by the Fund or
are paid directly by the Fund. Certain additional out-of-pocket expenses,
including costs of computer hardware and software, third party record-keeping
and processing of proxy statements, may only be reimbursed by the Fund with the
prior approval of the Fund's Board.



For the fiscal year ended October 31, 2007, the amount charged to Class S
aggregated $37,070. For the fiscal year ended October 31, 2006, the amount
charged to Class S aggregated $1,971.


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


The Fund, or the Advisor (including any affiliate of the Advisor), or both, may
pay unaffiliated third parties for providing recordkeeping and other
administrative services with respect to accounts of participants in retirement
plans or other beneficial owners of Fund shares whose interests are generally
held in an omnibus account.

Legal Counsel


Vedder Price P.C., 222 North LaSalle Street, Chicago,  Illinois 60601, serves as
legal counsel to the Fund.

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



Independent Registered Public Accounting Firm

PricewaterhouseCoopers LLP, 125 High Street, Boston, MA 02110, serves as the
Fund's independent registered public accounting firm.

                             PORTFOLIO TRANSACTIONS

The Advisor is generally responsible for placing the orders for the purchase and
sale of portfolio securities, including the allocation of brokerage. With
respect to those funds for which a sub-investment advisor manages the fund's
investments, references in this section to the "Advisor" should be read to mean
the Sub-Advisor, except as noted below.

The policy of the Advisor in placing orders for the purchase and sale of
securities for the Funds is to seek best execution, taking into account such
factors, among others, as price; commission (where applicable); the
broker-dealer's ability to ensure that securities will be delivered on
settlement date; the willingness of the broker-dealer to commit its capital and
purchase a thinly traded security for its own inventory; whether the
broker-dealer specializes in block orders or large program trades; the
broker-dealer's knowledge of the market and the security; the broker-dealer's
ability to maintain confidentiality; the broker-dealer's ability to provide
access to new issues; the broker-dealer's ability to provide support when
placing a difficult trade; the financial condition of the broker-dealer; and
whether the broker-dealer has the infrastructure and operational capabilities to
execute and settle the trade. The Advisor seeks to evaluate the overall
reasonableness of brokerage commissions with commissions charged on comparable
transactions and compares the brokerage commissions (if any) paid by the Funds
to reported commissions paid by others. The Advisor routinely reviews commission
rates, execution and settlement services performed and makes internal and
external comparisons.

Commission rates on transactions in equity securities on U.S. securities
exchanges are subject to negotiation. Commission rates on transactions in equity
securities on foreign securities exchanges are generally fixed. Purchases and
sales of fixed-income securities and certain over-the-counter securities are
effected on a net basis, without the payment of brokerage commissions.
Transactions in fixed income and certain over-the-counter securities are
generally placed by the Advisor with the principal market makers for these
securities unless the Advisor reasonably believes more favorable results are
available elsewhere. Transactions with dealers serving as market makers reflect
the spread between the bid and asked prices. Purchases of underwritten issues
will include an underwriting fee paid to the underwriter. Money market
instruments are normally purchased in principal transactions directly from the
issuer or from an underwriter or market maker.

It is likely that the broker-dealers selected based on the considerations
described in this section will include firms that also sell shares of the Funds
to their customers. However, the Advisor does not consider sales of shares of
the Funds as a factor in the selection of broker-dealers to execute portfolio
transactions for the Funds and, accordingly, has implemented policies and
procedures reasonably designed to prevent its traders from considering sales of
shares of the Funds as a factor in the selection of broker-dealers to execute
portfolio transactions for the Funds.

The Advisor is permitted by Section 28(e) of the Securities Exchange Act of
1934, as amended ("1934 Act"), when placing portfolio transactions for a Fund,
to cause the Fund to pay brokerage commissions in excess of that which another
broker-dealer might charge for executing the same transaction in order to obtain
research and brokerage services if the Advisor determines that such commissions
are reasonable in relation to the overall services provided. The Advisor may
from time to time, in reliance on Section 28(e) of the 1934 Act, execute
portfolio transactions with broker-dealers that provide research and brokerage
services to the Advisor. Consistent with the Advisor's policy regarding best
execution, where more than one broker is believed to be capable of providing
best execution for a particular trade, the Advisor may take into consideration
the receipt of research and brokerage services in selecting the broker-dealer to
execute the trade. Although certain research and brokerage services from
broker-dealers may be useful to a Fund and to the Advisor, it is the opinion of
the Advisor that such information only supplements its own research effort since
the information must still be analyzed, weighed and reviewed by the Advisor's
staff. To the extent that research and brokerage services of value are received
by the Advisor, the Advisor may avoid expenses that it might otherwise incur.
Research and brokerage services received from a broker-dealer may be useful to
the Advisor and its affiliates in providing investment management services to
all or some of its clients, which includes a Fund. Services received from
broker-dealers that executed securities transactions for a Portfolio will not
necessarily be used by the Advisor specifically to service such Fund.

Research and brokerage services provided by broker-dealers may include, but are
not limited to, information on the economy, industries, groups of securities,
individual companies, statistical information, accounting and tax law
interpretations, political developments, legal developments affecting portfolio
securities, technical market action, pricing and appraisal services, credit
analysis, risk measurement analysis, performance analysis and measurement and
analysis of corporate responsibility issues. Research and brokerage services are
typically received in the form of written or electronic reports, access to
specialized financial publications, telephone contacts and personal meetings
with security analysts, but may also be provided in the form of access to
various computer software and meetings arranged with corporate and industry
representatives.

The Advisor may also select broker-dealers and obtain from them research and
brokerage services that are used in connection with executing trades provided
that such services are consistent with interpretations under Section 28(e) of
the 1934 Act. Typically, these services take the form of computer software
and/or electronic communication services used by the Advisor to facilitate
trading activity with those broker-dealers.

Research and brokerage services may include products obtained from third parties
if the Advisor determines that such product or service constitutes brokerage and
research as defined in Section 28(e) and interpretations thereunder. Currently,
it is the Advisor's policy that Sub-Advisors may not execute portfolio
transactions on behalf of the Funds to obtain third party research and brokerage
services. The Advisor may, in the future, change this policy. Regardless,
certain Sub-Advisors may, as matter of internal policy, limit or preclude third
party research and brokerage services.

The Advisor may use brokerage commissions to obtain certain brokerage products
or services that have a mixed use (i.e., it also serves a function that does not
relate to the investment decision-making process). In those circumstances, the
Advisor will make a good faith judgment to evaluate the various benefits and
uses to which it intends to put the mixed use product or service and will pay
for that portion of the mixed use product or service that it reasonably believes
does not constitute research and brokerage services with its own resources.

DIMA will monitor regulatory developments and market practice in the use of
client commissions to obtain research and brokerage services and may adjust its
portfolio transactions policies in response thereto.

Investment decisions for each Fund and for other investment accounts managed by
the Advisor are made independently of each other in light of differing
conditions. However, the same investment decision may be made for two or more of
such accounts. In such cases, simultaneous transactions are inevitable. To the
extent permitted by law, the Advisor may aggregate the securities to be sold or
purchased for a Fund with those to be sold or purchased for other accounts in
executing transactions. Purchases or sales are then averaged as to price and
commission and allocated as to amount in a manner deemed equitable to each
account. While in some cases this practice could have a detrimental effect on
the price paid or received by, or on the size of the position obtained or
disposed of for, the Fund, in other cases it is believed that the ability to
engage in volume transactions will be beneficial to the Fund.

DIMA and its affiliates and the Funds' management team manage other mutual funds
and separate accounts, some of which use short sales of securities as a part of
its investment strategy. The simultaneous management of long and short
portfolios creates potential conflicts of interest including the risk that short
sale activity could adversely affect the market value of the long positions (and
vice versa), the risk arising from sequential orders in long and short
positions, and the risks associated with receiving opposing orders at the same
time.

DIMA has adopted procedures that it believes are reasonably designed to mitigate
these potential conflicts of interest. Incorporated in the procedures are
specific guidelines developed to ensure fair and equitable treatment for all
clients. DIMA and the investment team have established monitoring procedures and
a protocol for supervisory reviews, as well as compliance oversight to ensure
that potential conflicts of interest relating to this type of activity are
properly addressed.

Deutsche Bank AG or one of its affiliates (or in the case of a Sub-Advisor, the
Sub-Advisor or one of its affiliates) may act as a broker for the Funds and
receive brokerage commissions or other transaction-related compensation from the
Funds in the purchase and sale of securities, options or futures contracts when,
in the judgment of the Advisor, and in accordance with procedures approved by
the Funds' Boards, the affiliated broker will be able to obtain a price and
execution at least as favorable as those obtained from other qualified brokers
and if, in the transaction, the affiliated broker charges the Funds a rate
consistent with that charged to comparable unaffiliated customers in similar
transactions.

For the fiscal years ended October 31, 2005, 2006 and 2007, the Fund paid
aggregate brokerage commissions of $3,945,557, $1,523,015 and $0, respectively.

Securities of Regular Broker-Dealers. The Fund is required to identify any
securities of its "regular broker or dealers" (as such term is defined in the
1940 Act) that the Fund has acquired during the most recent year. As of October
31, 2007, the Fund did not hold any securities of its regular broker dealers.

The Fund did not pay any affiliated brokerage commissions for its most recent
fiscal year end.

Portfolio Turnover. Although the Fund does not intend to invest for the purpose
of seeking short-term profits, securities in the Fund will be sold whenever the
Advisor believes it is appropriate to do so in light of the investment
objectives of the Fund, without regard to the length of time a particular
security may have been held The Fund may sell securities held for a short time
in order to take advantage of what the Advisor believes to be temporary
disparities in normal yield relationships between securities. A high rate of
portfolio turnover (i.e., 100% or higher) will result in correspondingly higher
transaction costs to the Fund, particularly if the Fund's primary investments
are equity securities. A high rate of portfolio turnover will also increase the
likelihood of net short-term capital gains (distributions of which are taxable
to shareholders as ordinary income).

For the fiscal years ended October 31, 2007 and 2006, the Fund's portfolio
turnover rates were 119% and 140%, respectively.

                       PURCHASES AND REDEMPTIONS 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 DIDI of the order accompanied by
payment. Orders received by dealers or other financial services firms prior to
the determination of net asset value and received in good order by DIDI prior to
the determination of net asset value will be confirmed at a price based on the
net asset value next determined after receipt by DIDI ("trade date").


Certificates. Share certificates will not be issued. Share certificates now in a
shareholder's possession may be sent to the transfer agent for cancellation and
book-entry credit to such shareholder's account. Certain telephone and other
procedures require book-entry holdings. Shareholders with outstanding
certificates bear the risk of loss.


Additional Minimum Balance Policies. For fiduciary accounts such as IRAs, and
custodial accounts such as Uniform Gifts to Minor Act and Uniform Transfers to
Minor Act accounts, the minimum balance is $1,000 for Class S. A shareholder may
open an account with at least $1,000, if an automatic investment plan (AIP) of
$50/month is established. DWS Investments group retirement plans and certain
other accounts have similar or lower minimum share balance requirements.


Shareholders with a combined household account balance in any of the DWS Funds
of $100,000 or more, as well as group retirement and certain other accounts,
will not be subject to an automatic redemption.

Fiduciary (e.g., IRA or Roth IRA) and custodial accounts (e.g., UGMA or UTMA)
with balances below $1,000 are subject to automatic redemption following 60
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 Investments Service Corporation (the
"Transfer Agent"), will have no information with respect to or control over the
accounts of specific shareholders. Such shareholders may obtain access to their
accounts and information about their accounts only from their firm. Certain of
these firms may receive compensation from the Fund through the Shareholder
Service Agent for record-keeping and other expenses relating to these nominee
accounts. In addition, certain privileges with respect to the purchase and
redemption of shares or the reinvestment of dividends may not be available
through such firms. Some firms may participate in a program allowing them access
to their clients' accounts for servicing including, without limitation,
transfers of registration and dividend payee changes; and may perform functions
such as generation of confirmation statements and disbursement of cash
dividends. Such firms, including affiliates of DIDI, may receive compensation
from the Fund through the Shareholder Service Agent for these services.

DIDI has adopted an Incentive Plan (the "Plan") covering wholesalers that are
regional vice presidents ("DWS Investments Wholesalers"). Generally, DWS
Investments Wholesalers market shares of the DWS funds to financial advisors,
who in turn may recommend that investors purchase shares of a DWS fund. The Plan
is an incentive program that combines a monthly incentive component with a
quarterly strategic bonus component. Under the Plan, DWS Investments 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 -- "Strategic," "Tactical" or "all other funds" -- taking into
consideration, among other things, the following criteria, where applicable:

o        The Fund's  consistency  with DWS  Investments'  branding and long-term
         strategy;
o        The Fund's competitive performance;
o        The Fund's Morningstar rating;
o        The length of time the  Fund's  Portfolio  Managers  have  managed  the
         Fund/Strategy;
o        Market size for the fund category;
o        The Fund's size, including sales and redemptions of the Fund's shares.

This information and other factors are presented to a committee comprised of
representatives from various groups within DWS Investments, 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
Strategic and Tactical categories represents management's judgment based on the
above criteria. In addition, management may consider a fund's profile over the
course of several review periods before making a change to its category
assignment. These category assignments will be posted quarterly to the DWS
funds' Web site at www.dws-investments.com, approximately one month after the
end of each quarter. DWS Investments Wholesalers receive the highest
compensation for Strategic funds, less for Tactical funds and the lowest for all
other funds. The level of compensation among these categories may differ
significantly.

The prospect of receiving, or the receipt of, additional compensation by a DWS
Investments Wholesaler under the Plan may provide an incentive to favor
marketing the Strategic or Tactical funds over all other funds. The Plan,
however, will not change the price that investors pay for shares of a fund. The
DWS Investments Compliance Department monitors DWS Investments Wholesaler sales
and other activity in an effort to detect unusual activity in the context of the
compensation structure under the Plan. However, investors may wish to take the
Plan and the product category of the fund into account when considering
purchasing a fund or evaluating any recommendations relating to fund shares.



Telephone and Electronic Transaction Procedures. Shareholders have various
telephone, Internet, wire and other electronic privileges available. The Fund or
its agents will not be liable for any losses, expenses or costs arising out of
fraudulent or unauthorized instructions pursuant to these privileges if the Fund
or its agents reasonably believe, based upon reasonable verification procedures,
that the instructions were genuine. Verification procedures include recording
instructions, requiring certain identifying information before acting upon
instructions and sending written confirmations. During periods when it is
difficult to contact the Shareholder Service Agent, it may be difficult to use
telephone, wire and other privileges.

QuickBuy and QuickSell. QuickBuy and QuickSell permits the transfer of money via
the Automated Clearing House System (minimum $50 and maximum $250,000) from or
to a shareholder's bank, savings and loan, or credit union account in connection
with the purchase or redemption of Fund shares. Shares purchased by check or
through QuickBuy and QuickSell or Direct Deposit may not be redeemed under this
privilege until such Shares have been owned for at least 10 calendar days.
QuickBuy and QuickSell cannot be used with passbook savings accounts or for
certain tax-deferred plans.



Dividend Payment Option. Investors may have dividends and distributions
automatically deposited to their predesignated bank account through DWS
Investments' 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-investments.com or calling (800) 728-3337. Confirmation Statements will
be mailed to shareholders as notification that distributions have been
deposited.

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


o        Traditional,  Roth and Education IRAs. This includes Savings  Incentive
         Match Plan for  Employees  of Small  Employers  ("SIMPLE"),  Simplified
         Employee Pension Plan ("SEP") IRA accounts and prototype documents.

o        403(b)(7)  Custodial  Accounts.  This  type  of plan  is  available  to
         employees of most non-profit organizations.

o        Prototype  money  purchase  pension  and  profit-sharing  plans  may be
         adopted by employers.

Brochures describing these plans as well as model defined benefit plans, target
benefit plans, 457 plans, 401(k) plans, simple 401(k) plans and materials for
establishing them are available from the Shareholder Service Agent upon request.
Additional fees and transaction policies and procedures may apply to such plans.
Investors should consult with their own tax advisors before establishing a
retirement plan.

Purchases

The Fund reserves the right to withdraw all or any part of the offering made by
its Prospectuses and to reject purchase orders for any reason. Also, from time
to time, the Fund may temporarily suspend the offering of any class of its
shares to new investors. During the period of such suspension, persons who are
already shareholders of such class of such fund may be permitted to continue to
purchase additional shares of such class and to have dividends reinvested.

To help the government fight the funding of terrorism and money laundering
activities, federal law requires all financial institutions to obtain, verify
and record information that identifies each person who opens an account. For
more information, please see "Policies You Should Know About" in the Fund's
Prospectuses.

Eligible Class S Investors


A.        The following investors may purchase Class S shares of DWS Funds
          either (i) directly from DWS Investments Distributors, Inc. ("DIDI"),
          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 DIDI
                  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.


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


Revenue Sharing


In light of recent regulatory developments, the Advisor, the Distributor and
their affiliates have undertaken to furnish certain additional information below
regarding the level of payments made by them to selected affiliated and
unaffiliated brokers, dealers, participating insurance companies or other
financial intermediaries ("financial advisors") in connection with the sale
and/or distribution of Fund shares or the retention and/or servicing of
investors and Fund shares ("revenue sharing").

The Advisor, the Distributor and/or their affiliates may pay additional
compensation, out of their own assets and not as an additional charge to each
Fund, to financial advisors in connection with the sale and/or distribution of
Fund shares or the retention and/or servicing of Fund investors and Fund shares.
Such revenue sharing payments are in addition to any distribution or service
fees payable under any Rule 12b-1 or service plan of any fund, any record
keeping/sub-transfer agency/networking fees payable by each Fund (generally
through the Distributor or an affiliate) and/or the Distributor to certain
financial advisors for performing such services and any sales charges,
commissions, non-cash compensation arrangements expressly permitted under
applicable rules of FINRA or other concessions described in the fee table or
elsewhere in the Prospectuses or the SAI as payable to all financial advisors.
For example, the Advisor, the Distributor and/or their affiliates may compensate
financial advisors for providing each Fund with "shelf space" or access to a
third party platform or fund offering list, or other marketing programs
including, without limitation, inclusion of each Fund on preferred or
recommended sales lists, mutual fund "supermarket" platforms and other formal
sales programs; granting the Distributor access to the financial advisor's sales
force; granting the Distributor access to the financial advisor's conferences
and meetings; assistance in training and educating the financial advisor's
personnel; and, obtaining other forms of marketing support. The level of revenue
sharing payments made to financial advisors may be a fixed fee or based upon one
or more of the following factors: gross sales, current assets and/or number of
accounts of each Fund attributable to the financial advisor, the particular fund
or fund type or other measures as agreed to by the Advisor, the Distributor
and/or their affiliates and the financial advisors or any combination thereof.
The amount of these payments is determined at the discretion of the Advisor, the
Distributor and/or their affiliates from time to time, may be substantial, and
may be different for different financial advisors based on, for example, the
nature of the services provided by the financial advisor.

The Advisor, the Distributor and/or their affiliates currently make revenue
sharing payments from their own assets in connection with the sale and/or
distribution of DWS Fund shares, or the retention and/or servicing of investors,
to financial advisors in amounts that generally range from .01% up to .50% of
assets of the Fund serviced and maintained by the financial advisor, .05% to
..25% of sales of the Fund attributable to the financial advisor, a flat fee of
$13,350 up to $500,000, or any combination thereof. These amounts are annual
figures typically paid on a quarterly basis and are subject to change at the
discretion of the Advisor, the Distributor and/or their affiliates. Receipt of,
or the prospect of receiving, this additional compensation, may influence your
financial advisor's recommendation of this Fund or of any particular share class
of the Fund. You should review your financial advisor's compensation disclosure
and/or talk to your financial advisor to obtain more information on how this
compensation may have influenced your financial advisor's recommendation of this
Fund.

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

As of the date hereof, each Fund has been advised that the Advisor, the
Distributor and their affiliates expect that the following firms will receive
revenue sharing payments at different points during the coming year as described
above:

Channel: Broker-Dealers and Financial Advisors
AIG Advisors Group
Ameriprise
Cadaret, Grant & Co. Inc.
Capital Analyst, Incorporated
Citigroup Global Markets, Inc. (dba Smith Barney)
Commonwealth Equity Services, LLP (dba Commonwealth Financial Network)
Deutsche Bank Group
Ensemble Financial Services
First Allied Securities
First Clearing/Wachovia Securities
HD Vest Investment Securities, Inc.
ING Advisors Network
John Hancock Distributors LLC
LPL Financial
M.L. Stern & Co.
Meridien Financial Group
Merrill Lynch, Pierce, Fenner & Smith Inc.
Morgan Stanley
Oppenheimer & Co., Inc.
PlanMember Services
Raymond James & Associates
Raymond James Financial Services
RBC Dain Rauscher, Inc
Securities America, Inc.
UBS Financial Services
Wells Fargo Investments, LLC

Channel: Cash Product Platform
Allegheny Investments LTD
Bank of New York (Hare & Co.)
Brown Brothers Harriman
Brown Investment Advisory & Trust Company
Cadaret Grant & Co.
Chicago Mercantile Exchange
D.A. Davidson & Company
Deutsche Bank Group
Emmett A. Larkin Company
Fiduciary Trust Co. - International
First Southwest Company
J.P. Morgan Clearing Corp.
Legent Clearing LLC
Lincoln Investment Planning
LPL Financial
Mellon Financial Markets LLC
Mesirow Financial, Inc.
Penson Financial Services
Pershing Choice Platform
ProFunds Distributors, Inc.
Ridge Clearing & Outsourcing Solutions
Robert W. Baird & Co.
Romano Brothers and Company
SAMCO Capital Markets
Smith Moore & Company
Sungard Institutional Brokerage Inc.
Treasury Curve LLC
US Bancorp
UBS Financial Services
William Blair & Company

Channel: Third Party Insurance Platforms
Allstate Life Insurance Company of New York
Ameritas Life Insurance Group
Annuity Investors Life Insurance Company
Columbus Life Insurance Company
Commonwealth Annuity and Life Insurance Company
Companion Life Insurance Company
Connecticut General Life Insurance Company
Farmers New World Life Insurance Company
Fidelity Security Life Insurance Company
First Allmerica Financial Life Insurance Company
First Great West Life and Annuity Company
Genworth Life Insurance Company of New York
Genworth Life and Annuity Insurance Company
Great West Life and Annuity Insurance Company
Hartford Life Insurance Company
Integrity Life Insurance Company
John Hancock Life Insurance companies
Kemper Investors Life Insurance Company
Lincoln Benefit Life Insurance Company
Lincoln Life & Annuity Company of New York
Lincoln National Life Insurance Company
Massachusetts Mutual Life Insurance Group
MetLife Group
Minnesota Life Insurance Company
National Life Insurance Company
National Integrity Life Insurance Company
Nationwide Group
New York Life Insurance and Annuity Corporation
Phoenix Life Insurance Company
Protective Life Insurance
Provident Mutual Life Insurance
Prudential Insurance Company of America
Sun Life Group
Symetra Life Insurance Company
Transamerica Life Insurance Company
Union Central Life Insurance Company
United of Omaha Life Insurance Company
United Investors Life Insurance Company
Western Southern Life Assurance Company


Any additions, modifications or deletions to the financial advisors identified
above that have occurred since the date hereof are not reflected.

The Advisor, the Distributor or their affiliates may enter into additional
revenue sharing arrangements or change or discontinue existing arrangements with
financial advisors at any time without notice.

The prospect of receiving, or the receipt of additional compensation or
promotional incentives described above by financial advisors may provide such
financial advisors and/or their salespersons with an incentive to favor sales of
shares of the DWS funds or a particular DWS fund over sales of shares of mutual
funds (or non-mutual fund investments) with respect to which the financial
advisor does not receive additional compensation or promotional incentives, or
receives lower levels of additional compensation or promotional incentives.
Similarly, financial advisors may receive different compensation or incentives
that may influence their recommendation of any particular share class of the
Fund or of other funds. These payment arrangements, however, will not change the
price that an investor pays for Fund shares or the amount that the Fund receives
to invest on behalf of an investor and will not increase Fund expenses. You may
wish to take such payment arrangements into account when considering and
evaluating any recommendations relating to Fund shares and you should discuss
this matter with your financial advisor and review your financial advisor's
disclosures.

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




Automatic Investment Plan. A shareholder may purchase shares of the Fund through
an automatic investment plan. Investments are made automatically (minimum $1,000
and maximum $250,000 for initial investments and a minimum of $50 and maximum
$250,000 for subsequent investments) from the shareholder's account at a bank,
savings and loan or credit union into the shareholder's Fund account.
Termination by a shareholder will become effective within thirty days after the
Shareholder Service Agent has received the request. The Fund may immediately
terminate a shareholder's automatic investment plan in the event that any item
is unpaid by the shareholder's financial institution.



Minimum Subsequent Investment Policies. For current shareholders there is a $50
minimum investment requirement for subsequent investments in the fund. There is
no minimum subsequent investment requirement for investments on behalf of
participants in certain fee-based and wrap programs offered through financial
intermediaries approved by the Advisor.

Payroll Investment Plans. A shareholder may purchase shares through Payroll
Direct Deposit or Government Direct Deposit. Under these programs, all or a
portion of a shareholder's net pay or government check is invested each payment
period. A shareholder may terminate participation in these programs by giving
written notice to the shareholder's employer or government agency, as
appropriate. (A reasonable time to act is required.) The Fund is not responsible
for the efficiency of the employer or government agency making the payment or
any financial institutions transmitting payments.


It is our policy to offer purchase privileges to current or former directors or
trustees of the Deutsche or DWS Investments 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-adviser 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 Funds also reserve the right to waive the minimum account
balance requirement for employee and director accounts. Fees generally charged
to IRA accounts will be charged to accounts of employees and directors.

Expedited Purchase Procedures for Existing Shareholders. Shareholders of other
DWS funds who have submitted an account application and have certified a tax
identification number, clients having a regular investment counsel account with
the Advisor or its affiliates and members of their immediate families, officers
and employees of the Advisor or of any affiliated organization and their
immediate families, members of FINRA, and banks may open an account by wire by
calling (800) 728-3337 for instructions. The investor must send a duly completed
and signed application to the Fund promptly. A subsequent purchase order may be
placed by established shareholders (except by DWS Investments Individual
Retirement Account (IRA), DWS Simplified Profit Sharing and Money Purchase
Pension Plans, DWS Investments 401(k) and DWS Investments 403(b) Plan holders),
members of FINRA, and banks.


Redemptions

Redemption Fee. The Fund will impose a redemption fee of 2% of the total
redemption amount (calculated at net asset value, without regard to the effect
of any contingent deferred sales charge; any contingent deferred sales charge is
also assessed on the total redemption amount without regard to the assessment of
the 2% redemption fee) on all Fund shares redeemed or exchanged within 15 days
of buying them (either by purchase or exchange). The redemption fee is paid
directly to the Fund, and is designed to encourage long-term investment and to
offset transaction and other costs associated with short-term or excessive
trading. For purposes of determining whether the redemption fee applies, shares
held the longest time will be treated as being redeemed first and shares held
the shortest time will be treated as being redeemed last. The redemption fee is
applicable to Fund shares purchased either directly or through a financial
intermediary, such as a broker-dealer. Transactions through financial
intermediaries typically are placed with the Fund on an omnibus basis and
include both purchase and sale transactions placed on behalf of multiple
investors. These purchase and sale transactions are generally netted against one
another and placed on an aggregate basis; consequently the identities of the
individuals on whose behalf the transactions are placed generally are not known
to the Fund. For this reason, the Fund has undertaken to notify financial
intermediaries of their obligation to assess the redemption fee on customer
accounts and to collect and remit the proceeds to the Fund. However, due to
operational requirements, the intermediaries' methods for tracking and
calculating the fee may be inadequate or differ in some respects from the Fund.

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.

A distribution will be reinvested in shares of the same fund and class if the
distribution check is returned as undeliverable.

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 DIDI, 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 this Plan must reinvest Fund distributions.

Non-retirement plan shareholders may establish an Automatic Withdrawal Plan (the
"Plan") to receive monthly, quarterly or periodic redemptions from his or her
account for any designated amount of $50 or more. Shareholders may designate
which day they want the automatic withdrawal to be processed. The check amounts
may be based on the redemption of a fixed dollar amount, fixed share amount,
percent of account value or declining balance. The Plan provides for income
dividends and capital gains distributions, if any, to be reinvested in
additional shares. Shares are then liquidated as necessary to provide for
withdrawal payments. Since the withdrawals are in amounts selected by the
investor and have no relationship to yield or income, payments received cannot
be considered as yield or income on the investment and the resulting
liquidations may deplete or possibly extinguish the initial investment and any
reinvested dividends and capital gains distributions. Any such requests must be
received by the Fund's transfer agent ten days prior to the date of the first
automatic withdrawal. An Automatic Withdrawal Plan may be terminated at any time
by the shareholder, the Trust or its agent on written notice, and will be
terminated when all shares of the Fund under the Plan have been liquidated or
upon receipt by the Trust of notice of death of the shareholder.

Exchanges


Shareholders may request a taxable exchange of their shares for shares of the
corresponding class of certain other DWS funds without imposition of a sales
charge, subject to the provisions below. For purposes of calculating any CDSC,
amounts exchanged retain their original cost and purchase date.

Shareholders who exchange their shares out of a DWS money market fund (not
including shares acquired by dividend reinvestment or by exchange from Class A
shares of another DWS fund) into Class A shares of certain other DWS funds, will
generally be subject to the applicable sales charge.

Certain DWS funds may not be available to shareholders on an exchange. To learn
more about which DWS funds may be available on exchange, please contact your
financial services firm or visit our Web site at: www.dws-investments.com or
call (800) 728-3337.

Shareholders may obtain prospectus(es) of the DWS fund they are exchanging into
from dealers, other firms or DIDI.



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.

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.

                                    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 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 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 distribute dividends from its net investment income, if any,
annually. The Fund intends to distribute net realized capital gains after
utilization of capital loss carryforwards, if any, in December to prevent
application of a federal excise tax. An additional distribution may be made, if
necessary.

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 dividends, 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 dividends in cash and
         long-term capital gain dividends in shares of the same class at net
         asset value; or

2.       To receive income and capital gain dividends 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 that Fund and
confirmations will be mailed to each shareholder. If a shareholder has chosen to
receive cash, a check will be sent. Distributions of 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.

Taxation of the Fund. 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)      The Fund must derive at least 90% of its gross income in each taxable
         year from dividends, interest, payments with respect to certain
         securities loans, gains from the sale of stock, securities and foreign
         currencies, 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 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 derives 90% of their income from interest, dividends,
         capital gains, and other traditionally 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 (including
         receivables), U.S. 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 U.S. Government or other regulated investment
         companies) of any one issuer, of two or more issuers of which the Fund
         owns 20% more of the voting securities 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. If the Fund fails to qualify as a regulated investment company for a
period greater than two taxable years, the Fund may be required to recognize any
net built-in gains with respect to certain of its assets (i.e., the excess of
the aggregate gains, including items of income, over aggregate losses that would
have been realized with respect to such assets if the Fund had been liquidated)
if it qualifies as a regulated investment company in a subsequent year.

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 0% 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. The US currently has a comprehensive
income tax treaty with the following countries: Australia, Austria, Bangladesh,
Barbados, Belgium, Canada, China, Cyprus, the Czech Republic, Denmark, Egypt,
Estonia, Finland, France, Germany, Greece, Hungary, Iceland, India, Indonesia,
Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Korea, Latvia, Lithuania,
Luxembourg, Mexico, Morocco, Netherlands, New Zealand, Norway, Pakistan, the
Philippines, Poland, Portugal, Romania, Russian Federation, Slovak Republic,
Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Thailand,
Trinidad and Tobago, Tunisia, Turkey, Ukraine, the United Kingdom, and
Venezuela. Also, dividends received by the Fund from a real estate investment
trust or another regulated investment company generally are qualified dividend
income only to the extent the dividend distributions are made out of qualified
dividend income received by such real estate investment trust or other regulated
investment company.

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. Any capital loss carryforwards and any post-October loss
deferrals to which the Fund is entitled are disclosed in the Fund's annual and
semi-annual reports to shareholders.

If an individual receives a regular dividend qualifying for the long-term
capital gains rates and such dividend constitutes an "extraordinary dividend,"
and the individual subsequently recognizes a loss on the sale or exchange of
stock in respect of which the extraordinary dividend was paid, then the loss
will be long-term capital loss to the extent of such extraordinary dividend. An
"extraordinary dividend" on common stock for this purpose is generally a
dividend (i) in an amount greater than or equal to 10% of the taxpayer's tax
basis (or trading value) in a share of stock, aggregating dividends with
ex-dividend dates within an 85-day period or (ii) in an amount greater than 20%
of the taxpayer's tax basis (or trading value) in a share of stock, aggregating
dividends with ex-dividend dates within a 365-day period.

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.

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 15 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. If a
shareholder incurs a sales charge in acquiring shares of the Fund, disposes of
those shares within 90 days and then acquires shares in a mutual fund for which
the otherwise applicable sales charge is reduced by reason of a reinvestment
right (e.g., an exchange privilege), the original sales charge will not be taken
into account in computing gain/loss on the original shares to the extent the
subsequent sales charge is reduced. Instead, the disregarded portion of the
original sales charge will be added to the tax basis of the newly acquired
shares. Furthermore, the same rule also applies to a disposition of the newly
acquired shares made within 90 days of the second acquisition. This provision
prevents a shareholder from immediately deducting the sales charge by shifting
his or her investment within a family of mutual funds.

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 U.S. income tax treaty. The Fund may elect for U.S. 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 U.S. federal income tax deduction or as a foreign tax credit
against their U.S. 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") could potentially subject the
Fund to a U.S. 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."

Tax Effects of Certain Transactions. 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.

Certain types of income received by the Fund from 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 "unrelated business taxable income" ("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 by otherwise allowable deductions 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. In addition, 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). If a charitable remainder trust (as defined in Code Section 664)
realizes any UBTI for a taxable year, it will be subject to a 100% excise tax on
such UBTI.

The Fund's investment in so-called "section 1256 contracts," such as regulated
futures contracts, most foreign currency forward contracts traded in the
interbank market and options on most stock indices, are subject to special tax
rules. All section 1256 contracts held by the Fund at the end of its taxable
year are required to be marked to their market value, and any unrealized gain or
loss on those positions will be included in the Fund's income as if each
position had been sold for its fair market value at the end of the taxable year.
The resulting gain or loss will be combined with any gain or loss realized by
the Fund from positions in section 1256 contracts closed during the taxable
year. Provided such positions were held as capital assets and were not part of a
"hedging transaction" nor part of a "straddle," 60% of the resulting net gain or
loss will be treated as long-term capital gain or loss, and 40% of such net gain
or loss will be treated as short-term capital gain or loss, regardless of the
period of time the positions were actually held by the Fund.

In general, gain or loss on a short sale is recognized when the Fund closes the
sale by delivering the borrowed property to the lender, not when the borrowed
property is sold. Gain or loss from a short sale is generally considered as
capital gain or loss to the extent that the property used to close the short
sale constitutes a capital asset in the Fund's hands. Except with respect to
certain situations where the property used by the Fund to close a short sale has
a long-term holding period on the date of the short sale, special rules would
generally treat the gains on short sales as short-term capital gains. These
rules may also terminate the running of the holding period of "substantially
identical property" held by the Fund. Moreover, a loss on a short sale will be
treated as a long-term capital loss if, on the date of the short sale,
"substantially identical property" has been held by the Fund for more than one
year. In general, the Fund will not be permitted to deduct payments made to
reimburse the lender of securities for dividends paid on borrowed stock if the
short sale is closed on or before the 45th day after the short sale is entered
into.

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). With respect to certain
types of swaps, the Fund may be required to currently recognize income or loss
with respect to future payments on such swaps or may elect under certain
circumstances to mark such swaps to market annually for tax purposes as ordinary
income or loss. The tax treatment of many types of credit default swaps is
uncertain.

Other Tax Considerations. Under the backup withholding provisions of the Code,
redemption proceeds as well as distributions may be subject to federal income
tax withholding for certain shareholders, including those who fail to furnish
the Fund with their taxpayer identification numbers and certifications as to
their tax status. Certain shareholders are exempt from backup withholding.
Backup withholding is not an additional tax and any amount withheld may be
credited against a shareholder's U.S. Federal income tax liability.

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 IRS 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.

Taxation of Non-US Shareholders. Dividends paid by the Fund to non-US
shareholders are generally subject to withholding tax at a 30% rate or a reduced
rate specified by an applicable income tax treaty to the extent derived from
investment income and short-term capital gains. In order to obtain a reduced
rate of withholding, a non-US shareholder will be required to provide an IRS
Form W-8BEN certifying its entitlement to benefits under a treaty. The
withholding tax does not apply to regular dividends paid to a non-US shareholder
who provides a Form W-8ECI, certifying that the dividends are effectively
connected with the non-US shareholder's conduct of a trade or business within
the United States. Instead, the effectively connected dividends will be subject
to regular US income tax as if the non-US shareholder were a US shareholder. A
non-US corporation receiving effectively connected dividends may also be subject
to additional "branch profits tax" imposed at a rate of 30% (or a lower treaty
rate). A non-US shareholder who fails to provide an IRS Form W-8BEN or other
applicable form may be subject to backup withholding at the appropriate rate.

In general, United States federal withholding tax will not apply to any gain or
income realized by a non-US shareholder in respect of any distributions of net
long-term capital gains over net short-term capital losses, exempt-interest
dividends, or upon the sale or other disposition of shares of the Fund.

For taxable years beginning before January 1, 2008, properly-designated
dividends are generally exempt from United States federal withholding tax where
they (i) are paid in respect of the Fund's "qualified net interest income"
(generally, the Fund's US source interest income, other than certain contingent
interest and interest from obligations of a corporation or partnership in which
the Fund is at least a 10% shareholder, reduced by expenses that are allocable
to such income) or (ii) are paid in respect of the Fund's "qualified short-term
capital gains" (generally, the excess of the Fund's net short-term capital gain
over the Fund's long-term capital loss for such taxable year). However,
depending on its circumstances, the Fund may designate all, some or none of its
potentially eligible dividends as such qualified net interest income or as
qualified short-term capital gains, 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 non-US shareholder 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 designates the payment as qualified net interest income or qualified
short-term capital gain. Non-US shareholders should contact their intermediaries
with respect to the application of these rules to their accounts.

A distribution from the Fund to foreign shareholders who have held more than 5%
of the Fund at any time during the one-year period ending on the date of
distribution is treated as real property gain subject to 35% withholding tax and
treated as income effectively connected to a US trade or business with certain
tax filing requirements applicable, if such distribution is attributable to a
distribution received by the Fund from a REIT. Restrictions apply with respect
to wash sale and substitute payment transactions.

                                 NET ASSET VALUE

The net asset value of shares of the Fund is computed as of the close of regular
trading on the NYSE on each day the NYSE is open for trading (the "Value Time").
The NYSE 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 OTC market as of the Value Time. Lacking any sales, the
security is valued at the calculated mean between the most recent bid quotation
and the most recent asked quotation (the "Calculated Mean") on such exchange or
OTC market as of the Value Time. If it is not possible to determine the
Calculated Mean, the security is valued at the most recent bid quotation on such
exchange or OTC market as of the Value Time. In the case of certain foreign
exchanges or OTC markets, the closing price reported by the exchange or OTC
market (which may sometimes be referred to as the " official close" or the
"official closing price" or other similar term) will be considered the most
recent sale price.

Debt securities are valued as follows. Money market instruments purchased with
an original or remaining maturity of 60 days or less, maturing at par, are
valued at amortized cost. Other money market instruments are valued based on
information obtained from an approved pricing agent or, if such information is
not readily available, by using matrix pricing techniques (formula driven
calculations based primarily on current market yields). Bank loans are valued at
prices supplied by an pricing agent (which are intended to reflect the mean
between the bid and asked prices), if available, and otherwise at the mean of
the most recent bid and asked quotations or evaluated prices, as applicable,
based on quotations or evaluated prices obtained from one or more
broker-dealers. Privately placed debt securities, other than Rule 144A debt
securities, initially are valued at cost and thereafter based on all relevant
factors, including type of security, size of holding and restrictions on
disposition. Municipal debt securities are valued at prices supplied by a
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 NYSE. 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.


                           BOARD MEMBERS 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 person" (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

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth, Position                                                                   Number of Funds
 with the Trust and Length of     Business Experience and                                        in DWS Fund
 Time Served(1)                   Directorships During the Past 5 Years                          Complex Overseen
--------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                                                                  <C>
Paul K. Freeman                   Consultant, World Bank/Inter-American Development Bank;               134
(1950)                            Governing Council of the Independent Directors Council
Chairperson since 2009, and       (governance, executive committees); formerly: Project Leader,
Board Member since 1993           International Institute for Applied Systems Analysis
                                  (1998-2001); Chief Executive Officer, The Eric Group, Inc.
                                  (environmental insurance) (1986-1998)
--------------------------------------------------------------------------------------------------------------------
John W. Ballantine (1946)         Retired; formerly: Executive Vice President and Chief Risk            134
Board Member since 1999           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
--------------------------------------------------------------------------------------------------------------------
 Henry P. Becton, Jr. (1943)      Vice Chair, WGBH Educational Foundation; Directorships:               134
 Board Member since               Association of Public Television Stations; Becton Dickinson
 1990                             and Company(2) (medical technology company); Belo
                                  Corporation(2) (media company); Boston Museum
                                  of Science; Public Radio International; PRX,
                                  The Public Radio Exchange; The PBS Foundation;
                                  former Directorships: American Public
                                  Television; Concord Academy; New England
                                  Aquarium; Mass. Corporation for Educational
                                  Telecommunications; Committee for Economic
                                  Development; Public Broadcasting Service
--------------------------------------------------------------------------------------------------------------------
Dawn-Marie Driscoll (1946)        President, Driscoll Associates (consulting firm); Executive           134
Board Member since 1987           Fellow, Center for Business Ethics, Bentley University;
                                  formerly: Partner, Palmer & Dodge (1988-1990); Vice President
                                  of Corporate Affairs and General Counsel, Filene's
                                  (1978-1988); Directorships: Trustee of 20 open-end mutual
                                  funds managed by Sun Capital Advisers, Inc. (since 2007);
                                  Director of ICI Mutual Insurance Company (since 2007);
                                  Advisory Board, Center for Business Ethics,
                                  Bentley University; Trustee, Southwest Florida
                                  Community Foundation (charitable
                                  organization); former Directorships:
                                  Investment Company Institute (audit,
                                  executive, nominating committees) and
                                  Independent Directors Council (governance,
                                  executive
                                  committees)
--------------------------------------------------------------------------------------------------------------------
Keith R. Fox (1954)               Managing General Partner, Exeter Capital Partners (a series           134
Board Member since                of private investment funds); Directorships: Progressive
1996                              Holding Corporation (kitchen goods importer and distributor);
                                  Box Top Media Inc. (advertising); The Kennel Shop (retailer)
--------------------------------------------------------------------------------------------------------------------
Kenneth C. Froewiss               Clinical Professor of Finance, NYU Stern School of Business           134
(1945)                            (1997-present); Member, Finance Committee, Association for
Board Member since                Asian Studies (2002-present); Director, Mitsui Sumitomo
2001                              Insurance Group (US) (2004-present); prior thereto, Managing
                                  Director, J.P. Morgan (investment banking firm) (until 1996)
--------------------------------------------------------------------------------------------------------------------
Richard J. Herring                Jacob Safra Professor of International Banking and Professor,         134
(1946)                            Finance Department, The Wharton School, University of
Board Member since                Pennsylvania (since July 1972); Co-Director, Wharton
1990                              Financial Institutions Center (since July 2000); Director,
                                  Japan Equity Fund, Inc. (since September 2007), Thai Capital
                                  Fund, Inc. (since September 2007), Singapore Fund, Inc.
                                  (since September 2007); formerly: Vice Dean and Director,
                                  Wharton Undergraduate Division (July 1995-June 2000);
                                  Director, Lauder Institute of International Management
                                  Studies (July 2000-June 2006)
--------------------------------------------------------------------------------------------------------------------
William McClayton (1944)          Managing Director, Diamond Management & Technology                    134
Board Member since 2004           Consultants, Inc. (global management consulting firm)
                                  (2001-present); Directorship: Board of Managers, YMCA of
                                  Metropolitan Chicago; formerly: Senior Partner, Arthur
                                  Andersen LLP (accounting) (1966-2001); Trustee, Ravinia
                                  Festival
--------------------------------------------------------------------------------------------------------------------
Rebecca W. Rimel                  President and Chief Executive Officer, The Pew Charitable             134
(1951)                            Trusts (charitable organization) (1994 to present); Trustee,
Board Member since                Thomas Jefferson Foundation (charitable organization) (1994
1995                              to present); Trustee, Executive Committee, Philadelphia
                                  Chamber of Commerce (2001 to 2007); Trustee,
                                  Pro Publica (2007-present) (charitable
                                  organization); formerly: Executive Vice
                                  President, The Glenmede Trust Company
                                  (investment trust and wealth management) (1983
                                  to 2004); Board Member, Investor Education
                                  (charitable organization) (2004-2005);
                                  Director, Viasys Health Care(2) (January
                                  2007-June 2007)
--------------------------------------------------------------------------------------------------------------------
William N. Searcy, Jr.            Private investor since October 2003; Trustee of 20 open-end           134
(1946)                            mutual funds managed by Sun Capital Advisers, Inc. (since
Board Member since                October 1998); formerly: Pension & Savings Trust Officer,
1993                              Sprint Corporation(2) (telecommunications) (November
                                  1989-September 2003)
--------------------------------------------------------------------------------------------------------------------
Jean Gleason Stromberg            Retired; formerly: Consultant (1997-2001); Director, US               134
(1943)                            Government Accountability Office (1996-1997); Partner,
Board Member since                Fulbright & Jaworski, L.L.P. (law firm) (1978-1996);
1997                              Directorships: The William and Flora Hewlett Foundation;
                                  Business Leadership Council, Wellesley College; former
                                  Directorships: Service Source, Inc., Mutual Fund Directors
                                  Forum (2002-2004), American Bar Retirement Association
                                  (funding vehicle for retirement plans) (1987-1990 and
                                  1994-1996)
--------------------------------------------------------------------------------------------------------------------
Robert H. Wadsworth (1940)        President, Robert H. Wadsworth & Associates, Inc. (consulting         137
Board Member since 1999           firm) (1983 to present); Director, The Phoenix Boys Choir
                                  Association
--------------------------------------------------------------------------------------------------------------------

Interested Board Member

--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth, Position                                                                   Number of Funds
 with the Trust and Length of     Business Experience and                                        in DWS Fund
 Time Served(1)                   Directorships During the Past 5 Years                          Complex Overseen
--------------------------------------------------------------------------------------------------------------------
 Axel Schwarzer(3)                Managing Director(4), Deutsche Asset Management; Head of              134
 (1958)                           Deutsche Asset Management Americas; CEO of DWS Investments;
 Board Member since               formerly: board member of DWS Investments, Germany
 2006                             (1999-2005); Head of Sales and Product Management for the
                                  Retail and Private Banking Division of
                                  Deutsche Bank in Germany (1997-1999); various
                                  strategic and operational positions for
                                  Deutsche Bank Germany Retail and Private
                                  Banking Division in the field of investment
                                  funds, tax driven instruments and asset
                                  management for corporates (1989-1996)
--------------------------------------------------------------------------------------------------------------------

Officers(5)

--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth, Position
 with the Trust and Length of     Business Experience and
 Time Served(6)                   Directorships During the Past 5 Years
--------------------------------------------------------------------------------------------------------------------
 Michael G. Clark(7) (1965)       Managing Director(4), Deutsche Asset Management (2006-present); President of
 President, 2006-present          DWS family of funds; Director, ICI Mutual Insurance Company (since
                                  October 2007); 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(8) (1962)          Director(4), Deutsche Asset Management
 Vice President and Secretary,
 1999-present
--------------------------------------------------------------------------------------------------------------------
 Paul H. Schubert(7) (1963)       Managing Director(4), Deutsche Asset Management (since July 2004); formerly:
 Chief Financial Officer,         Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family
 2004-present                     of Funds (1998-2004); Vice President and Director of Mutual Fund Finance at UBS
 Treasurer, 2005-present          Global Asset Management (1994-1998)
--------------------------------------------------------------------------------------------------------------------
 Caroline Pearson(8) (1962)       Managing Director(4), Deutsche Asset Management
 Assistant Secretary,
 1997-present
--------------------------------------------------------------------------------------------------------------------
 Rita Rubin(9) (1970)             Vice President and Counsel, Deutsche Asset Management (since October 2007);
 Assistant Secretary,             formerly, Vice President, Morgan Stanley Investment Management (2004-2007);
 2009-present                     Attorney, Shearman & Sterling LLP (2004); Vice President and Associate General
                                  Counsel, UBS Global Asset Management (2001-2004)
--------------------------------------------------------------------------------------------------------------------
 Paul Antosca(8)                  Director(4), Deutsche Asset Management (since 2006); formerly: Vice President,
 (1957)                           The Manufacturers Life Insurance Company (U.S.A.) (1990-2006)
 Assistant Treasurer,
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Jack Clark (8)                   Director(4), Deutsche Asset Management (since 2007); formerly: Vice President,
 (1967)                           State Street Corporation (2002-2007)
 Assistant Treasurer,
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Diane Kenneally(8)               Director(4), Deutsche Asset Management
 (1966)
 Assistant Treasurer,
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Jason Vazquez(9) (1972)          Vice President, Deutsche Asset Management (since 2006); formerly: AML
 Anti-Money Laundering            Operations Manager for Bear Stearns (2004-2006); Supervising Compliance
 Compliance Officer,              Principal and Operations Manager for AXA Financial (1999-2004)
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Robert Kloby(9) (1962)           Managing Director(4), Deutsche Asset Management (2004-present); formerly: Chief
 Chief Compliance Officer,        Compliance Officer/Chief Risk Officer, Robeco USA (2000-2004); Vice President,
 2006-present                     The Prudential Insurance Company of America (1988-2000); E.F. Hutton and
                                  Company (1984-1988)
--------------------------------------------------------------------------------------------------------------------
 J. Christopher Jackson(9)        Director(4), Deutsche Asset Management (2006-present); formerly: Director,
 (1951)                           Senior Vice President, General Counsel, and Assistant Secretary, Hansberger
 Chief Legal Officer,             Global Investors, Inc. (1996-2006); Director, National Society of Compliance
 2006-present                     Professionals (2002-2005) (2006-2009)
--------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)      The length of time served represents the year in which the Board Member
         joined  the board of one or more DWS funds  currently  overseen  by the
         Board.

(2)      A publicly held company with securities  registered pursuant to Section
         12 of the Securities Exchange Act of 1934.

(3)      The mailing address of Axel Schwarzer is c/o Deutsche Investment
         Management Americas Inc., 345 Park Avenue, New York, New York 10154.
         Mr. Schwarzer is an interested Board Member by virtue of his positions
         with Deutsche Asset Management. As an interested person, Mr. Schwarzer
         receives no compensation from the Fund.

(4)      Executive title, not a board directorship.

(5)      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 Fund.

(6)      The length of time served  represents the year in which the officer was
         first elected in such capacity for one or more DWS funds.

(7)      Address:  345 Park Avenue, New York, New York 10154.

(8)      Address: One Beacon Street, Boston, Massachusetts 02108.

(9)      Address:  280 Park Avenue, New York, New York 10017.

Certain officers hold similar positions for other investment companies for which
DIMA or an affiliate serves as the Advisor.

Officer's Role with Principal Underwriter:  DWS Investments Distributors, Inc.

 Paul H. Schubert:                  Vice President
 Jason Vazquez:                     Vice President and AML Compliance Officer
 Caroline Pearson:                  Secretary

Board Members' Responsibilities. The officers of the Trust manage its day-to-day
operations under the direction of the Board. The primary responsibility of the
Board is to represent the interests of the Fund and to provide oversight of the
management of the Fund.

Board Committees. The Board has established the following standing committees:
Audit Committee, Nominating and Governance Committee, Contract Committee, Equity
Oversight Committee, Fixed-Income and Quant Oversight Committee, Marketing and
Shareholder Services Committee, and Operations Committee. For each committee,
the Board has adopted a written charter setting forth each committee's
responsibilities. Each committee was reconstituted effective April 1, 2008.

Audit Committee: The Audit Committee, which consists entirely of Independent
Board Members, assists the Board in fulfilling its responsibility for oversight
of (1) the integrity of the financial statements, (2) the Fund's accounting and
financial reporting policies and procedures, (3) the Fund's compliance with
legal and regulatory requirements related to accounting and financial reporting
and (4) the qualifications, independence and performance of the independent
registered public accounting firm for the Fund. It also approves and recommends
to the Board the appointment, retention or termination of the independent
registered public accounting firm for the Fund, reviews the scope of audit and
internal controls, considers and reports to the Board on matters relating to the
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
William McClayton (Chair), Kenneth C. Froewiss (Vice Chair), John W. Ballantine,
Henry P. Becton, Jr., Keith R. Fox and William N. Searcy, Jr. During the
calendar year 2008, the Audit Committee of the Fund's Board held six (6)
meetings.

Nominating and Governance Committee: The Nominating and Governance Committee,
which consists entirely of Independent Board Members, recommends individuals for
membership on the Board, nominates officers, Board and committee chairs, vice
chairs and committee members, and oversees the operations of the Board. The
Nominating and Governance Committee also reviews recommendations by shareholders
for candidates for Board positions. Shareholders may recommend candidates for
Board positions by forwarding their correspondence by US mail or courier service
to Dawn-Marie Driscoll, P.O. Box 100176, Cape Coral, FL 33904. The members of
the Nominating and Governance Committee are Henry P. Becton, Jr. (Chair),
Rebecca W. Rimel (Vice Chair), Paul K. Freeman and William McClayton. During the
calendar year 2008, the Nominating and Governance Committee of the Fund's Board
held four (4) meetings.

Contract Committee: The Contract Committee, which consists entirely of
Independent Board Members, reviews at least annually, (a) the Fund's financial
arrangements with DIMA and its affiliates, and (b) the Fund's expense ratios.
The members of the Contract Committee are Robert H. Wadsworth (Chair), Keith R.
Fox (Vice Chair), Henry P. Becton, Jr., Richard J. Herring, William McClayton
and Jean Gleason Stromberg. During the calendar year 2008, the Contract Review
Committee of the Fund's Board held seven (7) meetings.

Equity Oversight Committee: The Equity Oversight Committee reviews the
investment operations of those funds that primarily invest in equity securities
(except for those funds managed by a quantitative investment team). The members
of the Equity Oversight Committee are John W. Ballantine (Chair), William
McClayton (Vice Chair), Henry P. Becton, Jr., Keith R. Fox, Richard J. Herring
and Rebecca W. Rimel. During the calendar year 2008, the Equity Oversight
Committee of the Fund's Board held five (5) meetings.


Fixed-Income and Quant Oversight Committee: The Fixed-Income and Quant Oversight
Committee reviews the investment operations of those funds that primarily invest
in fixed-income securities or are managed by a quantitative investment team. The
members of the Fixed-Income and Quant Oversight Committee are William N. Searcy,
Jr. (Chair), Jean Gleason Stromberg (Vice Chair), Dawn-Marie Driscoll, Kenneth
C. Froewiss and Robert H. Wadsworth. During the calendar year 2008, the
Fixed-Income Oversight Committee of the Fund's Board held five (5) meetings.


Marketing and Shareholder Services Committee: The Marketing and Shareholder
Services Committee reviews the Fund's marketing program, sales practices and
literature and shareholder services. The members of the Marketing and
Shareholder Services Committee are Richard J. Herring (Chair), Dawn-Marie
Driscoll (Vice Chair), Rebecca W. Rimel, Jean Gleason Stromberg and Robert H.
Wadsworth. During the calendar year 2008, the Marketing/Distribution/Shareholder
Service Committee of the Fund's Board held four (4) meetings.

The Operations Committee: The Operations Committee reviews the administrative
operations, legal affairs and general compliance matters of the Fund. The
Operations Committee reviews administrative matters related to the operations of
the Fund, policies and procedures relating to portfolio transactions, custody
arrangements, fidelity bond and insurance arrangements, valuation of Fund assets
and securities and such other tasks as the full Board deems necessary or
appropriate. The Operations Committee also oversees the valuation of the Fund's
securities and other assets and determines, as needed, the fair value of Fund
securities or other assets under certain circumstances as described in the
Fund's Valuation Procedures. The Operations Committee has appointed a Valuation
Sub-Committee, which may make determinations of fair value required when the
Operations Committee is not in session. The members of the Operations Committee
are Dawn-Marie Driscoll (Chair), John W. Ballantine (Vice Chair), Kenneth C.
Froewiss, Rebecca W. Rimel and William N. Searcy, Jr. The members of the
Valuation Sub-Committee are Kenneth C. Froewiss (Chair), John W. Ballantine,
Dawn-Marie Driscoll (Alternate), Rebecca W. Rimel (Alternate) and William N.
Searcy, Jr. (Alternate). During the calendar year 2008, the Operations Committee
held four (4) meetings and the Valuation Sub-Committee held [number of meetings
varies by fund] meetings.

Ad Hoc Committees. In addition to the standing committees described above, from
time to time the Board may also form ad hoc committees to consider specific
issues.

Remuneration. Each Independent Board Member receives compensation from the Fund
for his or her services, which includes retainer fees and specified amounts for
various committee services and for the Board Chairperson. 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.

Board Members who are officers, directors, employees or stockholders of Deutsche
Asset Management or its affiliates receive no direct compensation from the 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
Fund. The following tables show compensation from the Fund and aggregate
compensation from all of the funds in the DWS fund complex received by each
Independent Board Member during the calendar year 2008. Mr. Schwarzer is an
interested person of the Fund and received no compensation from the Fund or any
fund in the DWS fund complex during the relevant periods.

<TABLE>
<CAPTION>
                                       Aggregate Compensation             Total Compensation
                                    from DWS International Select           from Fund and
  Name of Board Member                       Equity Fund                 DWS Fund Complex(1)
  --------------------                       -----------                 -------------------

<S>                                               <C>                           <C>
  John W. Ballantine                              $424                          $237,500
  Henry P. Becton, Jr.(2)                         $620                          $246,000
  Dawn-Marie Driscoll(2)(3)                       $746                          $292,500
  Keith R. Fox(2)                                 $586                          $229,500
  Paul K. Freeman                                 $447                          $255,000
  Kenneth C. Froewiss                             $586                          $226,750
  Richard J. Herring(2)                           $620                          $240,000
  William McClayton(4)                            $438                          $257,500
  Rebecca W. Rimel(2)                             $586                          $233,500
  William N. Searcy, Jr.                          $620                          $238,000
  Jean Gleason Stromberg                          $586                          $225,500
  Robert H. Wadsworth                             $438                          $273,500

(1)      The DWS fund complex is composed of 136 funds as of December 31, 2008.

(2)      Aggregate compensation includes amounts paid to the Board Members for
         special meetings of ad hoc committees of the Board in connection with
         the consolidation of the DWS fund boards and various funds, meetings
         for considering fund expense simplification initiatives, and
         consideration of issues specific to the Fund's direct shareholders
         (i.e., those shareholders who did not purchase shares through financial
         intermediaries). Such amounts totaled $8,000 for Mr. Becton, $2,000 for
         Ms. Driscoll, $2,000 for Mr. Fox, $2,000 for Dr. Herring and $8,000 for
         Ms. Rimel. These meeting fees were borne by the funds.

(3)      Includes  $70,000 in annual  retainer fees received by Ms.  Driscoll as
         Chairperson of DWS funds.

(4)      Includes $15,000 paid to Mr. McClayton for numerous special meetings of
         an ad hoc committee of the former Chicago Board in connection with
         board consolidation initiatives.

Board Member Ownership in the Fund

The following table shows the dollar range of equity securities beneficially
owned by each Board Member in the Fund and DWS fund complex as of December 31,
2008.

                                            Dollar Range of Beneficial            Aggregate Dollar Range of
                                                     Ownership               Ownership in all Funds Overseen by
                                               in DWS International                     Board Member
Board Member                                    Select Equity Fund               in the DWS Fund Complex(1)
------------                                    ------------------               --------------------------

Independent Board Member:

John W. Ballantine                                   [$/None]                              Over $100,000
Henry P. Becton, Jr.                                 [$/None]                              Over $100,000
Dawn-Marie Driscoll                                  [$/None]                              Over $100,000
Keith R. Fox                                         [$/None]                              Over $100,000
Paul K. Freeman                                      [$/None]                              Over $100,000
Kenneth C. Froewiss                                  [$/None]                              Over $100,000
Richard J. Herring                                   [$/None]                              Over $100,000
William McClayton                                    [$/None]                              Over $100,000
Rebecca W. Rimel                                     [$/None]                              Over $100,000
William N. Searcy, Jr.                               [$/None]                              Over $100,000
Jean Gleason Stromberg                               [$/None]                              Over $100,000
Robert H. Wadsworth                                  [$/None]                              Over $100,000

Interested Board Member:

Axel Schwarzer                                       [$/None]                              Over $100,000

(1)      Securities beneficially owned as defined under the 1934 Act include
         direct and/or indirect ownership of securities where the Board Member's
         economic interest is tied to the securities, employment ownership and
         securities when the Board Member can exert voting power, and when the
         Board Member has authority to sell the securities. The dollar ranges
         are: None, $1-$10,000, $10,001-$50,000, $50,001-$100,000 and 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, 2008. Immediate family members 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).

                                                                                   Value of        Percent of
                                   Owner and                                     Securities on     Class on an
Independent                     Relationship to                     Title of     an Aggregate       Aggregate
Board Member                      Board Member         Company        Class          Basis            Basis
------------                      ------------         -------        -----          -----            -----

John W. Ballantine                                      None
Henry P. Becton, Jr.                                    None
Dawn-Marie Driscoll                                     None
Keith R. Fox                                            None
Paul K. Freeman                                         None
Kenneth C. Froewiss                                     None
Richard J. Herring                                      None
William McClayton                                       None
Rebecca W. Rimel                                        None
William N. Searcy, Jr.                                  None
Jean Gleason Stromberg                                  None
Robert H. Wadsworth                                     None
</TABLE>

Securities Beneficially Owned

As of [Date within 30 days of filing], 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 [Date within 30 days of filing], no
person owned of record or beneficially 5% or more of any class of the Fund's
outstanding shares, except as noted below.



Agreement to Indemnify Independent Trustees for Certain Expenses


In connection with litigation or regulatory action related to possible improper
market timing or other improper trading activity or possible improper marketing
and sales activity in certain DWS Funds (the "Affected Funds"), DIMA has agreed
to indemnify and hold harmless the Affected Funds ("Fund Indemnification
Agreement") against any and all loss, damage, liability and expense, arising
from market timing or marketing and sales matters alleged in any enforcement
actions brought by governmental authorities involving or potentially affecting
the Affected Funds or DIMA ("Enforcement Actions") or that are the basis for
private actions brought by shareholders of the Affected Funds against the
Affected Funds, their directors 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 Affected
Funds and in light of the rebuttable presumption generally afforded to
independent directors/trustees of investment companies that they have not
engaged in disabling conduct, DIMA has also agreed, subject to applicable law
and regulation, to indemnify certain (or, with respect to certain Affected
Funds, all) of the Independent Trustees of the Affected Funds, 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 Affected Funds' Board determines that the
Independent Trustees ultimately would not be entitled to indemnification or (2)
for any liability of the Independent Trustees to the Funds 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 director or trustee of the Affected Funds as
determined in a final adjudication in such action or proceeding. The estimated
amount of any expenses that may be advanced to the Independent Trustees or
indemnity that may be payable under the indemnity agreements is currently
unknown. These agreements by DIMA will survive the termination of the investment
management agreements between DIMA and the Affected Funds.



                               TRUST ORGANIZATION

The Fund is a series of DWS Advisor Funds (the "Trust"). 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"). 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. The
Trust's name was changed to DWS Advisor Funds effective February 6, 2006. The
Board of Trustees of the Trust is responsible for the overall management and
supervision of the affairs of the Trust. The Declaration of Trust authorizes the
Board of Trustees to create a separate investment series or portfolios of
shares. On or about July 10, 2006, the International Select Equity Predecessor
Fund transferred all its assets and liabilities from DWS Investments Trust, a
Delaware statutory trust, into a new series of the Trust, under the same fund
name. The Trust offers shares of beneficial interest of separate series, par
value $0.001 per share. The shares of the other series of the Trust are offered
through separate prospectuses and statements of additional information. No
series of shares has any preference over any other series. The trust also
reserves the right to issue more than one class of shares of the Fund. 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 a Fund, 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 Advisor votes proxies pursuant to the proxy
voting policy and guidelines set forth in Appendix A to this SAI).

You may obtain information about how a fund voted proxies related to its
portfolio securities during the 12-month period ended June 30 by visiting the
Securities and Exchange Commission's Web site at www.sec.gov or by visiting our
Web site at: www.dws-investments.com (click on "proxy voting" at the bottom of
the page).



                              FINANCIAL STATEMENTS

International Select Equity Predecessor Fund's audited financial statements, for
the classes of shares it makes available, for the year ended October 31, 2007
are included in, and incorporated by reference into, this Statement of
Additional Information from the Annual Report to Shareholders of the Fund in
reliance upon the reports of PricewaterhouseCoopers LLP, the Fund's independent
registered public accounting firm, as experts in accounting and auditing. The
Board of Trustees of International Select Equity Predecessor Fund approved a
1.82569632-for-1 stock split of the Class R shares of International Select
Equity Predecessor Fund, a 1.81761006-for-1 stock split of the Institutional
Class shares of International Select Equity Predecessor Fund, a 1.79424978-for-1
stock split of the Investment Class shares of International Select Equity
Predecessor Fund and a 1.80772686-for-1 stock split of the Premier Class shares
of International Select Equity Predecessor Fund which was effective November 11,
2005. The share and per share data presented in the financial statements
incorporated by reference into this Statement of Additional Information have not
been restated for this split.

The financial statements, including the portfolio of investments together with
the notes to financial statements in the Annual Report to the Shareholders of
the Fund for the year ended October 31, 2007, are incorporated herein by
reference and are hereby deemed to be a part of this Statement of Additional
Information.


                             ADDITIONAL INFORMATION

The CUSIP number of DWS International Select Equity Fund Class S is 23339E707.

The Fund has a fiscal year end of October 31.

The Fund's prospectus and this SAI omit certain information contained in the
Registration Statement and its amendments 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.

The Trust has filed with the SEC, 100 F Street, NE, Washington, D.C. 20549, a
Registration Statement under the 1933 Act with respect to the securities of the
Fund and certain other series of the Trust. If further information is desired
with respect to the Trust, the Fund or such other series, reference is made to
the Registration Statement and the exhibits filed as part thereof. The
Registration Statement and its amendments are available for inspection by the
public at the SEC in Washington, D.C.



                      APPENDIX A -- PROXY VOTING GUIDELINES

       Deutsche Asset Management ("AM") Proxy Voting Policy and Guidelines


I.       INTRODUCTION

AM has adopted and implemented the following policies and procedures, which it
believes are reasonably designed to ensure that proxies are voted in the best
economic interest of clients, in accordance with its fiduciary duties and local
regulation. These Proxy Voting Policies, Procedures and Guidelines shall apply
to all accounts managed by US domiciled advisers and to all US client accounts
managed by non US regional offices. Non US regional offices are required to
maintain procedures and to vote proxies as may be required by law on behalf of
their non US clients. In addition, AM's proxy policies reflect the fiduciary
standards and responsibilities for ERISA accounts.

The attached guidelines represent a set of global recommendations that were
determined by the Global Proxy Voting Sub-Committee ("the GPVSC"). These
guidelines were developed to provide AM with a comprehensive list of
recommendations that represent how AM will generally vote proxies for its
clients. The recommendations derived from the application of these guidelines
are not intended to influence the various AM legal entities either directly or
indirectly by parent or affiliated companies. In addition, the organizational
structures and documents of the various AM legal entities allows, where
necessary or appropriate, the execution by individual AM subsidiaries of the
proxy voting rights independently of any DB parent or affiliated company. This
applies in particular to non U.S. fund management companies. The individuals
that make proxy voting decisions are also free to act independently, subject to
the normal and customary supervision by the management/boards of these AM legal
entities.


II.      AM'S PROXY VOTING RESPONSIBILITIES

Proxy votes are the property of AM's advisory clients.(1) As such, AM's
authority and responsibility to vote such proxies depend upon its contractual
relationships with its clients. AM has delegated responsibility for effecting
its advisory clients' proxy votes to Institutional Shareholder Services ("ISS"),
an independent third-party proxy voting specialist. ISS votes AM's advisory
clients' proxies in accordance with AM's proxy guidelines or AM's specific
instructions. Where a client has given specific instructions as to how a proxy
should be voted, AM will notify ISS to carry out those instructions. Where no
specific instruction exists, AM will follow the procedures in voting the proxies
set forth in this document. Certain Taft-Hartley clients may direct AM to have
ISS vote their proxies in accordance with Taft Hartley voting Guidelines

_____________________

(1)      For purposes of these Policies and Procedures, "clients" refers to
         persons or entities: for which AM serves as investment adviser or
         sub-adviser; for which AM votes proxies; and that have an economic or
         beneficial ownership interest in the portfolio securities of issuers
         soliciting such proxies.

Clients may in certain instances contract with their custodial agent and notify
AM that they wish to engage in securities lending transactions. In such cases,
it is the responsibility of the custodian to deduct the number of shares that
are on loan so that they do not get voted twice.


III.     POLICIES

1.       Proxy voting activities are conducted in the best economic interest of
         clients

AM has adopted the following policies and procedures to ensure that proxies are
voted in accordance with the best economic interest of its clients, as
determined by AM in good faith after appropriate review.

2.       The Global Proxy Voting Sub-Committee

The Global Proxy Voting Sub-Committee (the "GPVSC") is an internal working group
established by the applicable AM's Investment Risk Oversight Committee pursuant
to a written charter. The GPVSC is responsible for overseeing AM's proxy voting
activities, including:

(i)    adopting, monitoring and updating guidelines, attached as Exhibit A (the
       "Guidelines"), that provide how AM will generally vote proxies pertaining
       to a comprehensive list of common proxy voting matters;

(ii)   voting proxies where (A) the issues are not covered by specific client
       instruction or the Guidelines; (B) the Guidelines specify that the issues
       are to be determined on a case-by-case basis; or (C) where an exception
       to the Guidelines may be in the best economic interest of AM's clients;
       and

(iii)  monitoring the Proxy Vendor Oversight's proxy voting activities (see
       below).

AM's Proxy Vendor Oversight, a function of AM's Operations Group, is responsible
for coordinating with ISS to administer AM's proxy voting process and for voting
proxies in accordance with any specific client instructions or, if there are
none, the Guidelines, and overseeing ISS' proxy responsibilities in this regard.

3.       Availability of Proxy Voting Policies and Procedures and proxy voting
         record

Copies of these Policies and Procedures, as they may be updated from time to
time, are made available to clients as required by law and otherwise at AM's
discretion. Clients may also obtain information on how their proxies were voted
by AM as required by law and otherwise at AM's discretion; however, AM must not
selectively disclose its investment company clients' proxy voting records. The
Proxy Vendor Oversight will make proxy voting reports available to advisory
clients upon request. The investment companies' proxy voting records will be
disclosed to shareholders by means of publicly-available annual filings of each
company's proxy voting record for 12-month periods ended June 30 (see
"Recordkeeping" below), if so required by relevant law.


IV.      PROCEDURES

The key aspects of AM's proxy voting process are as follows:

1.       The GPVSC's Proxy Voting Guidelines

The Guidelines set forth the GPVSC's standard voting positions on a
comprehensive list of common proxy voting matters. The GPVSC has developed, and
continues to update the Guidelines based on consideration of current corporate
governance principles, industry standards, client feedback, and the impact of
the matter on issuers and the value of the investments.

The GPVSC will review the Guidelines as necessary to support the best economic
interests of AM's clients and, in any event, at least annually. The GPVSC will
make changes to the Guidelines, whether as a result of the annual review or
otherwise, taking solely into account the best economic interests of clients.
Before changing the Guidelines, the GPVSC will thoroughly review and evaluate
the proposed change and the reasons therefore, and the GPVSC Chair will ask
GPVSC members whether anyone outside of the AM organization (but within Deutsche
Bank and its affiliates) or any entity that identifies itself as a AM advisory
client has requested or attempted to influence the proposed change and whether
any member has a conflict of interest with respect to the proposed change. If
any such matter is reported to the GPVSC Chair, the Chair will promptly notify
the Conflicts of Interest Management Sub-Committee (see below) and will defer
the approval, if possible. Lastly, the GPVSC will fully document its rationale
for approving any change to the Guidelines.

The Guidelines may reflect a voting position that differs from the actual
practices of the public company(ies) within the Deutsche Bank organization or of
the investment companies for which AM or an affiliate serves as investment
adviser or sponsor. Investment companies, particularly closed-end investment
companies, are different from traditional operating companies. These differences
may call for differences in voting positions on the same matter. Further, the
manner in which AM votes investment company proxies may differ from proposals
for which a AM-advised or sponsored investment company solicits proxies from its
shareholders. As reflected in the Guidelines, proxies solicited by closed-end
(and open-end) investment companies are generally voted in accordance with the
pre-determined guidelines of ISS. See Section IV.3.B.

Funds ("Underlying Funds") in which Topiary Fund Management Fund of Funds (each,
a "Fund") invest, may from time to time seek to revise their investment terms
(i.e. liquidity, fees, etc.) or investment structure. In such event, the
Underlying Funds may require approval/consent from its investors to effect the
relevant changes. Topiary Fund Management has adopted Proxy Voting Procedures
which outline the process for these approvals.

2.       Specific proxy voting decisions made by the GPVSC

The Proxy Vendor Oversight will refer to the GPVSC all proxy proposals (i) that
are not covered by specific client instructions or the Guidelines; or (ii) that,
according to the Guidelines, should be evaluated and voted on a case-by-case
basis.

Additionally, if, the Proxy Vendor Oversight, the GPVSC Chair or any member of
the GPVSC, a portfolio manager, a research analyst or a sub-adviser believes
that voting a particular proxy in accordance with the Guidelines may not be in
the best economic interests of clients, that individual may bring the matter to
the attention of the GPVSC Chair and/or the Proxy Vendor Oversight.(2)

_____________________

(2)      The Proxy Vendor Oversight generally monitors upcoming proxy
         solicitations for heightened attention from the press or the industry
         and for novel or unusual proposals or circumstances, which may prompt
         the Proxy Vendor Oversight to bring the solicitation to the attention
         of the GPVSC Chair. AM portfolio managers, AM research analysts and
         sub-advisers also may bring a particular proxy vote to the attention of
         the GPVSC Chair, as a result of their ongoing monitoring of portfolio
         securities held by advisory clients and/or their review of the periodic
         proxy voting record reports that the GPVSC Chair distributes to AM
         portfolio managers and AM research analysts.

If the Proxy Vendor Oversight refers a proxy proposal to the GPVSC or the GPVSC
determines that voting a particular proxy in accordance with the Guidelines is
not in the best economic interests of clients, the GPVSC will evaluate and vote
the proxy, subject to the procedures below regarding conflicts.

The GPVSC endeavors to hold meetings to decide how to vote particular proxies
sufficiently before the voting deadline so that the procedures below regarding
conflicts can be completed before the GPVSC's voting determination.

3.       Certain proxy votes may not be cast

In some cases, the GPVSC may determine that it is in the best economic interests
of its clients not to vote certain proxies. If the conditions below are met with
regard to a proxy proposal, AM will abstain from voting:

o        Neither the Guidelines nor specific client instructions cover an issue;

o        ISS does not make a recommendation on the issue;

o        The GPVSC cannot convene on the proxy proposal at issue to make a
         determination as to what would be in the client's best interest. (This
         could happen, for example, if the Conflicts of Interest Management
         Sub-committee found that there was a material conflict or if despite
         all best efforts being made, the GPVSC quorum requirement could not be
         met).

In addition, it is AM's policy not to vote proxies of issuers subject to laws of
those jurisdictions that impose restrictions upon selling shares after proxies
are voted, in order to preserve liquidity. In other cases, it may not be
possible to vote certain proxies, despite good faith efforts to do so. For
example, some jurisdictions do not provide adequate notice to shareholders so
that proxies may be voted on a timely basis. Voting rights on securities that
have been loaned to third-parties transfer to those third-parties, with loan
termination often being the only way to attempt to vote proxies on the loaned
securities. Lastly, the GPVSC may determine that the costs to the client(s)
associated with voting a particular proxy or group of proxies outweighs the
economic benefits expected from voting the proxy or group of proxies.

The Proxy Vendor Oversight will coordinate with the GPVSC Chair regarding any
specific proxies and any categories of proxies that will not or cannot be voted.
The reasons for not voting any proxy shall be documented.

4.       Conflict of Interest Procedures

A. Procedures to Address Conflicts of Interest and Improper Influence

Overriding Principle. In the limited circumstances where the GPVSC votes
proxies,(3) the GPVSC will vote those proxies in accordance with what it, in
good faith, determines to be the best economic interests of AM's clients.(4)

_____________________

(3)      As mentioned above, the GPVSC votes proxies (i) where neither a
         specific client instruction nor a Guideline directs how the proxy
         should be voted, (ii) where the Guidelines specify that an issue is to
         be determined on a case by case basis or (iii) where voting in
         accordance with the Guidelines may not be in the best economic
         interests of clients.

(4)      The Proxy Vendor Oversight, who serves as the non-voting secretary of
         the GPVSC, may receive routine calls from proxy solicitors and other
         parties interested in a particular proxy vote. Any contact that
         attempts to exert improper pressure or influence shall be reported to
         the Conflicts of Interest Management Sub-Committee.

Independence of the GPVSC. As a matter of Compliance policy, the GPVSC and the
Proxy Vendor Oversight are structured to be independent from other parts of
Deutsche Bank. Members of the GPVSC and the employee responsible for Proxy
Vendor Oversight are employees of AM. As such, they may not be subject to the
supervision or control of any employees of Deutsche Bank Corporate and
Investment Banking division ("CIB"). Their compensation cannot be based upon
their contribution to any business activity outside of AM without prior approval
of Legal and Compliance. They can have no contact with employees of Deutsche
Bank outside of the Private Client and Asset Management division ("PCAM")
regarding specific clients, business matters or initiatives without the prior
approval of Legal and Compliance. They furthermore may not discuss proxy votes
with any person outside of AM (and within AM only on a need to know basis).

Conflict Review Procedures. There will be a committee (the "Conflicts of
Interest Management Sub-Committee") established within AM that will monitor for
potential material conflicts of interest in connection with proxy proposals that
are to be evaluated by the GPVSC. Promptly upon a determination that a vote
shall be presented to the GPVSC, the GPVSC Chair shall notify the Conflicts of
Interest Management Sub-Committee. The Conflicts of Interest Management
Sub-Committee shall promptly collect and review any information deemed
reasonably appropriate to evaluate, in its reasonable judgment, if AM or any
person participating in the proxy voting process has, or has the appearance of,
a material conflict of interest. For the purposes of this policy, a conflict of
interest shall be considered "material" to the extent that a reasonable person
could expect the conflict to influence, or appear to influence, the GPVSC's
decision on the particular vote at issue. GPVSC should provide the Conflicts of
Interest Management Sub-Committee a reasonable amount of time (no less than 24
hours) to perform all necessary and appropriate reviews. To the extent that a
conflicts review can not be sufficiently completed by the Conflicts of Interest
Management Sub-Committee the proxies will be voted in accordance with the
standard guidelines.

The information considered by the Conflicts of Interest Management Sub-Committee
may include without limitation information regarding (i) AM client
relationships; (ii) any relevant personal conflict known by the Conflicts of
Interest Management Sub-Committee or brought to the attention of that
sub-committee; (iii) and any communications with members of the GPVSC (or anyone
participating or providing information to the GPVSC) and any person outside of
the AM organization (but within Deutsche Bank and its affiliates) or any entity
that identifies itself as a AM advisory client regarding the vote at issue. In
the context of any determination, the Conflicts of Interest Management
Sub-Committee may consult with, and shall be entitled to rely upon, all
applicable outside experts, including legal counsel.

Upon completion of the investigation, the Conflicts of Interest Management
Sub-Committee will document its findings and conclusions. If the Conflicts of
Interest Management Sub-Committee determines that (i) AM has a material conflict
of interest that would prevent it from deciding how to vote the proxies
concerned without further client consent or (ii) certain individuals should be
recused from participating in the proxy vote at issue, the Conflicts of Interest
Management Sub-Committee will so inform the GPVSC chair.

If notified that AM has a material conflict of interest as described above, the
GPVSC chair will obtain instructions as to how the proxies should be voted
either from (i) if time permits, the effected clients, or (ii) in accordance
with the standard guidelines. If notified that certain individuals should be
recused from the proxy vote at issue, the GPVSC Chair shall do so in accordance
with the procedures set forth below.

Note: Any AM employee who becomes aware of a potential, material conflict of
interest in respect of any proxy vote to be made on behalf of clients shall
notify Compliance. Compliance shall call a meeting of the conflict review
committee to evaluate such conflict and determine a recommended course of
action.

Procedures to be followed by the GPVSC. At the beginning of any discussion
regarding how to vote any proxy, the GPVSC Chair (or his or her delegate) will
inquire as to whether any GPVSC member (whether voting or ex officio) or any
person participating in the proxy voting process has a personal conflict of
interest or has actual knowledge of an actual or apparent conflict that has not
been reported to the Conflicts of Interest Management Sub-Committee.

The GPVSC Chair also will inquire of these same parties whether they have actual
knowledge regarding whether any director, officer or employee outside of the AM
organization (but within Deutsche Bank and its affiliates) or any entity that
identifies itself as a AM advisory client, has: (i) requested that AM, the Proxy
Vendor Oversight (or any member thereof) or a GPVSC member vote a particular
proxy in a certain manner; (ii) attempted to influence AM, the Proxy Vendor
Oversight (or any member thereof), a GPVSC member or any other person in
connection with proxy voting activities; or (iii) otherwise communicated with a
GPVSC member or any other person participating or providing information to the
GPVSC regarding the particular proxy vote at issue, and which incident has not
yet been reported to the Conflicts of Interest Management Sub- Committee.

If any such incidents are reported to the GPVSC Chair, the Chair will promptly
notify the Conflicts of Interest Management Sub-Committee and, if possible, will
delay the vote until the Conflicts of Interest Management Sub-Committee can
complete the conflicts report. If a delay is not possible, the Conflicts of
Interest Management Sub-Committee will instruct the GPVSC whether anyone should
be recused from the proxy voting process, or whether AM should vote the proxy in
accordance with the standard guidelines, seek instructions as to how to vote the
proxy at issue from ISS or, if time permits, the effected clients. These
inquiries and discussions will be properly reflected in the GPVSC's minutes.

Duty to Report. Any AM employee, including any GPVSC member (whether voting or
ex officio), that is aware of any actual or apparent conflict of interest
relevant to, or any attempt by any person outside of the AM organization (but
within Deutsche Bank and its affiliates) or any entity that identifies itself as
a AM advisory client to influence, how AM votes its proxies has a duty to
disclose the existence of the situation to the GPVSC Chair (or his or her
designee) and the details of the matter to the Conflicts of Interest Management
Sub-Committee. In the case of any person participating in the deliberations on a
specific vote, such disclosure should be made before engaging in any activities
or participating in any discussion pertaining to that vote.

Recusal of Members. The GPVSC will recuse from participating in a specific proxy
vote any GPVSC members (whether voting or ex officio) and/or any other person
who (i) are personally involved in a material conflict of interest; or (ii) who,
as determined by the Conflicts of Interest Management Sub-Committee, have actual
knowledge of a circumstance or fact that could effect their independent
judgment, in respect of such vote. The GPVSC will also exclude from
consideration the views of any person (whether requested or volunteered) if the
GPVSC or any member thereof knows, or if the Conflicts of Interest Management
Sub-Committee has determined, that such other person has a material conflict of
interest with respect to the particular proxy, or has attempted to influence the
vote in any manner prohibited by these policies.

If, after excluding all relevant GPVSC voting members pursuant to the paragraph
above, there are three or more GPVSC voting members remaining, those remaining
GPVSC members will determine how to vote the proxy in accordance with these
Policies and Procedures. If there are fewer than three GPVSC voting members
remaining, the GPVSC Chair will vote the proxy in accordance with the standard
guidelines, will obtain instructions as to how to have the proxy voted from, if
time permits, the effected clients and otherwise from ISS.

B.       Investment Companies and Affiliated Public Companies

Investment Companies. As reflected in the Guidelines, all proxies solicited by
open-end and closed-end investment companies are voted in accordance with the
pre-determined guidelines of ISS, unless the investment company client directs
AM to vote differently on a specific proxy or specific categories of proxies.
However, regarding investment companies for which AM or an affiliate serves as
investment adviser or principal underwriter, such proxies are voted in the same
proportion as the vote of all other shareholders (i.e., "mirror" or "echo"
voting). Master fund proxies solicited from feeder funds are voted in accordance
with applicable provisions of Section 12 of the Investment Company Act of 1940.

Subject to participation agreements with certain Exchange Traded Funds ("ETF")
issuers that have received exemptive orders from the U.S. Securities and
Exchange Commission allowing investing DWS funds to exceed the limits set forth
in Section 12(d)(1)(A) and (B) of the Investment Company Act of 1940, DeAM will
echo vote proxies for ETFs in which Deutsche Bank holds more than 25% of
outstanding voting shares globally when required to do so by participation
agreements and SEC orders.

Affiliated Public Companies. For proxies solicited by non-investment company
issuers of or within the Deutsche Bank organization, e.g., Deutsche bank itself,
these proxies will be voted in the same proportion as the vote of other
shareholders (i.e., "mirror" or "echo" voting).

Note: With respect to the QP Trust (not registered under the Investment Company
Act of 1940), the Fund is not required to engage in echo voting and the
investment adviser will use these Guidelines, and may determine, with respect to
the QP Trust, to vote contrary to the positions in the Guidelines, consistent
with the Fund's best interest.

C.       Other Procedures That Limit Conflicts of Interest

AM and other entities in the Deutsche Bank organization have adopted a number of
policies, procedures and internal controls that are designed to avoid various
conflicts of interest, including those that may arise in connection with proxy
voting, including:

o        Deutsche Bank Americas Restricted Activities Policy. This policy
         provides for, among other things, independence of AM employees from
         CIB, and information barriers between AM and other affiliates.
         Specifically, no AM employee may be subject to the supervision or
         control of any employee of CIB. No AM employee shall have his or her
         compensation based upon his or her contribution to any business
         activity within the Bank outside of the business of AM, without the
         prior approval of Legal or Compliance. Further, no employee of CIB
         shall have any input into the compensation of a AM employee without the
         prior approval of Legal or Compliance. Under the information barriers
         section of this policy, as a general rule, AM employees who are
         associated with the investment process should have no contact with
         employees of Deutsche Bank or its affiliates, outside of PCAM,
         regarding specific clients, business matters, or initiatives. Further,
         under no circumstances should proxy votes be discussed with any
         Deutsche Bank employee outside of AM (and should only be discussed on a
         need-to-know basis within AM).

Other relevant internal policies include the Deutsche Bank Americas Code of
Professional Conduct, the Deutsche Asset Management Information Sharing
Procedures, the Deutsche Asset Management Code of Ethics, the Sarbanes-Oxley
Senior Officer Code of Ethics, and the Deutsche Bank Group Code of Conduct. The
GPVSC expects that these policies, procedures and internal controls will greatly
reduce the chance that the GPVSC (or, its members) would be involved in, aware
of or influenced by, an actual or apparent conflict of interest.


V.       RECORDKEEPING

At a minimum, the following types of records must be properly maintained and
readily accessible in order to evidence compliance with this policy.

o        AM will maintain a record of each vote cast by AM that includes among
         other things, company name, meeting date, proposals presented, vote
         cast and shares voted.

o        The Proxy Vendor Oversight maintains records for each of the proxy
         ballots it votes. Specifically, the records include, but are not
         limited to:

         -        The proxy statement (and any additional solicitation
                  materials) and relevant portions of annual statements.

         -        Any additional information considered in the voting process
                  that may be obtained from an issuing company, its agents or
                  proxy research firms.

         -        Analyst worksheets created for stock option plan and share
                  increase analyses.

         -        Proxy Edge print-screen of actual vote election.

o        AM will retain these Policies and Procedures and the Guidelines; will
         maintain records of client requests for proxy voting information; and
         will retain any documents the Proxy Vendor Oversight or the GPVSC
         prepared that were material to making a voting decision or that
         memorialized the basis for a proxy voting decision.

o        The GPVSC also will create and maintain appropriate records documenting
         its compliance with these Policies and Procedures, including records of
         its deliberations and decisions regarding conflicts of interest and
         their resolution.

o        With respect to AM's investment company clients, ISS will create and
         maintain records of each company's proxy voting record for 12-month
         periods ended June 30. AM will compile the following information for
         each matter relating to a portfolio security considered at any
         shareholder meeting held during the period covered by the report and
         with respect to which the company was entitled to vote:

         -        The name of the issuer of the portfolio security;

         -        The exchange ticker symbol of the portfolio security (if
                  symbol is available through reasonably practicable means);

         -        The Council on Uniform Securities Identification Procedures
                  number for the portfolio security (if the number is available
                  through reasonably practicable means);

         -        The shareholder meeting date;

         -        A brief identification of the matter voted on;

         -        Whether the matter was proposed by the issuer or by a security
                  holder;

         -        Whether the company cast its vote on the matter;

         -        How the company cast its vote (e.g., for or against proposal,
                  or abstain; for or withhold regarding election of directors);
                  and

         -        Whether the company cast its vote for or against management.

Note: This list is intended to provide guidance only in terms of the records
that must be maintained in accordance with this policy. In addition, please note
that records must be maintained in accordance with the applicable AM Records
Management Policy.

With respect to electronically stored records, "properly maintained" is defined
as complete, authentic (unalterable) usable and backed-up. At a minimum, records
should be retained for a period of not less than six years (or longer, if
necessary to comply with applicable regulatory requirements), the first three
years in an appropriate AM office.


VI.      THE GPVSC'S OVERSIGHT ROLE

In addition to adopting the Guidelines and making proxy voting decisions on
matters referred to it as set forth above, the GPVSC will monitor the proxy
voting process by reviewing summary proxy information presented by ISS. The
GPVSC will use this review process to determine, among other things, whether any
changes should be made to the Guidelines. This review will take place at least
quarterly and will be documented in the GPVSC's minutes.


Attachment A - Global Proxy Voting Guidelines







                            Deutsche Asset Management

                         Global Proxy Voting Guidelines



                             As Amended October 2008


                                [GRAPHIC OMITTED]
Table of contents

I        Board Of Directors And Executives

         A        Election Of Directors

         B        Classified Boards Of Directors

         C        Board And Committee Independence

         D        Liability And Indemnification Of Directors

         E        Qualifications Of Directors

         F        Removal Of Directors And Filling Of Vacancies

         G        Proposals To Fix The Size Of The Board

         H        Proposals to Restrict Chief Executive Officer's Service on

                  Multiple Boards

         I        Proposals to Restrict Supervisory Board Members Service on

                  Multiple Boards

         J        Proposals to Establish Audit Committees

II       Capital Structure

         A        Authorization Of Additional Shares

         B        Authorization Of "Blank Check" Preferred Stock

         C        Stock Splits/Reverse Stock Splits

         D        Dual Class/Supervoting Stock

         E        Large Block Issuance

         F        Recapitalization Into A Single Class Of Stock

         G        Share Repurchases

         H        Reductions In Par Value

III      Corporate Governance Issues

         A        Confidential Voting

         B        Cumulative Voting

         C        Supermajority Voting Requirements

         D        Shareholder Right To Vote

IV       Compensation

         A        Establishment of a Remuneration Committee

         B        Executive And Director Stock Option Plans

         C        Employee Stock Option/Purchase Plans

         D        Golden Parachutes

         E        Proposals To Limit Benefits Or Executive Compensation

         F        Option Expensing

         G        Management board election and motion

         H        Remuneration (variable pay)

         I        Long-term incentive plans

         J        Shareholder Proposals Concerning "Pay For Superior
                  Performance"

         K        Executive Compensation Advisory

V        Anti-Takeover Related Issues

         A        Shareholder Rights Plans ("Poison Pills")

         B        Reincorporation

         C        Fair-Price Proposals

         D        Exemption From State Takeover Laws

         E        Non-Financial Effects Of Takeover Bids

VI       Mergers & Acquisitions

VII      Social & Political Issues

         A        Labor & Human Rights

         B        Diversity & Equality

         C        Health & Safety

         D        Government/Military

         E        Tobacco

VIII     Environmental Issues

IX       Miscellaneous Items

         A        Ratification Of Auditors

         B        Limitation Of Non-Audit Services Provided By Independent
                  Auditor

         C        Audit Firm Rotation

         D        Transaction Of Other Business

         E        Motions To Adjourn The Meeting

         F        Bundled Proposals

         G        Change Of Company Name

         H        Proposals Related To The Annual Meeting

         I        Reimbursement Of Expenses Incurred From Candidate Nomination

         J        Investment Company Proxies

         K        International Proxy Voting


These Guidelines may reflect a voting position that differs from the actual
practices of the public company (ies) within the Deutsche Bank organization or
of the investment companies for which AM or an affiliate serves as investment
adviser or sponsor.

NOTE: Because of the unique structure and regulatory scheme applicable to
closed-end investment companies, the voting guidelines (particularly those
related to governance issues) generally will be inapplicable to holdings of
closed-end investment companies. As a result, determinations on the appropriate
voting recommendation for closed-end investment company shares will be made on a
case-by-case basis.


I.       Board of Directors and Executives

A.       Election of Directors

Routine: AM Policy is to vote "for" the uncontested election of directors. Votes
for a director in an uncontested election will be withheld in cases where a
director has shown an inability to perform his/her duties in the best interests
of the shareholders.

Proxy contest: In a proxy contest involving election of directors, a
case-by-case voting decision will be made based upon analysis of the issues
involved and the merits of the incumbent and dissident slates of directors. AM
will incorporate the decisions of a third party proxy research vendor,
currently, Institutional Shareholder Services ("ISS") subject to review by the
Proxy Voting Sub-Committee (GPVSC) as set forth in the AM's Proxy Voting
Policies and Procedures.

Rationale: The large majority of corporate directors fulfill their fiduciary
obligation and in most cases support for management's nominees is warranted. As
the issues relevant to a contested election differ in each instance, those cases
must be addressed as they arise.

B.       Classified Boards of Directors

AM policy is to vote against proposals to classify the board and for proposals
to repeal classified boards and elect directors annually.

Rationale: Directors should be held accountable on an annual basis. By
entrenching the incumbent board, a classified board may be used as an
anti-takeover device to the detriment of the shareholders in a hostile take-over
situation.

C.       Board and Committee Independence

AM policy is to vote:

1.       "For" proposals that require that a certain percentage (majority up to
         66 2/3%) of members of a board of directors be comprised of independent
         or unaffiliated directors.

2.       "For" proposals that require all members of a company's compensation,
         audit, nominating, or other similar committees be comprised of
         independent or unaffiliated directors.

3.       "Against" shareholder proposals to require the addition of special
         interest, or constituency, representatives to boards of directors.

4.       "For" separation of the Chairman and CEO positions.

5.       "Against" proposals that require a company to appoint a Chairman who is
         an independent director.

Rationale: Board independence is a cornerstone of effective governance and
accountability. A board that is sufficiently independent from management assures
that shareholders' interests are adequately represented. However, the Chairman
of the board must have sufficient involvement in and experience with the
operations of the company to perform the functions required of that position and
lead the company.

No director qualifies as 'independent' unless the board of directors
affirmatively determines that the director has no material relationship with the
listed company (either directly or as a partner, shareholder or officer of an
organization that has a relationship with the company).

Whether a director is in fact not "independent" will depend on the laws and
regulations of the primary market for the security and the exchanges, if any, on
which the security trades.

D.       Liability and Indemnification of Directors

AM policy is to vote "for" management proposals to limit directors' liability
and to broaden the indemnification of directors, unless broader indemnification
or limitations on directors' liability would effect shareholders' interests in
pending litigation.

Rationale: While shareholders want directors and officers to be responsible for
their actions, it is not in the best interests of the shareholders for them to
be to risk averse. If the risk of personal liability is too great, companies may
not be able to find capable directors willing to serve. We support expanding
coverage only for actions taken in good faith and not for serious violations of
fiduciary obligation or negligence.

E.       Qualifications of Directors

AM policy is to follow management's recommended vote on either management or
shareholder proposals that set retirement ages for directors or require specific
levels of stock ownership by directors.

Rationale: As a general rule, the board of directors, and not the shareholders,
is most qualified to establish qualification policies.

F.       Removal of Directors and Filling of Vacancies

AM policy is to vote "against" proposals that include provisions that directors
may be removed only for cause or proposals that include provisions that only
continuing directors may fill board vacancies.

Rationale: Differing state statutes permit removal of directors with or without
cause. Removal of directors for cause usually requires proof of self-dealing,
fraud or misappropriation of corporate assets, limiting shareholders' ability to
remove directors except under extreme circumstances. Removal without cause
requires no such showing.

Allowing only incumbent directors to fill vacancies can serve as an
anti-takeover device, precluding shareholders from filling the board until the
next regular election.

G.       Proposals to Fix the Size of the Board

AM policy is to vote:

1.       "For" proposals to fix the size of the board unless: (a) no specific
         reason for the proposed change is given; or (b) the proposal is part of
         a package of takeover defenses.

2.       "Against" proposals allowing management to fix the size of the board
         without shareholder approval.

Rationale: Absent danger of anti-takeover use, companies should be granted a
reasonable amount of flexibility in fixing the size of its board.

H.       Proposals to Restrict Chief Executive Officer's Service on Multiple
         Boards

AM policy is to vote "For" proposals to restrict a Chief Executive Officer from
serving on more than three outside boards of directors.

Rationale: Chief Executive Officer must have sufficient time to ensure that
shareholders' interests are represented adequately.

Note: A director's service on multiple closed-end fund boards within a fund
complex are treated as service on a single Board for the purpose of the proxy
voting guidelines.

I.       Proposals to Restrict Supervisory Board Members Service on Multiple
         Boards (For FFT Securities)

AM policy is to vote "for" proposals to restrict a Supervisory Board Member from
serving on more than five supervisory boards.

Rationale: We consider a strong, independent and knowledgeable supervisory board
as important counter-balance to executive management to ensure that the
interests of shareholders are fully reflected by the company.

Full information should be disclosed in the annual reports and accounts to allow
all shareholders to judge the success of the supervisory board controlling their
company.

Supervisory Board Member must have sufficient time to ensure that shareholders'
interests are represented adequately.

Note: A director's service on multiple closed-end fund boards within a fund
complex are treated as service on a single Board for the purpose of the proxy
voting guidelines.

J.       Proposals to Establish Audit Committees (For FFT and U.S. Securities)
         AM policy is to vote "for" proposals that require the establishment of
         audit committees.

Rationale: The audit committee should deal with accounting and risk management
related questions, verifies the independence of the auditor with due regard to
possible conflicts of interest. It also should determine the procedure of the
audit process.


II.      Capital Structure

A.       Authorization of Additional Shares (For U.S. Securities)

AM policy is to vote "for" proposals to increase the authorization of existing
classes of stock that do not exceed a 3:1 ratio of shares authorized to shares
outstanding for a large cap company, and do not exceed a 4:1 ratio of shares
authorized to shares outstanding for a small-midcap company (companies having a
market capitalization under one billion U.S. dollars.).

Rationale: While companies need an adequate number of shares in order to carry
on business, increases requested for general financial flexibility must be
limited to protect shareholders from their potential use as an anti-takeover
device. Requested increases for specifically designated, reasonable business
purposes (stock split, merger, etc.) will be considered in light of those
purposes and the number of shares required.

B.       Authorization of "Blank Check" Preferred Stock (For U.S. Securities)

AM policy is to vote:

1.   "Against" proposals to create blank check preferred stock or to increase
     the number of authorized shares of blank check preferred stock unless the
     company expressly states that the stock will not be used for anti-takeover
     purposes and will not be issued without shareholder approval.

2.   "For" proposals mandating shareholder approval of blank check stock
     placement.

Rationale: Shareholders should be permitted to monitor the issuance of classes
of preferred stock in which the board of directors is given unfettered
discretion to set voting, dividend, conversion and other rights for the shares
issued.

C.       Stock Splits/Reverse Stock Splits

AM policy is to vote "for" stock splits if a legitimate business purpose is set
forth and the split is in the shareholders' best interests. A vote is cast "for"
a reverse stock split only if the number of shares authorized is reduced in the
same proportion as the reverse split or if the effective increase in authorized
shares (relative to outstanding shares) complies with the proxy guidelines for
common stock increases (see, Section II.A, above.)

Rationale: Generally, stock splits do not detrimentally effect shareholders.
Reverse stock splits, however, may have the same result as an increase in
authorized shares and should be analyzed accordingly.

D.       Dual Class/Supervoting Stock

AM policy is to vote "against" proposals to create or authorize additional
shares of super-voting stock or stock with unequal voting rights.

Rationale: The "one share, one vote" principal ensures that no shareholder
maintains a voting interest exceeding their equity interest in the company.

E.       Large Block Issuance (For U.S. Securities)

AM policy is to address large block issuances of stock on a case-by-case basis,
incorporating the recommendation of an independent third party proxy research
firm (currently ISS) subject to review by the GPVSC as set forth in AM's Proxy
Policies and Procedures.

Additionally, AM supports proposals requiring shareholder approval of large
block issuances.

Rationale: Stock issuances must be reviewed in light of the business
circumstances leading to the request and the potential impact on shareholder
value.

F.       Recapitalization into a Single Class of Stock

AM policy is to vote "for" recapitalization plans to provide for a single class
of common stock, provided the terms are fair, with no class of stock being
unduly disadvantaged.

Rationale: Consolidation of multiple classes of stock is a business decision
that may be left to the board and/management if there is no adverse effect on
shareholders.

G.       Share Repurchases

AM policy is to vote "for" share repurchase plans provided all shareholders are
able to participate on equal terms.

Rationale: Buybacks are generally considered beneficial to shareholders because
they tend to increase returns to the remaining shareholders.

H.       Reductions in Par Value

AM policy is to vote "for" proposals to reduce par value, provided a legitimate
business purpose is stated (e.g., the reduction of corporate tax
responsibility.)

Rationale: Usually, adjustments to par value are a routine financial decision
with no substantial impact on shareholders.


III.     Corporate Governance Issues

A.       Confidential Voting

AM policy is to vote "for" proposals to provide for confidential voting and
independent tabulation of voting results and to vote "against" proposals to
repeal such provisions.

Rationale: Confidential voting protects the privacy rights of all shareholders.
This is particularly important for employee-shareholders or shareholders with
business or other affiliations with the company, who may be vulnerable to
coercion or retaliation when opposing management. Confidential voting does not
interfere with the ability of corporations to communicate with all shareholders,
nor does it prohibit shareholders from making their views known directly to
management.

B.       Cumulative Voting (For U.S. Securities)

AM policy is to vote "against" shareholder proposals requesting cumulative
voting and "for"management proposals to eliminate it. The protections afforded
shareholders by cumulative voting are not necessary when a company has a history
of good performance and does not have a concentrated ownership interest.
Accordingly, a vote is cast "against" cumulative voting and "for" proposals to
eliminate it if:

a)       The company has a five year return on investment greater than the
         relevant industry index,

b)       All directors and executive officers as a group beneficially own less
         than 10% of the outstanding stock, and

c)       No shareholder (or voting block) beneficially owns 15% or more of the
         company.

Thus, failure of any one of the three criteria results in a vote for cumulative
voting in accordance with the general policy.

Rationale: Cumulative voting is a tool that should be used to ensure that
holders of a significant number of shares may have board representation;
however, the presence of other safeguards may make their use unnecessary.

C.       Supermajority Voting Requirements

AM policy is to vote "against" management proposals to require a supermajority
vote to amend the charter or bylaws and to vote "for" shareholder proposals to
modify or rescind existing supermajority requirements.

*Exception made when company holds a controlling position and seeks to lower
threshold to maintain control and/or make changes to corporate by-laws.

Rationale: Supermajority voting provisions violate the democratic principle that
a simple majority should carry the vote. Setting supermajority requirements may
make it difficult or impossible for shareholders to remove egregious by-law or
charter provisions. Occasionally, a company with a significant insider held
position might attempt to lower a supermajority threshold to make it easier for
management to approve provisions that may be detrimental to shareholders. In
that case, it may not be in the shareholders interests to lower the
supermajority provision.

D.       Shareholder Right to Vote

AM policy is to vote "against" proposals that restrict the right of shareholders
to call special meetings, amend the bylaws, or act by written consent. Policy is
to vote "for" proposals that remove such restrictions.

Rationale: Any reasonable means whereby shareholders can make their views known
to management or effect the governance process should be supported.


IV.      Compensation

Annual Incentive Plans or Bonus Plans are often submitted to shareholders for
approval. These plans typically award cash to executives based on company
performance. Deutsche Bank believes that the responsibility for executive
compensation decisions rest with the board of directors and/or the compensation
committee, and its policy is not to second-guess the board's award of cash
compensation amounts to executives unless a particular award or series of awards
is deemed excessive. If stock options are awarded as part of these bonus or
incentive plans, the provisions must meet Deutsche Bank's criteria regarding
stock option plans, or similar stock-based incentive compensation schemes, as
set forth below.

A.       Establishment of a Remuneration Committee (For FFT Securities)

AM policy is to vote "for" proposals that require the establishment of a
remuneration committee.

Rationale: Corporations should disclose in each annual report or proxy statement
their policies on remuneration. Essential details regarding executive
remuneration including share options, long-term incentive plans and bonuses,
should be disclosed in the annual report, so that investors can judge whether
corporate pay policies and practices meet the standard.

The remuneration committee shall not comprise any board members and should be
sensitive to the wider scene on executive pay. It should ensure that
performance-based elements of executive pay are designed to align the interests
of shareholders.

B.       Executive and Director Stock Option Plans

AM policy is to vote "for" stock option plans that meet the following criteria:

(1)      The resulting dilution of existing shares is less than (a) 15 percent
         of outstanding shares for large capital corporations or (b) 20 percent
         of outstanding shares for small-mid capital companies (companies having
         a market capitalization under one billion U.S. dollars.)

(2)      The transfer of equity resulting from granting options at less than FMV
         is no greater than 3% of the over-all market capitalization of large
         capital corporations, or 5% of market cap for small-mid capital
         companies.

(3)      The plan does not contain express repricing provisions and, in the
         absence of an express statement that options will not be repriced; the
         company does not have a history of repricing options.

(4)      The plan does not grant options on super-voting stock.

AM will support performance-based option proposals as long as a) they do not
mandate that all options granted by the company must be performance based, and
b) only certain high-level executives are subject to receive the performance
based options.

AM will support proposals to eliminate the payment of outside director pensions.

Rationale: Determining the cost to the company and to shareholders of
stock-based incentive plans raises significant issues not encountered with
cash-based compensation plans. These include the potential dilution of existing
shareholders' voting power, the transfer of equity out of the company resulting
from the grant and execution of options at less than FMV and the authority to
reprice or replace underwater options. Our stock option plan analysis model
seeks to allow reasonable levels of flexibility for a company yet still protect
shareholders from the negative impact of excessive stock compensation.
Acknowledging that small mid-capital corporations often rely more heavily on
stock option plans as their main source of executive compensation and may not be
able to compete with their large capital competitors with cash compensation, we
provide slightly more flexibility for those companies.

C.       Employee Stock Option/Purchase Plans

AM policy is to vote for employee stock purchase plans (ESPP's) when the plan
complies with Internal Revenue Code 423, allowing non-management employees to
purchase stock at 85% of FMV.

AM policy is to vote "for" employee stock option plans (ESOPs) provided they
meet the standards for stock option plans in general. However, when computing
dilution and transfer of equity, ESOPs are considered independently from
executive and director option plans.

Rationale: ESOPs and ESPP's encourage rank-and-file employees to acquire an
ownership stake in the companies they work for and have been shown to promote
employee loyalty and improve productivity.

D.       Golden Parachutes

AM policy is to vote "for" proposals to require shareholder approval of golden
parachutes and for proposals that would limit golden parachutes to no more than
three times base compensation. Policy is to vote "against" more restrictive
shareholder proposals to limit golden parachutes.

Rationale: In setting a reasonable limitation, AM considers that an effective
parachute should be less attractive than continued employment and that the IRS
has opined that amounts greater than three times annual salary, are excessive.

E.       Proposals to Limit Benefits or Executive Compensation

AM policy is to vote "against"

1.   Proposals to limit benefits, pensions or compensation and

2.   Proposals that request or require disclosure of executive compensation
     greater than the disclosure required by Securities and Exchange Commission
     (SEC) regulations.

Rationale: Levels of compensation and benefits are generally considered to be
day-to-day operations of the company, and are best left unrestricted by
arbitrary limitations proposed by shareholders.

F.       Option Expensing

AM policy is to support proposals requesting companies to expense stock options.

Rationale: Although companies can choose to expense options voluntarily, the
Financial Accounting Standards Board (FASB) does not yet require it, instead
allowing companies to disclose the theoretical value of options as a footnote.
Because the expensing of stock options lowers earnings, most companies elect not
to do so. Given the fact that options have become an integral component of
compensation and their exercise results in a transfer of shareholder value, AM
agrees that their value should not be ignored and treated as "no cost"
compensation. The expensing of stock options would promote more modest and
appropriate use of stock options in executive compensation plans and present a
more accurate picture of company operational earnings.

G.        Management board election and motion (For FFT Securities)

AM policy is to vote "against":

o        the election of board members with positions on either remuneration or
         audit committees;

o        the election of supervisory board members with too many supervisory
         board mandates;

o        "automatic" election of former board members into the supervisory
         board.

Rationale: Management as an entity, and each of its members, are responsible for
all actions of the company, and are - subject to applicable laws and regulations
- accountable to the shareholders as a whole for their actions.

Sufficient information should be disclosed in the annual company report and
account to allow shareholders to judge the success of the company.

H.       Remuneration (variable pay): (For FFT Securities)

Executive remuneration for Management Board

AM policy is to vote "for" remuneration for Management Board that is transparent
and linked to results.

Rationale: Executive compensation should motivate management and align the
interests of management with the shareholders. The focus should be on criteria
that prevent excessive remuneration; but enable the company to hire and retain
first-class professionals.

Shareholder interests are normally best served when management is remunerated to
optimise long-term returns. Criteria should include suitable measurements like
return on capital employed or economic value added.

Interests should generally also be correctly aligned when management own shares
in the company - even more so if these shares represent a substantial portion of
their own wealth.

Its disclosure shall differentiate between fixed pay, variable (performance
related) pay and long-term incentives, including stock option plans with
valuation ranges as well as pension and any other significant arrangements.

Executive remuneration for Supervisory Board

AM policy is to vote "for" remuneration for Supervisory Board that is at least
50% in fixed form.

Rationale: It would normally be preferable if performance linked compensation
were not based on dividend payments, but linked to suitable result based
parameters. Consulting and procurement services should also be published in the
company report.

I.       Long-term incentive plans (For FFT Securities)

AM policy is to vote "for" long-term incentive plans for members of a management
board that reward for above average company performance.

Rationale: Incentive plans will normally be supported if they:

o        directly align the interests of members of management boards with those
         of shareholders;

o        establish challenging performance criteria to reward only above average
         performance;

o        measure performance by total shareholder return in relation to the
         market or a range of comparable companies;

o        are long-term in nature and encourage long-term ownership of the shares
         once exercised through minimum holding periods;

o        do not allow a repricing of the exercise price in stock option plans.

J.       Shareholder Proposals Concerning "Pay for Superior Performance"

AM policy is to address pay for superior performance proposals on a case-by-case
basis, incorporating the recommendation of an independent third party proxy
research firm (currently ISS) subject to review by the GPVSC as set forth in
AM's Proxy Policies and Procedures.

Rationale: While AM agrees that compensation issues are better left to the
discretion of management, they appreciate the need to monitor for excessive
compensation practices on a case by case basis. If, after a review of the ISS
metrics, AM is comfortable with ISS's applying this calculation and will vote
according to their recommendation.

K.       Executive Compensation Advisory

AM policy is to follow management's recommended vote on shareholder proposals to
propose an advisory resolution seeking to ratify the compensation of the
company's named executive officers (NEOs) on an annual basis.

Rationale: AM believes that controls exist within senior management and
corporate compensation committees, ensuring fair compensation to executives.
This might allow shareholders to require approval for all levels of management's
compensation.

V.       Anti-Takeover Related Issues

A.       Shareholder Rights Plans ("Poison Pills")

AM policy is to vote "for" proposals to require shareholder ratification of
poison pills or that request boards to redeem poison pills, and to vote
"against" the adoption of poison pills if they are submitted for shareholder
ratification.

Rationale: Poison pills are the most prevalent form of corporate takeover
defenses and can be (and usually are) adopted without shareholder review or
consent. The potential cost of poison pills to shareholders during an attempted
takeover outweighs the benefits.

B.       Reincorporation

AM policy is to examine reincorporation proposals on a case-by-case basis. The
voting decision is based on: (1) differences in state law between the existing
state of incorporation and the proposed state of incorporation; and (2)
differences between the existing and the proposed charter/bylaws/articles of
incorporation and their effect on shareholder rights. If changes resulting from
the proposed reincorporation violate the corporate governance principles set
forth in these guidelines, the reincorporation will be deemed contrary to
shareholder's interests and a vote cast "against."

Rationale: Reincorporations can be properly analyzed only by looking at the
advantages and disadvantages to their shareholders. Care must be taken that
anti-takeover protection is not the sole or primary result of a proposed change.

C.       Fair-Price Proposals

AM policy is to vote "for" management fair-price proposals, provided that: (1)
the proposal applies only to two-tier offers; (2) the proposal sets an objective
fair-price test based on the highest price that the acquirer has paid for a
company's shares; (3) the supermajority requirement for bids that fail the
fair-price test is no higher than two-thirds of the outstanding shares; (4) the
proposal contains no other anti-takeover provisions or provisions that restrict
shareholders rights.

A vote is cast for shareholder proposals that would modify or repeal existing
fair-price requirements that do not meet these standards.

Rationale: While fair price provisions may be used as anti-takeover devices, if
adequate provisions are included, they provide some protection to shareholders
who have some say in their application and the ability to reject those
protections if desired.

D.       Exemption from state takeover laws

AM policy is to vote "for" shareholder proposals to opt out of state takeover
laws and to vote "against" management proposals requesting to opt out of state
takeover laws.

Rationale: Control share statutes, enacted at the state level, may harm
long-term share value by entrenching management. They also unfairly deny certain
shares their inherent voting rights.

E.       Non-financial Effects of Takeover Bids

Policy is to vote "against" shareholder proposals to require consideration of
non-financial effects of merger or acquisition proposals.

Rationale: Non-financial effects may often be subjective and are secondary to
AM's stated purpose of acting in its client's best economic interest.


VI.      Mergers & Acquisitions

Evaluation of mergers, acquisitions and other special corporate transactions
(i.e., takeovers, spin-offs, sales of assets, reorganizations, restructurings
and recapitalizations) are performed on a case-by-case basis incorporating
information from an independent proxy research source (currently ISS.)
Additional resources including portfolio management and research analysts may be
considered as set forth in AM's Policies and Procedures.


VII.     Social, Environmental & Political Issues

Social and environmental issues are becoming increasingly important to corporate
success. We incorporate social and environmental considerations into both our
investment decisions and our proxy voting decisions - particularly if the
financial performance of the company could be impacted.

With increasing frequency, shareholder proposals are submitted relating to
social and political responsibility issues. Almost universally, the company
management will recommend a vote "against" these proposals. These types of
proposals cover an extremely wide range of issues. Many of the issues tend to be
controversial and are subject to more than one reasonable, yet opposing, theory
of support. More so than with other types of proxy proposals, social and
political responsibility issues may not have a connection to the economic and
corporate governance principles effecting shareholders' interests. AM's policy
regarding social and political responsibility issues, as with any other issue,
is designed to protect our client shareholders' economic interests.

Occasionally, a distinction is made between a shareholder proposal requesting
direct action on behalf of the board and a request for a report on (or
disclosure of) some information. In order to avoid unduly burdening any company
with reporting requirements, AM's policy is to vote against shareholder
proposals that demand additional disclosure or reporting than is required by the
Securities and Exchange Commission unless it appears there is a legitimate issue
and the company has not adequately addressed shareholders' concerns.

A.       Labor & Human Rights

AM policy is to vote "against" adopting global codes of conduct or workplace
standards exceeding those mandated by law.

Rationale: Additional requirements beyond those mandated by law are deemed
unnecessary and potentially burdensome to companies

B.       Diversity & Equality

1.       AM policy is to vote "against" shareholder proposals to force equal
         employment opportunity, affirmative action or board diversity.

Rationale: Compliance with State and Federal legislation along with information
made available through filings with the EEOC provides sufficient assurance that
companies act responsibly and make information public.

2.       AM policy is also to vote "against" proposals to adopt the Mac Bride
         Principles. The Mac Bride Principles promote fair employment,
         specifically regarding religious discrimination.

Rationale: Compliance with the Fair Employment Act of 1989 makes adoption of the
Mac Bride Principles redundant. Their adoption could potentially lead to charges
of reverse discrimination.

C.       Health & Safety

1.       AM policy is to vote "against" adopting a pharmaceutical price
         restraint policy or reporting pricing policy changes.

Rationale: Pricing is an integral part of business for pharmaceutical companies
and should not be dictated by shareholders (particularly pursuant to an
arbitrary formula.) Disclosing pricing policies may also jeopardize a company's
competitive position in the marketplace.

2.       AM policy is to vote "against" shareholder proposals to control the use
         or labeling of and reporting on genetically engineered products.

Rationale: Additional requirements beyond those mandated by law are deemed
unnecessary and potentially burdensome to companies.

D.       Government/Military

1.       AM policy is to vote against shareholder proposals regarding the
         production or sale of military arms or nuclear or space-based weapons,
         including proposals seeking to dictate a company's interaction with a
         particular foreign country or agency.

Rationale: Generally, management is in a better position to determine what
products or industries a company can and should participate in. Regulation of
the production or distribution of military supplies is, or should be, a matter
of government policy.

2.       AM policy is to vote "against" shareholder proposals regarding
         political contributions and donations.

Rationale: The Board of Directors and Management, not shareholders, should
evaluate and determine the recipients of any contributions made by the company.

3.       AM policy is to vote "against" shareholder proposals regarding
         charitable contributions and donations.

Rationale: The Board of Directors and Management, not shareholders, should
evaluate and determine the recipients of any contributions made by the company.

E.       Tobacco

1.       AM policy is to vote "against" shareholder proposals requesting
         additional standards or reporting requirements for tobacco companies as
         well as "against" requesting companies to report on the intentional
         manipulation of nicotine content.

Rationale: Where a tobacco company's actions meet the requirements of legal and
industry standards, imposing additional burdens may detrimentally effect a
company's ability to compete. The disclosure of nicotine content information
could affect the company's rights in any pending or future litigation.

2.       Shareholder requests to spin-off or restructure tobacco businesses will
         be opposed.

Rationale: These decisions are more appropriately left to the Board and
management, and not to shareholder mandate.


VIII.    Environmental Issues

AM policy is to follow management's recommended vote on CERES Principles or
other similar environmental mandates (e.g., those relating to Greenhouse gas
emissions or the use of nuclear power).

Rationale: Environmental issues are extensively regulated by outside agencies
and compliance with additional requirements often involves significant cost to
companies.


IX.      Miscellaneous Items

A.       Ratification of Auditors

AM policy is to vote "for" a) the management recommended selection of auditors
and b) proposals to require shareholder approval of auditors.

Rationale: Absent evidence that auditors have not performed their duties
adequately, support for management's nomination is warranted.

B.       Limitation of non-audit services provided by independent auditor

AM policy is to support proposals limiting non-audit fees to 50% of the
aggregate annual fees earned by the firm retained as a company's independent
auditor.

Rationale: In the wake of financial reporting problems and alleged audit
failures at a number of companies, AM supports the general principle that
companies should retain separate firms for audit and consulting services to
avoid potential conflicts of interest. However, given the protections afforded
by the recently enacted Sarbanes-Oxley Act of 2002 (which requires Audit
Committee pre-approval for non-audit services and prohibits auditors from
providing specific types of services), and the fact that some non-audit services
are legitimate audit-related services, complete separation of audit and
consulting fees may not be warranted. A reasonable limitation is appropriate to
help ensure auditor independence and it is reasonable to expect that audit fees
exceed non-audit fees.

C.       Audit firm rotation

AM policy is to support proposals seeking audit firm rotation unless the
rotation period sought is less than five years.

Rationale: While the Sarbanes-Oxley Act mandates that the lead audit partner be
switched every five years, AM believes that rotation of the actual audit firm
would provide an even stronger system of checks and balances on the audit
function.

D.       Transaction of Other Business

AM policy is to vote against "transaction of other business" proposals.

Rationale: This is a routine item to allow shareholders to raise other issues
and discuss them at the meeting. As the nature of these issues may not be
disclosed prior to the meeting, we recommend a vote against these proposals.
This protects shareholders voting by proxy (and not physically present at a
meeting) from having action taken at the meeting that they did not receive
proper notification of or sufficient opportunity to consider.

E.       Motions to Adjourn the Meeting

AM Policy is to vote against proposals to adjourn the meeting.

Rationale: Management may seek authority to adjourn the meeting if a favorable
outcome is not secured. Shareholders should already have had enough information
to make a decision. Once votes have been cast, there is no justification for
management to continue spending time and money to press shareholders for
support.

F.       Bundled Proposals

AM policy is to vote against bundled proposals if any bundled issue would
require a vote against it if proposed individually.

Rationale: Shareholders should not be forced to "take the good with the bad" in
cases where the proposals could reasonably have been submitted separately.

G.       Change of Company Name

AM policy is to support management on proposals to change the company name.

Rationale: This is generally considered a business decision for a company.

H.       Proposals Related to the Annual Meeting

AM Policy is to vote in favor of management for proposals related to the conduct
of the annual meeting (meeting time, place, etc.)

Rationale: These are considered routine administrative proposals.

I.       Reimbursement of Expenses Incurred from Candidate Nomination

AM policy is to follow management's recommended vote on shareholder proposals
related to the amending of company bylaws to provide for the reimbursement of
reasonable expenses incurred in connection with nominating one or more
candidates in a contested election of directors to the corporation's board of
directors.

Rationale: Corporations should not be liable for costs associated with
shareholder proposals for directors.

J.       Investment Company Proxies

Proxies solicited by investment companies are voted in accordance with the
recommendations of an independent third party, currently ISS. However, regarding
investment companies for which AM or an affiliate serves as investment adviser
or principal underwriter, such proxies are voted in the same proportion as the
vote of all other shareholders. Proxies solicited by master funds from feeder
funds will be voted in accordance with applicable provisions of Section 12 of
the Investment Company Act of 1940.

Investment companies, particularly closed-end investment companies, are
different from traditional operating companies. These differences may call for
differences in voting positions on the same matter. For example, AM could vote
"for" staggered boards of closed-end investment companies, although AM generally
votes "against" staggered boards for operating companies. Further, the manner in
which AM votes investment company proxies may differ from proposals for which a
AM-advised investment company solicits proxies from its shareholders. As
reflected in the Guidelines, proxies solicited by closed-end (and open-end)
investment companies are voted in accordance with the pre-determined guidelines
of an independent third-party.

Subject to participation agreements with certain Exchange Traded Funds ("ETF")
issuers that have received exemptive orders from the U.S. Securities and
Exchange Commission allowing investing DWS funds to exceed the limits set forth
in Section 12(d)(1)(A) and (B) of the Investment Company Act of 1940, DeAM will
echo vote proxies for ETFs in which Deutsche Bank holds more than 25% of
outstanding voting shares globally when required to do so by participation
agreements and SEC orders.

Note: With respect to the QP Trust (not registered under the Investment Company
Act of 1940), the Fund is not required to engage in echo voting and the
investment adviser will use these Guidelines, and may determine, with respect to
the QP Trust, to vote contrary to the positions in the Guidelines, consistent
with the Fund's best interest.


K.       International Proxy Voting

The above guidelines pertain to issuers organized in the United States, Canada
and Germany. Proxies solicited by other issuers are voted in accordance with
international guidelines or the recommendation of ISS and in accordance with
applicable law and regulation.







--------------------------------------------------------------------------------
IMPORTANT: The information contained herein is the property of Deutsche Bank
Group and may not be copied, used or disclosed in whole or in part, stored in a
retrieval system or transmitted in any form or by any means (electronic,
mechanical, reprographic, recording or otherwise) without the prior written
permission of Deutsche Bank Group.
--------------------------------------------------------------------------------


                      APPENDIX B -- RATINGS OF INVESTMENTS


Moody's Investors Service, Inc.'s Short-Term Debt Ratings

Moody's short-term debt ratings are opinions of the ability of issuers to repay
punctually promissory obligations not having an original maturity in excess of
one year.

Issuers rated Prime-1 or P-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 or P-1
repayment ability will often be evidenced by many of the following
characteristics:

Leading market positions in well established industries.

High rates of return on Fund employed.

Conservative capitalization structure with moderate reliance on debt and ample
asset protection.

Broad margins in earnings coverage of fixed financial charges and high internal
cash generation.

Well established access to a range of financial markets and assured sources of
alternate liquidity.

Issuers rated Prime-2 or P-2 (or supporting institutions) have a strong ability
for repayment of senior short-term debt obligations. This will normally be
evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

Standard & Poor's  Division of The  McGraw-Hill  Companies,  Inc.  ("Standard  &
Poor's") Corporate Bond Ratings

Investment Grade

AAA:  Debt  rated  AAA  has the  highest  rating  assigned  by  S&P's  to a debt
obligation. 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 bonds 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.

Speculative Grade

Debt rated BB, B, CCC, CC, and C is regarded as having predominantly speculative
characteristics with respect to capacity to pay interest and repay principal. BB
indicates the least degree of speculation and C the highest. While such debt
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major exposures to adverse conditions.

BB: Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.

B: Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal.

The B rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BB or BB- rating.

CCC: Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal.

The CCC rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied B or B- rating.

CC: The rating CC is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC debt rating.

C: The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.

C1: The Rating C1 is  reserved  for income  bonds on which no  interest is being
paid.

D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

NY: Bonds may lack a S&P's rating because no public rating has been requested,
because there is insufficient information on which to base a rating, or because
S&P's does not rate a particular type of obligation as a matter of policy.

Standard & Poor's  Commercial Paper Ratings

A: S&P's  commercial  paper rating is a current  assessment of the likelihood of
timely payment of debt considered short-term in the relevant market.

A-1: This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus (+) sign designation.

A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".

A-3: Issues carrying this designation have adequate capacity for timely payment.
They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.

Fitch Investors Service, Inc. Short-Term Ratings

Investment Grade

AAA:  Highest  credit  quality.  The risk  factors  are  negligible,  being only
slightly more than for risk-free U.S. Treasury debt.

AA+, AA, and AA-: High credit quality.  Protection  factors are strong.  Risk is
modest but may vary slightly from time to time because of economic conditions.

A+, A, and A-:  Protection  factors  are  average but  adequate.  However,  risk
factors are more variable and greater in periods of economic stress.

BBB+,  BBB, and BBB-:  Below  average  protection  factors but still  considered
sufficient  for  prudent  investment.  Considerable  variability  in risk during
economic cycles.

High Yield Grade

BB+, BB, and BB-: Below investment grade but deemed likely to meet obligations
when due. Present or prospective financial protection factors fluctuate
according to industry conditions or company fortunes. Overall quality may move
up or down frequently within this category.

B+, B, and B-: Below investment grade and possessing risk that obligations will
not be met when due. Financial protection factors will fluctuate widely
according to economic cycles, industry conditions and/or company fortunes.
Potential exists for frequent changes in the rating within this category or into
a higher or lower rating grade.

CCC: Well below investment grade securities. Considerable uncertainty exists as
to timely payment of principal interest or preferred dividends. Protection
factors are narrow and risk can be substantial with unfavorable
economic/industry conditions, and/or with unfavorable company developments.

Preferred stocks are rated on the same scale as bonds but the preferred rating
gives weight to its more junior position in the capital structure. Structured
financings are also rated on this scale.

DWS ADVISOR FUNDS
345 Park Avenue
New York, NY 10154

INVESTMENT ADVISOR
Deutsche Investment Management Americas Inc.
345 Park Avenue
New York, NY 10154

ADMINISTRATOR
Deutsche Investment Management Americas Inc.
345 Park Avenue
New York, NY 10154


DISTRIBUTOR
DWS Investments Distributors, Inc.
222 South Riverside Plaza
Chicago, IL  60606


CUSTODIAN
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109


TRANSFER AGENT
DWS Investments Service Company
222 South Riverside Plaza
Chicago, IL 60606


INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP
125 High Street
Boston, MA  02110

LEGAL COUNSEL
Willkie Farr & Gallagher LLP
787 Seventh Ave.
New York, NY  10019

SERVICE INFORMATION

Existing accounts, new accounts, prospectuses, the SAI, applications, service
forms, telephone exchanges, share price and performance -- 1-800-728-3337.

No person has been authorized to give any information or to make any
representations other than those contained in the Fund's Prospectuses, its
Statement of Additional Information or its official sales literature in
connection with the offering of the Fund's shares and, if given or made, such
other information or representations must not be relied on as having been
authorized by the Trust. Neither the Prospectuses nor this Statement of
Additional Information constitutes an offer in any state in which, or to any
person to whom, such offer may not lawfully be made.

<PAGE>

                            PART C. OTHER INFORMATION

<TABLE>
<CAPTION>
Item 23.          Exhibits
--------          --------

<S>               <C>      <C>       <C>
                  (a)      (1)       Amended and Restated Declaration of Trust dated June 2, 2008; (23)

                           (2)       Amended and Restated Designation of Series and Classes of  Shares of Beneficial
                                     Interest dated May 22, 2008; (24)

                  (b)                By-Laws of DWS Advisor Funds, dated as of April 1, 2008; (24)

                  (c)                Incorporated by reference to Exhibit (a)(1) above;

                  (d)      (1)       Amended and Restated Investment Management Agreement dated July 3, 2006 and
                                     revised as of March 22, 2007 and October 1, 2008, between the Registrant and
                                     Deutsche Investment Management Americas Inc. on behalf of Tax Free Money Fund
                                     Investment, NY Tax Free Money Fund, DWS Mid Cap Growth Fund, DWS Small Cap Growth
                                     Fund, DWS Short Duration Plus Fund, DWS Core Fixed Income Fund, DWS High Income
                                     Plus Fund, DWS International Select Equity Fund, DWS Lifecycle Long Range Fund,
                                     DWS Micro Cap Fund, DWS RREEF Real Estate Securities Fund, DWS RREEF Global Real
                                     Estate Securities Fund, DWS Short-Term Municipal Bond Fund and DWS Short Duration
                                     Fund; (26)

                           (2)       Sub-advisory Agreement between Deutsche Investment Management Americas Inc., in
                                     regards to DWS RREEF Global Real Estate Securities Fund, and RREEF America
                                     L.L.C., dated July 3, 2006; (17)

                           (3)       Sub-Subadvisory Agreement between RREEF America L.L.C., in regards to DWS RREEF
                                     Global Real Estate Securities Fund, and Deutsche Asset Management (Hong Kong),
                                     Limited, dated July 3, 2006; (17)

                           (4)       Sub-Subadvisory Agreement between RREEF America L.L.C., in regards to DWS RREEF
                                     Global Real Estate Securities Fund, and Deutsche Investments Australia Limited,
                                     dated July 3, 2006; (17)

                           (5)       Sub-advisory Agreement between Deutsche Asset Management, Inc., in regards to DWS
                                     RREEF Real Estate Securities Fund, and RREEF America L.L.C.; (17)

                           (6)       Sub-advisory Agreement between Deutsche Investment Management Americas Inc., in
                                     regards to DWS Lifecycle Long Range Fund and DWS Core Fixed Income Fund, and
                                     Aberdeen Asset Management Inc., dated December 2, 2005 as revised January 1,
                                     2007; (19)

                           (7)       Sub-Sub-Subadvisory Agreement between Deutsche Asset Management International
                                     GmbH, in regards to DWS RREEF Global Real Estate Securities Fund, and RREEF
                                     Global Advisers Limited, dated June 27, 2006; (17)

                  (e)                Distribution Agreement dated August 19, 2002; (1)

                  (f)                Not applicable.

                  (g)      (1)       Master Custodian Agreement between the Registrant and State Street Bank and Trust
                                     Company dated November 17, 2008; (27)



                                       3
<PAGE>

                           (2)       Master Custodian Agreement between the Registrant and Brown Brothers Harriman &
                                     Co., dated October 17, 2008; (27)

                  (h)      (1)       Amended and Restated Administrative Services Agreement between the Registrant and
                                     Deutsche Investment Management Americas Inc. dated as of October 1, 2008;(28)

                           (2)       Agency Agreement between Scudder Investments Service Company and DST Systems,
                                     Inc., dated January 15, 2003; (2)

                           (3)       Transfer Agency and Services Agreement, dated June 1, 2006, between Registrant
                                     and DWS Scudder Investments Service Company; (14)

                           (4)       Letters of Indemnity to the Scudder Funds and Independent Directors/Trustees
                                     dated October 8, 2004; (6)

                           (5)       Amendment dated November 17, 2004 to Exhibit A of the Expense Limitation
                                     Agreement dated April 25, 2003; (7)

                           (6)       Form of Mutual Fund Rule 22c-2 Information Sharing Agreement between DWS Scudder
                                     Distributors, Inc. and certain financial intermediaries, is filed herein;

                           (7)       Transfer Agency Fee Schedule dated October 1, 2006; (17)

                           (8)       Form of Expense Limitation Agreement, dated October 1, 2007, between the
                                     Registrant and Deutsche Investment Management Americas Inc., is filed herein;

                  (i)      (1)       Opinion and Consent of Willkie Farr & Gallagher LLP relating to Scudder
                                     PreservationPlus Fund - Classes A, C and Investment, Scudder Mid Cap Fund -
                                     Classes A, B, C, R, Institutional and Investment;3, (11)

                           (2)       Opinion and Consent of Bingham McCutchen LLP relating to Scudder PreservationPlus
                                     Fund - Classes A, C and Investment, Scudder Mid Cap Fund - Classes A, B, C, R,
                                     Institutional and Investment; (3), (11)

                           (3)       Opinion and Consent of Willkie Farr & Gallagher LLP relating to Cash Management
                                     Fund Investment, Treasury Money Fund Investment, Tax Free Money Fund Investment,
                                     N.Y. Tax Free Money Fund;(4)

                           (4)       Opinion and Consent of Willkie Farr & Gallagher LLP relating to Scudder Small Cap
                                     Growth Fund - Class S and AARP shares;(5)

                           (5)       Opinion and Consent of Bingham McCutchen LLP relating to Scudder Small Cap Growth
                                     Fund - Class S and AARP shares;(5)

                           (6)       Opinion and Consent of Willkie Farr & Gallagher relating to DWS Lifecycle Long
                                     Range Fund, Classes Investment and Institutional;(9)

                           (7)       Opinion and Consent of Bingham McCutchen LLP relating to DWS Lifecycle Long Range
                                     Fund, Classes Investment and Institutional;(9)

                           (8)       Opinion and Consent of Willkie Farr & Gallagher relating to DWS RREEF Global Real
                                     Estate Securities Fund, Classes A, C, Institutional and S;(10)

                           (9)       Opinion and Consent of Bingham McCutcheon LLP relating to DWS RREEF Global Real
                                     Estate Securities Fund, Classes A, C, Institutional and S; (10)



                                       4
<PAGE>

                           (10)      Opinion and Consent of Willkie Farr & Gallagher LLP relating to DWS Core Fixed
                                     Income Fund - Classes A, B, C, R, S, Institutional and Investment, DWS High
                                     Income Plus Fund - Classes A, B, C, S, AARP, Premier, Institutional and
                                     Investment, DWS Micro Cap Fund - Classes A, B, C, S, Institutional and
                                     Investment, DWS Short-Term Municipal Bond Fund - Classes A, B, C, S,
                                     Institutional and Investment, DWS International Select Equity Fund - Classes A,
                                     B, C, R, S, Premier, Institutional and Investment, DWS RREEF Real Estate
                                     Securities Fund - Classes A, B, C, R, S and Institutional;(11)

                           (11)      Opinion and Consent of Bingham McCutchen LLP relating to DWS Core Fixed Income
                                     Fund - Classes A, B, C, R, S, Institutional and Investment, DWS High Income Plus
                                     Fund - Classes A, B, C, S, AARP, Premier, Institutional and Investment, DWS Micro
                                     Cap Fund - Classes A, B, C, S, Institutional and Investment, DWS Short-Term
                                     Municipal Bond Fund - Classes A, B, C, S, Institutional and Investment, DWS
                                     International Select Equity Fund - Classes A, B, C, R, S, Premier, Institutional
                                     and Investment and DWS RREEF Real Estate Securities Fund - Classes A, B, C, R, S
                                     and Institutional;(11)

                           (12)      Opinion and Consent of Willkie Farr & Gallagher LLP relating to NY Tax Free Money
                                     Fund, Tax-Exempt New York Money Market Fund shares; (12)

                           (13)      Opinion and Consent of Bingham McCutchen LLP relating to NY Tax Free Money Fund,
                                     Tax-Exempt New York Money Market Fund shares; (12)

                           (14)      Opinion and Consent of Willkie Farr & Gallagher LLP relating to DWS Short
                                     Duration Fund; (13)

                           (15)      Opinion and Consent of Bingham McCutchen LLP relating to DWS Short Duration Fund;
                                     (13)

                           (16)      Opinion and Consent of Willkie Farr & Gallagher LLP relating to DWS Short
                                     Duration Plus Fund - Class B shares; (15)

                           (17)      Opinion and Consent of Bingham McCutchen LLP relating to DWS Short Duration Plus
                                     Fund - Class B shares; (15)

                           (18)      Opinion and Consent of Willkie Farr & Gallagher LLP relating to DWS Short
                                     Duration Plus Fund - Institutional Class shares; (24)

                           (19)      Opinion and Consent of Bingham McCutchen LLP relating to DWS Short Duration Plus
                                     Fund - Institutional Class shares; (24)

                           (20)      Opinion and Consent of Willkie Farr & Gallagher LLP relating to Tax Free Money
                                     Fund Investment - Institutional Shares; (26)

                           (21)      Opinion and Consent of Bingham McCutchen LLP relating to Tax Free Money Fund
                                     Investment- Institutional Class shares. (26)

                  (j)                Not applicable;

                  (k)                Not applicable;

                  (1)                Not applicable;



                                       5
<PAGE>

                  (m)      (1)       Rule 12b-1 Plan for DWS Micro Cap Fund - Class A shares, dated June 27, 2006;(14)

                           (2)       Rule 12b-1 Plan for DWS Micro Cap Fund - Class B shares, dated July 7, 2006;(14)

                           (3)       Rule 12b-1 Plan for DWS Micro Cap Fund - Class C shares, dated July 7, 2006; (14)

                           (4)       Rule 12b-1 Plan for DWS Mid Cap Growth Fund - Class A shares, dated June 27,
                                     2006;(14)

                           (5)       Rule 12b-1 Plan for DWS Mid Cap Growth Fund - Class B shares, dated June 1,
                                     2006;(14)

                           (6)       Rule 12b-1 Plan for DWS Mid Cap Growth Fund - Class C shares, dated June 1,
                                     2006;(14)

                           (7)       Rule 12b-1 Plan for DWS Short Duration Plus Fund - Class A shares, dated June 27,
                                     2006;(14)

                           (8)       Rule 12b-1 Plan for DWS Short Duration Plus Fund - Class C shares, dated June 27,
                                     2006;(14)

                           (9)       Rule 12b-1 Plan for DWS Small Cap Growth Fund - Class A shares, dated June 27,
                                     2006;(14)

                           (10)      Rule 12b-1 Plan for DWS Small Cap Growth Fund - Class B shares, dated July 1,
                                     2006;(14)

                           (11)      Rule 12b-1 Plan for DWS Small Cap Growth Fund - Class C shares, dated July 1,
                                     2006;(14)

                           (12)      Rule 12b-1 Plan for DWS RREEF Global Real Estate Securities Fund - Class A
                                     shares, dated July 5, 2006;(17)

                           (13)      Rule 12b-1 Plan for DWS RREEF Global Real Estate Securities Fund - Class C
                                     shares, dated July 5, 2006;(17)

                           (14)      Rule 12b-1 Plan for DWS Short Duration Plus Fund - Class B shares, dated April
                                     23, 2006;(17)

                           (15)      Rule 12b-1 Plan for DWS International Select Equity Fund - Class B, dated August
                                     1, 2006;(16)

                           (16)      Rule 12b-1 Plan for DWS International Select Equity Fund - Class A, dated June
                                     27, 2006;(16)

                           (17)      Rule 12b-1 Plan for DWS Short-Term Municipal Bond Fund - Class A, dated June 27,
                                     2006;(20)

                           (18)      Rule 12b-1 Plan for DWS Short-Term Municipal Bond Fund - Class B, dated July 7,
                                     2006;(20)

                           (19)      Rule 12b-1 Plan for DWS Core Fixed Income Fund - Class A, dated June 27,
                                     2006;(20)



                                       6
<PAGE>

                           (20)      Rule 12b-1 Plan for DWS Core Fixed Income Fund - Class B, dated July 7, 2006;(20)

                           (21)      Rule 12b-1 Plan for DWS Core Fixed Income Fund - Class C, dated July 7, 2006;(20)

                           (22)      Rule 12b-1 Plan for DWS High Income Plus Fund - Class A, dated June 27, 2006;(20)

                           (23)      Rule 12b-1 Plan for DWS High Income Plus Fund - Class B, dated July 7, 2006;(20)

                           (24)      Rule 12b-1 Plan for DWS High Income Plus Fund - Class C, dated July 7, 2006;(20)

                           (25)      Rule 12b-1 Plan for DWS Short Duration Fund - Class A, dated June 27, 2006;(20)

                           (26)      Rule 12b-1 Plan for DWS Short Duration Fund - Class B, dated July 7, 2006;(20)

                           (27)      Rule 12b-1 Plan for DWS Short Duration Fund - Class C, dated July 7, 2006;(20)

                  (n)                Amended and Restated Multi-Distribution System Plan with respect to DWS Advisor
                                     Funds, pursuant to Rule 18f-3;(18)

                  (p)      (1)       Code of Ethics for Deutsche Asset Management -- U.S., dated January 1, 2008; (19)

                           (2)       Consolidated Fund Code of Ethics dated March 14, 2006; (8)

                           (3)       Code of Ethics for Deutsche Asset Management (Asia) Limited and Deutsche Asset
                                     Management (Hong Kong) Limited, dated December 3, 2007; (19)

                           (4)       Global Code of Ethics for Deutsche Asset Management effective December 3, 2007; (22)
</TABLE>
____________________

(1)      Incorporated by reference to Post-Effective Amendment No. 95 to
         Registrant's Registration Statement as filed with the Commission on
         November 27, 2002.

(2)      Incorporated by reference to Post-Effective Amendment No. 100 to
         Registrant's Registration Statement as filed with the Commission on
         April 30, 2003.

(3)      Incorporated by reference to Post-Effective Amendment No. 105 to
         Registrant's Registration Statement as filed with the Commission on
         January 30, 2004.

(4)      Incorporated by reference to Post-Effective Amendment No. 107 to
         Registrant's Registration Statement as filed with the Commission on
         April 29, 2004.

(5)      Incorporated by reference to Post-Effective Amendment No. 113 to
         Registrant's Registration Statement as filed with the Commission on
         August 31, 2004.

(6)      Incorporated by reference to Post-Effective Amendment No. 114 to
         Registrant's Registration Statement as filed with the Commission on
         December 3, 2004.

(7)      Incorporated by reference to Post-Effective Amendment No. 116 to
         Registrant's Registration Statement as filed with the Commission on
         February 1, 2005.

(8)      Incorporated by reference to Post-Effective Amendment No. 133 to
         Registrant's Registration Statement as filed with the Commission on
         April 28, 2006.



                                       7
<PAGE>

(9)      Incorporated by reference to Post-Effective Amendment No. 138 to
         Registrant's Registration Statement as filed with the Commission on
         June 13, 2006.

(10)     Incorporated by reference to Post-Effective Amendment No. 141 to
         Registrant's Registration Statement as filed with the Commission on
         June 30, 2006.

(11)     Incorporated by reference to Post-Effective Amendment No. 142 to
         Registrant's Registration Statement as filed with the Commission on
         June 30, 2006.

(12)     Incorporated by reference to Post-Effective Amendment No. 145 to
         Registrant's Registration Statement as filed with the Commission on
         August 14, 2006.

(13)     Incorporated by reference to Post-Effective Amendment No. 146 to
         Registrant's Registration Statement as filed with the Commission on
         August 18, 2006.

(14)     Incorporated by reference to Post-Effective Amendment No. 149 to
         Registrant's Registration Statement as filed with the Commission on
         January 26, 2007.

(15)     Incorporated by reference to Post-Effective Amendment No. 150 to
         Registrant's Registration Statement as filed with the Commission on
         February 20, 2007.

(16)     Incorporated by reference to Post-Effective Amendment No. 151 to
         Registrant's Registration Statement as filed with the Commission on
         February 28, 2007.

(17)     Incorporated by reference to Post-Effective Amendment No. 153 to
         Registrant's Registration Statement as filed with the Commission on
         April 30, 2007.

(18)     Incorporated by reference to Post-Effective Amendment No. 155 to
         Registrant's Registration Statement as filed with the Commission on
         August 1, 2007.

(19)     Incorporated by reference to Post-Effective Amendment No. 156 to
         Registrant's Registration Statement as filed with the Commission on
         January 28, 2008.

(20)     Incorporated by reference to Post-Effective Amendment No. 157 to
         Registrant's Registration Statement as filed with the Commission on
         February 28, 2008.

(21)     Incorporated by reference to Post-Effective Amendment No. 158 to
         Registrant's Registration Statement as filed with the Commission on
         March 7, 2008.

(22)     Incorporated by reference to Post-Effective Amendment No. 159 to
         Registrant's Registration Statement as filed with the Commission on
         April 29, 2008.

(23)     Incorporated by reference to Post-Effective Amendment No. 160 to
         Registrant's Registration Statement as filed with the Commission on
         July 29, 2008.

(24)     Incorporated by reference to Post-Effective Amendment No. 161 to
         Registrant's Registration Statement as filed with the Commission on
         August 22, 2008.

(25)     Incorporated by reference to Post-Effective Amendment No. 162 to
         Registrant's Registration Statement as filed with the Commission on
         September 12, 2008.

(26)     Incorporated by reference to Post-Effective Amendment No. 163 to
         Registrant's Registration Statement as filed with the Commission on
         November 11, 2008.



                                       8
<PAGE>

(27)     Incorporated by reference to Post-Effective Amendment No. 164 to
         Registrant's Registration Statement as filed with the Commission on
         December 31, 2008.

(28)     Incorporated by reference to Post-Effective Amendment No. 165 to
         Registrant's Registration Statement as filed with the Commission on
         January 28, 2009.

Item 24.          Persons Controlled by or Under Common Control with Registrant
--------          -------------------------------------------------------------

         Information pertaining to persons controlled by or under common control
with Registrant is incorporated by reference from the Statement of Additional
Information contained in Part B of this Registration Statement.

Item 25.          Indemnification
--------          ---------------

         Article IV of the Registrant's Agreement and Declaration of Trust
(Exhibit (a)(1) hereto, which is incorporated herein by reference) provides in
effect that the Registrant will indemnify its officers and trustees under
certain circumstances. However, in accordance with Section 17(h) and 17(i) of
the Investment Company Act of 1940 and its own terms, said Article of the
Agreement and Declaration of Trust does not protect any person against any
liability to the Registrant or its shareholders to which such Trustee would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
or her office.

         The Registrant has purchased insurance policies insuring its officers
and trustees against certain liabilities which such officers and trustees may
incur while acting in such capacities and providing reimbursement to the
Registrant for sums which it may be permitted or required to pay to its officers
and trustees by way of indemnification against such liabilities, subject to
certain deductibles.

         On April 5, 2002, Zurich Scudder Investments, Inc. ("Scudder"), the
investment adviser, now known as Deutsche Investment Management Americas Inc.,
was acquired by Deutsche Bank AG, not including certain U.K. Operations (the
"Transaction"). In connection with the Trustees' evaluation of the Transaction,
Deutsche Bank agreed to indemnify, defend and hold harmless Registrant and the
trustees who were not "interested persons" of Scudder, Deutsche Bank or
Registrant (the "Independent Trustees") for and against any liability and claims
and expenses based upon or arising from, whether in whole or in part, or
directly or indirectly, any untrue statement or alleged untrue statement of a
material fact made to the Independent Trustees by Deutsche Bank in connection
with the Independent Trustees' consideration of the Transaction, or any omission
or alleged omission of a material fact necessary in order to make statements
made, in light of the circumstances under which they were made, not misleading.

         Deutsche Investment Management Americas Inc. (hereafter, "DIMA"), the
investment advisor, has agreed, subject to applicable law and regulation, to
indemnify and hold harmless the Registrant against any loss, damage, liability
and expense, including, without limitation, the advancement and payment, as
incurred, of reasonable fees and expenses of counsel (including counsel to the
Registrant and counsel to the Independent Trustees) and consultants, whether
retained by the Registrant or the Independent Trustees, and other customary
costs and expenses incurred by the Registrant in connection with any litigation
or regulatory action related to possible improper market timing or other
improper trading activity or possible improper marketing and sales activity in
the Registrant ("Private Litigation and Enforcement Actions"). In the event that
this indemnification is unavailable to the Registrant for any reason, then DIMA
has agreed to contribute to the amount paid or payable by the Registrant as a
result of any loss, damage, liability or expense in such proportion as is
appropriate to reflect the relative fault of DIMA and the Registrant with
respect to the matters which resulted in such loss, damage, liability or
expense, as well as any other relevant equitable considerations; provided, that
if no final determination is made in such action or proceeding as to the
relative fault of DIMA and the Registrant, then DIMA shall pay the entire amount
of such loss, damage, liability or expense.

         In recognition of its undertaking to indemnify the Registrant, and in
light of the rebuttable presumption generally afforded to non-interested board
members of an investment company that they have not engaged in disabling
conduct, DIMA has also agreed, subject to applicable law and regulation, to
indemnify and hold harmless


                                       9
<PAGE>

each of the Independent Trustees against any and all loss, damage, liability and
expense, including without limitation the advancement and payment as incurred of
reasonable fees and expenses of counsel and consultants, and other customary
costs and expenses incurred by the Independent Trustees, arising from the
matters alleged in any Private Litigation and Enforcement Actions or matters
arising from or similar in subject matter to the matters alleged in the Private
Litigation and Enforcement Actions (collectively, "Covered Matters"), including
without limitation:

         1. all reasonable legal and other expenses incurred by the Independent
         Trustees in connection with the Private Litigation and Enforcement
         Actions, and any actions that may be threatened or commenced in the
         future by any person (including any governmental authority), arising
         from or similar to the matters alleged in the Private Litigation and
         Enforcement Actions, including without limitation expenses related to
         the defense of, service as a witness in, or monitoring of such
         proceedings or actions;

         2. all liabilities and reasonable legal and other expenses incurred by
         any Independent Trustee in connection with any judgment resulting from,
         or settlement of, any such proceeding, action or matter;

         3. any loss or reasonable legal and other expenses incurred by any
         Independent Trustee as a result of the denial of, or dispute about, any
         insurance claim under, or actual or purported rescission or termination
         of, any policy of insurance arranged by DIMA (or by a representative of
         DIMA acting as such, acting as a representative of the Registrant or of
         the Independent Trustees or acting otherwise) for the benefit of the
         Independent Trustee, to the extent that such denial, dispute or
         rescission is based in whole or in part upon any alleged
         misrepresentation made in the application for such policy or any other
         alleged improper conduct on the part of DIMA, any of its corporate
         affiliates, or any of their directors, officers or employees;

         4. any loss or reasonable legal and other expenses incurred by any
         Independent Trustee, whether or not such loss or expense is incurred
         with respect to a Covered Matter, which is otherwise covered under the
         terms of any specified policy of insurance, but for which the
         Independent Trustee is unable to obtain advancement of expenses or
         indemnification under that policy of insurance, due to the exhaustion
         of policy limits which is due in whole or in part to DIMA or any
         affiliate thereof having received advancement of expenses or
         indemnification under that policy for or with respect to any Covered
         Matter; provided, that the total amount that DIMA will be obligated to
         pay under this provision for all loss or expense shall not exceed the
         amount that DIMA and any of its affiliates actually receive under that
         policy of insurance for or with respect to any and all Covered Matters;
         and

         5. all liabilities and reasonable legal and other expenses incurred by
         any Independent Trustee in connection with any proceeding or action to
         enforce his or her rights under the agreement, unless DIMA prevails on
         the merits of any such dispute in a final, nonappealable court order.

         DIMA is not required to pay costs or expenses or provide
indemnification to or for any individual Independent Trustee (i) with respect to
any particular proceeding or action as to which the Board of the Registrant has
determined that such Independent Trustee ultimately would not be entitled to
indemnification with respect thereto, or (ii) for any liability of the
Independent Trustee to the Registrant or its shareholders to which such
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 Registrant as determined in a final adjudication in
such proceeding or action. In addition, to the extent that DIMA has paid costs
or expenses under the agreement to any individual Independent Trustee with
respect to a particular proceeding or action, and there is a final adjudication
in such proceeding or action of the Independent Trustee's liability to the
Registrant or its shareholders by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the Independent Trustee's duties as a
Trustee of the Registrant, such Independent Trustee has undertaken to repay such
costs or expenses to DIMA.



                                       10
<PAGE>

Item 26.          Business and Other Connections of Investment Advisor
--------          ----------------------------------------------------

                  During the last two fiscal years, no director or officer of
                  Deutsche Investment Management Americas Inc., the investment
                  advisor, has engaged in any other business, profession,
                  vocation or employment of a substantial nature other than that
                  of the business of investment management and, through
                  affiliates, investment banking.

Item 27.          Principal Underwriters
--------          ----------------------

                  (a)

                  DWS Investments Distributors, Inc. acts as principal
                  underwriter of the Registrant's shares and acts as principal
                  underwriter for registered open-end management investment
                  companies other funds managed by Deutsche Investment
                  Management Americas Inc.

                  (b)

                  Information on the officers and directors of DWS Investments
                  Distributors, Inc., principal underwriter for the Registrant,
                  is set forth below. The principal business address is 222
                  South Riverside Plaza, Chicago, Illinois 60606.

<TABLE>
<CAPTION>
                      (1)                             (2)                                  (3)
          DWS Investments
          Distributors, Inc.
          Name and Principal              Positions and Offices with              Positions and
          Business Address                DWS Investments Distributors, Inc.      Offices with Registrant
          ----------------                ----------------------------------      -----------------------

<S>      <C>                              <C>
         Philipp Hensler                  Director, Chairman of the Board and     None
         345 Park Avenue                  CEO
         New York, NY 10154

         Michael Colon                    Director and Chief Operating Officer    None
         345 Park Avenue
         New York, NY 10154

         Thomas Winnick                   Director and President                  None
         345 Park Avenue
         New York, NY 10154

         Cliff Goldstein                  Chief Financial Officer and Treasurer   None
         100 Plaza One
         Jersey City, NJ 07311

         Robert Froehlich                 Vice President                          None
         222 South Riverside Plaza
         Chicago, IL 60606

         Paul Schubert                    Vice President                          Chief Financial Officer
         345 Park Avenue                                                          and Treasurer
         New York, NY 10154

         Mark Perrelli                    Vice President                          None
         345 Park Avenue
         New York, NY 10154



                                       11
<PAGE>

                      (1)                             (2)                                  (3)
          DWS Investments
          Distributors, Inc.
          Name and Principal              Positions and Offices with              Positions and
          Business Address                DWS Investments Distributors, Inc.      Offices with Registrant
          ----------------                ----------------------------------      -----------------------

         Donna White                      Chief Compliance Officer                None
         280 Park Avenue
         New York, NY 10017

         Jason Vazquez                    Vice President and AML Compliance       Anti-Money Laundering
         280 Park Avenue                  Officer                                 Compliance Officer
         New York, NY 10017

         Caroline Pearson                 Secretary                               Assistant Secretary
         One Beacon Street
         Boston, MA 02108

         Philip J. Collora                Assistant Secretary                     None
         222 South Riverside Plaza
         Chicago, IL 60606

         Patricia DeFilippis              Assistant Secretary                     None
         280 Park Avenue
         New York, NY 10017

         Anjie LaRocca                    Assistant Secretary                     None
         280 Park Avenue
         New York, NY 10017
</TABLE>

         (c)      Not applicable

Item 28.          Location of Accounts and Records
--------          --------------------------------

DWS Advisor Funds                                  345 Park Avenue
(Registrant)                                       New York, New York  10154

Deutsche Investment Management Americas Inc.       345 Park Avenue
(Investment Advisor)                               New York, NY 10154

Deutsche Investment Management Americas Inc.       345 Park Avenue
(Administrator)                                    New York, NY 10154

                                                   One Beacon Street
                                                   Boston, MA 02108

DWS Investments Service Company                    222 South Riverside Plaza
(Transfer Agent)                                   Chicago, IL 60606

DWS Investments Distributors, Inc.                 222 South Riverside Plaza
(Distributor)                                      Chicago, IL 60606

State Street Bank and Trust Company                225 Franklin Street
(Custodian)                                        Boston, MA 02110



                                       12
<PAGE>

Brown Brothers Harriman                            40 Water Street
(Custodian)                                        Boston, MA 02110

DST Systems, Inc.                                  333 West 11th Street
(Sub-Transfer Agent and                            Kansas City, MO 64105
Sub-Dividend Distribution Agent)

Item 29.          Management Services
--------          -------------------

                  Not applicable

Item 30.          Undertakings
--------          ------------

                  Not applicable


                                       13
<PAGE>

                                   SIGNATURES
                                   ----------

         Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of New York and the State of New York on
the 9th day of February 2009.

                                               DWS ADVISOR FUNDS

                                                By: /s/Michael G. Clark
                                                    -------------------
                                                    Michael G. Clark*
                                                    President

         Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to its Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
 SIGNATURE                                  TITLE                                        DATE
 ---------                                  -----                                        ----

<S>     <C>    <C>    <C>    <C>    <C>    <C>
 /s/Michael G. Clark
 -------------------------------------
 Michael G. Clark*                          President                                    February 9, 2009

 /s/Paul H. Schubert
 -------------------------------------
 Paul H. Schubert                           Chief Financial Officer and Treasurer        February 9, 2009

 /s/John W. Ballantine
 -------------------------------------
 John W. Ballantine*                        Trustee                                      February 9, 2009

 /s/Henry P. Becton, Jr.
 -------------------------------------
 Henry P. Becton, Jr.*                      Trustee                                      February 9, 2009

  /s/Dawn-Marie Driscoll
 -------------------------------------
 Dawn-Marie Driscoll*                       Trustee                                      February 9, 2009

 /s/Keith R. Fox
 -------------------------------------
 Keith R. Fox*                              Trustee                                      February 9, 2009

 /s/Paul K. Freeman
 -------------------------------------
 Paul K. Freeman*                           Chairperson and Trustee                      February 9, 2009

 /s/Kenneth C. Froewiss
 -------------------------------------
 Kenneth C. Froewiss*                       Trustee                                      February 9, 2009

 /s/Richard J. Herring
 -------------------------------------
 Richard J. Herring*                        Trustee                                      February 9, 2009

 /s/William McClayton
 -------------------------------------
 William McClayton*                         Trustee                                      February 9, 2009

 /s/Rebecca W. Rimel
 -------------------------------------
 Rebecca W. Rimel*                          Trustee                                      February 9, 2009

 /s/William N. Searcy, Jr.
 -------------------------------------
 William N. Searcy, Jr.*                    Trustee                                      February 9, 2009



                                       15
<PAGE>


 /s/Jean Gleason Stromberg
 -------------------------------------
 Jean Gleason Stromberg*                    Trustee                                      February 9, 2009

 /s/Robert H. Wadsworth
 -------------------------------------
 Robert H. Wadsworth*                       Trustee                                      February 9, 2009

 /s/Axel Schwarzer
 -------------------------------------
 Axel Schwarzer*                            Trustee                                      February 9, 2009
</TABLE>

*By:     /s/Caroline Pearson
         -----------------------------
         Caroline Pearson**
         Assistant Secretary

**       Attorney-in-fact pursuant to the powers of attorney as contained in and
         incorporated by reference to Post Effective Amendments No. 159 and 163
         to the Registration Statement, as filed on April 29, 2008 and November
         10, 2008, respectively.
<PAGE>

                                                      1933 Act File No. 33-07404
                                                     1940 Act File No. 811-04760




                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    EXHIBITS

                                       TO

                                    FORM N-1A


                        POST-EFFECTIVE AMENDMENT NO. 166
                            TO REGISTRATION STATEMENT

                                      UNDER

                           THE SECURITIES ACT OF 1933

                                       AND

                                AMENDMENT NO. 166
                            TO REGISTRATION STATEMENT

                                      UNDER

                       THE INVESTMENT COMPANY ACT OF 1940



                                DWS ADVISOR FUNDS



                                       14
<PAGE>


                                DWS ADVISOR FUNDS


                                  EXHIBIT INDEX

                                     (h)(6)

                                     (h)(8)





                                       15