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


                               NOVEMBER 15, 2007







                                   PROSPECTUS

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






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              DWS LIFECOMPASS RETIREMENT FUND - Classes A, B and C
                  (formerly DWS Conservative Allocation Fund)


                 DWS LIFECOMPASS 2015 FUND - Classes A, B and C
                    (formerly DWS Moderate Allocation Fund)


                 DWS LIFECOMPASS 2020 FUND - Classes A, B and C
                     (formerly DWS Growth Allocation Fund)


                 DWS LIFECOMPASS 2030 FUND - Classes A, B and C
                  (formerly DWS Growth Plus Allocation Fund)


                  DWS LIFECOMPASS 2040 FUND - Classes A and C



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.


                                         [DWS SCUDDER LOGO GRAPHIC APPEARS HERE]




<PAGE>
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CONTENTS
--------------------------------------------------------------------------------

<TABLE>
<S>      <C>
HOW EACH FUND WORKS

  4      DWS LifeCompass
         Retirement Fund

 15      DWS LifeCompass 2015 Fund

 26      DWS LifeCompass 2020 Fund

 37      DWS LifeCompass 2030 Fund

 48      DWS LifeCompass 2040 Fund

 56      Other Policies and Secondary
         Risks

 58      Who Manages and Oversees
         the Funds

 61      Financial Highlights


HOW TO INVEST IN THE FUNDS

 75      Choosing a Share Class

 81      How to Buy Class A, B and C
         Shares

 82      How to Exchange or Sell
         Class A, B and C Shares

 85      Policies You Should Know
         About

 98      Understanding Distributions
         and Taxes

103      Appendix
</TABLE>

<PAGE>

HOW EACH FUND WORKS

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

These funds use an asset allocation strategy, dividing their assets among
different types of investments. All five funds invest in other DWS funds and
non-affiliated investment companies. Each fund is designed for investors with a
particular time horizon or risk profile, and invests in a distinct mix of
funds. Because the underlying funds hold a range of securities, an investment
in a fund may offer exposure to thousands of individual securities.

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

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

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

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


<TABLE>
--------------------------------------------------------------------------------
<S>                                          <C>           <C>           <C>
                                             Class A       Class B       Class C
                         ticker symbol       SUCAX         SUCBX         SUCCX
                           fund number       480           680           780

DWS LIFECOMPASS RETIREMENT FUND
(formerly DWS Conservative Allocation Fund)
--------------------------------------------------------------------------------

</TABLE>

            THE FUND'S MAIN INVESTMENT STRATEGY

            The fund seeks current income and, as a secondary objective,
            long-term growth of capital. The fund is designed for investors who
            are already in retirement or who plan to retire or begin
            withdrawing portions of their investments in the near future. The
            fund pursues its investment objective by investing in other DWS
            mutual funds. The fund may also invest in securities of Exchange
            Traded Funds ("ETFs") when the desired economic exposure to a
            particular market or sector is not available through a DWS fund.

            The fund has a target asset allocation (see sidebar), which the
            managers use as a reference point in setting the fund's actual
            asset allocation. While the actual asset allocation may vary, the
            managers expect over the long term it will average out to be
            similar to the target asset allocation.

            The managers regularly review the actual asset allocation and may
            adjust it based on current or expected market conditions or to
            manage risk. In making their asset allocation decisions, the
            managers use a proprietary mix of quantitative and qualitative
            inputs to arrive at a view for the securities markets and segments
            of those markets. These inputs include, but are not limited to,
            return forecasts for asset classes and investment guidelines. Based
            on the desired exposure to particular investments and thorough risk
            analysis the managers then decide which funds to use as underlying
            funds and in which proportions.

            In order to mitigate the risks associated with a particular fund or
            manager and increase diversification in the fund, the fund will
            limit its investments in underlying funds so that no more than 40%
            of the overall allocation to equity will be invested in any one
            equity fund.

THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

The fund's target allocation is approximately:
- 35% Equity funds; and
- 65% Fixed Income funds.

4 | DWS LifeCompass Retirement Fund
<PAGE>

            The fund's underlying funds use a broad array of investment styles.
            These funds can buy many types of securities, among them common
            stocks of companies of any size, corporate bonds of varying credit
            quality, US government and agency bonds, mortgage- and asset-backed
            securities, money market instruments and others. These securities
            are mainly from US issuers but may be, to a more limited extent,
            from foreign issuers.


            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.

            The fund's allocations among the underlying funds will change over
            time, causing corresponding changes in the portfolio's risk
            profile.

            ASSET ALLOCATION RISK. Although asset allocation among different
            asset categories generally reduces risk and exposure to any one
            category, the risk remains that the Advisor may favor an asset
            category that performs poorly relative to the other asset
            categories. To the extent that alternative asset categories
            underperform the general stock market, the fund would perform
            poorly relative to a fund invested primarily in the general stock
            market.

            MUTUAL FUND INVESTMENT RISK. The fund's investments are
            concentrated in underlying funds, so the fund's investment
            performance is directly related to the performance of the
            underlying funds. The fund's net asset value will change with
            changes in the equity and bond markets and the value of the
            underlying funds in which it invests. To the extent the particular
            underlying funds in which the fund invests underperform their
            benchmarks and/or other funds investing in the same asset class the
            fund would perform poorly relative to other asset allocation funds.
            In addition, the fund indirectly pays a portion of the expenses
            incurred by the underlying funds. As the underlying funds or the
            fund's allocations among the underlying funds change from time to
            time, or to the extent that the expense ratio of the underlying
            funds changes, the weighted average operating expenses borne by the
            fund may increase or decrease.


                                            DWS LifeCompass Retirement Fund  | 5
<PAGE>

            Investment risks of the underlying funds

            The investment risks below are risks of certain of the underlying
            funds; by investing in the underlying funds the fund is also
            exposed to these risks. In the sections below, the term "fund"
            refers to one or more of the underlying funds. For more information
            on the risks of the underlying funds, see each underlying fund's
            prospectus.

            BOND MARKET RISK. The fund is also affected by how fixed-income
            securities perform. Bonds could be hurt by rises in market interest
            rates. A rise in interest rates generally means a fall in bond
            prices and, in turn, a fall in the value of your investment. To the
            extent that an underlying fund emphasizes bonds from any given
            industry, it could be hurt if that industry does not do well. Some
            bonds could be paid off earlier than expected, which would hurt the
            performance of an underlying fund; with mortgage- or asset-backed
            securities, any unexpected behavior in interest rates could
            increase the volatility of an underlying fund's share price and
            yield. Corporate bonds could perform less well than other bonds in
            a weak economy.

            CREDIT RISK. A fund purchasing bonds faces the risk that the
            creditworthiness of an issuer may decline, causing the value of its
            bonds to decline. In addition, an issuer may not be able to make
            timely payments on the interest and/or principal on the bonds it
            has issued. Because the issuers of high-yield bonds or junk bonds
            (rated below the fourth highest category) may be in uncertain
            financial health, the prices of their bonds can be more vulnerable
            to bad economic news or even the expectation of bad news, than
            investment-grade bonds. In some cases, bonds, particularly
            high-yield bonds, may decline in credit quality or go into default.
            Because the fund may invest in securities not paying current
            interest or in securities already in default, these risks may be
            more pronounced.

            STOCK MARKET RISK. The fund is affected by how the stock market
            performs. To the extent the fund invests in a particular
            capitalization or market sector, the fund's performance may be
            proportionately affected by that segment's general performance.
            When stock prices fall, you should expect the value of your
            investment to fall as well. Because a stock represents ownership in
            its issuer, stock prices can be hurt by poor management, shrinking
            product demand and other business risks. These factors may affect
            single companies as


6 | DWS LifeCompass Retirement Fund
<PAGE>

            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 an attractive price for them.

            ETF RISK. An ETF is a fund that holds a portfolio of common stocks
            or bonds designed to track the performance of a securities index or
            industry sector. ETFs trade on a securities exchange and their
            shares may, at times, trade at a premium or discount to their NAV.
            In addition, an ETF may not replicate exactly the performance of
            the index it seeks to track for a number of reasons, including
            transaction costs incurred by the ETF. ETFs incur fees and
            expenses, such as operating expenses, licensing fees, trustee fees
            and marketing expenses, which are borne proportionately by ETF
            shareholders, such as the fund. The fund will also incur brokerage
            costs when purchasing and selling shares of ETFs.

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

            -  POLITICAL RISK. Some foreign governments have limited the
               outflow of profits to investors abroad, imposed restrictions on
               the exchange or export of foreign currency, extended diplomatic
               disputes to include trade and financial relations, seized
               foreign investment and imposed high 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 foreign company, as compared
               to the financial reports of US companies.

            -  LIQUIDITY RISK. Investments that trade less can be more
               difficult or more costly to buy, or to sell, than more liquid or
               active investments. This liquidity risk is a factor of the
               trading volume of a particular investment, as well as the size
               and liquidity of the entire local market. On the whole, foreign
               exchanges are smaller and less liquid than the US market. This
               can make buying and selling certain


                                            DWS LifeCompass Retirement Fund  | 7
<PAGE>

               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. This creates the possibility that changes in
               exchange rates between foreign currencies and the US dollar will
               affect the US dollar value of foreign securities or the income
               or gain received on these securities.

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

            REALLOCATION RISK. From time to time, one or more underlying funds
            may experience relatively large investments or redemptions due to
            reallocations or rebalancings of the fund or other fund-of-fund
            products managed by the Advisor. These transactions will affect the
            underlying funds, since underlying funds that experience
            redemptions as a result of reallocations or rebalancings may have
            to sell securities and underlying funds that receive additional
            cash will have to invest such cash. In addition, a large redemption
            by a fund in a specific underlying fund could also hurt the
            performance of another fund currently invested in the same
            underlying fund. While it is impossible to predict the overall
            impact of these transactions over time, there could also be adverse
            effects on a fund's


8 | DWS LifeCompass Retirement Fund
<PAGE>

            performance to the extent that the underlying funds may be required
            to sell securities or invest cash at times when they would
            otherwise not do so. These transactions could also accelerate the
            realization of taxable income if sales of securities resulted in
            gains and could also increase transaction costs for the underlying
            funds. The managers attempt to minimize such impact on the
            underlying funds to the extent consistent with pursuing the
            investment objective of a fund. The managers consider the impact on
            the underlying funds of transactions by the fund and an underlying
            fund may discontinue sales of shares to the fund.

            Other factors that could affect performance include:

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

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


                                            DWS LifeCompass Retirement Fund  | 9
<PAGE>

THE FUND'S PERFORMANCE HISTORY

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

The bar chart shows how the performance of the fund's Class A shares has varied
from year to year, which may give some idea of risk. The bar chart does not
reflect sales loads; if it did, total returns would be lower than those shown.
The table on the following page shows how fund performance compares to relevant
index information (which, unlike the fund performance, does not reflect fees or
expenses). The table includes the effects of maximum sales loads. The
performance of both 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
individual federal marginal income tax rates and do not reflect the impact of
state and local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown in the table. After-tax returns shown
are not relevant for investors who hold their shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts.

The inception date for Class A shares was December 29, 2000. In the bar chart,
the performance figures for Class A for periods prior to that date are based on
the historical performance of the fund's original share class (Class S),
adjusted to reflect the higher gross total annual operating expenses of Class
A.

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

DWS LifeCompass Retirement 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 CHART GRAPHIC APPEARS HERE]

<TABLE>
<S>        <C>       <C>       <C>       <C>        <C>       <C>        <C>       <C>       <C>
14.05       5.34      2.55      2.83      -3.17      5.94     13.27       7.42      4.43      9.10
 1997       1998      1999      2000      2001       2002      2003       2004      2005      2006
</TABLE>

<TABLE>
<CAPTION>
2007 TOTAL RETURN AS OF SEPTEMBER 30: 5.06%
<S>                                         <C>
FOR THE PERIODS INCLUDED IN THE BAR CHART:

BEST QUARTER: 7.55%, Q2 2003                WORST QUARTER: -5.66%, Q3 2002
</TABLE>



10 | DWS LifeCompass Retirement Fund
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2006

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                              1 YEAR      5 YEARS      10 YEARS
<S>                                          <C>         <C>          <C>
--------------------------------------------------------------------------------
 CLASS A
   Return before Taxes                          2.82         4.21         4.20
--------------------------------------------------------------------------------
   Return after Taxes on Distributions          1.71         3.17         2.66
--------------------------------------------------------------------------------
   Return after Taxes on Distributions
   and Sale of Fund Shares                     1.93*         3.00         2.61
--------------------------------------------------------------------------------
 CLASS B (Return before Taxes)                 5.27          4.48         4.05
--------------------------------------------------------------------------------
 CLASS C (Return before Taxes)                 8.27          4.66         4.04
--------------------------------------------------------------------------------
 RUSSELL 1000 INDEX (reflects no
 deductions for fees, expenses or
 taxes)                                       15.46          6.82         8.39
--------------------------------------------------------------------------------
 RUSSELL 2000 INDEX (reflects no
 deductions for fees, expenses or
 taxes)                                       18.37         11.39         9.64
--------------------------------------------------------------------------------
 LEHMAN BROTHERS U.S. AGGREGATE
 INDEX (reflects no deductions for fees,
 expenses or taxes)                            4.33          5.06         6.09
--------------------------------------------------------------------------------
 CREDIT SUISSE HIGHYIELD INDEX
 (reflects no deductions for fees,
 expenses or taxes)                           11.92         11.07         7.09
--------------------------------------------------------------------------------
 MERRILL LYNCH 3-MONTH US TREASURY
 BILL INDEX (reflects no deductions for
 fees, expenses or taxes)                      4.82          2.36         3.69
--------------------------------------------------------------------------------
 MORGAN STANLEY CAPITAL
 INTERNATIONAL (MSCI) EUROPE,
 AUSTRALASIA AND THE FAR EAST (EAFE)
 INDEX (reflects no deductions for fees,
 expenses or taxes)                           26.34         14.98         7.50
--------------------------------------------------------------------------------
</TABLE>


 *   Returns after Taxes on Distributions and Sale of Fund Shares are higher
     than Returns after Taxes on Distributions for the same period due to a
     capital loss occurring upon redemption resulting in an assumed tax
     deduction for the shareholder.

Total returns would have been lower if the advisor had not maintained the
expenses of certain of the underlying funds.

 RUSSELL 1000 (Reg. TM) INDEX is an unmanaged price-only index of the 1,000
 largest capitalized companies that are domiciled in the US and whose common
 stocks are traded.

 The RUSSELL 2000 (Reg. TM) INDEX is an unmanaged capitalization-weighted
 measure of approximately 2,000 small US stocks.

 LEHMAN BROTHERS U.S. AGGREGATE INDEX is an unmanaged market value-weighted
 measure of Treasury issues, agency issues, corporate bond issues and mortgage
 securities.

 The CREDIT SUISSE HIGH YIELD INDEX is an unmanaged trader-priced portfolio,
 constructed to mirror the global high-yield debt market.


                                           DWS LifeCompass Retirement Fund  | 11
<PAGE>

 The MERRILL LYNCH 3-MONTH US TREASURY BILL INDEX is an unmanaged index
 capturing the performance of a single issue maturing closest to, but not
 exceeding, three months from the re-balancing date.

 MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) EUROPE, AUSTRALASIA AND THE FAR
 EAST (EAFE) 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-scudder.com.


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

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


12 | DWS LifeCompass Retirement Fund
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
Class A, Class B or Class C shares of the fund. This information doesn't
include any fees that may be charged by your financial advisor. The fund's
shareholders directly bear the fees and expenses of the fund, subject to the
Advisor's contractual obligations to waive fees or reimburse expenses to
maintain the fund's operating expenses at a specified level (see "Net Annual
Fund and Acquired Funds (Underlying Funds) Operating Expenses" in the table
below). The fund will indirectly bear its proportionate share of fees and
expenses incurred by the underlying DWS funds and, potentially, exchange-traded
funds in which the fund is invested (see "Acquired Funds (Underlying Funds)
Fees and Expenses" in the table below). This information does not include any
fees that may be charged by your financial advisor.


<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
FEE TABLE                                        CLASS A         CLASS B        CLASS C
<S>                                              <C>               <C>          <C>
-------------------------------------------------------------------------------------------
 SHAREHOLDER FEES, paid directly from your investment
-------------------------------------------------------------------------------------------
 Maximum Sales Charge (Load) Imposed
 on Purchases (as % of offering price)             5.75% 1         None          None
-------------------------------------------------------------------------------------------
 Maximum Contingent Deferred Sales
 Charge (Load) (as % of redemption
 proceeds)                                         None 2          4.00%         1.00%
-------------------------------------------------------------------------------------------
 Redemption/Exchange fee on shares
 owned less than 15 days (as % of
 redemption proceeds) 3                            2.00            2.00          2.00
-------------------------------------------------------------------------------------------
 ANNUAL OPERATING EXPENSES, deducted from fund assets
-------------------------------------------------------------------------------------------
 Management Fee 4                                  0.10  %         0.10%         0.10%
-------------------------------------------------------------------------------------------
 Distribution/Service (12b-1) Fee                  0.23            0.99          0.99
-------------------------------------------------------------------------------------------
 Other Expenses                                    0.29            0.25          0.25
-------------------------------------------------------------------------------------------
 Acquired Funds (Underlying Funds) Fees
 and Expenses 5                                    0.54            0.54          0.54
-------------------------------------------------------------------------------------------
 TOTAL ANNUAL OPERATING EXPENSES                   1.16            1.88          1.88
-------------------------------------------------------------------------------------------
 Less Expense Waiver/Reimbursement 6               0.10            0.07          0.07
-------------------------------------------------------------------------------------------
 NET ANNUAL OPERATING EXPENSES 6                  1.06            1.81          1.81
-------------------------------------------------------------------------------------------
</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 next six
     months following purchase.

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    The Advisor does not receive any investment advisory fees for managing the
     fund but does receive a 0.10% administration fee. In addition, the Advisor
     receives fees as investment advisor to each underlying DWS fund.

5    The amount indicated is based on the indirect net expenses associated with
     the fund's investment in the underlying funds for the fiscal year ended
     August 31, 2007.

                                           DWS LifeCompass Retirement Fund  | 13
<PAGE>

6    Effective November 15, 2007 through November 30, 2008, the advisor has
     contractually agreed to waive all or a portion of its management fee and
     reimburse or pay operating expenses of the fund to the extent necessary to
     maintain the fund's total operating expenses at 0.52%, 1.27% and 1.27% for
     Class A, Class B and Class C shares, respectively, excluding certain
     expenses such as extraordinary expenses, taxes, brokerage, interest and
     indirect expenses of underlying DWS funds.

Based on the costs above (including one year of capped expenses in each period),
this example helps you compare the expenses of each share class 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        $677         $913       $1,168       $1,895
--------------------------------------------------------------------------------
 Class B shares         584          884        1,210        1,835
--------------------------------------------------------------------------------
 Class C shares         284          584        1,010        2,195
--------------------------------------------------------------------------------
 EXPENSES, assuming you kept your shares
--------------------------------------------------------------------------------
 Class A shares        $677         $913       $1,168       $1,895
--------------------------------------------------------------------------------
 Class B shares         184          584        1,010        1,835
--------------------------------------------------------------------------------
 Class C shares         184          584        1,010        2,195
--------------------------------------------------------------------------------
</TABLE>

14 | DWS LifeCompass Retirement Fund
<PAGE>


<TABLE>
--------------------------------------------------------------------------------
<S>                                         <C>           <C>           <C>
                                            Class A       Class B       Class C
                      ticker symbol         SPDAX         SPDBX         SPDCX
                        fund number         481           681           781

DWS LIFECOMPASS 2015 FUND
(formerly DWS Moderate Allocation Fund)
--------------------------------------------------------------------------------

</TABLE>

            THE FUND'S MAIN INVESTMENT STRATEGY

            The fund seeks to achieve as high total return as is consistent
            with its asset allocation until the target year. As the fund
            approaches its target year, the fund will decrease its emphasis on
            growth of capital and increase its emphasis on current income. The
            fund is designed for investors seeking to meet their respective
            investment goals, such as retirement, around the year 2015. The
            fund pursues its investment objective by investing in other DWS
            mutual funds. The fund may also invest in securities of Exchange
            Traded Funds ("ETFs") when the economic exposure to a particular
            market or sector is not available through a DWS fund.

            The fund has a target asset allocation, which the managers use as a
            reference point in setting the fund's actual asset allocation (see
            sidebar). The target asset allocation for the fund will change over
            time based on the number of years remaining until the target year,
            becoming more conservative as the fund approaches the target year.
            As the target year approaches, the fund's target asset allocation
            will approach that of the DWS LifeCompass Retirement Fund (the
            "Retirement Fund"). Once the fund's actual asset allocation is
            similar to that of the Retirement Fund, the fund may be combined
            with the Retirement Fund or another DWS fund offered at the time.

            The fund's target asset allocation may differ from the fund's actual
            asset allocation. The managers periodically review the actual asset
            allocation and may adjust it based on the target investment horizon,
            current or expected market conditions or to manage risk. In making
            their asset allocation decisions, the managers use a proprietary mix
            of quantitative and qualitative inputs to arrive at a view for the
            securities markets and segments of those markets. These inputs
            include, but are not limited to, return forecasts for asset classes,
            target

THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

The fund's current target asset allocation is approximately:
- 60% Equity funds; and
- 40% Fixed Income funds.

                                                 DWS LifeCompass 2015 Fund  | 15
<PAGE>

            investments horizon and investment guidelines. Based on the desired
            exposure to particular investments and thorough risk analysis the
            managers then decide which funds to use as underlying funds and in
            which proportions.

            In order to mitigate the risks associated with a particular fund or
            manager and increase diversification in the fund, the fund will
            limit its investments in underlying funds so that no more than 40%
            of the overall allocation to equity will be invested in any one
            equity fund.

            The fund's underlying funds use a broad array of investment styles.
            These funds can buy many types of securities, among them common
            stocks of companies of any size, corporate bonds of varying credit
            quality, US government and agency bonds, mortgage- and asset-backed
            securities, money market instruments and others. These securities
            are mainly from US issuers but may be, to a more limited extent,
            from foreign issuers.


            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.

            The fund's allocations among the underlying funds will change over
            time, causing corresponding changes in the portfolio's risk
            profile.

            ASSET ALLOCATION RISK. Although asset allocation among different
            asset categories generally reduces risk and exposure to any one
            category, the risk remains that the Advisor may favor an asset
            category that performs poorly relative to the other asset
            categories. To the extent that alternative asset categories
            underperform the general stock market, the fund would perform
            poorly relative to a fund invested primarily in the general stock
            market.

            MUTUAL FUND INVESTMENT RISK. The fund's investments are
            concentrated in underlying funds, so the fund's investment
            performance is directly related to the performance of the
            underlying funds. The fund's net asset value will change with
            changes in the equity and bond markets and the value of the
            underlying funds in which it invests. To the extent the particular
            underlying funds in which the fund invests underperform their
            benchmarks and/or other funds investing in the same asset


16 | DWS LifeCompass 2015 Fund
<PAGE>

            class the fund would perform poorly relative to other asset
            allocation funds. In addition, the fund indirectly pays a portion
            of the expenses incurred by the underlying funds. As the underlying
            funds or the fund's allocations among the underlying funds change
            from time to time, or to the extent that the expense ratio of the
            underlying funds changes, the weighted average operating expenses
            borne by the fund may increase or decrease.


            Investment risks of the underlying funds

            The investment risks below are risks of certain of the underlying
            funds; by investing in the underlying funds the fund is also
            exposed to these risks. In the sections below, the term "fund"
            refers to one or more of the underlying funds. For more information
            on the risks of the underlying funds, see each underlying fund's
            prospectus.

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

            ETF RISK. An ETF is a fund that holds a portfolio of common stocks
            or bonds designed to track the performance of a securities index or
            industry sector. ETFs trade on a securities exchange and their
            shares may, at times, trade at a premium or discount to their NAV.
            In addition, an ETF may not replicate exactly the performance of
            the index it seeks to track for a number of reasons, including
            transaction costs incurred by the ETF. ETFs incur fees and
            expenses, such as operating expenses, licensing fees, trustee fees
            and marketing expenses, which are borne proportionately by ETF
            shareholders, such as the fund. The fund will also incur brokerage
            costs when purchasing and selling shares of ETFs.


                                                 DWS LifeCompass 2015 Fund  | 17
<PAGE>

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

            -  POLITICAL RISK. Some foreign governments have limited the
               outflow of profits to investors abroad, imposed restrictions on
               the exchange or export of foreign currency, extended diplomatic
               disputes to include trade and financial relations, seized
               foreign investment and imposed high 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 foreign company, as compared
               to the financial reports of US companies.

            -  LIQUIDITY RISK. Investments that trade less can be more
               difficult or more costly to buy, or to sell, than more liquid or
               active investments. This liquidity risk is a factor of the
               trading volume of a particular investment, as well as the size
               and liquidity of the entire local market. On the whole, foreign
               exchanges are smaller and less liquid than the US market. 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. This creates the possibility that changes in
               exchange rates between foreign currencies and the US dollar will
               affect the US dollar value of foreign securities or the income
               or gain received on these securities.

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

18 | DWS LifeCompass 2015 Fund
<PAGE>

            -  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.

            BOND MARKET RISK. The fund is also affected by how fixed-income
            securities perform. Bonds could be hurt by rises in market interest
            rates. A rise in interest rates generally means a fall in bond
            prices and, in turn, a fall in the value of your investment. To the
            extent that an underlying fund emphasizes bonds from any given
            industry, it could be hurt if that industry does not do well. Some
            bonds could be paid off earlier than expected, which would hurt the
            performance of an underlying fund; with mortgage- or asset-backed
            securities, any unexpected behavior in interest rates could
            increase the volatility of an underlying fund's share price and
            yield. Corporate bonds could perform less well than other bonds in
            a weak economy.

            CREDIT RISK. A fund purchasing bonds faces the risk that the
            creditworthiness of an issuer may decline, causing the value of its
            bonds to decline. In addition, an issuer may not be able to make
            timely payments on the interest and/or principal on the bonds it
            has issued. Because the issuers of high-yield bonds or junk bonds
            (rated below the fourth highest category) may be in uncertain
            financial health, the prices of their bonds can be more vulnerable
            to bad economic news or even the expectation of bad news, than
            investment-grade bonds. In some cases, bonds, particularly
            high-yield bonds, may decline in credit quality or go into default.
            Because the fund may invest in securities not paying current
            interest or in securities already in default, these risks may be
            more pronounced.


                                                 DWS LifeCompass 2015 Fund  | 19
<PAGE>

            REALLOCATION RISK. From time to time, one or more underlying funds
            may experience relatively large investments or redemptions due to
            reallocations or rebalancings of the fund or other fund-of-fund
            products managed by the Advisor. These transactions will affect the
            underlying funds, since underlying funds that experience
            redemptions as a result of reallocations or rebalancings may have
            to sell securities and underlying funds that receive additional
            cash will have to invest such cash. In addition, a large redemption
            by a fund in a specific underlying fund could also hurt the
            performance of another fund currently invested in the same
            underlying fund. While it is impossible to predict the overall
            impact of these transactions over time, there could also be adverse
            effects on a fund's performance to the extent that the underlying
            funds may be required to sell securities or invest cash at times
            when they would otherwise not do so. These transactions could also
            accelerate the realization of taxable income if sales of securities
            resulted in gains and could also increase transaction costs for the
            underlying funds. The managers attempt to minimize such impact on
            the underlying funds to the extent consistent with pursuing the
            investment objective of a fund. The managers consider the impact on
            the underlying funds of transactions by the fund and an underlying
            fund may discontinue sales of shares to the fund.

            Other factors that could affect performance include:

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

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


20 | DWS LifeCompass 2015 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 information (which, unlike the fund performance, does not reflect fees or
expenses). The table includes the effects of maximum sales loads. The
performance of both 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
individual federal marginal income tax rates and do not reflect the impact of
state and local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown in the table. After-tax returns shown
are not relevant for investors who hold their shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts.

The inception date for Class A shares was December 29, 2000. In the bar chart,
the performance figures for Class A for periods prior to that date are based on
the historical performance of the fund's original share class (Class S),
adjusted to reflect the higher gross total annual operating expenses of Class
A.

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

DWS LifeCompass 2015 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 CHART GRAPHIC APPEARS HERE]

<TABLE>
<S>        <C>       <C>        <C>        <C>        <C>         <C>        <C>       <C>       <C>
13.02       7.34     16.34       -2.88      -9.28      -12.18     18.77       8.79      5.10     11.11
 1997       1998      1999       2000       2001        2002       2003       2004      2005      2006
</TABLE>

<TABLE>
<CAPTION>
2007 TOTAL RETURN AS OF SEPTEMBER 30: 6.00%
<S>                                         <C>
FOR THE PERIODS INCLUDED IN THE BAR CHART:

BEST QUARTER: 12.46%, Q4 1999               WORST QUARTER: -10.32%, Q3 1998
</TABLE>



                                                 DWS LifeCompass 2015 Fund  | 21
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2006

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                              1 YEAR      5 YEARS      10 YEARS
--------------------------------------------------------------------------------
<S>                                          <C>         <C>          <C>
 CLASS A
   Return before Taxes                          4.72         4.55         4.51
--------------------------------------------------------------------------------
   Return after Taxes on Distributions          3.72         3.76         3.11
--------------------------------------------------------------------------------
   Return after Taxes on Distributions
   and Sale of Fund Shares                      1.22         3.34         3.07
--------------------------------------------------------------------------------
 CLASS B (Return before Taxes)                  7.35         4.85         4.36
--------------------------------------------------------------------------------
 CLASS C (Return before Taxes)                 10.38         5.02         4.36
--------------------------------------------------------------------------------
 RUSSELL 1000 INDEX (reflects no
 deductions for fees, expenses or
 taxes)                                        15.46         6.82         8.39
--------------------------------------------------------------------------------
 LEHMAN BROTHERS U.S. AGGREGATE
 INDEX (reflects no deductions for fees,
 expenses or taxes)                             4.33         5.06         6.09
--------------------------------------------------------------------------------
 RUSSELL 2000 INDEX (reflects no
 deductions for fees, expenses or
 taxes)                                        18.37        11.39         9.64
--------------------------------------------------------------------------------
 MORGAN STANLEY CAPITAL
 INTERNATIONAL (MSCI) EUROPE,
 AUSTRALASIA AND THE FAR EAST (EAFE)
 INDEX (reflects no deductions for fees,
 expenses or taxes)                            26.34        14.98         7.50
--------------------------------------------------------------------------------
 CREDIT SUISSE HIGHYIELD INDEX
 (reflects no deductions for fees,
 expenses or taxes)                            11.92        11.07         7.09
--------------------------------------------------------------------------------
 MERRILL LYNCH 3-MONTH US TREASURY
 BILL INDEX (reflects no deductions for
 fees, expenses or taxes)                       4.82         2.36         3.69
--------------------------------------------------------------------------------
</TABLE>


 Total returns would have been lower if the advisor had not maintained the
 expenses of certain of the underlying funds.

 RUSSELL 1000 (Reg. TM) INDEX is an unmanaged price-only index of the 1,000
 largest capitalized companies that are domiciled in the US and whose common
 stocks are traded.

 LEHMAN BROTHERS U.S. AGGREGATE INDEX is an unmanaged market value-weighted
 measure of Treasury issues, agency issues, corporate bond issues and mortgage
 securities.

 The RUSSELL 2000 (Reg. TM) INDEX is an unmanaged capitalization-weighted
 measure of approximately 2,000 small US stocks.

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

 The CREDIT SUISSE HIGH YIELD INDEX is an unmanaged trader-priced portfolio,
 constructed to mirror the global high-yield debt market.


22 | DWS LifeCompass 2015 Fund
<PAGE>

 The MERRILL LYNCH 3-MONTH US TREASURY BILL INDEX is an unmanaged index
 capturing the performance of a single issue maturing closest to, but not
 exceeding, three months from the re-balancing date.


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


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

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


                                                 DWS LifeCompass 2015 Fund  | 23
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
Class A, Class B or Class C shares of the fund. This information doesn't
include any fees that may be charged by your financial advisor. The fund's
shareholders directly bear the fees and expenses of the fund, subject to the
Advisor's contractual obligations to waive fees or reimburse expenses to
maintain the fund's operating expenses at a specified level (see "Net Annual
Fund and Acquired Funds (Underlying Funds) Operating Expenses" in the table
below). The fund will indirectly bear its proportionate share of fees and
expenses incurred by the underlying DWS funds and, potentially, exchange-traded
funds in which the fund is invested (see "Acquired Funds (Underlying Funds)
Fees and Expenses" in the table below). This information does not include any
fees that may be charged by your financial advisor.


<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
FEE TABLE                                        CLASS A          CLASS B       CLASS C
<S>                                              <C>              <C>          <C>
------------------------------------------------------------------------------------------
 SHAREHOLDER FEES, paid directly from your investment
------------------------------------------------------------------------------------------
 Maximum Sales Charge (Load) Imposed
 on Purchases (as % of offering price)            5.75% 1          None          None
------------------------------------------------------------------------------------------
 Maximum Contingent Deferred Sales
 Charge (Load) (as % of redemption
 proceeds)                                        None 2           4.00%         1.00%
------------------------------------------------------------------------------------------
 Redemption/Exchange fee on shares
 owned less than 15 days (as % of
 redemption proceeds) 3                           2.00             2.00          2.00
------------------------------------------------------------------------------------------
 ANNUAL OPERATING EXPENSES, deducted from fund assets
------------------------------------------------------------------------------------------
 Management Fee 4                                 0.10  %          0.10%         0.10%
------------------------------------------------------------------------------------------
 Distribution/Service (12b-1) Fee                 0.24             0.99          0.99
------------------------------------------------------------------------------------------
 Other Expenses                                   0.28             0.27          0.22
------------------------------------------------------------------------------------------
 Acquired Funds (Underlying Funds) Fees
 and Expenses5                                    0.62             0.62          0.62
------------------------------------------------------------------------------------------
 TOTAL ANNUAL OPERATING EXPENSES                  1.24             1.98          1.93
------------------------------------------------------------------------------------------
 Less Expense Waiver/Reimbursement 6              0.14             0.13          0.08
------------------------------------------------------------------------------------------
 NET ANNUAL OPERATING EXPENSES 6                  1.10             1.85          1.85
------------------------------------------------------------------------------------------
</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 next six months
    following purchase.

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   The Advisor does not receive any investment advisory fees for managing the
    fund but does receive a 0.10% administration fee. In addition, the Advisor
    receives fees as investment advisor to each underlying DWS fund.

5   The amount indicated is based on the indirect net expenses associated with
    the fund's investment in the underlying funds for the fiscal year ended
    August 31, 2007.

24 | DWS LifeCompass 2015 Fund
<PAGE>

6   Effective November 15, 2007 through November 30, 2008, the advisor has
    contractually agreed to waive all or a portion of its management fee and
    reimburse or pay operating expenses of the fund to the extent necessary to
    maintain the fund's total operating expenses at 0.48%, 1.23% and 1.23% for
    Class A, Class B and Class C shares, respectively, excluding certain
    expenses such as extraordinary expenses, taxes, brokerage, interest and
    indirect expenses of underlying DWS funds.

Based on the costs above (including one year of capped expenses in each
period), this example helps you compare the expenses of each share class 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        $681         $933       $1,204        $1,977
--------------------------------------------------------------------------------
 Class B shares         588          909        1,256        1,929
--------------------------------------------------------------------------------
 Class C shares         288          598        1,034        2,247
--------------------------------------------------------------------------------
 EXPENSES, assuming you kept your shares
--------------------------------------------------------------------------------
 Class A shares        $681         $933       $1,204       $1,977
--------------------------------------------------------------------------------
 Class B shares         188          609        1,056        1,929
--------------------------------------------------------------------------------
 Class C shares         188          598        1,034        2,247
--------------------------------------------------------------------------------
</TABLE>



                                                 DWS LifeCompass 2015 Fund  | 25
<PAGE>


<TABLE>
--------------------------------------------------------------------------------
<S>                                     <C>           <C>           <C>
                                        Class A       Class B       Class C
                      ticker symbol     SUPAX         SUPBX         SUPCX
                        fund number     482           682           782

DWS LIFECOMPASS 2020 FUND
(formerly DWS Growth Allocation Fund)
--------------------------------------------------------------------------------

</TABLE>

            THE FUND'S MAIN INVESTMENT STRATEGY

            The fund seeks to achieve as high total return as is consistent
            with its asset allocation until the target year. As the fund
            approaches its target year, the fund will decrease its emphasis on
            growth of capital and increase its emphasis on current income. The
            fund is designed for investors seeking to meet their respective
            investment goals, such as retirement, around the year 2020. The
            fund pursues its investment objective by investing in other DWS
            mutual funds. The fund may also invest in securities of Exchange
            Traded Funds ("ETFs") when the desired economic exposure to a
            particular market or sector is not available through a DWS fund.

            The fund has a target asset allocation, which the managers use as a
            reference point in setting the fund's actual asset allocation (see
            sidebar). The target asset allocation for the fund will change over
            time based on the number of years remaining until the target year,
            becoming more conservative as the fund approaches the target year.
            As the target year approaches, the fund's target asset allocation
            will approach that of the Retirement Fund. Once the fund's actual
            asset allocation is similar to that of the Retirement Fund, the
            fund may be combined with the Retirement Fund or another DWS fund
            offered at the time.

            The fund's target asset allocation may differ from the fund's actual
            asset allocation. The managers periodically review the actual asset
            allocation and may adjust it based on the target investment horizon,
            current or expected market conditions or to manage risk. In making
            their asset allocation decisions, the managers use a proprietary mix
            of quantitative and qualitative inputs to arrive at a view for the
            securities markets and segments of those markets. These inputs
            include, but are not limited to, return forecasts for asset classes,
            target investment

THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

The fund's current target asset allocation is approximately:
- 70% Equity funds; and
- 30% Fixed Income funds.

26 | DWS LifeCompass 2020 Fund
<PAGE>

            horizon and investment guidelines. Based on the desired exposure to
            particular investments and thorough risk analysis the managers then
            decide which funds to use as underlying funds and in which
            proportions.

            In order to mitigate the risks associated with a particular fund or
            manager and increase diversification in the fund, the fund will
            limit its investments in underlying funds so that no more than 40%
            of the overall allocation to equity will be invested in any one
            equity fund.

            The fund's underlying funds use a broad array of investment styles.
            These funds can buy many types of securities, among them common
            stocks of companies of any size, corporate bonds of varying credit
            quality, US government and agency bonds, mortgage- and asset-backed
            securities, money market instruments and others. These securities
            are mainly from US issuers but may be, to a more limited extent,
            from foreign issuers.


            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.

            The fund's allocations among the underlying funds will change over
            time, causing corresponding changes in the portfolio's risk
            profile.

            ASSET ALLOCATION RISK. Although asset allocation among different
            asset categories generally reduces risk and exposure to any one
            category, the risk remains that the Advisor may favor an asset
            category that performs poorly relative to the other asset
            categories. To the extent that alternative asset categories
            underperform the general stock market, the fund would perform
            poorly relative to a fund invested primarily in the general stock
            market.

            MUTUAL FUND INVESTMENT RISK. The fund's investments are
            concentrated in underlying funds, so the fund's investment
            performance is directly related to the performance of the
            underlying funds. The fund's net asset value will change with
            changes in the equity and bond markets and the value of the
            underlying funds in which it invests. To the extent the particular
            underlying funds in which the fund invests underperform their
            benchmarks and/or other funds investing in the same asset


                                                 DWS LifeCompass 2020 Fund  | 27
<PAGE>

            class the fund would perform poorly relative to other asset
            allocation funds. In addition, the fund indirectly pays a portion
            of the expenses incurred by the underlying funds. As the underlying
            funds or the fund's allocations among the underlying funds change
            from time to time, or to the extent that the expense ratio of the
            underlying funds changes, the weighted average operating expenses
            borne by the fund may increase or decrease.


            Investment risks of the underlying funds

            The investment risks below are risks of certain of the underlying
            funds; by investing in the underlying funds the fund is also
            exposed to these risks. In the sections below, the term "fund"
            refers to one or more of the underlying funds. For more information
            on the risks of the underlying funds, see each underlying fund's
            prospectus.

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

            ETF RISK. An ETF is a fund that holds a portfolio of common stocks
            or bonds designed to track the performance of a securities index or
            industry sector. ETFs trade on a securities exchange and their
            shares may, at times, trade at a premium or discount to their NAV.
            In addition, an ETF may not replicate exactly the performance of
            the index it seeks to track for a number of reasons, including
            transaction costs incurred by the ETF. ETFs incur fees and
            expenses, such as operating expenses, licensing fees, trustee fees
            and marketing expenses, which are borne proportionately by ETF
            shareholders, such as the fund. The fund will also incur brokerage
            costs when purchasing and selling shares of ETFs.


28 | DWS LifeCompass 2020 Fund
<PAGE>

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

            -  POLITICAL RISK. Some foreign governments have limited the
               outflow of profits to investors abroad, imposed restrictions on
               the exchange or export of foreign currency, extended diplomatic
               disputes to include trade and financial relations, seized
               foreign investment and imposed high 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 foreign company, as compared
               to the financial reports of US companies.

            -  LIQUIDITY RISK. Investments that trade less can be more
               difficult or more costly to buy, or to sell, than more liquid or
               active investments. This liquidity risk is a factor of the
               trading volume of a particular investment, as well as the size
               and liquidity of the entire local market. On the whole, foreign
               exchanges are smaller and less liquid than the US market. 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. This creates the possibility that changes in
               exchange rates between foreign currencies and the US dollar will
               affect the US dollar value of foreign securities or the income
               or gain received on these securities.

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

                                                 DWS LifeCompass 2020 Fund  | 29
<PAGE>

            -  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.

            BOND MARKET RISK. The fund is also affected by how fixed-income
            securities perform. Bonds could be hurt by rises in market interest
            rates. A rise in interest rates generally means a fall in bond
            prices and, in turn, a fall in the value of your investment. To the
            extent that an underlying fund emphasizes bonds from any given
            industry, it could be hurt if that industry does not do well. Some
            bonds could be paid off earlier than expected, which would hurt the
            performance of an underlying fund; with mortgage- or asset-backed
            securities, any unexpected behavior in interest rates could
            increase the volatility of an underlying fund's share price and
            yield. Corporate bonds could perform less well than other bonds in
            a weak economy.

            CREDIT RISK. A fund purchasing bonds faces the risk that the
            creditworthiness of an issuer may decline, causing the value of its
            bonds to decline. In addition, an issuer may not be able to make
            timely payments on the interest and/or principal on the bonds it
            has issued. Because the issuers of high-yield bonds or junk bonds
            (rated below the fourth highest category) may be in uncertain
            financial health, the prices of their bonds can be more vulnerable
            to bad economic news or even the expectation of bad news, than
            investment-grade bonds. In some cases, bonds, particularly
            high-yield bonds, may decline in credit quality or go into default.
            Because the fund may invest in securities not paying current
            interest or in securities already in default, these risks may be
            more pronounced.


30 | DWS LifeCompass 2020 Fund
<PAGE>

            REALLOCATION RISK. From time to time, one or more underlying funds
            may experience relatively large investments or redemptions due to
            reallocations or rebalancings of the fund or other fund-of-fund
            products managed by the Advisor. These transactions will affect the
            underlying funds, since underlying funds that experience
            redemptions as a result of reallocations or rebalancings may have
            to sell securities and underlying funds that receive additional
            cash will have to invest such cash. In addition, a large redemption
            by a fund in a specific underlying fund could also hurt the
            performance of another fund currently invested in the same
            underlying fund. While it is impossible to predict the overall
            impact of these transactions over time, there could also be adverse
            effects on a fund's performance to the extent that the underlying
            funds may be required to sell securities or invest cash at times
            when they would otherwise not do so. These transactions could also
            accelerate the realization of taxable income if sales of securities
            resulted in gains and could also increase transaction costs for the
            underlying funds. The managers attempt to minimize such impact on
            the underlying funds to the extent consistent with pursuing the
            investment objective of a fund. The managers consider the impact on
            the underlying funds of transactions by the fund and an underlying
            fund may discontinue sales of shares to the fund.

            Other factors that could affect performance include:

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

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


                                                 DWS LifeCompass 2020 Fund  | 31
<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 information (which, unlike the fund performance, does not reflect fees or
expenses). The table includes the effects of maximum sales loads. The
performance of both 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
individual federal marginal income tax rates and do not reflect the impact of
state and local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown in the table. After-tax returns shown
are not relevant for investors who hold their shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts.

The inception date for Class A shares was December 29, 2000. In the bar chart,
the performance figures for Class A for periods prior to that date are based on
the historical performance of the fund's original share class (Class S),
adjusted to reflect the higher gross total annual operating expenses of Class
A.

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

DWS LifeCompass 2020 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 CHART GRAPHIC APPEARS HERE]


<TABLE>
<S>        <C>       <C>        <C>        <C>         <C>         <C>        <C>        <C>       <C>
14.62       9.30     34.87       -6.53      -13.57      -18.96     25.39      10.06       5.84     13.30
 1997       1998      1999       2000        2001        2002       2003       2004       2005      2006
</TABLE>


<TABLE>
<CAPTION>
2007 TOTAL RETURN AS OF SEPTEMBER 30: 6.69%
<S>                                         <C>
FOR THE PERIODS INCLUDED IN THE BAR CHART:

BEST QUARTER: 21.73%, Q4 1999               WORST QUARTER: -15.45%, Q3 2002
</TABLE>



32 | DWS LifeCompass 2020 Fund
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2006

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                              1 YEAR      5 YEARS      10 YEARS
--------------------------------------------------------------------------------
<S>                                          <C>         <C>          <C>
 CLASS A
   Return before Taxes                          6.78         4.79         5.61
--------------------------------------------------------------------------------
   Return after Taxes on Distributions          5.95         4.29         4.59
--------------------------------------------------------------------------------
   Return after Taxes on Distributions
   and Sale of Fund Shares                      2.60         3.75         4.36
--------------------------------------------------------------------------------
 CLASS B (Return before Taxes)                  9.41         5.07         5.44
--------------------------------------------------------------------------------
 CLASS C (Return before Taxes)                 12.49         5.24         5.45
--------------------------------------------------------------------------------
 RUSSELL 1000 INDEX (reflects no
 deductions for fees, expenses or
 taxes)                                        15.46         6.82         8.39
--------------------------------------------------------------------------------
 LEHMAN BROTHERS U.S. AGGREGATE
 INDEX (reflects no deductions for fees,
 expenses or taxes)                             4.33         5.06         6.09
--------------------------------------------------------------------------------
 RUSSELL 2000 INDEX (reflects no
 deductions for fees, expenses or
 taxes)                                        18.37        11.39         9.64
--------------------------------------------------------------------------------
 MORGAN STANLEY CAPITAL
 INTERNATIONAL (MSCI) EUROPE,
 AUSTRALASIA AND THE FAR EAST (EAFE)
 INDEX (reflects no deductions for fees,
 expenses or taxes)                            26.34        14.98         7.50
--------------------------------------------------------------------------------
 CREDIT SUISSE HIGHYIELD INDEX
 (reflects no deductions for fees,
 expenses or taxes)                            11.92        11.07         7.09
--------------------------------------------------------------------------------
 MERRILL LYNCH 3-MONTH US TREASURY
 BILL INDEX (reflects no deductions for
 fees, expenses or taxes)                       4.82         2.36         3.69
--------------------------------------------------------------------------------
</TABLE>


 Total returns would have been lower if the advisor had not maintained the
 expenses of certain of the underlying funds.

 RUSSELL 1000 (Reg. TM) INDEX is an unmanaged price-only index of the 1,000
 largest capitalized companies that are domiciled in the US and whose common
 stocks are traded.

 LEHMAN BROTHERS U.S. AGGREGATE INDEX is an unmanaged market value-weighted
 measure of Treasury issues, agency issues, corporate bond issues and mortgage
 securities.

 The RUSSELL 2000 (Reg. TM) INDEX is an unmanaged capitalization-weighted
 measure of approximately 2,000 small US stocks.

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

 The CREDIT SUISSE HIGH YIELD INDEX is an unmanaged trader-priced portfolio,
 constructed to mirror the global high-yield debt market.


                                                 DWS LifeCompass 2020 Fund  | 33
<PAGE>

 The MERRILL LYNCH 3-MONTH US TREASURY BILL INDEX is an unmanaged index
 capturing the performance of a single issue maturing closest to, but not
 exceeding, three months from the re-balancing date.


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


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

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


34 | DWS LifeCompass 2020 Fund
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
Class A, Class B or Class C shares of the fund. This information doesn't
include any fees that may be charged by your financial advisor. The fund's
shareholders directly bear the fees and expenses of the fund, subject to the
Advisor's contractual obligations to waive fees or reimburse expenses to
maintain the fund's operating expenses at a specified level (see "Net Annual
Fund and Acquired Funds (Underlying Funds) Operating Expenses" in the table
below). The fund will indirectly bear its proportionate share of fees and
expenses incurred by the underlying DWS funds and, potentially, exchange-traded
funds in which the fund is invested (see "Acquired Funds (Underlying Funds)
Fees and Expenses" in the table below). This information does not include any
fees that may be charged by your financial advisor.


<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
FEE TABLE                                        CLASS A         CLASS B       CLASS C
<S>                                              <C>              <C>          <C>
-----------------------------------------------------------------------------------------
 SHAREHOLDER FEES, paid directly from your investment
-----------------------------------------------------------------------------------------
 Maximum Sales Charge (Load) Imposed
 on Purchases (as % of offering price)            5.75% 1          None          None
-----------------------------------------------------------------------------------------
 Maximum Contingent Deferred Sales
 Charge (Load) (as % of redemption
 proceeds)                                        None 2           4.00%         1.00%
-----------------------------------------------------------------------------------------
 Redemption/Exchange fee on shares
 owned less than 15 days (as % of
 redemption proceeds) 3                           2.00             2.00          2.00
-----------------------------------------------------------------------------------------
 ANNUAL OPERATING EXPENSES, deducted from fund assets
-----------------------------------------------------------------------------------------
 Management Fee 4                                 0.10  %          0.10%         0.10%
-----------------------------------------------------------------------------------------
 Distribution/Service (12b-1) Fee                 0.24             0.99          0.99
-----------------------------------------------------------------------------------------
 Other Expenses                                   0.33             0.31          0.27
-----------------------------------------------------------------------------------------
 Acquired Funds (Underlying Funds) Fees
 and Expenses 5                                   0.61             0.61          0.61
-----------------------------------------------------------------------------------------
 TOTAL ANNUAL OPERATING EXPENSES                  1.28             2.01          1.97
-----------------------------------------------------------------------------------------
 Less Expense Waiver/Reimbursement 6              0.18             0.16          0.12
-----------------------------------------------------------------------------------------
 NET ANNUAL OPERATING EXPENSES 6                  1.10             1.85          1.85
-----------------------------------------------------------------------------------------
</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 next six months
    following purchase.

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   The Advisor does not receive any investment advisory fees for managing the
    fund but does receive a 0.10% administration fee. In addition, the Advisor
    receives fees as investment advisor to each underlying DWS fund.

5   The amount indicated is based on the indirect net expenses associated with
    the fund's investment in the underlying funds for the fiscal year ended
    August 31, 2007.


                                                 DWS LifeCompass 2020 Fund  | 35
<PAGE>

6   Effective November 15, 2007 through November 30, 2008, the advisor has
    contractually agreed to waive all or a portion of its management fee and
    reimburse or pay operating expenses of the fund to the extent necessary to
    maintain the fund's total operating expenses at 0.49%, 1.24% and 1.24% for
    Class A, Class B and Class C shares, respectively, excluding certain
    expenses such as extraordinary expenses, taxes, brokerage, interest and
    indirect expenses of underlying DWS funds.

Based on the costs above (including one year of capped expenses in each
period), this example helps you compare the expenses of each share class 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        $681         $941       $1,221       $2,016
--------------------------------------------------------------------------------
 Class B shares         588          915        1,268        1,964
--------------------------------------------------------------------------------
 Class C shares         288          607        1,051        2,286
--------------------------------------------------------------------------------
 EXPENSES, assuming you kept your shares
--------------------------------------------------------------------------------
 Class A shares        $681         $941       $1,221       $2,016
--------------------------------------------------------------------------------
 Class B shares         188          615        1,068        1,964
--------------------------------------------------------------------------------
 Class C shares         188          607        1,051        2,286
--------------------------------------------------------------------------------
</TABLE>



36 | DWS LifeCompass 2020 Fund
<PAGE>


<TABLE>
--------------------------------------------------------------------------------
<S>                                     <C>           <C>           <C>
                                        Class A       Class B       Class C
                   ticker symbol        PLUSX         PLSBX         PLSCX
                     fund number        1084          1284          1384

DWS LIFECOMPASS 2030 FUND
(formerly DWS Growth Plus Allocation Fund)
--------------------------------------------------------------------------------

</TABLE>

            THE FUND'S MAIN INVESTMENT STRATEGY

            The fund seeks to achieve as high total return as is consistent
            with its asset allocation until the target year. As the fund
            approaches its target year, the fund will decrease its emphasis on
            growth of capital and increase its emphasis on current income. The
            fund is designed for investors seeking to meet their respective
            investment goals, such as retirement, around the year 2030. The
            fund pursues its investment objective by investing in other DWS
            mutual funds. The fund may also invest in securities of Exchange
            Traded Funds ("ETFs") when the desired economic exposure to a
            particular market or sector is not available through a DWS fund.

            The fund has a target asset allocation, which the managers use as a
            reference point in setting the fund's actual asset allocation (see
            sidebar). The target asset allocation for the fund will change over
            time based on the number of years remaining until the target year,
            becoming more conservative as the fund approaches the target year.
            As the target year approaches, the fund's target asset allocation
            will approach that of the Retirement Fund. Once the fund's actual
            asset allocation is similar to that of the Retirement Fund, the
            fund may be combined with the Retirement Fund or another DWS fund
            offered at the time.

            The fund's target asset allocation may differ from the fund's actual
            asset allocation. The managers periodically review the actual asset
            allocation and may adjust it based on the target investment horizon,
            current or expected market conditions or to manage risk. In making
            their asset allocation decisions, the managers use a proprietary mix
            of quantitative and qualitative inputs to arrive at a view for the
            securities markets and segments of those markets. These inputs
            include, but are not limited to, return forecasts for asset classes,
            target investment

THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

The fund's current target asset allocation is approximately:
- 90% Equity funds; and
- 10% Fixed Income funds.

                                                 DWS LifeCompass 2030 Fund  | 37
<PAGE>

            horizon and investment guidelines. Based on the desired exposure to
            particular investments and thorough risk analysis the managers then
            decide which funds to use as underlying funds and in which
            proportions.

            In order to mitigate the risks associated with a particular fund or
            manager and increase diversification in the fund, the fund will
            limit its investments in underlying funds so that no more than 40%
            of the overall allocation to equity will be invested in any one
            equity fund.

            The fund's underlying funds use a broad array of investment styles.
            These funds can buy many types of securities, among them common
            stocks of companies of any size, corporate bonds of varying credit
            quality, US government and agency bonds, mortgage- and asset-backed
            securities, money market instruments and others. These securities
            are mainly from US issuers but may be, to a more limited extent,
            from foreign issuers.


            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.

            The fund's allocations among the underlying funds will change over
            time, causing corresponding changes in the portfolio's risk
            profile.

            ASSET ALLOCATION RISK. Although asset allocation among different
            asset categories generally reduces risk and exposure to any one
            category, the risk remains that the Advisor may favor an asset
            category that performs poorly relative to the other asset
            categories. To the extent that alternative asset categories
            underperform the general stock market, the fund would perform
            poorly relative to a fund invested primarily in the general stock
            market.

            MUTUAL FUND INVESTMENT RISK. The fund's investments are
            concentrated in underlying funds, so the fund's investment
            performance is directly related to the performance of the
            underlying funds. The fund's net asset value will change with
            changes in the equity and bond markets and the value of the
            underlying funds in which it invests. To the extent the particular
            underlying funds in which the fund invests underperform their
            benchmarks and/or other funds investing in the same asset


38 | DWS LifeCompass 2030 Fund
<PAGE>

            class the fund would perform poorly relative to other asset
            allocation funds. In addition, the fund indirectly pays a portion
            of the expenses incurred by the underlying funds. As the underlying
            funds or the fund's allocations among the underlying funds change
            from time to time, or to the extent that the expense ratio of the
            underlying funds changes, the weighted average operating expenses
            borne by the fund may increase or decrease.


            Investment risks of the underlying funds

            The investment risks below are risks of certain of the underlying
            funds; by investing in the underlying funds the fund is also
            exposed to these risks. In the sections below, the term "fund"
            refers to one or more of the underlying funds. For more information
            on the risks of the underlying funds, see each underlying fund's
            prospectus.

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

            ETF RISK. An ETF is a fund that holds a portfolio of common stocks
            or bonds designed to track the performance of a securities index or
            industry sector. ETFs trade on a securities exchange and their
            shares may, at times, trade at a premium or discount to their NAV.
            In addition, an ETF may not replicate exactly the performance of
            the index it seeks to track for a number of reasons, including
            transaction costs incurred by the ETF. ETFs incur fees and
            expenses, such as operating expenses, licensing fees, trustee fees
            and marketing expenses, which are borne proportionately by ETF
            shareholders, such as the fund. The fund will also incur brokerage
            costs when purchasing and selling shares of ETFs.


                                                 DWS LifeCompass 2030 Fund  | 39
<PAGE>

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

            -  POLITICAL RISK. Some foreign governments have limited the
               outflow of profits to investors abroad, imposed restrictions on
               the exchange or export of foreign currency, extended diplomatic
               disputes to include trade and financial relations, seized
               foreign investment and imposed high 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 foreign company, as compared
               to the financial reports of US companies.

            -  LIQUIDITY RISK. Investments that trade less can be more
               difficult or more costly to buy, or to sell, than more liquid or
               active investments. This liquidity risk is a factor of the
               trading volume of a particular investment, as well as the size
               and liquidity of the entire local market. On the whole, foreign
               exchanges are smaller and less liquid than the US market. 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. This creates the possibility that changes in
               exchange rates between foreign currencies and the US dollar will
               affect the US dollar value of foreign securities or the income
               or gain received on these securities.

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

40 | DWS LifeCompass 2030 Fund
<PAGE>

            -  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.

            BOND MARKET RISK. The fund is also affected by how fixed-income
            securities perform. Bonds could be hurt by rises in market interest
            rates. A rise in interest rates generally means a fall in bond
            prices and, in turn, a fall in the value of your investment. To the
            extent that an underlying fund emphasizes bonds from any given
            industry, it could be hurt if that industry does not do well. Some
            bonds could be paid off earlier than expected, which would hurt the
            performance of an underlying fund; with mortgage- or asset-backed
            securities, any unexpected behavior in interest rates could
            increase the volatility of an underlying fund's share price and
            yield. Corporate bonds could perform less well than other bonds in
            a weak economy.

            CREDIT RISK. A fund purchasing bonds faces the risk that the
            creditworthiness of an issuer may decline, causing the value of its
            bonds to decline. In addition, an issuer may not be able to make
            timely payments on the interest and/or principal on the bonds it
            has issued. Because the issuers of high-yield bonds or junk bonds
            (rated below the fourth highest category) may be in uncertain
            financial health, the prices of their bonds can be more vulnerable
            to bad economic news or even the expectation of bad news, than
            investment-grade bonds. In some cases, bonds, particularly
            high-yield bonds, may decline in credit quality or go into default.
            Because the fund may invest in securities not paying current
            interest or in securities already in default, these risks may be
            more pronounced.


                                                 DWS LifeCompass 2030 Fund  | 41
<PAGE>

            REALLOCATION RISK. From time to time, one or more underlying funds
            may experience relatively large investments or redemptions due to
            reallocations or rebalancings of the fund or other fund-of-fund
            products managed by the Advisor. These transactions will affect the
            underlying funds, since underlying funds that experience
            redemptions as a result of reallocations or rebalancings may have
            to sell securities and underlying funds that receive additional
            cash will have to invest such cash. In addition, a large redemption
            by a fund in a specific underlying fund could also hurt the
            performance of another fund currently invested in the same
            underlying fund. While it is impossible to predict the overall
            impact of these transactions over time, there could also be adverse
            effects on a fund's performance to the extent that the underlying
            funds may be required to sell securities or invest cash at times
            when they would otherwise not do so. These transactions could also
            accelerate the realization of taxable income if sales of securities
            resulted in gains and could also increase transaction costs for the
            underlying funds. The managers attempt to minimize such impact on
            the underlying funds to the extent consistent with pursuing the
            investment objective of a fund. The managers consider the impact on
            the underlying funds of transactions by the fund and an underlying
            fund may discontinue sales of shares to the fund.

            Other factors that could affect performance include:

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

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


42 | DWS LifeCompass 2030 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 information (which, unlike the fund performance, does not reflect fees or
expenses). The table includes the effects of maximum sales loads. The
performance of both 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
individual federal marginal income tax rates and do not reflect the impact of
state and local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown in the table. After-tax returns shown
are not relevant for investors who hold their shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts.

The inception date for Class A, B and C shares was November 1, 2004.

DWS LifeCompass 2030 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 CHART GRAPHIC APPEARS HERE]

<TABLE>
<S>       <C>
 6.68     15.94
2005      2006
</TABLE>





<TABLE>
<CAPTION>
2007 TOTAL RETURN AS OF SEPTEMBER 30: 7.34%
<S>                                         <C>
FOR THE PERIODS INCLUDED IN THE BAR CHART:

BEST QUARTER: 7.25%, Q4 2006                WORST QUARTER: -2.09%, Q2 2006
</TABLE>



                                                 DWS LifeCompass 2030 Fund  | 43
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2006


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                              1 YEAR      SINCE INCEPTION*
<S>                                          <C>         <C>
--------------------------------------------------------------------------------
 CLASS A
   Return before Taxes                          9.28            10.21
--------------------------------------------------------------------------------
   Return after Taxes on Distributions          7.62             8.91
--------------------------------------------------------------------------------
   Return after Taxes on Distributions
   and Sale of Fund Shares                      6.64             8.17
--------------------------------------------------------------------------------
 CLASS B (Return before Taxes)                 11.96            11.20
--------------------------------------------------------------------------------
 CLASS C (Return before Taxes)                 15.07            12.42
--------------------------------------------------------------------------------
 RUSSELL 1000 INDEX (reflects no
 deductions for fees, expenses or
 taxes)                                        15.46            13.90
--------------------------------------------------------------------------------
 LEHMAN BROTHERS U.S. AGGREGATE
 INDEX (reflects no deductions for fees,
 expenses or taxes)                             4.33             3.17
--------------------------------------------------------------------------------
 RUSSELL 2000 INDEX (reflects no
 deductions for fees, expenses or
 taxes)                                        18.37            16.21
--------------------------------------------------------------------------------
 MORGAN STANLEY CAPITAL
 INTERNATIONAL (MSCI) EUROPE,
 AUSTRALASIA AND THE FAR EAST (EAFE)
 INDEX (reflects no deductions for fees,
 expenses or taxes)                            26.34            24.21
--------------------------------------------------------------------------------
 CREDIT SUISSE HIGHYIELD INDEX
 (reflects no deductions for fees,
 expenses or taxes)                            11.92             7.79
--------------------------------------------------------------------------------
 MERRILL LYNCH 3-MONTH US TREASURY
 BILL INDEX (reflects no deductions for
 fees, expenses or taxes)                       4.82             3.76
--------------------------------------------------------------------------------
</TABLE>


     *   Fund inception: 11/1/04. Index comparisons begin 10/31/04.

 Total returns would have been lower if the advisor had not maintained the
 expenses of certain of the underlying funds.

 RUSSELL 1000 (Reg. TM) INDEX is an unmanaged price-only index of the 1,000
 largest capitalized companies that are domiciled in the US and whose common
 stocks are traded.

 LEHMAN BROTHERS U.S. AGGREGATE INDEX is an unmanaged market value-weighted
 measure of Treasury issues, agency issues, corporate bond issues and mortgage
 securities.

 The RUSSELL 2000 (Reg. TM) INDEX is an unmanaged capitalization-weighted
 measure of approximately 2,000 small US stocks.

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

 The CREDIT SUISSE HIGH YIELD INDEX is an unmanaged trader-priced portfolio,
 constructed to mirror the global high-yield debt market.


44 | DWS LifeCompass 2030 Fund
<PAGE>

 The MERRILL LYNCH 3-MONTH US TREASURY BILL INDEX is an unmanaged index
 capturing the performance of a single issue maturing closest to, but not
 exceeding, three months from the re-balancing date.


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


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

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


                                                 DWS LifeCompass 2030 Fund  | 45
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
Class A, Class B or Class C shares of the fund. This information doesn't
include any fees that may be charged by your financial advisor. The fund's
shareholders directly bear the fees and expenses of the fund, subject to the
Advisor's contractual obligations to waive fees or reimburse expenses to
maintain the fund's operating expenses at a specified level (see "Net Annual
Fund and Acquired Funds (Underlying Funds) Operating Expenses" in the table
below). The fund will indirectly bear its proportionate share of fees and
expenses incurred by the underlying DWS funds and, potentially, exchange-traded
funds in which the fund is invested (see "Acquired Funds (Underlying Funds)
Fees and Expenses" in the table below). This information does not include any
fees that may be charged by your financial advisor.


<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
FEE TABLE                                        CLASS A         CLASS B       CLASS C
<S>                                              <C>                 <C>          <C>
------------------------------------------------------------------------------------------
 SHAREHOLDER FEES, paid directly from your investment
------------------------------------------------------------------------------------------
 Maximum Sales Charge (Load) Imposed
 on Purchases (as % of offering price)            5.75% 1          None          None
------------------------------------------------------------------------------------------
 Maximum Contingent Deferred Sales
 Charge (Load) (as % of redemption
 proceeds)                                        None 2           4.00%         1.00%
------------------------------------------------------------------------------------------
 Redemption/Exchange fee on shares
 owned less than 15 days (as % of
 redemption proceeds) 3                           2.00             2.00          2.00
------------------------------------------------------------------------------------------
 ANNUAL OPERATING EXPENSES, deducted from fund assets
------------------------------------------------------------------------------------------
 Management Fee 4                                 0.10  %          0.10%         0.10%
------------------------------------------------------------------------------------------
 Distribution/Service (12b-1) Fee                 0.24             0.99          0.99
------------------------------------------------------------------------------------------
 Other Expenses                                   0.61             0.66          0.60
------------------------------------------------------------------------------------------
 Acquired Funds (Underlying Funds) Fees
 and Expenses 5                                   0.70             0.70          0.70
------------------------------------------------------------------------------------------
 TOTAL ANNUAL OPERATING EXPENSES                  1.65             2.45          2.39
------------------------------------------------------------------------------------------
 Less Expense Waiver/Reimbursement 6              0.50             0.55          0.49
------------------------------------------------------------------------------------------
 NET ANNUAL OPERATING EXPENSES 6                  1.15             1.90          1.90
------------------------------------------------------------------------------------------
</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 next six months
    following purchase.

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   The Advisor does not receive any investment advisory fees for managing the
    fund but does receive a 0.10% administration fee. In addition, the Advisor
    receives fees as investment advisor to each underlying DWS fund.

5   The amount indicated is based on the indirect net expenses associated with
    the fund's investment in the underlying funds for the fiscal year ended
    August 31, 2007.


46 | DWS LifeCompass 2030 Fund
<PAGE>

6   Effective November 15, 2007 through November 30, 2008, the advisor has
    contractually agreed to waive all or a portion of its management fee and
    reimburse or pay operating expenses of the fund to the extent necessary to
    maintain the fund's total operating expenses at 0.45%, 1.20% and 1.20% for
    Class A, Class B and Class C shares, respectively, excluding certain
    expenses such as extraordinary expenses, taxes, brokerage, interest and
    indirect expenses of underlying DWS funds.

Based on the costs above (including one year of capped expenses in each
period), this example helps you compare the expenses of each share class 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        $685       $1,019       $1,376       $2,378
--------------------------------------------------------------------------------
 Class B shares         593        1,011        1,456        2,364
--------------------------------------------------------------------------------
 Class C shares         293          699        1,231        2,689
--------------------------------------------------------------------------------
 EXPENSES, assuming you kept your shares
--------------------------------------------------------------------------------
 Class A shares        $685       $1,019       $1,376       $2,378
--------------------------------------------------------------------------------
 Class B shares         193          711        1,256        2,364
--------------------------------------------------------------------------------
 Class C shares         193          699        1,231        2,689
--------------------------------------------------------------------------------
</TABLE>


                                                 DWS LifeCompass 2030 Fund  | 47
<PAGE>


<TABLE>
--------------------------------------------------------------------------------
<S>                                                     <C>           <C>
                                                        Class A       Class C
                                        fund number     457           757

DWS LIFECOMPASS 2040 FUND
--------------------------------------------------------------------------------


</TABLE>

            THE FUND'S MAIN INVESTMENT STRATEGY

            The fund seeks to achieve as high total return as is consistent
            with its asset allocation until the target year. As the fund
            approaches its target year, the fund will decrease its emphasis on
            growth of capital and increase its emphasis on current income. The
            fund is designed for investors seeking to meet their respective
            investment goals, such as retirement, around the year 2040. The
            fund pursues its investment objective by investing in other DWS
            mutual funds. The fund may also invest in securities of Exchange
            Traded Funds ("ETFs") when the desired economic exposure to a
            particular market or sector is not available through a DWS fund.

            The fund has a target asset allocation, which the managers use as a
            reference point in setting the fund's actual asset allocation (see
            sidebar). The target asset allocation for the fund will change over
            time based on the number of years remaining until the target year,
            becoming more conservative as the fund approaches the target year.
            As the target year approaches, the fund's target asset allocation
            will approach that of the Retirement Fund. Once the fund's actual
            asset allocation is similar to that of the Retirement Fund, the
            fund may be combined with the Retirement Fund or another DWS fund
            offered at the time.

            The fund's target asset allocation may differ from the fund's actual
            asset allocation. The managers periodically review the actual asset
            allocation and may adjust it based on the target investment horizon,
            current or expected market conditions or to manage risk. In making
            their asset allocation decisions, the managers use a proprietary mix
            of quantitative and qualitative inputs to arrive at a view for the
            securities markets and segments of those markets. These inputs
            include, but are not limited to, return forecasts for asset classes,
            target investment horizon and investment guidelines. Based on the
            desired exposure to particular investments and thorough risk
            analysis the managers then decide which funds to use as underlying
            funds and in which proportions.

THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

The fund's current target asset allocation is approximately:
- 95% Equity funds; and
- 5% Fixed Income funds.

48 | DWS LifeCompass 2040 Fund
<PAGE>

            In order to mitigate the risks associated with a particular fund or
            manager and increase diversification in the fund, the fund will
            limit its investments in underlying funds so that no more than 40%
            of the overall allocation to equity will be invested in any one
            equity fund.

            The fund's underlying funds use a broad array of investment styles.
            These funds can buy many types of securities, among them common
            stocks of companies of any size, corporate bonds of varying credit
            quality, US government and agency bonds, mortgage- and asset-backed
            securities, money market instruments and others. These securities
            are mainly from US issuers but may be, to a more limited extent,
            from foreign issuers.


            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.

            The fund's allocations among the underlying funds will change over
            time, causing corresponding changes in the portfolio's risk
            profile.

            ASSET ALLOCATION RISK. Although asset allocation among different
            asset categories generally reduces risk and exposure to any one
            category, the risk remains that the Advisor may favor an asset
            category that performs poorly relative to the other asset
            categories. To the extent that alternative asset categories
            underperform the general stock market, the fund would perform
            poorly relative to a fund invested primarily in the general stock
            market.

            MUTUAL FUND INVESTMENT RISK. The fund's investments are
            concentrated in underlying funds, so the fund's investment
            performance is directly related to the performance of the
            underlying funds. The fund's net asset value will change with
            changes in the equity and bond markets and the value of the
            underlying funds in which it invests. To the extent the particular
            underlying funds in which the fund invests underperform their
            benchmarks and/or other funds investing in the same asset class the
            fund would perform poorly relative to other asset allocation funds.
            In addition, the fund indirectly pays a portion of the expenses
            incurred by the underlying funds. As the underlying funds or the
            fund's allocations among the


                                                 DWS LifeCompass 2040 Fund  | 49
<PAGE>

            underlying funds change from time to time, or to the extent that
            the expense ratio of the underlying funds changes, the weighted
            average operating expenses borne by the fund may increase or
            decrease.


            Investment risks of the underlying funds

            The investment risks below are risks of certain of the underlying
            funds; by investing in the underlying funds the fund is also
            exposed to these risks. In the sections below, the term "fund"
            refers to one or more of the underlying funds. For more information
            on the risks of the underlying funds, see each underlying fund's
            prospectus.

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

            ETF RISK. An ETF is a fund that holds a portfolio of common stocks
            or bonds designed to track the performance of a securities index or
            industry sector. ETFs trade on a securities exchange and their
            shares may, at times, trade at a premium or discount to their NAV.
            In addition, an ETF may not replicate exactly the performance of
            the index it seeks to track for a number of reasons, including
            transaction costs incurred by the ETF. ETFs incur fees and
            expenses, such as operating expenses, licensing fees, trustee fees
            and marketing expenses, which are borne proportionately by ETF
            shareholders, such as the fund. The fund will also incur brokerage
            costs when purchasing and selling shares of ETFs.

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


50 | DWS LifeCompass 2040 Fund
<PAGE>

            -  POLITICAL RISK. Some foreign governments have limited the
               outflow of profits to investors abroad, imposed restrictions on
               the exchange or export of foreign currency, extended diplomatic
               disputes to include trade and financial relations, seized
               foreign investment and imposed high 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 foreign company, as compared
               to the financial reports of US companies.

            -  LIQUIDITY RISK. Investments that trade less can be more
               difficult or more costly to buy, or to sell, than more liquid or
               active investments. This liquidity risk is a factor of the
               trading volume of a particular investment, as well as the size
               and liquidity of the entire local market. On the whole, foreign
               exchanges are smaller and less liquid than the US market. 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. This creates the possibility that changes in
               exchange rates between foreign currencies and the US dollar will
               affect the US dollar value of foreign securities or the income
               or gain received on these securities.

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

                                                 DWS LifeCompass 2040 Fund  | 51
<PAGE>

            -  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.

            BOND MARKET RISK. The fund is also affected by how fixed-income
            securities perform. Bonds could be hurt by rises in market interest
            rates. A rise in interest rates generally means a fall in bond
            prices and, in turn, a fall in the value of your investment. To the
            extent that an underlying fund emphasizes bonds from any given
            industry, it could be hurt if that industry does not do well. Some
            bonds could be paid off earlier than expected, which would hurt the
            performance of an underlying fund; with mortgage- or asset-backed
            securities, any unexpected behavior in interest rates could
            increase the volatility of an underlying fund's share price and
            yield. Corporate bonds could perform less well than other bonds in
            a weak economy.

            CREDIT RISK. A fund purchasing bonds faces the risk that the
            creditworthiness of an issuer may decline, causing the value of its
            bonds to decline. In addition, an issuer may not be able to make
            timely payments on the interest and/or principal on the bonds it
            has issued. Because the issuers of high-yield bonds or junk bonds
            (rated below the fourth highest category) may be in uncertain
            financial health, the prices of their bonds can be more vulnerable
            to bad economic news or even the expectation of bad news, than
            investment-grade bonds. In some cases, bonds, particularly
            high-yield bonds, may decline in credit quality or go into default.
            Because the fund may invest in securities not paying current
            interest or in securities already in default, these risks may be
            more pronounced.


52 | DWS LifeCompass 2040 Fund
<PAGE>

            REALLOCATION RISK. From time to time, one or more underlying funds
            may experience relatively large investments or redemptions due to
            reallocations or rebalancings of the fund or other fund-of-fund
            products managed by the Advisor. These transactions will affect the
            underlying funds, since underlying funds that experience
            redemptions as a result of reallocations or rebalancings may have
            to sell securities and underlying funds that receive additional
            cash will have to invest such cash. In addition, a large redemption
            by a fund in a specific underlying fund could also hurt the
            performance of another fund currently invested in the same
            underlying fund. While it is impossible to predict the overall
            impact of these transactions over time, there could also be adverse
            effects on a fund's performance to the extent that the underlying
            funds may be required to sell securities or invest cash at times
            when they would otherwise not do so. These transactions could also
            accelerate the realization of taxable income if sales of securities
            resulted in gains and could also increase transaction costs for the
            underlying funds. The managers attempt to minimize such impact on
            the underlying funds to the extent consistent with pursuing the
            investment objective of a fund. The managers consider the impact on
            the underlying funds of transactions by the fund and an underlying
            fund may discontinue sales of shares to the fund.

            Other factors that could affect performance include:

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

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


            THE FUND'S PERFORMANCE HISTORY

            Since the fund is newly offered, past performance information
            is not available.


                                                 DWS LifeCompass 2040 Fund  | 53
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
Class A or Class C shares of the fund. This information doesn't include any
fees that may be charged by your financial advisor. The fund's shareholders
directly bear the fees and expenses of the fund, subject to the Advisor's
contractual obligations to waive fees or reimburse expenses to maintain the
fund's operating expenses at a specified level (see "Net Annual Fund and
Acquired Funds (Underlying Funds) Operating Expenses" in the table below). The
fund will indirectly bear its proportionate share of fees and expenses incurred
by the underlying DWS funds and, potentially, exchange-traded funds in which
the fund is invested (see "Acquired Funds (Underlying Funds) Fees and Expenses"
in the table below). This information does not include any fees that may be
charged by your financial advisor.


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
FEE TABLE                                           CLASS A             CLASS C
<S>                                                 <C>                 <C>
--------------------------------------------------------------------------------
 SHAREHOLDER FEES, paid directly from your investment
--------------------------------------------------------------------------------
 Maximum Sales Charge (Load) Imposed
 on Purchases (as % of offering price)               5.75%1             None
--------------------------------------------------------------------------------
 Maximum Contingent Deferred Sales
 Charge (Load) (as % of redemption
 proceeds)                                           None 2              1.00%
--------------------------------------------------------------------------------
 Redemption/Exchange fee, on shares
 owned less than 15 days (as % of
 redemption proceeds) 3                              2.00                2.00
--------------------------------------------------------------------------------
 ANNUAL OPERATING EXPENSES, deducted from fund assets
--------------------------------------------------------------------------------
 Management Fee 4                                    0.10  %             0.10%
--------------------------------------------------------------------------------
 Distribution/Service (12b-1) Fees                   0.25                1.00
--------------------------------------------------------------------------------
 Other Expenses 5,6                                  0.64                0.64
--------------------------------------------------------------------------------
 Acquired Funds (Underlying Funds) Fees
 and Expenses 7                                      0.70                0.70
--------------------------------------------------------------------------------
 TOTAL ANNUAL OPERATING EXPENSES                     1.69                2.44
--------------------------------------------------------------------------------
 Less Expense Waiver/Reimbursement 8                 0.50                0.50
--------------------------------------------------------------------------------
 NET ANNUAL OPERATING EXPENSES                       1.19                1.94
--------------------------------------------------------------------------------
</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 during the next six months
    following purchase.

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   The Advisor does not receive any investment advisory fees for managing the
    fund but does receive a 0.10% administration fee. In addition, the Advisor
    receives fees as investment advisor to each underlying DWS fund.

5   "Other Expenses" are based on estimated amounts for the current fiscal year.
    Actual expenses may be different.


54 | DWS LifeCompass 2040 Fund
<PAGE>

6   "Other Expenses" includes an estimate of organizational and offering
    expenses estimated at 0.10% for the first year of operations.

7   "Acquired Funds (Underlying Funds) Fees and Expenses" are based upon
    estimated allocations for the current fiscal year. Actual expenses may be
    different. Underlying funds' expense ratios reduced for contractual expense
    limitations and reimbursements where applicable, based on most recent
    prospectuses.

8   Through November 30, 2008, the Advisor has contractually agreed to waive all
    or a portion of its management fee and reimburse or pay operating expenses
    to the extent necessary to maintain the fund's total operating expenses at
    0.49% and 1.24% for Class A and Class C shares, respectively, excluding
    certain expenses such as extraordinary expenses, taxes, brokerage, interest,
    and acquired funds (underlying funds) fees and expenses (estimated at
    0.70%).

Based on the costs above (including one year of capped expenses in each
period), this example helps you compare the expenses of each share class 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
<S>                             <C>                     <C>
--------------------------------------------------------------------------------
 EXPENSES, assuming you sold your shares at the end of each period
--------------------------------------------------------------------------------
 Class A shares                   $689                   $1,011
--------------------------------------------------------------------------------
 Class C shares                    297                      692
--------------------------------------------------------------------------------
 EXPENSES, assuming you kept your shares
--------------------------------------------------------------------------------
 Class A shares                   $689                   $1,011
--------------------------------------------------------------------------------
 Class C shares                    197                      692
--------------------------------------------------------------------------------
</TABLE>



                                                 DWS LifeCompass 2040 Fund  | 55
<PAGE>

OTHER POLICIES AND SECONDARY RISKS

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

           -  Although major changes tend to be infrequent, each fund's Board
              could change a fund's investment objective without seeking
              shareholder approval.

           -  Each fund (or the underlying funds) may trade actively. This
              could raise transaction costs (thus lowering return) and could
              mean higher taxable distributions.

           -  Certain underlying funds are permitted, but not required, to use
              various types of derivatives (contracts whose value is based on,
              for example, indexes, currencies or securities). In particular, a
              fund may use futures, options, and covered call options. A fund
              may use derivatives in circumstances where the managers believe
              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.

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


           Secondary risks of the underlying funds

           The investment risks below are risks of certain of the underlying
           funds; by investing in the underlying funds the fund is also exposed
           to these risks. In the sections below, the term "fund" refers to one
           or more of the underlying funds. For more information on the risks
           of the underlying funds, see each underlying fund's prospectus.

           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 not
           have the intended effects and 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;


56 | Other Policies and Secondary Risks
<PAGE>

           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.

           GROWTH INVESTING RISK. Since growth stocks usually reinvest a large
           portion of earnings in their own businesses, they may lack the
           dividends associated with value stocks that might otherwise cushion
           their decline in a falling market. Earnings disappointments in
           growth stocks often result in sharp price declines because investors
           buy these stocks because of their potential for superior earnings
           growth. Growth stocks may also be out of favor for certain periods
           in relation to value stocks.

           VALUE INVESTING RISK. At times, "value" investing may perform better
           than or worse than other investment styles and the overall market.
           If the Advisor overestimates the value or return potential of one or
           more common stocks, the fund may underperform the general equity
           market. Value stocks may also be out of favor for certain periods in
           relation to growth stocks.

           PRICING RISK. At times, market conditions might make it hard 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 methodologies, it is
           possible that the value determined for an investment may be
           different than the value realized upon such investment's sale. If
           the fund has valued its securities too highly, you may end up paying
           too much for fund shares when you buy into the fund. If the fund
           underestimates the price of its securities, you may not receive the
           full market value for your fund shares when you sell.


           For more information

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

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


                                        Other Policies and Secondary Risks  | 57
<PAGE>

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

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


WHO MANAGES AND OVERSEES THE FUNDS


           The investment advisor

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

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

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


58 | Who Manages and Oversees the Funds
<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.

           MANAGEMENT FEE. The Advisor does not receive any advisory fee for
           managing the funds but does receive fees as investment advisor to
           each underlying fund.

           The Advisor and its affiliates earn fees at varying rates for
           providing services to the underlying DWS funds. The Advisor may
           therefore have a conflict of interest in selecting the underlying
           DWS funds and in determining whether to invest in an ETF, from which
           it will not receive any fees. However, the Advisor is a fiduciary to
           each fund and is required to act in each fund's best interest.

           A discussion regarding the basis for the Board's renewal of each
           fund's investment management agreement is contained in the
           shareholder report for the period ended February 28, 2007, and a
           discussion regarding the Board's approval of the new investment
           management agreement for DWS LifeCompass 2040 Fund will be included
           in the fund's annual report for the period ended February 29, 2008
           (see "Shareholder reports" on the back cover).

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


                                        Who Manages and Oversees the Funds  | 59
<PAGE>

Portfolio management

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

The following people handle the day-to-day management of each fund.

Robert Wang
Managing Director of Deutsche Asset
Management and Portfolio Manager of the funds.
- 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 funds in 2002.
- BS, The Wharton School, University of Pennsylvania.

Inna Okounkova
Director of Deutsche Asset Management and Portfolio Manager of the funds.
- Joined Deutsche Asset Management in 1999 as a quantitative analyst, becoming
  an associate portfolio manager in 2001.
- Lead Portfolio Manager for Asset
  Allocation Strategies: New York.
- Joined the funds in 2002.
- MS, Moscow State University; MBA,
  University of Chicago -  Graduate School of Business.

Each fund's Statement of Additional Information provides additional information
about the portfolio managers' investments in a fund, a description of their
compensation structure and information regarding other accounts they manage.


60 | Who Manages and Oversees the Funds
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights are designed to help you understand recent financial
performance. The figures in the first part of each table are for a single
share. The total return figures represent the percentage that an investor in a
fund would have earned (or lost), assuming all dividends and distributions were
reinvested. This information has been audited by PricewaterhouseCoopers LLP,
independent registered public accounting firm, whose report, along with each
fund's financial statements, is included in each fund's annual report (see
"Shareholder reports" on the back cover). Since DWS LifeCompass 2040 Fund is
newly offered, financial information is not available.



                                                      Financial Highlights  | 61
<PAGE>

DWS LifeCompass Retirement Fund - Class A

<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31,                      2007           2006           2005          2004          2003
<S>                                     <C>            <C>            <C>            <C>           <C>
SELECTED PER SHARE DATA
-----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD      $12.16       $  11.83       $  11.17      $  10.69      $  10.30
-----------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
  Net investment income a                     .38           .33            .28           .29           .29
-----------------------------------------------------------------------------------------------------------------
  Net realized and unrealized gain
  (loss)                                     .57            .33            .72           .52           .40
-----------------------------------------------------------------------------------------------------------------
  TOTAL FROM INVESTMENT OPERATIONS           .95            .66           1.00           .81           .69
-----------------------------------------------------------------------------------------------------------------
Less distributions from:
  Net investment income                     (.60)        (  .33)        (  .34)       (  .33)       (  .30)
-----------------------------------------------------------------------------------------------------------------
Redemption fees                              .00*           .00*           .00*            -             -
-----------------------------------------------------------------------------------------------------------------
Net asset value, end of period            $12.51       $  12.16       $  11.83      $  11.17      $  10.69
-----------------------------------------------------------------------------------------------------------------
Total Return (%) b,d                        7.90 c          5.66 c        9.04 c        7.61 c        6.85
-----------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)        47             41             36            17            11
-----------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions (%) g                             .63            .88            .77           .57 f         .23 e
-----------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%) g                             .62            .61            .55           .39 f         .23 e
-----------------------------------------------------------------------------------------------------------------
Ratio of net investment income (%)          3.04           2.74           2.42          2.58          2.77
-----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%)                   21             69             55            56           104
-----------------------------------------------------------------------------------------------------------------
</TABLE>


a   Based on average shares outstanding during the period.

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

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

d   Total return would have been lower if the Advisor had not maintained some
    Underlying Funds' expenses.

e   The Fund invests in other DWS funds and although this class did not incur
    any fees or expenses other than distribution/service fees for the period,
    the Fund did bear its proportionate share of the fees and expenses incurred
    by the Underlying DWS Funds in which the Fund is invested.

f   Effective April 1, 2004, the Fund implemented a new expense structure in
    which the Fund directly bears the fees and expenses of the Fund in addition
    to its proportionate share of the fees and expenses incurred by the
    Underlying DWS Funds in which the Fund is invested.

g   Does not include expenses of the Underlying DWS Funds in which the Fund
    invests.

*   Amount is less than $.005.

62 | Financial Highlights
<PAGE>

DWS LifeCompass Retirement Fund - Class B


<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31,                      2007           2006           2005           2004          2003
<S>                                          <C>            <C>            <C>            <C>           <C>
SELECTED PER SHARE DATA
-----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD      $12.16       $  11.83       $  11.17      $  10.70      $  10.31
-----------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
  Net investment income a                    .29            .24            .20           .20           .21
-----------------------------------------------------------------------------------------------------------------
  Net realized and unrealized gain
  (loss)                                     .57            .33            .71           .51           .40
-----------------------------------------------------------------------------------------------------------------
  TOTAL FROM INVESTMENT OPERATIONS           .86            .57            .91           .71           .61
-----------------------------------------------------------------------------------------------------------------
Less distributions from:
  Net investment income                     (.50)        (  .24)        (  .25)       (  .24)       (  .22)
-----------------------------------------------------------------------------------------------------------------
Redemption fees                              .00*           .00*           .00*            -             -
-----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD            $12.52       $  12.16       $  11.83      $  11.17      $  10.70
-----------------------------------------------------------------------------------------------------------------
Total Return (%) b,d                        7.16 c         4.87 c         8.24 c        6.69 c        6.04
-----------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)         8              8              8             6             4
-----------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions (%) g                            1.34           1.65           1.60        1.26 f         .99 e
-----------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%) g                            1.34           1.36           1.30        1.14 f         .99 e
-----------------------------------------------------------------------------------------------------------------
Ratio of net investment income (%)          2.32           1.99           1.67          1.83          2.01
-----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%)                   21             69             55            56           104
-----------------------------------------------------------------------------------------------------------------
</TABLE>


a   Based on average shares outstanding during the period.

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

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

d   Total return would have been lower if the Advisor had not maintained some
    Underlying Funds' expenses.

e   The Fund invests in other DWS funds and although this class did not incur
    any fees or expenses other than distribution/service fees for the period,
    the Fund did bear its proportionate share of the fees and expenses incurred
    by the Underlying DWS Funds in which the Fund is invested.

f   Effective April 1, 2004, the Fund implemented a new expense structure in
    which the Fund directly bears the fees and expenses of the Fund in addition
    to its proportionate share of the fees and expenses incurred by the
    Underlying DWS Funds in which the Fund is invested.

g   Does not include expenses of the Underlying DWS Funds in which the Fund
    invests.

*   Amount is less than $.005.

                                                      Financial Highlights  | 63
<PAGE>

DWS LifeCompass Retirement Fund - Class C


<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31,                      2007           2006           2005           2004          2003
<S>                                          <C>            <C>            <C>            <C>           <C>
SELECTED PER SHARE DATA
-----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD      $12.16       $  11.82       $  11.16       $  10.69      $  10.30
-----------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
  Net investment income a                    .30            .24            .19            .20           .21
-----------------------------------------------------------------------------------------------------------------
  Net realized and unrealized gain
  (loss)                                     .56            .34            .72            .51           .40
-----------------------------------------------------------------------------------------------------------------
  TOTAL FROM INVESTMENT OPERATIONS           .86            .58            .91            .71           .61
-----------------------------------------------------------------------------------------------------------------
Less distributions from:
  Net investment income                     (.50)        (  .24)        (  .25)        (  .24)       (  .22)
-----------------------------------------------------------------------------------------------------------------
Redemption fees                              .00*           .00*           .00*             -             -
-----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD            $12.52       $  12.16       $  11.82       $  11.16      $  10.69
-----------------------------------------------------------------------------------------------------------------
Total Return (%) b,d                        7.26 c          4.87 c        8.27 c         6.69 c        6.04
-----------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)        14             12              9              4             2
-----------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions (%) g                            1.34           1.45           1.39           1.21 f         .99 e
-----------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%) g                            1.29           1.36           1.30           1.14 f         .99 e
-----------------------------------------------------------------------------------------------------------------
Ratio of net investment income (%)          2.37           1.99           1.67           1.82          2.01
-----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%)                   21             69             55             56           104
-----------------------------------------------------------------------------------------------------------------
</TABLE>


a   Based on average shares outstanding during the period.

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

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

d   Total return would have been lower if the Advisor had not maintained some
    Underlying Funds' expenses.

e   The Fund invests in other DWS funds and although this class did not incur
    any fees or expenses other than distribution/service fees for the period,
    the Fund did bear its proportionate share of the fees and expenses incurred
    by the Underlying DWS Funds in which the Fund is invested.

f   Effective April 1, 2004, the Fund implemented a new expense structure in
    which the Fund directly bears the fees and expenses of the Fund in addition
    to its proportionate share of the fees and expenses incurred by the
    Underlying DWS Funds in which the Fund is invested.

g   Does not include expenses of the Underlying DWS Funds in which the Fund
    invests.

*   Amount is less than $.005.

64 | Financial Highlights
<PAGE>

DWS LifeCompass 2015 Fund - Class A


<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31,                       2007            2006         2005           2004           2003
<S>                                      <C>             <C>             <C>             <C>             <C>
SELECTED PER SHARE DATA
-----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD      $11.98        $ 11.55        $ 10.63        $  9.91        $ 9.38
-----------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
  Net investment income a                    .29            .25            .21            .22           .21
-----------------------------------------------------------------------------------------------------------------
  Net realized and unrealized gain
  (loss)                                     .86            .50            .95            .70           .55
-----------------------------------------------------------------------------------------------------------------
  TOTAL FROM INVESTMENT OPERATIONS          1.15            .75           1.16            .92           .76
-----------------------------------------------------------------------------------------------------------------
Less distributions from:
  Net investment income                     (.66)         ( .32)         ( .24)        (  .20)         (.23)
-----------------------------------------------------------------------------------------------------------------
Redemption fees                              .00*           .00*           .00*             -             -
-----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD            $12.47        $ 11.98        $ 11.55        $ 10.63        $ 9.91
-----------------------------------------------------------------------------------------------------------------
Total Return (%) b,d                        9.78 c         6.59 c        10.95 c         9.34 c        8.28
-----------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)       131            104            113            .56            35
-----------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions (%) g                             .61            .80            .77            .54 f         .23 e
-----------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%) g                             .57            .61            .55            .38 f         .23 e
-----------------------------------------------------------------------------------------------------------------
Ratio of net investment income (%)          2.28           2.14           1.84           2.12          2.30
-----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%)                   21             52             35             37           101
-----------------------------------------------------------------------------------------------------------------
</TABLE>


a   Based on average shares outstanding during the period.

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

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

d   Total return would have been lower if the Advisor had not maintained some
    Underlying Funds' expenses.

e   The Fund invests in other DWS funds and although this class did not incur
    any fees or expenses other than distribution/service fees for the period,
    the Fund did bear its proportionate share of the fees and expenses incurred
    by the Underlying DWS Funds in which the Fund is invested.

f   Effective April 1, 2004, the Fund implemented a new expense structure in
    which the Fund directly bears the fees and expenses of the Fund in addition
    to its proportionate share of the fees and expenses incurred by the
    Underlying DWS Funds in which the Fund is invested.

g   Does not include expenses of the Underlying DWS Funds in which the Fund
    invests.

*   Amount is less than $.005.

                                                      Financial Highlights  | 65
<PAGE>

DWS LifeCompass 2015 Fund - Class B


<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31,                       2007            2006            2005           2004           2003
<S>                                          <C>             <C>             <C>            <C>             <C>
SELECTED PER SHARE DATA
-----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD       $11.98        $  11.54        $  10.63        $  9.91        $  9.38
-----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
  Net investment income a                     .19             .16             .12            .14            .14
-----------------------------------------------------------------------------------------------------------------------
  Net realized and unrealized gain
  (loss)                                      .86             .51             .95            .70            .55
-----------------------------------------------------------------------------------------------------------------------
  TOTAL FROM INVESTMENT OPERATIONS           1.05             .67            1.07            .84            .69
-----------------------------------------------------------------------------------------------------------------------
Less distributions from:
  Net investment income                      (.56)         (  .23)         (  .16)        (  .12)         ( .16)
-----------------------------------------------------------------------------------------------------------------------
Redemption fees                               .00*            .00*            .00*             -              -
-----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD             $12.47        $  11.98        $  11.54        $ 10.63        $  9.91
-----------------------------------------------------------------------------------------------------------------------
Total Return (%) b,d                         8.94 c          5.78 c         10.17 c         8.49 c         7.46
-----------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)         24              24              23             13              9
-----------------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions (%) g                             1.37            1.42            1.35           1.21 f         1.00 e
-----------------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%) g                             1.34            1.37            1.30           1.12 f         1.00 e
-----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (%)           1.51            1.38            1.09           1.37           1.53
-----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%)                    21              52              35             37            101
-----------------------------------------------------------------------------------------------------------------------
</TABLE>


a   Based on average shares outstanding during the period.

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

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

d   Total return would have been lower if the Advisor had not maintained some
    Underlying Funds' expenses.

e   The Fund invests in other DWS funds and although this class did not incur
    any fees or expenses other than distribution/service fees for the period,
    the Fund did bear its proportionate share of the fees and expenses incurred
    by the Underlying DWS Funds in which the Fund is invested.

f   Effective April 1, 2004, the Fund implemented a new expense structure in
    which the Fund directly bears the fees and expenses of the Fund in addition
    to its proportionate share of the fees and expenses incurred by the
    Underlying DWS Funds in which the Fund is invested.

g   Does not include expenses of the Underlying DWS Funds in which the Fund
    invests.

*   Amount is less than $.005.

66 | Financial Highlights
<PAGE>

DWS LifeCompass 2015 Fund - Class C


<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31,                       2007            2006           2005           2004           2003
<S>                                          <C>             <C>             <C>            <C>             <C>
SELECTED PER SHARE DATA
----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD       $11.97        $  11.54       $  10.62        $  9.90        $  9.37
----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
  Net investment income a                     .20             .16            .13            .14            .14
----------------------------------------------------------------------------------------------------------------------
  Net realized and unrealized gain
  (loss)                                      .86             .50            .95            .70            .54
----------------------------------------------------------------------------------------------------------------------
  TOTAL FROM INVESTMENT OPERATIONS           1.06             .66           1.08            .84            .68
----------------------------------------------------------------------------------------------------------------------
Less distributions from:
  Net investment income                      (.56)         (  .23)        (  .16)        (  .12)         ( .15)
----------------------------------------------------------------------------------------------------------------------
Redemption fees                               .00*            .00*           .00*             -              -
----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD             $12.47        $  11.97       $  11.54        $ 10.62        $  9.90
----------------------------------------------------------------------------------------------------------------------
Total Return (%) b.d                         8.96 c          5.82 c        10.28           8.50 c         7.44
----------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)         37              34             27              9              4
----------------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions (%) g                             1.31            1.35           1.26           1.18 f          .99 e
----------------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%) g                             1.30            1.34           1.26           1.13 f          .99 e
----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (%)           1.55            1.41           1.13           1.36           1.54
----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%)                    21              52             35             37            101
----------------------------------------------------------------------------------------------------------------------
</TABLE>


a   Based on average shares outstanding during the period.

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

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

d   Total return would have been lower if the Advisor had not maintained some
    Underlying Funds' expenses.

e   The Fund invests in other DWS funds and although this class did not incur
    any fees or expenses other than distribution/service fees for the period,
    the Fund did bear its proportionate share of the fees and expenses incurred
    by the Underlying DWS Funds in which the Fund is invested.

f   Effective April 1, 2004, the Fund implemented a new expense structure in
    which the Fund directly bears the fees and expenses of the Fund in addition
    to its proportionate share of the fees and expenses incurred by the
    Underlying DWS Funds in which the Fund is invested.

g   Does not include expenses of the Underlying DWS Funds in which the Fund
    invests.

*   Amount is less than $.005.

                                                      Financial Highlights  | 67
<PAGE>

DWS LifeCompass 2020 Fund - Class A

<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31,                      2007          2006          2005          2004          2003
<S>                                         <C>           <C>           <C>           <C>           <C>
SELECTED PER SHARE DATA
--------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD     $ 14.29      $  13.49      $  12.14      $  11.08      $  10.21
--------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
  Net investment income a                    .26           .23           .19           .17           .15
--------------------------------------------------------------------------------------------------------------
  Net realized and unrealized gain
  (loss)                                    1.35           .84          1.35          1.07           .85
--------------------------------------------------------------------------------------------------------------
  TOTAL FROM INVESTMENT OPERATIONS          1.61          1.07          1.54          1.24          1.00
--------------------------------------------------------------------------------------------------------------
Less distributions from:
  Net investment income                    ( .43)       (  .27)       (  .19)       (  .18)       (  .13)
--------------------------------------------------------------------------------------------------------------
Redemption fees                              .00*          .00*          .00*            -             -
--------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD           $ 15.47      $  14.29      $  13.49      $  12.14      $  11.08
--------------------------------------------------------------------------------------------------------------
Total Return (%) b,c,d                     11.33          8.06         12.76         11.19         10.00
--------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)       100            86            74            39            24
--------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions (%) g                             .67           .76           .74           .46 f         .22 e
--------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%) g                             .62           .61           .55           .39 f         .22 e
--------------------------------------------------------------------------------------------------------------
Ratio of net investment income (%)          1.70          1.59          1.46          1.40          1.52
--------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%)                   22            59            31            43            93
--------------------------------------------------------------------------------------------------------------
</TABLE>


a   Based on average shares outstanding during the period.

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

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

d   Total return would have been lower if the Advisor had not maintained some
    Underlying Funds' expenses.

e   The Fund invests in other DWS funds and although this class did not incur
    any fees or expenses other than distribution/service fees for the period,
    the Fund did bear its proportionate share of the fees and expenses incurred
    by the Underlying DWS Funds in which the Fund is invested.

f   Effective April 1, 2004, the Fund implemented a new expense structure in
    which the Fund directly bears the fees and expenses of the Fund in addition
    to its proportionate share of the fees and expenses incurred by the
    Underlying DWS Funds in which the Fund is invested.

g   Does not include expenses of the Underlying DWS Funds in which the Fund
    invests.

*   Amount is less than $.005.

68 | Financial Highlights
<PAGE>

DWS LifeCompass 2020 Fund - Class B


<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31,                      2007          2006          2005          2004          2003
<S>                                     <C>           <C>           <C>           <C>           <C>
SELECTED PER SHARE DATA
--------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD     $ 14.15      $  13.35      $  12.02      $  10.97      $  10.11
--------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
  Net investment income a                    .15           .12           .09           .08           .08
--------------------------------------------------------------------------------------------------------------
  Net realized and unrealized gain
  (loss)                                    1.33           .85          1.33          1.06           .84
--------------------------------------------------------------------------------------------------------------
  TOTAL FROM INVESTMENT OPERATIONS          1.48           .97          1.42          1.14           .92
--------------------------------------------------------------------------------------------------------------
Less distributions from:
  Net investment income                    ( .31)       (  .17)       (  .09)       (  .09)       (  .06)
--------------------------------------------------------------------------------------------------------------
Redemption fees                              .00*          .00*          .00*            -             -
--------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD           $ 15.32      $  14.15      $  13.35      $  12.02      $  10.97
--------------------------------------------------------------------------------------------------------------
Total Return (%) b,c,d                     10.49          7.31         11.86         10.36          9.17
--------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)        28            29            26            14            11
--------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions (%) g                            1.40          1.46          1.46          1.23 f         .97 e
--------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%) g                            1.35          1.36          1.30          1.13 f         .97 e
--------------------------------------------------------------------------------------------------------------
Ratio of net investment income (%)           .97           .84           .71           .66           .77
--------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%)                   22            59            31            43            93
--------------------------------------------------------------------------------------------------------------
</TABLE>


a   Based on average shares outstanding during the period.

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

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

d   Total return would have been lower if the Advisor had not maintained some
    Underlying Funds' expenses.

e   The Fund invests in other DWS funds and although this class did not incur
    any fees or expenses other than distribution/service fees for the period,
    the Fund did bear its proportionate share of the fees and expenses incurred
    by the Underlying DWS Funds in which the Fund is invested.

f   Effective April 1, 2004, the Fund implemented a new expense structure in
    which the Fund directly bears the fees and expenses of the Fund in addition
    to its proportionate share of the fees and expenses incurred by the
    Underlying DWS Funds in which the Fund is invested.

g   Does not include expenses of the Underlying DWS Funds in which the Fund
    invests.

*   Amount is less than $.005.

                                                      Financial Highlights  | 69
<PAGE>

DWS LifeCompass 2020 Fund - Class C


<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31,                       2007         2006          2005          2004          2003
<S>                                      <C>            <C>            <C>            <C>            <C>
SELECTED PER SHARE DATA
------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD      $ 14.15       $13.35       $ 12.02        $10.97       $ 10.11
------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
  Net investment income a                     .15          .12           .09           .08           .08
------------------------------------------------------------------------------------------------------------
  Net realized and unrealized gain
  (loss)                                     1.33          .85          1.33          1.05           .84
------------------------------------------------------------------------------------------------------------
  TOTAL FROM INVESTMENT OPERATIONS           1.48          .97          1.42          1.13           .92
------------------------------------------------------------------------------------------------------------
Less distributions from:
  Net investment income                     ( .31)        (.17)        ( .09)         (.08)        ( .06)
------------------------------------------------------------------------------------------------------------
Redemption fees                               .00          .00           .00             -             -
------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD            $ 15.32       $14.15       $ 13.35        $12.02       $ 10.97
------------------------------------------------------------------------------------------------------------
Total Return (%) b,c,d                      10.49         7.30         11.86         10.34          9.17
------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)         40           36            28             9             4
------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions (%) g                             1.37         1.41          1.39          1.21 f         .99 e
------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%) g                             1.32         1.36          1.30          1.15 f         .99 e
------------------------------------------------------------------------------------------------------------
Ratio of net investment income (%)           1.00          .84           .71           .65           .75
------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%)                    22           59            31            43            93
------------------------------------------------------------------------------------------------------------
</TABLE>


a   Based on average shares outstanding during the period.

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

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

d   Total return would have been lower if the Advisor had not maintained some
    Underlying Funds' expenses.

e   The Fund invests in other DWS funds and although this class did not incur
    any fees or expenses other than distribution/service fees for the period,
    the Fund did bear its proportionate share of the fees and expenses incurred
    by the Underlying DWS Funds in which the Fund is invested.

f   Effective April 1, 2004, the Fund implemented a new expense structure in
    which the Fund directly bears the fees and expenses of the Fund in addition
    to its proportionate share of the fees and expenses incurred by the
    Underlying DWS Funds in which the Fund is invested.

g   Does not include expenses of the Underlying DWS Funds in which the Fund
    invests.

*   Amount is less than $.005.

70 | Financial Highlights
<PAGE>

DWS LifeCompass 2030 Fund - Class A

<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31,                                  2007           2006           2005 a
<S>                                                     <C>            <C>            <C>
SELECTED PER SHARE DATA
------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                 $ 11.50       $  10.82       $  10.00
------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
  Net investment income b                                .10            .08            .04
------------------------------------------------------------------------------------------------
  Net realized and unrealized gain (loss)               1.39            .93            .88
------------------------------------------------------------------------------------------------
  TOTAL FROM INVESTMENT OPERATIONS                      1.49           1.01            .92
------------------------------------------------------------------------------------------------
Less distributions from:
  Net investment income                                ( .29)        (  .23)        (  .10)
------------------------------------------------------------------------------------------------
  Net realized gains                                   ( .43)        (  .10)             -
------------------------------------------------------------------------------------------------
  TOTAL DISTRIBUTIONS                                  ( .72)        (  .33)        (  .10)
------------------------------------------------------------------------------------------------
Redemption fees                                          .00***         .00***         .00***
------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD                       $ 12.27       $  11.50       $  10.82
------------------------------------------------------------------------------------------------
Total Return (%) c,d,e                                 13.17           9.52           9.24**
------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                    21             14              7
------------------------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) f       1.00           1.60           3.41*
------------------------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) f         .55            .58            .55*
------------------------------------------------------------------------------------------------
Ratio of net investment income (%)                       .88            .77            .46*
------------------------------------------------------------------------------------------------
Portfolio turnover rate (%)                               20             63             28*
------------------------------------------------------------------------------------------------
</TABLE>


a   For the period from November 1, 2004 (commencement of sales of Class A
    shares) to August 31, 2005.

b   Based on average shares outstanding during the period.

c   Total return does not reflect the effect of any sales charge.

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

e   Total return would have been lower if the Advisor had not maintained some
    Underlying Funds' expenses.

f   Does not include expenses of the Underlying DWS Funds in which the Fund
    invests.

*   Annualized

**   Not annualized

***   Amount is less than $.005.

                                                      Financial Highlights  | 71
<PAGE>

DWS LifeCompass 2030 Fund - Class B

<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31,                                  2007           2006           2005 a
<S>                                                <C>            <C>            <C>
SELECTED PER SHARE DATA
------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                 $ 11.45       $  10.78       $  10.00
------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
  Net investment income b                                .01            .00***      (  .02)
------------------------------------------------------------------------------------------------
  Net realized and unrealized gain (loss)               1.37            .92            .89
------------------------------------------------------------------------------------------------
  TOTAL FROM INVESTMENT OPERATIONS                      1.38            .92            .87
------------------------------------------------------------------------------------------------
Less distributions from:
  Net investment income                                ( .19)        (  .15)        (  .09)
------------------------------------------------------------------------------------------------
  Net realized gains                                   ( .43)        (  .10)             -
------------------------------------------------------------------------------------------------
  TOTAL DISTRIBUTIONS                                  ( .62)        (  .25)        (  .09)
------------------------------------------------------------------------------------------------
Redemption fees                                          .00***         .00***         .00***
------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD                       $ 12.21       $  11.45       $  10.78
------------------------------------------------------------------------------------------------
Total Return (%) c,d,e                                 12.26           8.61           8.70**
------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                     4              3              2
------------------------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) f       1.81           2.38           4.22*
------------------------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) f        1.30           1.33           1.30*
------------------------------------------------------------------------------------------------
Ratio of net investment income (%)                       .13            .02         (  .29)*
------------------------------------------------------------------------------------------------
Portfolio turnover rate (%)                               20             63             28*
------------------------------------------------------------------------------------------------
</TABLE>

a   For the period from November 1, 2004 (commencement of sales of Class B
    shares) to August 31, 2005.

b   Based on average shares outstanding during the period.

c   Total return does not reflect the effect of any sales charge.

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

e   Total return would have been lower if the Advisor had not maintained some
    Underlying Funds' expenses.

f   Does not include expenses of the Underlying DWS Funds in which the Fund
    invests.

*   Annualized

**   Not annualized

***   Amount is less than $.005.

72 | Financial Highlights
<PAGE>

DWS LifeCompass 2030 Fund - Class C


<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31,                                  2007           2006           2005 a
<S>                                                <C>            <C>            <C>
SELECTED PER SHARE DATA
------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                 $ 11.44       $  10.77       $  10.00
------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
  Net investment income b                                .01            .00***      (  .02)
------------------------------------------------------------------------------------------------
  Net realized and unrealized gain (loss)               1.38            .92            .88
------------------------------------------------------------------------------------------------
  TOTAL FROM INVESTMENT OPERATIONS                      1.39            .92            .86
------------------------------------------------------------------------------------------------
Less distributions from:
  Net investment income                                ( .19)        (  .15)        (  .09)
------------------------------------------------------------------------------------------------
  Net realized gains                                   ( .43)        (  .10)             -
------------------------------------------------------------------------------------------------
  TOTAL DISTRIBUTIONS                                  ( .62)        (  .25)        (  .09)
------------------------------------------------------------------------------------------------
Redemption fees                                          .00***         .00***         .00***
------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD                       $ 12.21       $  11.44       $  10.77
------------------------------------------------------------------------------------------------
Total Return (%) c,d,e                                 12.35           8.62           8.60**
------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                    11              7              4
------------------------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) f       1.74           2.33           4.12*
------------------------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) f        1.30           1.33           1.30*
------------------------------------------------------------------------------------------------
Ratio of net investment income (%)                       .13            .02         (  .29)*
------------------------------------------------------------------------------------------------
Portfolio turnover rate (%)                               20             63             28*
--------------------------------------------------   --------       --------       --------
</TABLE>


a   For the period from November 1, 2004 (commencement of sales of Class C
    shares) to August 31, 2005.

b   Based on average shares outstanding during the period.

c   Total return does not reflect the effect of any sales charge.

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

e   Total return would have been lower if the Advisor had not maintained some
    Underlying Funds' expenses.

f   Does not include expenses of the Underlying DWS Funds in which the Fund
    invests.

*   Annualized

**   Not annualized

***   Amount is less than $.005.

                                                      Financial Highlights  | 73
<PAGE>

HOW TO INVEST IN THE FUNDS

The following pages tell you how to invest in a fund and what to expect as a
shareholder. If you're investing directly with DWS Scudder, all of this
information applies to you.

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 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>

CHOOSING A SHARE CLASS

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

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.

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 comparison of the
main features of each class.


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

 -  0.75% annual distribution fee and up
    to 0.25% annual shareholder servicing
    fee
------------------------------------------------------------------------------------------
</TABLE>



                                                    Choosing a Share Class  | 75
<PAGE>

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


           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 PRICE 1,2        NET INVESTMENT 2
--------------------------------------------------------------------------------
<S>                             <C>                       <C>
  Up to $50,000                 5.75%                     6.10%
--------------------------------------------------------------------------------
$    50,000-$99,999             4.50                      4.71
--------------------------------------------------------------------------------
$  100,000-$249,999             3.50                      3.63
--------------------------------------------------------------------------------
$  250,000-$499,999             2.60                      2.67
--------------------------------------------------------------------------------
$  500,000-$999,999             2.00                      2.04
--------------------------------------------------------------------------------
  $1 million or more          see below                see below
--------------------------------------------------------------------------------
</TABLE>


           1   The offering price includes the sales charge.

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


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

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

76 | Choosing a Share Class
<PAGE>

           -  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")

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

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

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

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

           IN CERTAIN CIRCUMSTANCES, YOU MAY BE ABLE TO BUY CLASS A SHARES
           WITHOUT A SALES CHARGE. For example, the sales charge will be waived
           if you are reinvesting dividends or distributions or if you are
           exchanging an investment in Class A shares of another fund in the
           DWS family of funds for an investment in Class A shares of a fund.
           In addition, a sales charge waiver may


                                                    Choosing a Share Class  | 77
<PAGE>

           apply to transactions by certain retirement plans and certain other
           entities or persons (e.g., affiliated persons of DeAM 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).

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

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

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


           Class B shares

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

           With Class B shares, you pay no up-front sales charge to a fund.
           Class B shares have a 12b-1 plan, under which a distribution fee of
           0.75% and a shareholder servicing fee of up to 0.25% are deducted
           from class assets each year. This means the annual expenses for
           Class B shares are somewhat higher (and their performance
           correspondingly lower) compared to Class A shares. However, unlike
           Class A shares, your entire investment


78 | Choosing a Share Class
<PAGE>

           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.

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


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


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


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

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


                                                    Choosing a Share Class  | 79
<PAGE>

           Class C shares

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

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

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

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


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


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


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

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


80 | Choosing a Share Class
<PAGE>

How to BUY Class A, B and C Shares



<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
 FIRST INVESTMENT                              ADDITIONAL INVESTMENTS
<S>                                            <C>
 $1,000 or more for regular accounts           $50 or more for regular accounts and
 $500 or more for IRAs                         IRA accounts
 $500 or more with an Automatic                $50 or more with an Automatic
 Investment Plan                               Investment Plan
----------------------------------------------------------------------------------------
 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 MAIL OR EXPRESS MAIL (SEE BELOW)

 -  Fill out and sign an application           -  Send a check made out to "DWS
                                                  Scudder" and a DWS Scudder
 -  Send it to us at the appropriate              appropriate address below
    address, along with an investment
    check
                                               -  If you don't have an investment slip,
                                                  simply include a letter with your
                                                  name, account number, the full name
                                                  of the fund and the share class and
                                                  your investment instructions
----------------------------------------------------------------------------------------
 BY WIRE
 -  Call (800) 621-1048 for instructions       -  Call (800) 621-1048 for instructions
----------------------------------------------------------------------------------------
 BY PHONE
 Not available                                 -  Call (800) 621-1048 for instructions
----------------------------------------------------------------------------------------
 WITH AN AUTOMATIC INVESTMENT PLAN
 -  Fill in the application and include a      -  Call (800) 621-1048 for instructions
    voided check
----------------------------------------------------------------------------------------
 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                                 -  Go to www.dws-scudder.com and
                                                  register

                                               -  Follow the instructions for buying
                                                  shares with money from your bank
                                                  account
----------------------------------------------------------------------------------------
</TABLE>


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

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

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

                                        How to Buy Class A, B and C Shares  | 81
<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
    $500 minimum for IRAs
----------------------------------------------------------------------------------------
 THROUGH A FINANCIAL ADVISOR
 -  Contact your advisor by the method         -  Contact your advisor by the method
    that's most convenient for you                that's most convenient for you
----------------------------------------------------------------------------------------
 BY PHONE OR WIRE
 -  Call (800) 621-1048 for instructions       -  Call (800) 621-1048 for instructions
----------------------------------------------------------------------------------------
 BY MAIL OR EXPRESS MAIL
 (see previous page for address)
 Write a letter that includes:                 Write a letter that includes:

 -  the fund, class and account number         -  the fund, class and account number
    you're exchanging out of                      from which you want to sell shares

 -  the dollar amount or number of shares      -  the dollar amount or number of shares
    you want to exchange                          you want to sell

 -  the name and class of the fund you         -  your name(s), signature(s) and
    want to exchange into                         address, as they appear on your
                                                  account
 -  your name(s), signature(s) and
    address, as they appear on your            -  a daytime telephone number
    account

 -  a daytime telephone number
----------------------------------------------------------------------------------------
 WITH AN AUTOMATIC EXCHANGE PLAN                WITH AN AUTOMATIC WITHDRAWAL PLAN
 -  To set up regular exchanges from a         -  Call (800) 621-1048 (minimum $50)
    fund account, call (800) 621-1048
----------------------------------------------------------------------------------------
 USING QuickSell
 Not available                                 -  Call (800) 621-1048 to make sure
                                                  QuickSell is set up on your account; if
                                                  it is, you can request a transfer to your
                                                  bank account of any amount between
                                                  $50 and $250,000
----------------------------------------------------------------------------------------
 ON THE INTERNET
 -  Register at www.dws-scudder.com            -  Register at www.dws-scudder.com
    and log in and then follow the                and log in and then follow the
    instructions for making on-line               instructions for making on-line
    exchanges                                     redemptions
----------------------------------------------------------------------------------------
</TABLE>


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

<TABLE>
<S>               <C>
TO REACH US:      WEB SITE: www.dws-scudder.com
                  TELEPHONE REPRESENTATIVE: (800) 621-1048, M-F, 9 a.m. - 6 p.m. ET
                  TDD LINE: (800) 972-3006, M-F, 9 a.m. - 6 p.m. ET
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82 | How to Exchange or Sell Class A, B and C Shares
<PAGE>

           Financial intermediary support payments

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

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


                           How to Exchange or Sell Class A, B and C Shares  | 83
<PAGE>

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

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

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


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

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


POLICIES YOU SHOULD KNOW ABOUT

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

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

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

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


           Policies about transactions

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


                                            Policies You Should Know About  | 85
<PAGE>

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

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

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

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

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

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

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

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


86 | Policies You Should Know About
<PAGE>

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

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

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

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


                                            Policies You Should Know About  | 87
<PAGE>

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

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

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


88 | Policies You Should Know About
<PAGE>

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

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

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

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


                                            Policies You Should Know About  | 89
<PAGE>

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

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

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

           The redemption fee will not be charged in connection with the
           following exchange or redemption transactions: (i) transactions on
           behalf of participants in certain research wrap programs; (ii)
           transactions on behalf of participants in certain group retirement
           plans and financial intermediaries whose processing systems are
           incapable of properly applying the redemption fee to underlying
           shareholders; (iii) transactions on behalf of a shareholder to


90 | Policies You Should Know About
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           return any excess IRA contributions to the shareholder; (iv)
           transactions on behalf of a shareholder to effect a required minimum
           distribution on an IRA; (v) 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; (vi) transactions on
           behalf of certain unaffiliated mutual funds operating as funds of
           funds; (vii) 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;
           (viii) transactions involving hardship of any registered
           shareholder; (ix) systematic transactions with pre-defined trade
           dates for purchases, exchanges or redemptions, such as automatic
           account rebalancing, or loan origination and repayments; (x)
           transactions involving shares purchased through the reinvestment of
           dividends or other distributions; (xi) transactions involving shares
           transferred from another account in the same fund or converted from
           another class of the same fund (e.g., shares converting from Class B
           to Class A) (the redemption fee period will carry over to the
           acquired shares); (xii) transactions initiated by a fund or
           administrator (e.g., redemptions for not meeting account minimums,
           to pay account fees funded by share redemptions, or in the event of
           the liquidation or merger of the fund); or (xiii) transactions in
           cases when there are legal or contractual limitations or
           restrictions on the imposition of the redemption fee (as determined
           by a fund or its agents in their sole discretion). It is the policy
           of the DWS funds to permit approved fund platform providers to
           execute transactions within the funds without the imposition of a
           redemption fee if such providers have implemented alternative
           measures that are determined by the Advisor to provide controls on
           short-term and excessive trading that are comparable to the DWS
           funds' policies.

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

THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

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

                                            Policies You Should Know About  | 91
<PAGE>

           (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.

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

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

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


92 | Policies You Should Know About
<PAGE>

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

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

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

           SELLING SHARES OF TRUST ACCOUNTS AND BUSINESS OR ORGANIZATION
           ACCOUNTS may require additional documentation. Please call (800)
           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 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  | 93
<PAGE>

           -  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. Such
              withdrawals may be made at 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

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

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

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

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


94 | Policies You Should Know About
<PAGE>

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

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


                                            Policies You Should Know About  | 95
<PAGE>

           How each fund calculates share price

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


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


           The price at which you buy shares is the NAV, 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 the NAV, although a CDSC may be taken out of the proceeds
           (see "Choosing a Share Class").

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

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


96 | Policies You Should Know About
<PAGE>

           TO THE EXTENT THAT A FUND OR AN UNDERLYING FUND INVESTS IN
           SECURITIES THAT ARE TRADED PRIMARILY IN FOREIGN MARKETS, the value
           of its holdings could change at a time when you aren't able to buy
           or sell fund shares. This is because some foreign markets are open
           on days or at times when a fund or an underlying fund doesn't price
           its shares. (Note that prices for securities that trade on foreign
           exchanges can change significantly on days when the New York Stock
           Exchange is closed and you cannot buy or sell fund shares. Price
           changes in the securities a fund or an underlying 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
              as federal income tax if we have been notified by the IRS that
              you are subject to backup withholding or if you fail to provide
              us with a correct taxpayer ID number and certain certifications
              or certification that you are exempt from backup withholding

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

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


                                            Policies You Should Know About  | 97
<PAGE>

           -  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 fee);
              you may recognize a gain or loss on the redemption of your fund
              shares and incur a tax liability

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

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


UNDERSTANDING DISTRIBUTIONS AND TAXES

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

           DWS LifeCompass Retirement Fund and DWS LifeCompass 2015 Fund each
           intend to pay dividends and distributions to their shareholders
           quarterly, in March, June, September and December. DWS LifeCompass
           2020 Fund, DWS LifeCompass 2030 Fund and DWS LifeCompass 2040 Fund
           each intend to pay dividends and distributions annually in December.
           If necessary, each fund may do so at other times as well.


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.

98 | Understanding Distributions and Taxes
<PAGE>

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

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

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

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




                                     Understanding Distributions and Taxes  | 99
<PAGE>

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


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

- qualified dividend income
--------------------------------------------------------------------------------
TRANSACTIONS INVOLVING FUND
SHARES
- gains from selling fund                       -  gains from selling fund
  shares held for more than                        shares held for one year or
  one year                                         less
--------------------------------------------------------------------------------
</TABLE>
           ANY DIRECT INVESTMENTS IN FOREIGN SECURITIES BY A FUND OR AN
           UNDERLYING FUND MAY BE SUBJECT TO FOREIGN WITHHOLDING TAXES. In that
           case, a fund's yield on those securities would generally be
           decreased. Shareholders of the fund generally will not be entitled
           to a credit or deduction with respect to foreign taxes paid by the
           fund or the underlying funds. In addition, any investments in
           foreign securities or foreign currencies may increase or accelerate
           a fund's recognition of ordinary income and may affect the timing or
           amount of the fund's distributions. If you invest in a fund through
           a taxable account, your after-tax return could be negatively
           impacted.

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

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

100 | Understanding Distributions and Taxes
<PAGE>

           holding period and other requirements with respect to the
           dividend-paying stocks in its portfolio and the shareholder must
           meet certain holding period and other requirements with respect to a
           fund's shares for the lower tax rates to apply.

           For taxable years beginning before January 1, 2011, the maximum
           federal income tax rate imposed on long-term capital gains
           recognized by individuals and other noncorporate shareholders has
           been reduced to 15%. For more information, see the Statement of
           Additional Information, under "Taxes."

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

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

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

           The above discussion is applicable to shareholders who are US
           persons. If you are a non-US person, please consult your own tax
           advisor with respect to the US tax consequences to you of an
           investment in a fund.

           FUND OF FUNDS STRUCTURE. The use of a fund of funds structure could
           affect the amount, timing and type of distributions from the fund
           and, therefore, may increase the amount of taxes payable by
           shareholders.



                                    Understanding Distributions and Taxes  | 101
<PAGE>

           If the fund receives dividends from an underlying fund that
           qualifies as a regulated investment company and the underlying fund
           designates such dividends as qualified dividend income, then the
           fund may in turn designate that portion of its distributions derived
           from those dividends as qualified dividend income as well, provided
           the fund meets the holding period and other requirements with
           respect to shares of the underlying fund.


102 | Appendix
<PAGE>

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


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

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


                                                                 Appendix  | 103
<PAGE>


DWS LifeCompass Retirement Fund - Class A
<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               5.75%                   $10,000                            5%
---------------------------------------------------------------------------------------------
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER      ANNUAL FEES
              FEES AND        EXPENSE        FEES AND           FEES AND            AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
---------------------------------------------------------------------------------------------
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        1.06%             -2.04%       $  9,796.35        $   676.87
---------------------------------------------------------------------------------------------
   2           10.25%        1.16%              1.73%       $ 10,172.52        $   115.82
---------------------------------------------------------------------------------------------
   3           15.76%        1.16%              5.63%       $ 10,563.15        $   120.27
---------------------------------------------------------------------------------------------
   4           21.55%        1.16%              9.69%       $ 10,968.77        $   124.89
---------------------------------------------------------------------------------------------
   5           27.63%        1.16%             13.90%       $ 11,389.98        $   129.68
---------------------------------------------------------------------------------------------
   6           34.01%        1.16%             18.27%       $ 11,827.35        $   134.66
---------------------------------------------------------------------------------------------
   7           40.71%        1.16%             22.82%       $ 12,281.52        $   139.83
---------------------------------------------------------------------------------------------
   8           47.75%        1.16%             27.53%       $ 12,753.13        $   145.20
---------------------------------------------------------------------------------------------
   9           55.13%        1.16%             32.43%       $ 13,242.85        $   150.78
---------------------------------------------------------------------------------------------
  10           62.89%        1.16%             37.51%       $ 13,751.38        $   156.57
---------------------------------------------------------------------------------------------
  TOTAL                                                                        $ 1,894.57
---------------------------------------------------------------------------------------------
</TABLE>


DWS LifeCompass Retirement Fund - Class B

<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
---------------------------------------------------------------------------------------------
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER        ANNUAL
              FEES AND        EXPENSE        FEES AND           FEES AND         FEES AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
---------------------------------------------------------------------------------------------
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        1.81%              3.19%       $ 10,319.00        $   183.89
---------------------------------------------------------------------------------------------
   2           10.25%        1.88%              6.41%       $ 10,640.95        $   197.02
---------------------------------------------------------------------------------------------
   3           15.76%        1.88%              9.73%       $ 10,972.95        $   203.17
---------------------------------------------------------------------------------------------
   4           21.55%        1.88%             13.15%       $ 11,315.31        $   209.51
---------------------------------------------------------------------------------------------
   5           27.63%        1.88%             16.68%       $ 11,668.34        $   216.05
---------------------------------------------------------------------------------------------
   6           34.01%        1.88%             20.32%       $ 12,032.40        $   222.79
---------------------------------------------------------------------------------------------
   7           40.71%        1.16%             24.94%       $ 12,494.44        $   142.26
---------------------------------------------------------------------------------------------
   8           47.75%        1.16%             29.74%       $ 12,974.23        $   147.72
---------------------------------------------------------------------------------------------
   9           55.13%        1.16%             34.72%       $ 13,472.44        $   153.39
---------------------------------------------------------------------------------------------
  10           62.89%        1.16%             39.90%       $ 13,989.78        $   159.28
---------------------------------------------------------------------------------------------
  TOTAL                                                                        $ 1,835.08
---------------------------------------------------------------------------------------------
</TABLE>




104 | Appendix

<PAGE>

DWS LifeCompass Retirement Fund - Class C

<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
---------------------------------------------------------------------------------------------
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER      ANNUAL FEES
              FEES AND        EXPENSE        FEES AND           FEES AND            AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
---------------------------------------------------------------------------------------------
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        1.81%              3.19%       $ 10,319.00        $   183.89
---------------------------------------------------------------------------------------------
   2           10.25%        1.88%              6.41%       $ 10,640.95        $   197.02
---------------------------------------------------------------------------------------------
   3           15.76%        1.88%              9.73%       $ 10,972.95        $   203.17
---------------------------------------------------------------------------------------------
   4           21.55%        1.88%             13.15%       $ 11,315.31        $   209.51
---------------------------------------------------------------------------------------------
   5           27.63%        1.88%             16.68%       $ 11,668.34        $   216.05
---------------------------------------------------------------------------------------------
   6           34.01%        1.88%             20.32%       $ 12,032.40        $   222.79
---------------------------------------------------------------------------------------------
   7           40.71%        1.88%             24.08%       $ 12,407.81        $   229.74
---------------------------------------------------------------------------------------------
   8           47.75%        1.88%             27.95%       $ 12,794.93        $   236.91
---------------------------------------------------------------------------------------------
   9           55.13%        1.88%             31.94%       $ 13,194.13        $   244.30
---------------------------------------------------------------------------------------------
  10           62.89%        1.88%             36.06%       $ 13,605.79        $   251.92
---------------------------------------------------------------------------------------------
  TOTAL                                                                        $ 2,195.30
---------------------------------------------------------------------------------------------
</TABLE>


DWS LifeCompass 2015 Fund - Class A

<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               5.75%                   $10,000                            5%
---------------------------------------------------------------------------------------------
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER        ANNUAL
              FEES AND        EXPENSE        FEES AND           FEES AND         FEES AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
---------------------------------------------------------------------------------------------
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        1.10%             -2.07%       $  9,792.58        $   680.70
---------------------------------------------------------------------------------------------
   2           10.25%        1.24%              1.61%       $ 10,160.78        $   123.71
---------------------------------------------------------------------------------------------
   3           15.76%        1.24%              5.43%       $ 10,542.82        $   128.36
---------------------------------------------------------------------------------------------
   4           21.55%        1.24%              9.39%       $ 10,939.23        $   133.19
---------------------------------------------------------------------------------------------
   5           27.63%        1.24%             13.51%       $ 11,350.55        $   138.20
---------------------------------------------------------------------------------------------
   6           34.01%        1.24%             17.77%       $ 11,777.33        $   143.39
---------------------------------------------------------------------------------------------
   7           40.71%        1.24%             22.20%       $ 12,220.15        $   148.78
---------------------------------------------------------------------------------------------
   8           47.75%        1.24%             26.80%       $ 12,679.63        $   154.38
---------------------------------------------------------------------------------------------
   9           55.13%        1.24%             31.56%       $ 13,156.39        $   160.18
---------------------------------------------------------------------------------------------
  10           62.89%        1.24%             36.51%       $ 13,651.07        $   166.21
---------------------------------------------------------------------------------------------
  TOTAL                                                                        $ 1,977.10
---------------------------------------------------------------------------------------------
</TABLE>



                                                                 Appendix  | 105
<PAGE>


DWS LifeCompass 2015 Fund - Class B

<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
---------------------------------------------------------------------------------------------
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER      ANNUAL FEES
              FEES AND        EXPENSE        FEES AND           FEES AND            AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
---------------------------------------------------------------------------------------------
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        1.85%              3.15%       $ 10,315.00        $   187.91
---------------------------------------------------------------------------------------------
   2           10.25%        1.98%              6.27%       $ 10,626.51        $   207.32
---------------------------------------------------------------------------------------------
   3           15.76%        1.98%              9.47%       $ 10,947.43        $   213.58
---------------------------------------------------------------------------------------------
   4           21.55%        1.98%             12.78%       $ 11,278.05        $   220.03
---------------------------------------------------------------------------------------------
   5           27.63%        1.98%             16.19%       $ 11,618.64        $   226.68
---------------------------------------------------------------------------------------------
   6           34.01%        1.98%             19.70%       $ 11,969.53        $   233.52
---------------------------------------------------------------------------------------------
   7           40.71%        1.24%             24.20%       $ 12,419.58        $   151.21
---------------------------------------------------------------------------------------------
   8           47.75%        1.24%             28.87%       $ 12,886.56        $   156.90
---------------------------------------------------------------------------------------------
   9           55.13%        1.24%             33.71%       $ 13,371.09        $   162.80
---------------------------------------------------------------------------------------------
  10           62.89%        1.24%             38.74%       $ 13,873.84        $   168.92
---------------------------------------------------------------------------------------------
  TOTAL                                                                        $ 1,928.87
---------------------------------------------------------------------------------------------
</TABLE>


DWS LifeCompass 2015 Fund - Class C

<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
---------------------------------------------------------------------------------------------
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER        ANNUAL
              FEES AND        EXPENSE        FEES AND           FEES AND         FEES AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
---------------------------------------------------------------------------------------------
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        1.85%              3.15%       $ 10,315.00        $   187.91
---------------------------------------------------------------------------------------------
   2           10.25%        1.93%              6.32%       $ 10,631.67        $   202.14
---------------------------------------------------------------------------------------------
   3           15.76%        1.93%              9.58%       $ 10,958.06        $   208.34
---------------------------------------------------------------------------------------------
   4           21.55%        1.93%             12.94%       $ 11,294.48        $   214.74
---------------------------------------------------------------------------------------------
   5           27.63%        1.93%             16.41%       $ 11,641.22        $   221.33
---------------------------------------------------------------------------------------------
   6           34.01%        1.93%             19.99%       $ 11,998.60        $   228.12
---------------------------------------------------------------------------------------------
   7           40.71%        1.93%             23.67%       $ 12,366.96        $   235.13
---------------------------------------------------------------------------------------------
   8           47.75%        1.93%             27.47%       $ 12,746.62        $   242.35
---------------------------------------------------------------------------------------------
   9           55.13%        1.93%             31.38%       $ 13,137.95        $   249.79
---------------------------------------------------------------------------------------------
  10           62.89%        1.93%             35.41%       $ 13,541.28        $   257.45
---------------------------------------------------------------------------------------------
  TOTAL                                                                        $ 2,247.30
---------------------------------------------------------------------------------------------
</TABLE>



106 | Appendix

<PAGE>

DWS LifeCompass 2020 Fund - Class A

<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               5.75%                   $10,000                            5%
---------------------------------------------------------------------------------------------
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER        ANNUAL
              FEES AND        EXPENSE        FEES AND           FEES AND         FEES AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
---------------------------------------------------------------------------------------------
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        1.10%             -2.07%       $  9,792.58        $   680.70
---------------------------------------------------------------------------------------------
   2           10.25%        1.28%              1.57%       $ 10,156.86        $   127.68
---------------------------------------------------------------------------------------------
   3           15.76%        1.28%              5.35%       $ 10,534.69        $   132.43
---------------------------------------------------------------------------------------------
   4           21.55%        1.28%              9.27%       $ 10,926.58        $   137.35
---------------------------------------------------------------------------------------------
   5           27.63%        1.28%             13.33%       $ 11,333.05        $   142.46
---------------------------------------------------------------------------------------------
   6           34.01%        1.28%             17.55%       $ 11,754.64        $   147.76
---------------------------------------------------------------------------------------------
   7           40.71%        1.28%             21.92%       $ 12,191.92        $   153.26
---------------------------------------------------------------------------------------------
   8           47.75%        1.28%             26.45%       $ 12,645.46        $   158.96
---------------------------------------------------------------------------------------------
   9           55.13%        1.28%             31.16%       $ 13,115.87        $   164.87
---------------------------------------------------------------------------------------------
  10           62.89%        1.28%             36.04%       $ 13,603.78        $   171.01
---------------------------------------------------------------------------------------------
  TOTAL                                                                        $ 2,016.48
---------------------------------------------------------------------------------------------
</TABLE>


DWS LifeCompass 2020 Fund - Class B

<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
---------------------------------------------------------------------------------------------
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER        ANNUAL
              FEES AND        EXPENSE        FEES AND           FEES AND         FEES AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
---------------------------------------------------------------------------------------------
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        1.85%              3.15%       $ 10,315.00        $   187.91
---------------------------------------------------------------------------------------------
   2           10.25%        2.01%              6.23%       $ 10,623.42        $   210.43
---------------------------------------------------------------------------------------------
   3           15.76%        2.01%              9.41%       $ 10,941.06        $   216.72
---------------------------------------------------------------------------------------------
   4           21.55%        2.01%             12.68%       $ 11,268.20        $   223.20
---------------------------------------------------------------------------------------------
   5           27.63%        2.01%             16.05%       $ 11,605.12        $   229.88
---------------------------------------------------------------------------------------------
   6           34.01%        2.01%             19.52%       $ 11,952.11        $   236.75
---------------------------------------------------------------------------------------------
   7           40.71%        1.28%             23.97%       $ 12,396.73        $   155.83
---------------------------------------------------------------------------------------------
   8           47.75%        1.28%             28.58%       $ 12,857.89        $   161.63
---------------------------------------------------------------------------------------------
   9           55.13%        1.28%             33.36%       $ 13,336.20        $   167.64
---------------------------------------------------------------------------------------------
  10           62.89%        1.28%             38.32%       $ 13,832.30        $   173.88
---------------------------------------------------------------------------------------------
  TOTAL                                                                        $ 1,963.87
---------------------------------------------------------------------------------------------
</TABLE>



                                                                 Appendix  | 107
<PAGE>

DWS LifeCompass 2020 Fund - Class C

<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
---------------------------------------------------------------------------------------------
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER        ANNUAL
              FEES AND        EXPENSE        FEES AND           FEES AND         FEES AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
---------------------------------------------------------------------------------------------
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        1.85%              3.15%       $ 10,315.00        $   187.91
---------------------------------------------------------------------------------------------
   2           10.25%        1.97%              6.28%       $ 10,627.54        $   206.28
---------------------------------------------------------------------------------------------
   3           15.76%        1.97%              9.50%       $ 10,949.56        $   212.53
---------------------------------------------------------------------------------------------
   4           21.55%        1.97%             12.81%       $ 11,281.33        $   218.97
---------------------------------------------------------------------------------------------
   5           27.63%        1.97%             16.23%       $ 11,623.16        $   225.61
---------------------------------------------------------------------------------------------
   6           34.01%        1.97%             19.75%       $ 11,975.34        $   232.45
---------------------------------------------------------------------------------------------
   7           40.71%        1.97%             23.38%       $ 12,338.19        $   239.49
---------------------------------------------------------------------------------------------
   8           47.75%        1.97%             27.12%       $ 12,712.04        $   246.74
---------------------------------------------------------------------------------------------
   9           55.13%        1.97%             30.97%       $ 13,097.21        $   254.22
---------------------------------------------------------------------------------------------
  10           62.89%        1.97%             34.94%       $ 13,494.06        $   261.92
---------------------------------------------------------------------------------------------
  TOTAL                                                                        $ 2,286.12
---------------------------------------------------------------------------------------------
</TABLE>


DWS LifeCompass 2030 Fund - Class A

<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               5.75%                   $10,000                            5%
---------------------------------------------------------------------------------------------
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER        ANNUAL
              FEES AND        EXPENSE        FEES AND           FEES AND         FEES AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
---------------------------------------------------------------------------------------------
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        1.15%             -2.12%       $  9,787.86        $   685.47
---------------------------------------------------------------------------------------------
   2           10.25%        1.65%              1.16%       $ 10,115.76        $   164.20
---------------------------------------------------------------------------------------------
   3           15.76%        1.65%              4.55%       $ 10,454.63        $   169.71
---------------------------------------------------------------------------------------------
   4           21.55%        1.65%              8.05%       $ 10,804.86        $   175.39
---------------------------------------------------------------------------------------------
   5           27.63%        1.65%             11.67%       $ 11,166.83        $   181.27
---------------------------------------------------------------------------------------------
   6           34.01%        1.65%             15.41%       $ 11,540.92        $   187.34
---------------------------------------------------------------------------------------------
   7           40.71%        1.65%             19.28%       $ 11,927.54        $   193.61
---------------------------------------------------------------------------------------------
   8           47.75%        1.65%             23.27%       $ 12,327.11        $   200.10
---------------------------------------------------------------------------------------------
   9           55.13%        1.65%             27.40%       $ 12,740.07        $   206.80
---------------------------------------------------------------------------------------------
  10           62.89%        1.65%             31.67%       $ 13,166.86        $   213.73
---------------------------------------------------------------------------------------------
  TOTAL                                                                        $ 2,377.62
---------------------------------------------------------------------------------------------
</TABLE>



108 | Appendix
<PAGE>


DWS LifeCompass 2030 Fund - Class B

<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
---------------------------------------------------------------------------------------------
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER        ANNUAL
              FEES AND        EXPENSE        FEES AND           FEES AND         FEES AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
---------------------------------------------------------------------------------------------
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        1.90%              3.10%       $ 10,310.00        $   192.95
---------------------------------------------------------------------------------------------
   2           10.25%        2.45%              5.73%       $ 10,572.91        $   255.82
---------------------------------------------------------------------------------------------
   3           15.76%        2.45%              8.43%       $ 10,842.51        $   262.34
---------------------------------------------------------------------------------------------
   4           21.55%        2.45%             11.19%       $ 11,119.00        $   269.03
---------------------------------------------------------------------------------------------
   5           27.63%        2.45%             14.03%       $ 11,402.53        $   275.89
---------------------------------------------------------------------------------------------
   6           34.01%        2.45%             16.93%       $ 11,693.30        $   282.92
---------------------------------------------------------------------------------------------
   7           40.71%        1.65%             20.85%       $ 12,085.02        $   196.17
---------------------------------------------------------------------------------------------
   8           47.75%        1.65%             24.90%       $ 12,489.87        $   202.74
---------------------------------------------------------------------------------------------
   9           55.13%        1.65%             29.08%       $ 12,908.28        $   209.53
---------------------------------------------------------------------------------------------
  10           62.89%        1.65%             33.41%       $ 13,340.71        $   216.55
---------------------------------------------------------------------------------------------
  TOTAL                                                                        $ 2,363.94
---------------------------------------------------------------------------------------------
</TABLE>


DWS LifeCompass 2030 Fund - Class C

<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
---------------------------------------------------------------------------------------------
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER        ANNUAL
              FEES AND        EXPENSE        FEES AND           FEES AND         FEES AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
---------------------------------------------------------------------------------------------
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        1.90%              3.10%       $ 10,310.00        $   192.95
---------------------------------------------------------------------------------------------
   2           10.25%        2.39%              5.79%       $ 10,579.09        $   249.62
---------------------------------------------------------------------------------------------
   3           15.76%        2.39%              8.55%       $ 10,855.21        $   256.14
---------------------------------------------------------------------------------------------
   4           21.55%        2.39%             11.39%       $ 11,138.53        $   262.83
---------------------------------------------------------------------------------------------
   5           27.63%        2.39%             14.29%       $ 11,429.24        $   269.68
---------------------------------------------------------------------------------------------
   6           34.01%        2.39%             17.28%       $ 11,727.54        $   276.72
---------------------------------------------------------------------------------------------
   7           40.71%        2.39%             20.34%       $ 12,033.63        $   283.95
---------------------------------------------------------------------------------------------
   8           47.75%        2.39%             23.48%       $ 12,347.71        $   291.36
---------------------------------------------------------------------------------------------
   9           55.13%        2.39%             26.70%       $ 12,669.99        $   298.96
---------------------------------------------------------------------------------------------
  10           62.89%        2.39%             30.01%       $ 13,000.67        $   306.76
---------------------------------------------------------------------------------------------
  TOTAL                                                                        $ 2,688.97
---------------------------------------------------------------------------------------------
</TABLE>



                                                                 Appendix  | 109
<PAGE>

DWS LifeCompass 2040 Fund - Class A

<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               5.75%                   $10,000                            5%
---------------------------------------------------------------------------------------------
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER        ANNUAL
              FEES AND        EXPENSE        FEES AND           FEES AND         FEES AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
---------------------------------------------------------------------------------------------
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        1.19%             -2.16%       $  9,784.09        $   689.29
---------------------------------------------------------------------------------------------
   2           10.25%        1.59%              1.18%       $ 10,117.73        $   158.22
---------------------------------------------------------------------------------------------
   3           15.76%        1.59%              4.63%       $ 10,462.74        $   163.61
---------------------------------------------------------------------------------------------
   4           21.55%        1.59%              8.20%       $ 10,819.52        $   169.19
---------------------------------------------------------------------------------------------
   5           27.63%        1.59%             11.88%       $ 11,188.47        $   174.96
---------------------------------------------------------------------------------------------
   6           34.01%        1.59%             15.70%       $ 11,570.00        $   180.93
---------------------------------------------------------------------------------------------
   7           40.71%        1.59%             19.65%       $ 11,964.53        $   187.10
---------------------------------------------------------------------------------------------
   8           47.75%        1.59%             23.73%       $ 12,372.52        $   193.48
---------------------------------------------------------------------------------------------
   9           55.13%        1.59%             27.94%       $ 12,794.43        $   200.08
---------------------------------------------------------------------------------------------
  10           62.89%        1.59%             32.31%       $ 13,230.72        $   206.90
---------------------------------------------------------------------------------------------
  TOTAL                                                                        $ 2,323.77
---------------------------------------------------------------------------------------------
</TABLE>


DWS LifeCompass 2040 Fund - Class C

<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
---------------------------------------------------------------------------------------------
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER        ANNUAL
              FEES AND        EXPENSE        FEES AND           FEES AND         FEES AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
---------------------------------------------------------------------------------------------
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        1.94%              3.06%       $ 10,306.00        $   196.97
---------------------------------------------------------------------------------------------
   2           10.25%        2.34%              5.80%       $ 10,580.14        $   244.37
---------------------------------------------------------------------------------------------
   3           15.76%        2.34%              8.62%       $ 10,861.57        $   250.87
---------------------------------------------------------------------------------------------
   4           21.55%        2.34%             11.50%       $ 11,150.49        $   257.54
---------------------------------------------------------------------------------------------
   5           27.63%        2.34%             14.47%       $ 11,447.09        $   264.39
---------------------------------------------------------------------------------------------
   6           34.01%        2.34%             17.52%       $ 11,751.58        $   271.42
---------------------------------------------------------------------------------------------
   7           40.71%        2.34%             20.64%       $ 12,064.18        $   278.64
---------------------------------------------------------------------------------------------
   8           47.75%        2.34%             23.85%       $ 12,385.08        $   286.06
---------------------------------------------------------------------------------------------
   9           55.13%        2.34%             27.15%       $ 12,714.53        $   293.67
---------------------------------------------------------------------------------------------
  10           62.89%        2.34%             30.53%       $ 13,052.73        $   301.48
---------------------------------------------------------------------------------------------
  TOTAL                                                                        $ 2,645.40
---------------------------------------------------------------------------------------------
</TABLE>



110 | Appendix
<PAGE>

TO GET MORE INFORMATION

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

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

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


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



<TABLE>
<S>                         <C>                                  <C>
SEC FILE NUMBER:
DWS Target Date Series      DWS LifeCompass Retirement Fund      811-8606
DWS Target Date Series            DWS LifeCompass 2015 Fund      811-8606
DWS Target Date Series            DWS LifeCompass 2020 Fund      811-8606
DWS Target Date Series            DWS LifeCompass 2030 Fund      811-8606
DWS Target Date Series            DWS LifeCompass 2040 Fund      811-8606
</TABLE>




(11/15/07) DTDSF-1
[RECYCLED PAPER GRAPHIC APPEARS HERE]    [DWS SCUDDER LOGO GRAPHIC APPEARS HERE]




<PAGE>

                                NOVEMBER 15, 2007







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

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

                        DWS LIFECOMPASS RETIREMENT FUND
                  (formerly DWS Conservative Allocation Fund)


                            DWS LIFECOMPASS 2015 FUND
                     (formerly DWS Moderate Allocation Fund)


                            DWS LIFECOMPASS 2020 FUND
                      (formerly DWS Growth Allocation Fund)


                            DWS LIFECOMPASS 2030 FUND
                   (formerly DWS Growth Plus Allocation Fund)


                            DWS LIFECOMPASS 2040 FUND



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


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




<PAGE>

CONTENTS
--------------------------------------------------------------------------------

<TABLE>
<S>      <C>
HOW EACH FUND WORKS
  4      DWS LifeCompass
         Retirement Fund
 15      DWS LifeCompass 2015 Fund
 26      DWS LifeCompass 2020 Fund
 37      DWS LifeCompass 2030 Fund
 48      DWS LifeCompass 2040 Fund
 56      Other Policies and Secondary
         Risks
 58      Who Manages and Oversees
         the Funds
 61      Financial Highlights


</TABLE>
<TABLE>
<S>      <C>
HOW TO INVEST IN THE FUNDS
 66      How to Buy, Sell and
         Exchange Shares
 70      Policies You Should Know
         About
 82      Understanding Distributions
         and Taxes
 86      Appendix
</TABLE>

<PAGE>

HOW EACH FUND WORKS

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

These funds use an asset allocation strategy, dividing their assets among
different types of investments. All five funds invest in other DWS funds and
non-affiliated investment companies. Each fund is designed for investors with a
particular time horizon or risk profile, and invests in a distinct mix of funds.
Because the underlying funds hold a range of securities, an investment in a fund
may offer exposure to thousands of individual securities.

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

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

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

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


<TABLE>
<S>                                              <C>
--------------------------------------------------------------------------------
                                                                   Class S
                                                ticker symbol      SCPCX
                                                  fund number      2080
  DWS LIFECOMPASS RETIREMENT FUND
(formerly DWS Conservative Allocation Fund)
--------------------------------------------------------------------------------
</TABLE>

            THE FUND'S MAIN INVESTMENT STRATEGY

            The fund seeks current income and, as a secondary objective,
            long-term growth of capital. The fund is designed for investors who
            are already in retirement or who plan to retire or begin withdrawing
            portions of their investments in the near future. The fund pursues
            its investment objective by investing in other DWS mutual funds. The
            fund may also invest in securities of Exchange Traded Funds ("ETFs")
            when the desired economic exposure to a particular market or sector
            is not available through a DWS fund.

            The fund has a target asset allocation (see sidebar), which the
            managers use as a reference point in setting the fund's actual asset
            allocation. While the actual asset allocation may vary, the managers
            expect over the long term it will average out to be similar to the
            target asset allocation.

            The managers regularly review the actual asset allocation and may
            adjust it based on current or expected market conditions or to
            manage risk. In making their asset allocation decisions, the
            managers use a proprietary mix of quantitative and qualitative
            inputs to arrive at a view for the securities markets and segments
            of those markets. These inputs include, but are not limited to,
            return forecasts for asset classes and investment guidelines. Based
            on the desired exposure to particular investments and thorough risk
            analysis the managers then decide which funds to use as underlying
            funds and in which proportions.

            In order to mitigate the risks associated with a particular fund or
            manager and increase diversification in the fund, the fund will
            limit its investments in underlying funds so that no more than 40%
            of the overall allocation to equity will be invested in any one
            equity fund.

THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

The fund's target allocation is approximately:
- 35% Equity funds; and
- 65% Fixed Income funds.


4 | DWS LifeCompass Retirement Fund
<PAGE>

            The fund's underlying funds use a broad array of investment styles.
            These funds can buy many types of securities, among them common
            stocks of companies of any size, corporate bonds of varying credit
            quality, US government and agency bonds, mortgage- and asset-backed
            securities, money market instruments and others. These securities
            are mainly from US issuers but may be, to a more limited extent,
            from foreign issuers.


            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.

            The fund's allocations among the underlying funds will change over
            time, causing corresponding changes in the portfolio's risk profile.

            ASSET ALLOCATION RISK. Although asset allocation among different
            asset categories generally reduces risk and exposure to any one
            category, the risk remains that the Advisor may favor an asset
            category that performs poorly relative to the other asset
            categories. To the extent that alternative asset categories
            underperform the general stock market, the fund would perform poorly
            relative to a fund invested primarily in the general stock market.

            MUTUAL FUND INVESTMENT RISK. The fund's investments are concentrated
            in underlying funds, so the fund's investment performance is
            directly related to the performance of the underlying funds. The
            fund's net asset value will change with changes in the equity and
            bond markets and the value of the underlying funds in which it
            invests. To the extent the particular underlying funds in which the
            fund invests underperform their benchmarks and/or other funds
            investing in the same asset class the fund would perform poorly
            relative to other asset allocation funds. In addition, the fund
            indirectly pays a portion of the expenses incurred by the underlying
            funds. As the underlying funds or the fund's allocations among the
            underlying funds change from time to time, or to the extent that the
            expense ratio of the underlying funds changes, the weighted average
            operating expenses borne by the fund may increase or decrease.


                                            DWS LifeCompass Retirement Fund  | 5
<PAGE>

            Investment risks of the underlying funds

            The investment risks below are risks of certain of the underlying
            funds; by investing in the underlying funds the fund is also exposed
            to these risks. In the sections below, the term "fund" refers to one
            or more of the underlying funds. For more information on the risks
            of the underlying funds, see each underlying fund's prospectus.

            BOND MARKET RISK. The fund is also affected by how fixed-income
            securities perform. Bonds could be hurt by rises in market interest
            rates. A rise in interest rates generally means a fall in bond
            prices and, in turn, a fall in the value of your investment. To the
            extent that an underlying fund emphasizes bonds from any given
            industry, it could be hurt if that industry does not do well. Some
            bonds could be paid off earlier than expected, which would hurt the
            performance of an underlying fund; with mortgage- or asset-backed
            securities, any unexpected behavior in interest rates could increase
            the volatility of an underlying fund's share price and yield.
            Corporate bonds could perform less well than other bonds in a weak
            economy.

            CREDIT RISK. A fund purchasing bonds faces the risk that the
            creditworthiness of an issuer may decline, causing the value of its
            bonds to decline. In addition, an issuer may not be able to make
            timely payments on the interest and/or principal on the bonds it has
            issued. Because the issuers of high-yield bonds or junk bonds (rated
            below the fourth highest category) may be in uncertain financial
            health, the prices of their bonds can be more vulnerable to bad
            economic news or even the expectation of bad news, than
            investment-grade bonds. In some cases, bonds, particularly
            high-yield bonds, may decline in credit quality or go into default.
            Because the fund may invest in securities not paying current
            interest or in securities already in default, these risks may be
            more pronounced.

            STOCK MARKET RISK. The fund is affected by how the stock market
            performs. To the extent the fund invests in a particular
            capitalization or market sector, the fund's performance may be
            proportionately affected by that segment's general performance. When
            stock prices fall, you should expect the value of your investment to
            fall as well. Because a stock represents ownership in its issuer,
            stock prices can be hurt by poor management, shrinking product
            demand and other business risks. These factors may affect single
            companies as


6 | DWS LifeCompass Retirement Fund
<PAGE>

            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 an
            attractive price for them.

            ETF RISK. An ETF is a fund that holds a portfolio of common stocks
            or bonds designed to track the performance of a securities index or
            industry sector. ETFs trade on a securities exchange and their
            shares may, at times, trade at a premium or discount to their NAV.
            In addition, an ETF may not replicate exactly the performance of the
            index it seeks to track for a number of reasons, including
            transaction costs incurred by the ETF. ETFs incur fees and expenses,
            such as operating expenses, licensing fees, trustee fees and
            marketing expenses, which are borne proportionately by ETF
            shareholders, such as the fund. The fund will also incur brokerage
            costs when purchasing and selling shares of ETFs.

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

            -  POLITICAL RISK. Some foreign governments have limited the outflow
               of profits to investors abroad, imposed restrictions on the
               exchange or export of foreign currency, extended diplomatic
               disputes to include trade and financial relations, seized foreign
               investment and imposed high 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 foreign company, as compared
               to the financial reports of US companies.

            -  LIQUIDITY RISK. Investments that trade less can be more difficult
               or more costly to buy, or to sell, than more liquid or active
               investments. This liquidity risk is a factor of the trading
               volume of a particular investment, as well as the size and
               liquidity of the entire local market. On the whole, foreign
               exchanges are smaller and less liquid than the US market. This
               can make buying and selling certain


                                            DWS LifeCompass Retirement Fund  | 7
<PAGE>

               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. This creates the possibility that changes in
               exchange rates between foreign currencies and the US dollar will
               affect the US dollar value of foreign securities or the income or
               gain received on these securities.

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

            REALLOCATION RISK. From time to time, one or more underlying funds
            may experience relatively large investments or redemptions due to
            reallocations or rebalancings of the fund or other fund-of-fund
            products managed by the Advisor. These transactions will affect the
            underlying funds, since underlying funds that experience redemptions
            as a result of reallocations or rebalancings may have to sell
            securities and underlying funds that receive additional cash will
            have to invest such cash. In addition, a large redemption by a fund
            in a specific underlying fund could also hurt the performance of
            another fund currently invested in the same underlying fund. While
            it is impossible to predict the overall impact of these transactions
            over time, there could also be adverse effects on a fund's


8 | DWS LifeCompass Retirement Fund
<PAGE>

            performance to the extent that the underlying funds may be required
            to sell securities or invest cash at times when they would otherwise
            not do so. These transactions could also accelerate the realization
            of taxable income if sales of securities resulted in gains and could
            also increase transaction costs for the underlying funds. The
            managers attempt to minimize such impact on the underlying funds to
            the extent consistent with pursuing the investment objective of a
            fund. The managers consider the impact on the underlying funds of
            transactions by the fund and an underlying fund may discontinue
            sales of shares to the fund.

            Other factors that could affect performance include:

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

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


                                            DWS LifeCompass Retirement Fund  | 9
<PAGE>

THE FUND'S PERFORMANCE HISTORY

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

The bar chart shows how the performance of the fund's Class S shares has varied
from year to year, which may give some idea of risk. The table on the following
page shows how fund performance compares to relevant index information (which,
unlike the fund performance, does not reflect fees or expenses). The performance
of both 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
individual federal marginal income tax rates and do not reflect the impact of
state and local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown in the table. After-tax returns shown
are not relevant for investors who hold their shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts.

DWS LifeCompass Retirement Fund

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





<TABLE>
<S>        <C>       <C>       <C>       <C>        <C>        <C>        <C>       <C>       <C>
14.36       5.63      2.84      3.09      -2.92      -5.79     13.63       7.70      4.69      9.29
1997       1998      1999      2000      2001       2002       2003       2004      2005      2006
</TABLE>





<TABLE>
<CAPTION>
2007 TOTAL RETURN AS OF SEPTEMBER 30: 5.27%
<S>                                         <C>
FOR THE PERIODS INCLUDED IN THE BAR CHART:
BEST QUARTER: 7.51%, Q2 2003                WORST QUARTER: -5.69%, Q3 2002
</TABLE>



10 | DWS LifeCompass Retirement Fund
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2006


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                              1 YEAR      5 YEARS      10 YEARS
--------------------------------------------------------------------------------
<S>                                          <C>         <C>          <C>
 CLASS S
--------------------------------------------------------------------------------
   Return before Taxes                          9.29         5.70         5.07
--------------------------------------------------------------------------------
   Return after Taxes on Distributions          8.02         4.56         3.47
--------------------------------------------------------------------------------
   Return after Taxes on Distributions
   and Sale of Fund Shares                      6.14         4.23         3.40
--------------------------------------------------------------------------------
 RUSSELL 1000 INDEX (reflects no
 deductions for fees, expenses or
 taxes)                                        15.46         6.82         8.39
--------------------------------------------------------------------------------
 RUSSELL 2000 INDEX (reflects no
 deductions for fees, expenses or
 taxes)                                        18.37        11.39         9.64
--------------------------------------------------------------------------------
 LEHMAN BROTHERS U.S. AGGREGATE
 INDEX (reflects no deductions for fees,
 expenses or taxes)                             4.33         5.06         6.09
--------------------------------------------------------------------------------
 CREDIT SUISSE HIGHYIELD INDEX
 (reflects no deductions for fees,
 expenses or taxes)                            11.92        11.07         7.09
--------------------------------------------------------------------------------
 MERRILL LYNCH 3-MONTH US TREASURY
 BILL INDEX (reflects no deductions for
 fees, expenses or taxes)                       4.82         2.36         3.69
--------------------------------------------------------------------------------
 MORGAN STANLEY CAPITAL
 INTERNATIONAL (MSCI) EUROPE,
 AUSTRALASIA AND THE FAR EAST (EAFE)
 INDEX (reflects no deductions for fees,
 expenses or taxes)                            26.34        14.98         7.50
--------------------------------------------------------------------------------
</TABLE>


 Total returns would have been lower if the advisor had not maintained the
 expenses of certain of the underlying funds.

 RUSSELL 1000 (Reg. TM) INDEX is an unmanaged price-only index of the 1,000
 largest capitalized companies that are domiciled in the US and whose common
 stocks are traded.

 The RUSSELL 2000 (Reg. TM) INDEX is an unmanaged capitalization-weighted
 measure of approximately 2,000 small US stocks.

 LEHMAN BROTHERS U.S. AGGREGATE INDEX is an unmanaged market value-weighted
 measure of Treasury issues, agency issues, corporate bond issues and mortgage
 securities.

 The CREDIT SUISSE HIGH YIELD INDEX is an unmanaged trader-priced portfolio,
 constructed to mirror the global high-yield debt market.

 The MERRILL LYNCH 3-MONTH US TREASURY BILL INDEX is an unmanaged index
 capturing the performance of a single issue maturing closest to, but not
 exceeding, three months from the re-balancing date.

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


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

                                           DWS LifeCompass Retirement Fund  | 11
<PAGE>

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


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

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


12 | DWS LifeCompass Retirement Fund
<PAGE>

HOW MUCH INVESTORS PAY

This fund's Class S shares have no sales charges or other shareholder fees other
than a short-term redemption/exchange fee. This information doesn't include any
fees that may be charged by your financial advisor. The fund's shareholders
directly bear the fees and expenses of the fund, subject to the Advisor's
contractual obligations to waive fees or reimburse expenses to maintain the
fund's operating expenses at a specified level (see "Net Annual Fund and
Acquired Funds (Underlying Funds) Operating Expenses" in the table below). The
fund will indirectly bear its proportionate share of fees and expenses incurred
by the underlying DWS funds and, potentially, exchange-traded funds in which the
fund is invested (see "Acquired Funds (Underlying Funds) Fees and Expenses" in
the table below). This information does not include any fees that may be charged
by your financial advisor.


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

 ANNUAL OPERATING EXPENSES, deducted from fund assets
--------------------------------------------------------------------------------
 Management Fee 2                              0.10%
--------------------------------------------------------------------------------
 Distribution/Service (12b-1) Fee              0.00
--------------------------------------------------------------------------------
 Other Expenses                                0.37
--------------------------------------------------------------------------------
 Acquired Funds (Underlying Funds) Fees
 and Expenses 3                                0.54
--------------------------------------------------------------------------------
 TOTAL ANNUAL OPERATING EXPENSES               1.01
--------------------------------------------------------------------------------
 Less Expense Waiver/Reimbursement 4           0.20
--------------------------------------------------------------------------------
 NET ANNUAL OPERATING EXPENSES 4               0.81
--------------------------------------------------------------------------------
</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  The Advisor does not receive any investment advisory fees for managing the
   fund but does receive a 0.10% administration fee. In addition, the Advisor
   receives fees as investment advisor to each underlying DWS fund.

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

4  Effective November 15, 2007 through November 30, 2008, the advisor has
   contractually agreed to waive all or a portion of its management fee and
   reimburse or pay operating expenses of the fund to the extent necessary to
   maintain the fund's total operating expenses at 0.27% for Class S shares,
   excluding certain expenses such as extraordinary expenses, taxes, brokerage,
   interest and indirect expenses of underlying DWS funds.


                                           DWS LifeCompass Retirement Fund  | 13
<PAGE>

Based on the costs above (including one year of capped expenses in each period),
this example helps you compare the expenses of each share class 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         $83         $302         $538       $1,218
--------------------------------------------------------------------------------
</TABLE>



14 | DWS LifeCompass Retirement Fund
<PAGE>


<TABLE>
<S>                                          <C>
--------------------------------------------------------------------------------
                                                                 Class S
                                                ticker symbol    SPBAX
                                                  fund number    2081
    DWS LIFECOMPASS 2015 FUND
  (formerly DWS Moderate Allocation Fund)
--------------------------------------------------------------------------------
</TABLE>

            THE FUND'S MAIN INVESTMENT STRATEGY

            The fund seeks to achieve as high total return as is consistent with
            its asset allocation until the target year. As the fund approaches
            its target year, the fund will decrease its emphasis on growth of
            capital and increase its emphasis on current income. The fund is
            designed for investors seeking to meet their respective investment
            goals, such as retirement, around the year 2015. The fund pursues
            its investment objective by investing in other DWS mutual funds. The
            fund may also invest in securities of Exchange Traded Funds ("ETFs")
            when the economic exposure to a particular market or sector is not
            available through a DWS fund.

            The fund has a target asset allocation, which the managers use as a
            reference point in setting the fund's actual asset allocation (see
            sidebar). The target asset allocation for the fund will change over
            time based on the number of years remaining until the target year,
            becoming more conservative as the fund approaches the target year.
            As the target year approaches, the fund's target asset allocation
            will approach that of the DWS LifeCompass Retirement Fund (the
            "Retirement Fund"). Once the fund's actual asset allocation is
            similar to that of the Retirement Fund, the fund may be combined
            with the Retirement Fund or another DWS fund offered at the time.

            The fund's target asset allocation may differ from the fund's actual
            asset allocation. The managers periodically review the actual asset
            allocation and may adjust it based on the target investment horizon,
            current or expected market conditions or to manage risk. In making
            their asset allocation decisions, the managers use a proprietary mix
            of quantitative and qualitative inputs to arrive at a view for the
            securities markets and segments of those markets. These inputs
            include, but are not limited to, return forecasts for asset classes,
            target


THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

The fund's current target asset allocation is approximately:
- 60% Equity funds; and
- 40% Fixed Income funds.

                                                 DWS LifeCompass 2015 Fund  | 15
<PAGE>

            investments horizon and investment guidelines. Based on the desired
            exposure to particular investments and thorough risk analysis the
            managers then decide which funds to use as underlying funds and in
            which proportions.

            In order to mitigate the risks associated with a particular fund or
            manager and increase diversification in the fund, the fund will
            limit its investments in underlying funds so that no more than 40%
            of the overall allocation to equity will be invested in any one
            equity fund.

            The fund's underlying funds use a broad array of investment styles.
            These funds can buy many types of securities, among them common
            stocks of companies of any size, corporate bonds of varying credit
            quality, US government and agency bonds, mortgage- and asset-backed
            securities, money market instruments and others. These securities
            are mainly from US issuers but may be, to a more limited extent,
            from foreign issuers.


            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.

            The fund's allocations among the underlying funds will change over
            time, causing corresponding changes in the portfolio's risk profile.

            ASSET ALLOCATION RISK. Although asset allocation among different
            asset categories generally reduces risk and exposure to any one
            category, the risk remains that the Advisor may favor an asset
            category that performs poorly relative to the other asset
            categories. To the extent that alternative asset categories
            underperform the general stock market, the fund would perform poorly
            relative to a fund invested primarily in the general stock market.

            MUTUAL FUND INVESTMENT RISK. The fund's investments are concentrated
            in underlying funds, so the fund's investment performance is
            directly related to the performance of the underlying funds. The
            fund's net asset value will change with changes in the equity and
            bond markets and the value of the underlying funds in which it
            invests. To the extent the particular underlying funds in which the
            fund invests underperform their benchmarks and/or other funds
            investing in the same asset


16 | DWS LifeCompass 2015 Fund
<PAGE>

            class the fund would perform poorly relative to other asset
            allocation funds. In addition, the fund indirectly pays a portion of
            the expenses incurred by the underlying funds. As the underlying
            funds or the fund's allocations among the underlying funds change
            from time to time, or to the extent that the expense ratio of the
            underlying funds changes, the weighted average operating expenses
            borne by the fund may increase or decrease.


            Investment risks of the underlying funds

            The investment risks below are risks of certain of the underlying
            funds; by investing in the underlying funds the fund is also exposed
            to these risks. In the sections below, the term "fund" refers to one
            or more of the underlying funds. For more information on the risks
            of the underlying funds, see each underlying fund's prospectus.

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

            ETF RISK. An ETF is a fund that holds a portfolio of common stocks
            or bonds designed to track the performance of a securities index or
            industry sector. ETFs trade on a securities exchange and their
            shares may, at times, trade at a premium or discount to their NAV.
            In addition, an ETF may not replicate exactly the performance of the
            index it seeks to track for a number of reasons, including
            transaction costs incurred by the ETF. ETFs incur fees and expenses,
            such as operating expenses, licensing fees, trustee fees and
            marketing expenses, which are borne proportionately by ETF
            shareholders, such as the fund. The fund will also incur brokerage
            costs when purchasing and selling shares of ETFs.


                                                 DWS LifeCompass 2015 Fund  | 17
<PAGE>

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

            -  POLITICAL RISK. Some foreign governments have limited the outflow
               of profits to investors abroad, imposed restrictions on the
               exchange or export of foreign currency, extended diplomatic
               disputes to include trade and financial relations, seized foreign
               investment and imposed high 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 foreign company, as compared
               to the financial reports of US companies.

            -  LIQUIDITY RISK. Investments that trade less can be more difficult
               or more costly to buy, or to sell, than more liquid or active
               investments. This liquidity risk is a factor of the trading
               volume of a particular investment, as well as the size and
               liquidity of the entire local market. On the whole, foreign
               exchanges are smaller and less liquid than the US market. 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. This creates the possibility that changes in
               exchange rates between foreign currencies and the US dollar will
               affect the US dollar value of foreign securities or the income or
               gain received on these securities.

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

18 | DWS LifeCompass 2015 Fund
<PAGE>

            -  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.

            BOND MARKET RISK. The fund is also affected by how fixed-income
            securities perform. Bonds could be hurt by rises in market interest
            rates. A rise in interest rates generally means a fall in bond
            prices and, in turn, a fall in the value of your investment. To the
            extent that an underlying fund emphasizes bonds from any given
            industry, it could be hurt if that industry does not do well. Some
            bonds could be paid off earlier than expected, which would hurt the
            performance of an underlying fund; with mortgage- or asset-backed
            securities, any unexpected behavior in interest rates could increase
            the volatility of an underlying fund's share price and yield.
            Corporate bonds could perform less well than other bonds in a weak
            economy.

            CREDIT RISK. A fund purchasing bonds faces the risk that the
            creditworthiness of an issuer may decline, causing the value of its
            bonds to decline. In addition, an issuer may not be able to make
            timely payments on the interest and/or principal on the bonds it has
            issued. Because the issuers of high-yield bonds or junk bonds (rated
            below the fourth highest category) may be in uncertain financial
            health, the prices of their bonds can be more vulnerable to bad
            economic news or even the expectation of bad news, than
            investment-grade bonds. In some cases, bonds, particularly
            high-yield bonds, may decline in credit quality or go into default.
            Because the fund may invest in securities not paying current
            interest or in securities already in default, these risks may be
            more pronounced.


                                                 DWS LifeCompass 2015 Fund  | 19
<PAGE>

            REALLOCATION RISK. From time to time, one or more underlying funds
            may experience relatively large investments or redemptions due to
            reallocations or rebalancings of the fund or other fund-of-fund
            products managed by the Advisor. These transactions will affect the
            underlying funds, since underlying funds that experience redemptions
            as a result of reallocations or rebalancings may have to sell
            securities and underlying funds that receive additional cash will
            have to invest such cash. In addition, a large redemption by a fund
            in a specific underlying fund could also hurt the performance of
            another fund currently invested in the same underlying fund. While
            it is impossible to predict the overall impact of these transactions
            over time, there could also be adverse effects on a fund's
            performance to the extent that the underlying funds may be required
            to sell securities or invest cash at times when they would otherwise
            not do so. These transactions could also accelerate the realization
            of taxable income if sales of securities resulted in gains and could
            also increase transaction costs for the underlying funds. The
            managers attempt to minimize such impact on the underlying funds to
            the extent consistent with pursuing the investment objective of a
            fund. The managers consider the impact on the underlying funds of
            transactions by the fund and an underlying fund may discontinue
            sales of shares to the fund.

            Other factors that could affect performance include:

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

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


20 | DWS LifeCompass 2015 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 information (which,
unlike the fund performance, does not reflect fees or expenses). The performance
of both 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
individual federal marginal income tax rates and do not reflect the impact of
state and local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown in the table. After-tax returns shown
are not relevant for investors who hold their shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts.

DWS LifeCompass 2015 Fund

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





<TABLE>
<S>        <C>       <C>        <C>        <C>        <C>         <C>        <C>       <C>       <C>
13.33       7.64     16.66       -2.64      -9.14      -11.97     19.06       9.07      5.28     11.50
1997       1998      1999       2000       2001        2002       2003       2004      2005      2006
</TABLE>





<TABLE>
<CAPTION>
2007 TOTAL RETURN AS OF SEPTEMBER 30: 6.04%
<S>                                         <C>
FOR THE PERIODS INCLUDED IN THE BAR CHART:
BEST QUARTER: 12.53%, Q4 1999               WORST QUARTER: -10.26%, Q3 1998
</TABLE>



                                                 DWS LifeCompass 2015 Fund  | 21
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2006


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                               1 YEAR       5 YEARS     10 YEARS
--------------------------------------------------------------------------------
<S>                                          <C>           <C>          <C>
 CLASS S
--------------------------------------------------------------------------------
   Return before Taxes                           11.50         6.06         5.38
--------------------------------------------------------------------------------
   Return after Taxes on Distributions           10.35         5.18         3.92
--------------------------------------------------------------------------------
   Return after Taxes on Distributions
   and Sale of Fund Shares                        7.64         4.72         3.88
--------------------------------------------------------------------------------
 RUSSELL 1000 INDEX (reflects no
 deductions for fees, expenses or
 taxes)                                          15.46         6.82         8.39
--------------------------------------------------------------------------------
 LEHMAN BROTHERS U.S. AGGREGATE
 INDEX (reflects no deductions for fees,
 expenses or taxes)                               4.33         5.06         6.09
--------------------------------------------------------------------------------
 RUSSELL 2000 INDEX (reflects no
 deductions for fees, expenses or
 taxes)                                          18.37        11.39         9.64
--------------------------------------------------------------------------------
 MORGAN STANLEY CAPITAL
 INTERNATIONAL (MSCI) EUROPE,
 AUSTRALASIA AND THE FAR EAST (EAFE)
 INDEX (reflects no deductions for fees,
 expenses or taxes)                              26.34        14.98         7.50
--------------------------------------------------------------------------------
 CREDIT SUISSE HIGHYIELD INDEX
 (reflects no deductions for fees,
 expenses or taxes)                              11.92        11.07         7.09
--------------------------------------------------------------------------------
 MERRILL LYNCH 3-MONTH US TREASURY
 BILL INDEX (reflects no deductions for
 fees, expenses or taxes)                         4.82         2.36         3.69
--------------------------------------------------------------------------------
</TABLE>


 Total returns would have been lower if the advisor had not maintained the
 expenses of certain of the underlying funds.

 RUSSELL 1000 (Reg. TM) INDEX is an unmanaged price-only index of the 1,000
 largest capitalized companies that are domiciled in the US and whose common
 stocks are traded.

 LEHMAN BROTHERS U.S. AGGREGATE INDEX is an unmanaged market value-weighted
 measure of Treasury issues, agency issues, corporate bond issues and mortgage
 securities.

 The RUSSELL 2000 (Reg. TM) INDEX is an unmanaged capitalization-weighted
 measure of approximately 2,000 small US stocks.

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

 The CREDIT SUISSE HIGH YIELD INDEX is an unmanaged trader-priced portfolio,
 constructed to mirror the global high-yield debt market.

 The MERRILL LYNCH 3-MONTH US TREASURY BILL INDEX is an unmanaged index
 capturing the performance of a single issue maturing closest to, but not
 exceeding, three months from the re-balancing date.


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

22 | DWS LifeCompass 2015 Fund
<PAGE>

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


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

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


                                                 DWS LifeCompass 2015 Fund  | 23
<PAGE>

HOW MUCH INVESTORS PAY

This fund's Class S shares have no sales charges or other shareholder fees other
than a short-term redemption/exchange fee. This information doesn't include any
fees that may be charged by your financial advisor. The fund's shareholders
directly bear the fees and expenses of the fund, subject to the Advisor's
contractual obligations to waive fees or reimburse expenses to maintain the
fund's operating expenses at a specified level (see "Net Annual Fund and
Acquired Funds (Underlying Funds) Operating Expenses" in the table below). The
fund will indirectly bear its proportionate share of fees and expenses incurred
by the underlying DWS funds and, potentially, exchange-traded funds in which the
fund is invested (see "Acquired Funds (Underlying Funds) Fees and Expenses" in
the table below). This information does not include any fees that may be charged
by your financial advisor.


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

 ANNUAL OPERATING EXPENSES, deducted from fund assets
--------------------------------------------------------------------------------
 Management Fee 2                              0.10%
--------------------------------------------------------------------------------
 Distribution/Service (12b-1) Fee              0.00
--------------------------------------------------------------------------------
 Other Expenses                                0.21
--------------------------------------------------------------------------------
 Acquired Funds (Underlying Funds) Fees
 and Expenses 3                                0.62
--------------------------------------------------------------------------------
 TOTAL ANNUAL OPERATING EXPENSES               0.93
--------------------------------------------------------------------------------
 Less Expense Waiver/Reimbursement 4           0.08
--------------------------------------------------------------------------------
 NET ANNUAL OPERATING EXPENSES 4               0.85
--------------------------------------------------------------------------------
</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  The Advisor does not receive any investment advisory fees for managing the
   fund but does receive a 0.10% administration fee. In addition, the Advisor
   receives fees as investment advisor to each underlying DWS fund.

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

4  Effective November 15, 2007 through November 30, 2008, the advisor has
   contractually agreed to waive all or a portion of its management fee and
   reimburse or pay operating expenses of the fund to the extent necessary to
   maintain the fund's total operating expenses at 0.23% for Class S shares,
   excluding certain expenses such as extraordinary expenses, taxes, brokerage,
   interest and indirect expenses of underlying DWS funds.

24 | DWS LifeCompass 2015 Fund
<PAGE>

Based on the costs above (including one year of capped expenses in each period),
this example helps you compare the expenses of each share class 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         $87         $288         $507       $1,136
--------------------------------------------------------------------------------
</TABLE>



                                                 DWS LifeCompass 2015 Fund  | 25
<PAGE>


<TABLE>
<S>                                        <C>
--------------------------------------------------------------------------------
                                                                     Class S
                                                  ticker symbol      SPGRX
                                                    fund number      2082
    DWS LIFECOMPASS 2020 FUND
  (formerly DWS Growth Allocation Fund)
--------------------------------------------------------------------------------
</TABLE>

            THE FUND'S MAIN INVESTMENT STRATEGY

            The fund seeks to achieve as high total return as is consistent with
            its asset allocation until the target year. As the fund approaches
            its target year, the fund will decrease its emphasis on growth of
            capital and increase its emphasis on current income. The fund is
            designed for investors seeking to meet their respective investment
            goals, such as retirement, around the year 2020. The fund pursues
            its investment objective by investing in other DWS mutual funds. The
            fund may also invest in securities of Exchange Traded Funds ("ETFs")
            when the desired economic exposure to a particular market or sector
            is not available through a DWS fund.

            The fund has a target asset allocation, which the managers use as a
            reference point in setting the fund's actual asset allocation (see
            sidebar). The target asset allocation for the fund will change over
            time based on the number of years remaining until the target year,
            becoming more conservative as the fund approaches the target year.
            As the target year approaches, the fund's target asset allocation
            will approach that of the Retirement Fund. Once the fund's actual
            asset allocation is similar to that of the Retirement Fund, the fund
            may be combined with the Retirement Fund or another DWS fund offered
            at the time.

            The fund's target asset allocation may differ from the fund's actual
            asset allocation. The managers periodically review the actual asset
            allocation and may adjust it based on the target investment horizon,
            current or expected market conditions or to manage risk. In making
            their asset allocation decisions, the managers use a proprietary mix
            of quantitative and qualitative inputs to arrive at a view for the
            securities markets and segments of those markets. These inputs
            include, but are not limited to, return forecasts for asset classes,
            target investment



THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

The fund's current target asset allocation is approximately:
- 70% Equity funds; and
- 30% Fixed Income funds.




26 | DWS LifeCompass 2020 Fund
<PAGE>

            horizon and investment guidelines. Based on the desired exposure to
            particular investments and thorough risk analysis the managers then
            decide which funds to use as underlying funds and in which
            proportions.

            In order to mitigate the risks associated with a particular fund or
            manager and increase diversification in the fund, the fund will
            limit its investments in underlying funds so that no more than 40%
            of the overall allocation to equity will be invested in any one
            equity fund.

            The fund's underlying funds use a broad array of investment styles.
            These funds can buy many types of securities, among them common
            stocks of companies of any size, corporate bonds of varying credit
            quality, US government and agency bonds, mortgage- and asset-backed
            securities, money market instruments and others. These securities
            are mainly from US issuers but may be, to a more limited extent,
            from foreign issuers.


            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.

            The fund's allocations among the underlying funds will change over
            time, causing corresponding changes in the portfolio's risk profile.

            ASSET ALLOCATION RISK. Although asset allocation among different
            asset categories generally reduces risk and exposure to any one
            category, the risk remains that the Advisor may favor an asset
            category that performs poorly relative to the other asset
            categories. To the extent that alternative asset categories
            underperform the general stock market, the fund would perform poorly
            relative to a fund invested primarily in the general stock market.

            MUTUAL FUND INVESTMENT RISK. The fund's investments are concentrated
            in underlying funds, so the fund's investment performance is
            directly related to the performance of the underlying funds. The
            fund's net asset value will change with changes in the equity and
            bond markets and the value of the underlying funds in which it
            invests. To the extent the particular underlying funds in which the
            fund invests underperform their benchmarks and/or other funds
            investing in the same asset


                                                 DWS LifeCompass 2020 Fund  | 27
<PAGE>

            class the fund would perform poorly relative to other asset
            allocation funds. In addition, the fund indirectly pays a portion of
            the expenses incurred by the underlying funds. As the underlying
            funds or the fund's allocations among the underlying funds change
            from time to time, or to the extent that the expense ratio of the
            underlying funds changes, the weighted average operating expenses
            borne by the fund may increase or decrease.


            Investment risks of the underlying funds

            The investment risks below are risks of certain of the underlying
            funds; by investing in the underlying funds the fund is also exposed
            to these risks. In the sections below, the term "fund" refers to one
            or more of the underlying funds. For more information on the risks
            of the underlying funds, see each underlying fund's prospectus.

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

            ETF RISK. An ETF is a fund that holds a portfolio of common stocks
            or bonds designed to track the performance of a securities index or
            industry sector. ETFs trade on a securities exchange and their
            shares may, at times, trade at a premium or discount to their NAV.
            In addition, an ETF may not replicate exactly the performance of the
            index it seeks to track for a number of reasons, including
            transaction costs incurred by the ETF. ETFs incur fees and expenses,
            such as operating expenses, licensing fees, trustee fees and
            marketing expenses, which are borne proportionately by ETF
            shareholders, such as the fund. The fund will also incur brokerage
            costs when purchasing and selling shares of ETFs.


28 | DWS LifeCompass 2020 Fund
<PAGE>

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

            -  POLITICAL RISK. Some foreign governments have limited the outflow
               of profits to investors abroad, imposed restrictions on the
               exchange or export of foreign currency, extended diplomatic
               disputes to include trade and financial relations, seized foreign
               investment and imposed high 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 foreign company, as compared
               to the financial reports of US companies.

            -  LIQUIDITY RISK. Investments that trade less can be more difficult
               or more costly to buy, or to sell, than more liquid or active
               investments. This liquidity risk is a factor of the trading
               volume of a particular investment, as well as the size and
               liquidity of the entire local market. On the whole, foreign
               exchanges are smaller and less liquid than the US market. 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. This creates the possibility that changes in
               exchange rates between foreign currencies and the US dollar will
               affect the US dollar value of foreign securities or the income or
               gain received on these securities.

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

                                                 DWS LifeCompass 2020 Fund  | 29
<PAGE>

            -  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.

            BOND MARKET RISK. The fund is also affected by how fixed-income
            securities perform. Bonds could be hurt by rises in market interest
            rates. A rise in interest rates generally means a fall in bond
            prices and, in turn, a fall in the value of your investment. To the
            extent that an underlying fund emphasizes bonds from any given
            industry, it could be hurt if that industry does not do well. Some
            bonds could be paid off earlier than expected, which would hurt the
            performance of an underlying fund; with mortgage- or asset-backed
            securities, any unexpected behavior in interest rates could increase
            the volatility of an underlying fund's share price and yield.
            Corporate bonds could perform less well than other bonds in a weak
            economy.

            CREDIT RISK. A fund purchasing bonds faces the risk that the
            creditworthiness of an issuer may decline, causing the value of its
            bonds to decline. In addition, an issuer may not be able to make
            timely payments on the interest and/or principal on the bonds it has
            issued. Because the issuers of high-yield bonds or junk bonds (rated
            below the fourth highest category) may be in uncertain financial
            health, the prices of their bonds can be more vulnerable to bad
            economic news or even the expectation of bad news, than
            investment-grade bonds. In some cases, bonds, particularly
            high-yield bonds, may decline in credit quality or go into default.
            Because the fund may invest in securities not paying current
            interest or in securities already in default, these risks may be
            more pronounced.


30 | DWS LifeCompass 2020 Fund
<PAGE>

            REALLOCATION RISK. From time to time, one or more underlying funds
            may experience relatively large investments or redemptions due to
            reallocations or rebalancings of the fund or other fund-of-fund
            products managed by the Advisor. These transactions will affect the
            underlying funds, since underlying funds that experience redemptions
            as a result of reallocations or rebalancings may have to sell
            securities and underlying funds that receive additional cash will
            have to invest such cash. In addition, a large redemption by a fund
            in a specific underlying fund could also hurt the performance of
            another fund currently invested in the same underlying fund. While
            it is impossible to predict the overall impact of these transactions
            over time, there could also be adverse effects on a fund's
            performance to the extent that the underlying funds may be required
            to sell securities or invest cash at times when they would otherwise
            not do so. These transactions could also accelerate the realization
            of taxable income if sales of securities resulted in gains and could
            also increase transaction costs for the underlying funds. The
            managers attempt to minimize such impact on the underlying funds to
            the extent consistent with pursuing the investment objective of a
            fund. The managers consider the impact on the underlying funds of
            transactions by the fund and an underlying fund may discontinue
            sales of shares to the fund.

            Other factors that could affect performance include:

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

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


                                                 DWS LifeCompass 2020 Fund  | 31
<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 information (which,
unlike the fund performance, does not reflect fees or expenses). The performance
of both 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
individual federal marginal income tax rates and do not reflect the impact of
state and local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown in the table. After-tax returns shown
are not relevant for investors who hold their shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts.

DWS LifeCompass 2020 Fund

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





<TABLE>
<S>        <C>       <C>        <C>        <C>         <C>         <C>        <C>        <C>       <C>
14.93       9.60     35.24       -6.29      -13.39      -18.80     25.64      10.33       6.10     13.50
1997       1998      1999       2000        2001        2002       2003       2004       2005      2006
</TABLE>





<TABLE>
<CAPTION>
2007 TOTAL RETURN AS OF SEPTEMBER 30: 6.89%
<S>                                         <C>
FOR THE PERIODS INCLUDED IN THE BAR CHART:
BEST QUARTER: 21.81%, Q4 1999               WORST QUARTER: -15.50%, Q3 2002
</TABLE>



32 | DWS LifeCompass 2020 Fund
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2006


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                               1 YEAR       5 YEARS     10 YEARS
--------------------------------------------------------------------------------
<S>                                          <C>           <C>          <C>
 CLASS S
--------------------------------------------------------------------------------
   Return before Taxes                           13.50         6.27         6.48
--------------------------------------------------------------------------------
   Return after Taxes on Distributions           12.54         5.69         5.41
--------------------------------------------------------------------------------
   Return after Taxes on Distributions
   and Sale of Fund Shares                        9.03         5.13         5.18
--------------------------------------------------------------------------------
 RUSSELL 1000 INDEX (reflects no
 deductions for fees, expenses or
 taxes)                                          15.46         6.82         8.39
--------------------------------------------------------------------------------
 LEHMAN BROTHERS U.S. AGGREGATE
 INDEX (reflects no deductions for fees,
 expenses or taxes)                               4.33         5.06         6.09
--------------------------------------------------------------------------------
 RUSSELL 2000 INDEX (reflects no
 deductions for fees, expenses or
 taxes)                                          18.37        11.39         9.64
--------------------------------------------------------------------------------
 MORGAN STANLEY CAPITAL
 INTERNATIONAL (MSCI) EUROPE,
 AUSTRALASIA AND THE FAR EAST (EAFE)
 INDEX (reflects no deductions for fees,
 expenses or taxes)                              26.34        14.98         7.50
--------------------------------------------------------------------------------
 CREDIT SUISSE HIGHYIELD INDEX
 (reflects no deductions for fees,
 expenses or taxes)                              11.92        11.07         7.09
--------------------------------------------------------------------------------
 MERRILL LYNCH 3-MONTH US TREASURY
 BILL INDEX (reflects no deductions for
 fees, expenses or taxes)                         4.82         2.36         3.69
--------------------------------------------------------------------------------
</TABLE>


 Total returns would have been lower if the advisor had not maintained the
 expenses of certain of the underlying funds.

 RUSSELL 1000 (Reg. TM) INDEX is an unmanaged price-only index of the 1,000
 largest capitalized companies that are domiciled in the US and whose common
 stocks are traded.

 LEHMAN BROTHERS U.S. AGGREGATE INDEX is an unmanaged market value-weighted
 measure of Treasury issues, agency issues, corporate bond issues and mortgage
 securities.

 The RUSSELL 2000 (Reg. TM) INDEX is an unmanaged capitalization-weighted
 measure of approximately 2,000 small US stocks.

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

 The CREDIT SUISSE HIGH YIELD INDEX is an unmanaged trader-priced portfolio,
 constructed to mirror the global high-yield debt market.

 The MERRILL LYNCH 3-MONTH US TREASURY BILL INDEX is an unmanaged index
 capturing the performance of a single issue maturing closest to, but not
 exceeding, three months from the re-balancing date.


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

                                                 DWS LifeCompass 2020 Fund  | 33
<PAGE>

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


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

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

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


34 | DWS LifeCompass 2020 Fund
<PAGE>

HOW MUCH INVESTORS PAY

This fund's Class S shares have no sales charges or other shareholder fees other
than a short-term redemption/exchange fee. This information doesn't include any
fees that may be charged by your financial advisor. The fund's shareholders
directly bear the fees and expenses of the fund, subject to the Advisor's
contractual obligations to waive fees or reimburse expenses to maintain the
fund's operating expenses at a specified level (see "Net Annual Fund and
Acquired Funds (Underlying Funds) Operating Expenses" in the table below). The
fund will indirectly bear its proportionate share of fees and expenses incurred
by the underlying DWS funds and, potentially, exchange-traded funds in which the
fund is invested (see "Acquired Funds (Underlying Funds) Fees and Expenses" in
the table below). This information does not include any fees that may be charged
by your financial advisor.


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

 ANNUAL OPERATING EXPENSES, deducted from fund assets
--------------------------------------------------------------------------------
 Management Fee 2                              0.10%
--------------------------------------------------------------------------------
 Distribution/Service (12b-1) Fee              0.00
--------------------------------------------------------------------------------
 Other Expenses                                0.38
--------------------------------------------------------------------------------
 Acquired Funds (Underlying Funds) Fees
 and Expenses 3                                0.61
--------------------------------------------------------------------------------
 TOTAL ANNUAL OPERATING EXPENSES               1.09
--------------------------------------------------------------------------------
 Less Expense Waiver/Reimbursement 4           0.24
--------------------------------------------------------------------------------
 NET ANNUAL OPERATING EXPENSES 4               0.85
--------------------------------------------------------------------------------
</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  The Advisor does not receive any investment advisory fees for managing the
   fund but does receive a 0.10% administration fee. In addition, the Advisor
   receives fees as investment advisor to each underlying DWS fund.

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

4  Effective November 15, 2007 through November 30, 2008, the advisor has
   contractually agreed to waive all or a portion of its management fee and
   reimburse or pay operating expenses of the fund to the extent necessary to
   maintain the fund's total operating expenses at 0.24% for Class S shares,
   excluding certain expenses such as extraordinary expenses, taxes, brokerage,
   interest and indirect expenses of underlying DWS funds.

                                                 DWS LifeCompass 2020 Fund  | 35
<PAGE>

Based on the costs above (including one year of capped expenses in each period),
this example helps you compare the expenses of each share class 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         $87         $323         $578       $1,307
--------------------------------------------------------------------------------
</TABLE>



36 | DWS LifeCompass 2020 Fund
<PAGE>


<TABLE>
<S>                                             <C>
--------------------------------------------------------------------------------
                                                                      Class S
                                               ticker symbol          PPLSX
                                                 fund number          2084
    DWS LIFECOMPASS 2030 FUND
  (formerly DWS Growth Plus Allocation Fund)
--------------------------------------------------------------------------------
</TABLE>

            THE FUND'S MAIN INVESTMENT STRATEGY

            The fund seeks to achieve as high total return as is consistent with
            its asset allocation until the target year. As the fund approaches
            its target year, the fund will decrease its emphasis on growth of
            capital and increase its emphasis on current income. The fund is
            designed for investors seeking to meet their respective investment
            goals, such as retirement, around the year 2030. The fund pursues
            its investment objective by investing in other DWS mutual funds. The
            fund may also invest in securities of Exchange Traded Funds ("ETFs")
            when the desired economic exposure to a particular market or sector
            is not available through a DWS fund.

            The fund has a target asset allocation, which the managers use as a
            reference point in setting the fund's actual asset allocation (see
            sidebar). The target asset allocation for the fund will change over
            time based on the number of years remaining until the target year,
            becoming more conservative as the fund approaches the target year.
            As the target year approaches, the fund's target asset allocation
            will approach that of the Retirement Fund. Once the fund's actual
            asset allocation is similar to that of the Retirement Fund, the fund
            may be combined with the Retirement Fund or another DWS fund offered
            at the time.

            The fund's target asset allocation may differ from the fund's actual
            asset allocation. The managers periodically review the actual asset
            allocation and may adjust it based on the target investment horizon,
            current or expected market conditions or to manage risk. In making
            their asset allocation decisions, the managers use a proprietary mix
            of quantitative and qualitative inputs to arrive at a view for the
            securities markets and segments of those markets. These inputs
            include, but are not limited to, return forecasts for asset classes,
            target investment



THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

The fund's current target asset allocation is approximately:
- 90% Equity funds; and
- 10% Fixed Income funds.




                                                 DWS LifeCompass 2030 Fund  | 37
<PAGE>

            horizon and investment guidelines. Based on the desired exposure to
            particular investments and thorough risk analysis the managers then
            decide which funds to use as underlying funds and in which
            proportions.

            In order to mitigate the risks associated with a particular fund or
            manager and increase diversification in the fund, the fund will
            limit its investments in underlying funds so that no more than 40%
            of the overall allocation to equity will be invested in any one
            equity fund.

            The fund's underlying funds use a broad array of investment styles.
            These funds can buy many types of securities, among them common
            stocks of companies of any size, corporate bonds of varying credit
            quality, US government and agency bonds, mortgage- and asset-backed
            securities, money market instruments and others. These securities
            are mainly from US issuers but may be, to a more limited extent,
            from foreign issuers.


            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.

            The fund's allocations among the underlying funds will change over
            time, causing corresponding changes in the portfolio's risk profile.

            ASSET ALLOCATION RISK. Although asset allocation among different
            asset categories generally reduces risk and exposure to any one
            category, the risk remains that the Advisor may favor an asset
            category that performs poorly relative to the other asset
            categories. To the extent that alternative asset categories
            underperform the general stock market, the fund would perform poorly
            relative to a fund invested primarily in the general stock market.

            MUTUAL FUND INVESTMENT RISK. The fund's investments are concentrated
            in underlying funds, so the fund's investment performance is
            directly related to the performance of the underlying funds. The
            fund's net asset value will change with changes in the equity and
            bond markets and the value of the underlying funds in which it
            invests. To the extent the particular underlying funds in which the
            fund invests underperform their benchmarks and/or other funds
            investing in the same asset


38 | DWS LifeCompass 2030 Fund
<PAGE>

            class the fund would perform poorly relative to other asset
            allocation funds. In addition, the fund indirectly pays a portion of
            the expenses incurred by the underlying funds. As the underlying
            funds or the fund's allocations among the underlying funds change
            from time to time, or to the extent that the expense ratio of the
            underlying funds changes, the weighted average operating expenses
            borne by the fund may increase or decrease.


            Investment risks of the underlying funds

            The investment risks below are risks of certain of the underlying
            funds; by investing in the underlying funds the fund is also exposed
            to these risks. In the sections below, the term "fund" refers to one
            or more of the underlying funds. For more information on the risks
            of the underlying funds, see each underlying fund's prospectus.

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

            ETF RISK. An ETF is a fund that holds a portfolio of common stocks
            or bonds designed to track the performance of a securities index or
            industry sector. ETFs trade on a securities exchange and their
            shares may, at times, trade at a premium or discount to their NAV.
            In addition, an ETF may not replicate exactly the performance of the
            index it seeks to track for a number of reasons, including
            transaction costs incurred by the ETF. ETFs incur fees and expenses,
            such as operating expenses, licensing fees, trustee fees and
            marketing expenses, which are borne proportionately by ETF
            shareholders, such as the fund. The fund will also incur brokerage
            costs when purchasing and selling shares of ETFs.


                                                 DWS LifeCompass 2030 Fund  | 39
<PAGE>

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

            -  POLITICAL RISK. Some foreign governments have limited the outflow
               of profits to investors abroad, imposed restrictions on the
               exchange or export of foreign currency, extended diplomatic
               disputes to include trade and financial relations, seized foreign
               investment and imposed high 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 foreign company, as compared
               to the financial reports of US companies.

            -  LIQUIDITY RISK. Investments that trade less can be more difficult
               or more costly to buy, or to sell, than more liquid or active
               investments. This liquidity risk is a factor of the trading
               volume of a particular investment, as well as the size and
               liquidity of the entire local market. On the whole, foreign
               exchanges are smaller and less liquid than the US market. 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. This creates the possibility that changes in
               exchange rates between foreign currencies and the US dollar will
               affect the US dollar value of foreign securities or the income or
               gain received on these securities.

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

40 | DWS LifeCompass 2030 Fund
<PAGE>

            -  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.

            BOND MARKET RISK. The fund is also affected by how fixed-income
            securities perform. Bonds could be hurt by rises in market interest
            rates. A rise in interest rates generally means a fall in bond
            prices and, in turn, a fall in the value of your investment. To the
            extent that an underlying fund emphasizes bonds from any given
            industry, it could be hurt if that industry does not do well. Some
            bonds could be paid off earlier than expected, which would hurt the
            performance of an underlying fund; with mortgage- or asset-backed
            securities, any unexpected behavior in interest rates could increase
            the volatility of an underlying fund's share price and yield.
            Corporate bonds could perform less well than other bonds in a weak
            economy.

            CREDIT RISK. A fund purchasing bonds faces the risk that the
            creditworthiness of an issuer may decline, causing the value of its
            bonds to decline. In addition, an issuer may not be able to make
            timely payments on the interest and/or principal on the bonds it has
            issued. Because the issuers of high-yield bonds or junk bonds (rated
            below the fourth highest category) may be in uncertain financial
            health, the prices of their bonds can be more vulnerable to bad
            economic news or even the expectation of bad news, than
            investment-grade bonds. In some cases, bonds, particularly
            high-yield bonds, may decline in credit quality or go into default.
            Because the fund may invest in securities not paying current
            interest or in securities already in default, these risks may be
            more pronounced.


                                                 DWS LifeCompass 2030 Fund  | 41
<PAGE>

            REALLOCATION RISK. From time to time, one or more underlying funds
            may experience relatively large investments or redemptions due to
            reallocations or rebalancings of the fund or other fund-of-fund
            products managed by the Advisor. These transactions will affect the
            underlying funds, since underlying funds that experience redemptions
            as a result of reallocations or rebalancings may have to sell
            securities and underlying funds that receive additional cash will
            have to invest such cash. In addition, a large redemption by a fund
            in a specific underlying fund could also hurt the performance of
            another fund currently invested in the same underlying fund. While
            it is impossible to predict the overall impact of these transactions
            over time, there could also be adverse effects on a fund's
            performance to the extent that the underlying funds may be required
            to sell securities or invest cash at times when they would otherwise
            not do so. These transactions could also accelerate the realization
            of taxable income if sales of securities resulted in gains and could
            also increase transaction costs for the underlying funds. The
            managers attempt to minimize such impact on the underlying funds to
            the extent consistent with pursuing the investment objective of a
            fund. The managers consider the impact on the underlying funds of
            transactions by the fund and an underlying fund may discontinue
            sales of shares to the fund.

            Other factors that could affect performance include:

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

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


42 | DWS LifeCompass 2030 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 information (which,
unlike the fund performance, does not reflect fees or expenses). The performance
of both 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
individual federal marginal income tax rates and do not reflect the impact of
state and local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown in the table. After-tax returns shown
are not relevant for investors who hold their shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts.

DWS LifeCompass 2030 Fund

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





<TABLE>
<S>       <C>
 6.95     16.14
2005      2006
</TABLE>





<TABLE>
<CAPTION>
2007 TOTAL RETURN AS OF SEPTEMBER 30: 7.59%
<S>                                         <C>
FOR THE PERIODS INCLUDED IN THE BAR CHART:
BEST QUARTER: 7.24%, Q4 2006                WORST QUARTER: -2.09%, Q2 2006
</TABLE>



                                                 DWS LifeCompass 2030 Fund  | 43
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2006


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                               1 YEAR       SINCE INCEPTION*
--------------------------------------------------------------------------------
<S>                                          <C>           <C>
 CLASS S
--------------------------------------------------------------------------------
   Return before Taxes                           16.14            13.52
--------------------------------------------------------------------------------
   Return after Taxes on Distributions           14.30            12.11
--------------------------------------------------------------------------------
   Return after Taxes on Distributions
   and Sale of Fund Shares                       11.17            10.98
--------------------------------------------------------------------------------
 RUSSELL 1000 INDEX (reflects no
 deductions for fees, expenses or
 taxes)                                          15.46            13.90
--------------------------------------------------------------------------------
 LEHMAN BROTHERS U.S. AGGREGATE
 INDEX (reflects no deductions for fees,
 expenses or taxes)                               4.33             3.17
--------------------------------------------------------------------------------
 RUSSELL 2000 INDEX (reflects no
 deductions for fees, expenses or
 taxes)                                          18.37            16.21
--------------------------------------------------------------------------------
 MORGAN STANLEY CAPITAL
 INTERNATIONAL (MSCI) EUROPE,
 AUSTRALASIA AND THE FAR EAST (EAFE)
 INDEX (reflects no deductions for fees,
 expenses or taxes)                              26.34            24.21
--------------------------------------------------------------------------------
 CREDIT SUISSE HIGHYIELD INDEX
 (reflects no deductions for fees,
 expenses or taxes)                              11.92             7.79
--------------------------------------------------------------------------------
 MERRILL LYNCH 3-MONTH US TREASURY
 BILL INDEX (reflects no deductions for
 fees, expenses or taxes)                         4.82             3.74
--------------------------------------------------------------------------------
</TABLE>


 *   Fund inception: 11/1/04. Index comparisons begin 10/31/04.

 Total returns would have been lower if the advisor had not maintained the
 expenses of certain of the underlying funds.

 RUSSELL 1000 (Reg. TM) INDEX is an unmanaged price-only index of the 1,000
 largest capitalized companies that are domiciled in the US and whose common
 stocks are traded.

 LEHMAN BROTHERS U.S. AGGREGATE INDEX is an unmanaged market value-weighted
 measure of Treasury issues, agency issues, corporate bond issues and mortgage
 securities.

 The RUSSELL 2000 (Reg. TM) INDEX is an unmanaged capitalization-weighted
 measure of approximately 2,000 small US stocks.

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

 The CREDIT SUISSE HIGH YIELD INDEX is an unmanaged trader-priced portfolio,
 constructed to mirror the global high-yield debt market.


44 | DWS LifeCompass 2030 Fund
<PAGE>

 The MERRILL LYNCH 3-MONTH US TREASURY BILL INDEX is an unmanaged index
 capturing the performance of a single issue maturing closest to, but not
 exceeding, three months from the re-balancing date.


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


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

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

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


                                                 DWS LifeCompass 2030 Fund  | 45
<PAGE>

HOW MUCH INVESTORS PAY

This fund's Class S shares have no sales charges or other shareholder fees other
than a short-term redemption/exchange fee. This information doesn't include any
fees that may be charged by your financial advisor. The fund's shareholders
directly bear the fees and expenses of the fund, subject to the Advisor's
contractual obligations to waive fees or reimburse expenses to maintain the
fund's operating expenses at a specified level (see "Net Annual Fund and
Acquired Funds (Underlying Funds) Operating Expenses" in the table below). The
fund will indirectly bear its proportionate share of fees and expenses incurred
by the underlying DWS funds and, potentially, exchange-traded funds in which the
fund is invested (see "Acquired Funds (Underlying Funds) Fees and Expenses" in
the table below). This information does not include any fees that may be charged
by your financial advisor.


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

 ANNUAL OPERATING EXPENSES, deducted from fund assets
--------------------------------------------------------------------------------
 Management Fee 2                              0.10%
--------------------------------------------------------------------------------
 Distribution/Service (12b-1) Fee              0.00
--------------------------------------------------------------------------------
 Other Expenses                                0.63
--------------------------------------------------------------------------------
 Acquired Funds (Underlying Funds) Fees
 and Expenses 3                                0.70
--------------------------------------------------------------------------------
 TOTAL ANNUAL OPERATING EXPENSES               1.43
--------------------------------------------------------------------------------
 Less Expense Waiver/Reimbursement 4           0.53
--------------------------------------------------------------------------------
 NET ANNUAL OPERATING EXPENSES 4               0.90
--------------------------------------------------------------------------------
</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  The Advisor does not receive any investment advisory fees for managing the
   fund but does receive a 0.10% administration fee. In addition, the Advisor
   receives fees as investment advisor to each underlying DWS fund.

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

4  Effective November 15, 2007 through November 30, 2008, the advisor has
   contractually agreed to waive all or a portion of its management fee and
   reimburse or pay operating expenses of the fund to the extent necessary to
   maintain the fund's total operating expenses at 0.20% for Class S shares,
   excluding certain expenses such as extraordinary expenses, taxes, brokerage,
   interest and indirect expenses of underlying DWS funds.

46 | DWS LifeCompass 2030 Fund
<PAGE>

Based on the costs above (including one year of capped expenses in each period),
this example helps you compare the expenses of each share class 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         $92         $400         $731       $1,667
--------------------------------------------------------------------------------
</TABLE>



                                                 DWS LifeCompass 2030 Fund  | 47
<PAGE>


<TABLE>
<S>                              <C>
--------------------------------------------------------------------------------
                                                      Class S
                                        fund number   2057
    DWS LIFECOMPASS 2040 FUND
--------------------------------------------------------------------------------

</TABLE>

            THE FUND'S MAIN INVESTMENT STRATEGY

            The fund seeks to achieve as high total return as is consistent with
            its asset allocation until the target year. As the fund approaches
            its target year, the fund will decrease its emphasis on growth of
            capital and increase its emphasis on current income. The fund is
            designed for investors seeking to meet their respective investment
            goals, such as retirement, around the year 2040. The fund pursues
            its investment objective by investing in other DWS mutual funds. The
            fund may also invest in securities of Exchange Traded Funds ("ETFs")
            when the desired economic exposure to a particular market or sector
            is not available through a DWS fund.

            The fund has a target asset allocation, which the managers use as a
            reference point in setting the fund's actual asset allocation (see
            sidebar). The target asset allocation for the fund will change over
            time based on the number of years remaining until the target year,
            becoming more conservative as the fund approaches the target year.
            As the target year approaches, the fund's target asset allocation
            will approach that of the Retirement Fund. Once the fund's actual
            asset allocation is similar to that of the Retirement Fund, the fund
            may be combined with the Retirement Fund or another DWS fund offered
            at the time.

            The fund's target asset allocation may differ from the fund's actual
            asset allocation. The managers periodically review the actual asset
            allocation and may adjust it based on the target investment horizon,
            current or expected market conditions or to manage risk. In making
            their asset allocation decisions, the managers use a proprietary mix
            of quantitative and qualitative inputs to arrive at a view for the
            securities markets and segments of those markets. These inputs
            include, but are not limited to, return forecasts for asset classes,
            target investment horizon and investment guidelines. Based on the
            desired exposure to particular investments and thorough risk
            analysis the managers then decide which funds to use as underlying
            funds and in which proportions.



THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

The fund's current target asset allocation is approximately:
- 95% Equity funds; and
- 5% Fixed Income funds.




48 | DWS LifeCompass 2040 Fund
<PAGE>

            In order to mitigate the risks associated with a particular fund or
            manager and increase diversification in the fund, the fund will
            limit its investments in underlying funds so that no more than 40%
            of the overall allocation to equity will be invested in any one
            equity fund.

            The fund's underlying funds use a broad array of investment styles.
            These funds can buy many types of securities, among them common
            stocks of companies of any size, corporate bonds of varying credit
            quality, US government and agency bonds, mortgage- and asset-backed
            securities, money market instruments and others. These securities
            are mainly from US issuers but may be, to a more limited extent,
            from foreign issuers.


            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.

            The fund's allocations among the underlying funds will change over
            time, causing corresponding changes in the portfolio's risk profile.

            ASSET ALLOCATION RISK. Although asset allocation among different
            asset categories generally reduces risk and exposure to any one
            category, the risk remains that the Advisor may favor an asset
            category that performs poorly relative to the other asset
            categories. To the extent that alternative asset categories
            underperform the general stock market, the fund would perform poorly
            relative to a fund invested primarily in the general stock market.

            MUTUAL FUND INVESTMENT RISK. The fund's investments are concentrated
            in underlying funds, so the fund's investment performance is
            directly related to the performance of the underlying funds. The
            fund's net asset value will change with changes in the equity and
            bond markets and the value of the underlying funds in which it
            invests. To the extent the particular underlying funds in which the
            fund invests underperform their benchmarks and/or other funds
            investing in the same asset class the fund would perform poorly
            relative to other asset allocation funds. In addition, the fund
            indirectly pays a portion of the expenses incurred by the underlying
            funds. As the underlying funds or the fund's allocations among the


                                                 DWS LifeCompass 2040 Fund  | 49
<PAGE>

            underlying funds change from time to time, or to the extent that the
            expense ratio of the underlying funds changes, the weighted average
            operating expenses borne by the fund may increase or decrease.


            Investment risks of the underlying funds

            The investment risks below are risks of certain of the underlying
            funds; by investing in the underlying funds the fund is also exposed
            to these risks. In the sections below, the term "fund" refers to one
            or more of the underlying funds. For more information on the risks
            of the underlying funds, see each underlying fund's prospectus.

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

            ETF RISK. An ETF is a fund that holds a portfolio of common stocks
            or bonds designed to track the performance of a securities index or
            industry sector. ETFs trade on a securities exchange and their
            shares may, at times, trade at a premium or discount to their NAV.
            In addition, an ETF may not replicate exactly the performance of the
            index it seeks to track for a number of reasons, including
            transaction costs incurred by the ETF. ETFs incur fees and expenses,
            such as operating expenses, licensing fees, trustee fees and
            marketing expenses, which are borne proportionately by ETF
            shareholders, such as the fund. The fund will also incur brokerage
            costs when purchasing and selling shares of ETFs.

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


50 | DWS LifeCompass 2040 Fund
<PAGE>

            -  POLITICAL RISK. Some foreign governments have limited the outflow
               of profits to investors abroad, imposed restrictions on the
               exchange or export of foreign currency, extended diplomatic
               disputes to include trade and financial relations, seized foreign
               investment and imposed high 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 foreign company, as compared
               to the financial reports of US companies.

            -  LIQUIDITY RISK. Investments that trade less can be more difficult
               or more costly to buy, or to sell, than more liquid or active
               investments. This liquidity risk is a factor of the trading
               volume of a particular investment, as well as the size and
               liquidity of the entire local market. On the whole, foreign
               exchanges are smaller and less liquid than the US market. 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. This creates the possibility that changes in
               exchange rates between foreign currencies and the US dollar will
               affect the US dollar value of foreign securities or the income or
               gain received on these securities.

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

                                                 DWS LifeCompass 2040 Fund  | 51
<PAGE>

            -  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.

            BOND MARKET RISK. The fund is also affected by how fixed-income
            securities perform. Bonds could be hurt by rises in market interest
            rates. A rise in interest rates generally means a fall in bond
            prices and, in turn, a fall in the value of your investment. To the
            extent that an underlying fund emphasizes bonds from any given
            industry, it could be hurt if that industry does not do well. Some
            bonds could be paid off earlier than expected, which would hurt the
            performance of an underlying fund; with mortgage- or asset-backed
            securities, any unexpected behavior in interest rates could increase
            the volatility of an underlying fund's share price and yield.
            Corporate bonds could perform less well than other bonds in a weak
            economy.

            CREDIT RISK. A fund purchasing bonds faces the risk that the
            creditworthiness of an issuer may decline, causing the value of its
            bonds to decline. In addition, an issuer may not be able to make
            timely payments on the interest and/or principal on the bonds it has
            issued. Because the issuers of high-yield bonds or junk bonds (rated
            below the fourth highest category) may be in uncertain financial
            health, the prices of their bonds can be more vulnerable to bad
            economic news or even the expectation of bad news, than
            investment-grade bonds. In some cases, bonds, particularly
            high-yield bonds, may decline in credit quality or go into default.
            Because the fund may invest in securities not paying current
            interest or in securities already in default, these risks may be
            more pronounced.


52 | DWS LifeCompass 2040 Fund
<PAGE>

            REALLOCATION RISK. From time to time, one or more underlying funds
            may experience relatively large investments or redemptions due to
            reallocations or rebalancings of the fund or other fund-of-fund
            products managed by the Advisor. These transactions will affect the
            underlying funds, since underlying funds that experience redemptions
            as a result of reallocations or rebalancings may have to sell
            securities and underlying funds that receive additional cash will
            have to invest such cash. In addition, a large redemption by a fund
            in a specific underlying fund could also hurt the performance of
            another fund currently invested in the same underlying fund. While
            it is impossible to predict the overall impact of these transactions
            over time, there could also be adverse effects on a fund's
            performance to the extent that the underlying funds may be required
            to sell securities or invest cash at times when they would otherwise
            not do so. These transactions could also accelerate the realization
            of taxable income if sales of securities resulted in gains and could
            also increase transaction costs for the underlying funds. The
            managers attempt to minimize such impact on the underlying funds to
            the extent consistent with pursuing the investment objective of a
            fund. The managers consider the impact on the underlying funds of
            transactions by the fund and an underlying fund may discontinue
            sales of shares to the fund.

            Other factors that could affect performance include:

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

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


            THE FUND'S PERFORMANCE HISTORY

            Since the fund is newly offered, past performance information is not
            available.


                                                 DWS LifeCompass 2040 Fund  | 53
<PAGE>

HOW MUCH INVESTORS PAY

This fund's Class S shares have no sales charges or other shareholder fees other
than a short-term redemption/exchange fee. This information doesn't include any
fees that may be charged by your financial advisor. The fund's shareholders
directly bear the fees and expenses of the fund, subject to the Advisor's
contractual obligations to waive fees or reimburse expenses to maintain the
fund's operating expenses at a specified level (see "Net Annual Fund and
Acquired Funds (Underlying Funds) Operating Expenses" in the table below). The
fund will indirectly bear its proportionate share of fees and expenses incurred
by the underlying DWS funds and, potentially, exchange-traded funds in which the
fund is invested (see "Acquired Funds (Underlying Funds) Fees and Expenses" in
the table below). This information does not include any fees that may be charged
by your financial advisor.


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

 ANNUAL OPERATING EXPENSES, deducted from fund assets
--------------------------------------------------------------------------------
 Management Fee 2                              0.10%
--------------------------------------------------------------------------------
 Distribution/Service (12b-1) Fees             0.00
--------------------------------------------------------------------------------
 Other Expenses 3                              0.65
--------------------------------------------------------------------------------
 Acquired Funds (Underlying Funds) Fees
 and Expenses 4                                0.70
--------------------------------------------------------------------------------
 TOTAL ANNUAL OPERATING EXPENSES               1.45
--------------------------------------------------------------------------------
 Less Expense Waiver/Reimbursement 5           0.51
--------------------------------------------------------------------------------
 NET ANNUAL OPERATING EXPENSES                 0.94
--------------------------------------------------------------------------------
</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  The Advisor does not receive any investment advisory fees for managing the
   fund but does receive a 0.10% administration fee. In addition, the Advisor
   receives fees as investment advisor to each underlying DWS fund.

3  "Other Expenses" includes an estimate of organizational and offering expenses
   estimated at 0.10% for the first year of operations.

4  "Acquired Funds (Underlying Funds) Fees and Expenses" are based upon
   estimated allocations for the current fiscal year. Actual expenses may be
   different. Underlying funds' expense ratios reduced for contractual expense
   limitations and reimbursements where applicable, based on most recent
   prospectuses.

5  Through November 30, 2008, the Advisor has contractually agreed to waive all
   or a portion of its management fee and reimburse or pay operating expenses to
   the extent necessary to maintain the fund's total operating expenses at 0.24%
   for Class S shares, excluding certain expenses such as extraordinary
   expenses, taxes, brokerage, interest, and acquired funds (underlying funds)
   fees and expenses (estimated at 0.70%).


54 | DWS LifeCompass 2040 Fund
<PAGE>

Based on the costs above (including one year of capped expenses in each period),
this example helps you compare the expenses of each share class 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
--------------------------------------------------------------------------------
<S>                  <C>         <C>
 Class S shares         $96         $387
--------------------------------------------------------------------------------
</TABLE>



                                                 DWS LifeCompass 2040 Fund  | 55
<PAGE>

OTHER POLICIES AND SECONDARY RISKS

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

           -  Although major changes tend to be infrequent, each fund's Board
              could change a fund's investment objective without seeking
              shareholder approval.

           -  Each fund (or the underlying funds) may trade actively. This could
              raise transaction costs (thus lowering return) and could mean
              higher taxable distributions.

           -  Certain underlying funds are permitted, but not required, to use
              various types of derivatives (contracts whose value is based on,
              for example, indexes, currencies or securities). In particular, a
              fund may use futures, options, and covered call options. A fund
              may use derivatives in circumstances where the managers believe
              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.

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


           Secondary risks of the underlying funds

           The investment risks below are risks of certain of the underlying
           funds; by investing in the underlying funds the fund is also exposed
           to these risks. In the sections below, the term "fund" refers to one
           or more of the underlying funds. For more information on the risks of
           the underlying funds, see each underlying fund's prospectus.

           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 not
           have the intended effects and 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;


56 | Other Policies and Secondary Risks
<PAGE>

           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.

           GROWTH INVESTING RISK. Since growth stocks usually reinvest a large
           portion of earnings in their own businesses, they may lack the
           dividends associated with value stocks that might otherwise cushion
           their decline in a falling market. Earnings disappointments in growth
           stocks often result in sharp price declines because investors buy
           these stocks because of their potential for superior earnings growth.
           Growth stocks may also be out of favor for certain periods in
           relation to value stocks.

           VALUE INVESTING RISK. At times, "value" investing may perform better
           than or worse than other investment styles and the overall market. If
           the Advisor overestimates the value or return potential of one or
           more common stocks, the fund may underperform the general equity
           market. Value stocks may also be out of favor for certain periods in
           relation to growth stocks.

           PRICING RISK. At times, market conditions might make it hard 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 methodologies, it is
           possible that the value determined for an investment may be different
           than the value realized upon such investment's sale. If the fund has
           valued its securities too highly, you may end up paying too much for
           fund shares when you buy into the fund. If the fund underestimates
           the price of its securities, you may not receive the full market
           value for your fund shares when you sell.


           For more information

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

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


                                        Other Policies and Secondary Risks  | 57
<PAGE>

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

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


WHO MANAGES AND OVERSEES THE FUNDS


           The investment advisor

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

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

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


58 | Who Manages and Oversees the Funds
<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.

           MANAGEMENT FEE. The Advisor does not receive any advisory fee for
           managing the funds but does receive fees as investment advisor to
           each underlying fund.

           The Advisor and its affiliates earn fees at varying rates for
           providing services to the underlying DWS funds. The Advisor may
           therefore have a conflict of interest in selecting the underlying DWS
           funds and in determining whether to invest in an ETF, from which it
           will not receive any fees. However, the Advisor is a fiduciary to
           each fund and is required to act in each fund's best interest.

           A discussion regarding the basis for the Board's renewal of each
           fund's investment management agreement and, as applicable,
           subadvisory agreement, is contained in the shareholder report for the
           period ended February 28, 2007, and a discussion regarding the
           Board's approval of the new investment management agreement for DWS
           LifeCompass 2040 Fund will be included in the fund's annual report
           for the period ended February 29, 2008 (see "Shareholder reports" on
           the back cover).

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


                                        Who Manages and Oversees the Funds  | 59
<PAGE>

Portfolio management

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

The following people handle the day-to-day management of each fund.

Robert Wang
Managing Director of Deutsche Asset
Management and Portfolio Manager of the funds.
- 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 funds in 2002.
- BS, The Wharton School, University of Pennsylvania.

Inna Okounkova
Director of Deutsche Asset Management and Portfolio Manager of the funds.
- Joined Deutsche Asset Management in 1999 as a quantitative analyst, becoming
  an associate portfolio manager in 2001.
- Lead Portfolio Manager for Asset
  Allocation Strategies: New York.
- Joined the funds in 2002.
- MS, Moscow State University; MBA,
  University of Chicago -  Graduate School of Business.

Each fund's Statement of Additional Information provides additional information
about the portfolio managers' investments in a fund, a description of their
compensation structure and information regarding other accounts they manage.


60 | Who Manages and Oversees the Funds
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights are designed to help you understand recent financial
performance. The figures in the first part of each table are for a single share.
The total return figures represent the percentage that an investor in a fund
would have earned (or lost), assuming all dividends and distributions were
reinvested. This information has been audited by PricewaterhouseCoopers LLP,
independent registered public accounting firm, whose report, along with each
fund's financial statements, is included in each fund's annual report (see
"Shareholder reports" on the back cover). Since DWS LifeCompass 2040 Fund is
newly offered, financial information is not available.

DWS LifeCompass Retirement Fund - Class S


<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
YEARS ENDED AUGUST 31,                        2007           2006           2005           2004          2003
------------------------------------------------------------------------------------------------------------------
<S>                                     <C>            <C>            <C>            <C>            <C>
SELECTED PER SHARE DATA
------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD      $  12.16       $  11.83       $  11.17       $  10.69      $  10.30
------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
  Net investment income a                      .41            .36            .32            .32           .31
------------------------------------------------------------------------------------------------------------------
  Net realized and unrealized gain
  (loss)                                       .57            .33            .71            .51           .40
------------------------------------------------------------------------------------------------------------------
  TOTAL FROM INVESTMENT OPERATIONS             .98            .69           1.03            .83           .71
------------------------------------------------------------------------------------------------------------------
Less distributions from:
  Net investment income                     (  .63)        (  .36)        (  .37)        (  .35)       (  .32)
------------------------------------------------------------------------------------------------------------------
Redemption fees                                .00*           .00*           .00*             -             -
------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD            $  12.51       $  12.16       $  11.83       $  11.17      $  10.69
------------------------------------------------------------------------------------------------------------------
Total Return (%) c                            8.18 b         5.93 b         9.33 b         7.86 b        7.10
------------------------------------------------------------------------------------------------------------------

RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)          81             80             36             43            42
------------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions (%) f                               .48            .65            .57            .23 e           -d
------------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%) f                               .37            .35            .30            .13 e           -d
------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (%)            3.29           3.00           2.67           2.84          3.00
------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%)                     21             69             55             56           104
------------------------------------------------------------------------------------------------------------------
</TABLE>


a  Based on average shares outstanding during the period.

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

c  Total return would have been lower if the Advisor had not maintained some
   Underlying Funds' expenses.

d  The Fund invests in other DWS funds, and although this class did not incur
   any direct expenses for the period, the Fund did bear its proportionate share
   of the fees and expenses incurred by the Underlying DWS Funds in which the
   Fund is invested.

e  Effective April 1, 2004, the Fund implemented a new expense structure in
   which the Fund directly bears the fees and expenses of the Fund in addition
   to its proportionate share of the fees and expenses incurred by the
   Underlying DWS Funds in which the Fund is invested.

f  Does not include expenses of the Underlying DWS Funds in which the Fund
   invests.

* Amount is less than $.005.

                                                      Financial Highlights  | 61
<PAGE>

DWS LifeCompass 2015 Fund - Class S


<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
YEARS ENDED AUGUST 31,                         2007            2006            2005           2004           2003
<S>                                      <C>             <C>             <C>             <C>             <C>
-----------------------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA
-----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD       $  11.96        $  11.54        $  10.62        $  9.90        $  9.38
-----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
  Net investment income a                       .32             .28             .24            .25            .24
-----------------------------------------------------------------------------------------------------------------------
  Net realized and unrealized gain
  (loss)                                        .86             .49             .95            .70            .53
-----------------------------------------------------------------------------------------------------------------------
  TOTAL FROM INVESTMENT OPERATIONS             1.18             .77            1.19            .95            .77
-----------------------------------------------------------------------------------------------------------------------
Less distributions from:
  Net investment income                      (  .69)         (  .35)         (  .27)        (  .23)         ( .25)
-----------------------------------------------------------------------------------------------------------------------
Redemption fees                                 .00*            .00*            .00*             -              -
-----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD             $  12.45        $  11.96        $  11.54        $ 10.62        $  9.90
-----------------------------------------------------------------------------------------------------------------------
Total Return (%) c                             9.97 b          6.78 b         11.23 b         9.70 b         8.43
-----------------------------------------------------------------------------------------------------------------------

RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)          135             142             126            124            145
-----------------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions (%)f                                 .40             .54             .36            .23 e            -d
-----------------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%)f                                 .35             .36             .30            .12 e            -d
-----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (%)             2.50            2.39            2.09           2.37           2.53
-----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%)                      21              52              35             37            101
-----------------------------------------------------------------------------------------------------------------------
</TABLE>


a  Based on average shares outstanding during the period.

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

c  Total return would have been lower if the Advisor had not maintained some
   Underlying Funds' expenses.

d  The Fund invests in other DWS funds, and although this class did not incur
   any direct expenses for the period, the Fund did bear its proportionate share
   of the fees and expenses incurred by the Underlying DWS Funds in which the
   Fund is invested.

e  Effective April 1, 2004, the Fund implemented a new expense structure in
   which the Fund directly bears the fees and expenses of the Fund in addition
   to its proportionate share of the fees and expenses incurred by the
   Underlying DWS Funds in which the Fund is invested.

f  Does not include expenses of the Underlying DWS Funds in which the Fund
   invests.

* Amount is less than $.005.

62 | Financial Highlights
<PAGE>

DWS LifeCompass 2020 Fund - Class S


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
YEARS ENDED AUGUST 31,                       2007          2006          2005          2004          2003
--------------------------------------------------------------------------------------------------------------
<S>                                     <C>           <C>           <C>           <C>           <C>
SELECTED PER SHARE DATA
--------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD     $  14.32      $  13.52      $  12.17      $  11.10      $  10.24
--------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
  Net investment income a                     .29           .26           .22           .20           .18
--------------------------------------------------------------------------------------------------------------
  Net realized and unrealized gain
  (loss)                                     1.36           .85          1.36          1.08           .84
--------------------------------------------------------------------------------------------------------------
  TOTAL FROM INVESTMENT OPERATIONS           1.65          1.11          1.58          1.28          1.02
--------------------------------------------------------------------------------------------------------------
Less distributions from:
  Net investment income                    (  .47)       (  .31)       (  .23)       (  .21)       (  .16)
--------------------------------------------------------------------------------------------------------------
Redemption fees                               .00*          .00*          .00*            -             -
--------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD           $  15.50      $  14.32      $  13.52      $  12.17      $  11.10
--------------------------------------------------------------------------------------------------------------
Total Return (%) b, c                       11.60          8.33         13.02         11.50         10.18
--------------------------------------------------------------------------------------------------------------

RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)        153           154            92            84            87
--------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions (%) f                              .48           .53           .48           .25 e           -d
--------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%) f                              .37           .36 f         .30           .12 e           -d
--------------------------------------------------------------------------------------------------------------
Ratio of net investment income (%)           1.95          1.84          1.71          1.67          1.74
--------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%)                    22            59            31            43            93
--------------------------------------------------------------------------------------------------------------
</TABLE>


a  Based on average shares outstanding during the period.

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

c  Total return would have been lower if the Advisor had not maintained some
   Underlying Funds' expenses.

d  The Fund invests in other DWS funds, and although this class did not incur
   any direct expenses for the period, the Fund did bear its proportionate share
   of the fees and expenses incurred by the Underlying DWS Funds in which the
   Fund is invested.

e  Effective April 1, 2004, the Fund implemented a new expense structure in
   which the Fund directly bears the fees and expenses of the Fund in addition
   to its proportionate share of the fees and expenses incurred by the
   Underlying DWS Funds in which the Fund is invested.

f  Does not include expenses of the Underlying DWS Funds in which the Fund
   invests.

* Amount is less than $.005.

                                                      Financial Highlights  | 63
<PAGE>

DWS LifeCompass 2030 Fund - Class S


<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
YEARS ENDED AUGUST 31,                                   2007           2006           2005 a
------------------------------------------------------------------------------------------------
<S>                                                <C>            <C>            <C>
SELECTED PER SHARE DATA
------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                 $  11.51       $  10.84       $  10.00
------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
  Net investment income b                                 .13            .11            .06
------------------------------------------------------------------------------------------------
  Net realized and unrealized gain (loss)                1.40            .92            .89
------------------------------------------------------------------------------------------------
  TOTAL FROM INVESTMENT OPERATIONS                       1.53           1.03            .95
------------------------------------------------------------------------------------------------
Less distributions from:
  Net investment income                                (  .32)        (  .26)        (  .11)
------------------------------------------------------------------------------------------------
  Net realized gains                                   (  .43)        (  .10)             -
------------------------------------------------------------------------------------------------
  TOTAL DISTRIBUTIONS                                  (  .75)        (  .36)        (  .11)
------------------------------------------------------------------------------------------------
Redemption fees                                           .00***         .00***         .00***
------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD                       $  12.29       $  11.51       $  10.84
------------------------------------------------------------------------------------------------
Total Return (%) c,d                                    13.54           9.69           9.49**
------------------------------------------------------------------------------------------------

RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                      4              3              2
------------------------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%)e          .78           1.37           3.22*
------------------------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%)e           .30            .33            .30*
------------------------------------------------------------------------------------------------
Ratio of net investment income (%)                       1.13           1.02            .71*
------------------------------------------------------------------------------------------------
Portfolio turnover rate (%)                                20             63             28*
------------------------------------------------------------------------------------------------
</TABLE>


a   For the period from November 1, 2004 (commencement of sales of Class S
    shares) to August 31, 2005.

b   Based on average shares outstanding during the period.

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

d   Total return would have been lower if the Advisor had not maintained some
    Underlying Funds' expenses.

e   Does not include expenses of the Underlying DWS Funds in which the Fund
    invests.

*   Annualized

**  Not annualized

*** Amount is less than $.005.

64 | Financial Highlights
<PAGE>

HOW TO INVEST IN THE FUNDS

The following pages tell you how to invest in a fund and what to expect as a
shareholder. If you're investing directly with DWS Scudder, all of this
information applies to you.

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 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, Sell and Exchange Shares

BUYING SHARES: Use these instructions to invest directly. Make out your check
to "DWS Scudder."


<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                       IRA accounts
 $1,000 or more with an Automatic              $50 or more with an Automatic
 Investment Plan                               Investment Plan
------------------------------------------------------------------------------------------------
 BY MAIL OR EXPRESS MAIL (SEE BELOW)
 -  Fill out and sign an application           Send a DWS Scudder investment slip or
 -  Send it to us at the appropriate           short note that includes:
    address, along with an investment          -  fund and class name
    check                                      -  account number
                                               -  check payable to "DWS Scudder"
------------------------------------------------------------------------------------------------
 BY WIRE
 -  Call (800) 728-3337 for instructions       -  Call (800) 728-3337 for instructions
------------------------------------------------------------------------------------------------
 BY PHONE
 Not available                                 -  Call (800) 728-3337 for instructions
------------------------------------------------------------------------------------------------
 WITH AN AUTOMATIC INVESTMENT PLAN
 -  Fill in the information on your            -  To set up regular investments from a
    application and include a voided check        bank checking account, call
                                                  (800) 728-3337
------------------------------------------------------------------------------------------------
 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
 -  Go to www.dws-scudder.com                  -  Call (800) 728-3337 to ensure you have
 -  Print out a prospectus and a new              electronic services
    account application                        -  Register at www.dws-scudder.com
 -  Complete and return the application        -  Follow the instructions for buying
    with your check                               shares with money from your bank
                                                  account
------------------------------------------------------------------------------------------------
</TABLE>


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

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

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


66 | How to Buy, Sell and Exchange Shares
<PAGE>

EXCHANGING OR SELLING SHARES: Use these instructions to exchange or sell shares
in an account opened directly with DWS Scudder.


<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
 -  Exchanges into new accounts:                writing with a signature guarantee;
    $2,500 minimum per fund                     please see "Signature Guarantee" for
    $1,000 minimum for IRAs                     details
------------------------------------------------------------------------------------------------
 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
 -  your name(s), signature(s) and                 account
    address, as they appear on your             -  a daytime telephone number
    account
 -  a daytime telephone number
------------------------------------------------------------------------------------------------
 WITH AN AUTOMATIC EXCHANGE PLAN                WITH AN AUTOMATIC WITHDRAWAL PLAN
 -  To set up regular exchanges from a          -  To set up regular cash payments from
    fund account, call (800) 728-3337              a DWS fund account, call
                                                   (800) 728-3337
------------------------------------------------------------------------------------------------
 USING QuickSell
 Not available                                  - Call (800) 728-3337
                                                  to make sure QuickSell is set up
                                                  on your account; if it is, you
                                                  can request a transfer to your
                                                  bank account of any amount
                                                  between $50 and $250,000
------------------------------------------------------------------------------------------------
 ON THE INTERNET
 -  Register at www.dws-scudder.com             -  Register at www.dws-scudder.com
 -  Follow the instructions for making on-      -  Follow the instructions for making on-
    line exchanges                                 line redemptions
------------------------------------------------------------------------------------------------
</TABLE>


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

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



                                      How to Buy, Sell and Exchange Shares  | 67
<PAGE>

           Financial intermediary support payments

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

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


68 | How to Buy, Sell and Exchange Shares
<PAGE>

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

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

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


                                      How to Buy, Sell and Exchange Shares  | 69
<PAGE>

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


POLICIES YOU SHOULD KNOW ABOUT

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

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

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

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

           Policies about transactions

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


THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

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



70 | Policies You Should Know About
<PAGE>

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

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

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

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

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

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

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

           INITIAL PURCHASE. The minimum initial investment is $2,500, except
           for investments on behalf of participants in certain fee-based and
           wrap programs offered through certain financial intermediaries
           approved by the Advisor, for which there is no minimum initial
           investment; and fiduciary accounts such as IRAs and


                                            Policies You Should Know About  | 71
<PAGE>

           custodial accounts such as Uniform Gifts to Minors Act and Uniform
           Transfers to Minors Act accounts for which the minimum initial
           investment is $1,000 per account. In addition, the minimum initial
           investment is $1,000 if an automatic investment plan of $50 per month
           is established. Group retirement plans and certain other accounts
           have similar or lower minimum share balance requirements.

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

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

           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.


72 | Policies You Should Know About
<PAGE>

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

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

           Shareholders are limited to four roundtrip transactions in the same
           DWS Fund (excluding money market funds) over a rolling 12-month
           period. Shareholders with four or more roundtrip transactions in the
           same DWS Fund within a rolling 12-month period generally will be
           blocked from making additional purchases of, or exchanges into, that
           DWS Fund. Each fund has sole discretion whether to remove a block
           from a shareholder's


                                            Policies You Should Know About  | 73
<PAGE>

           account. The rights of a shareholder to redeem shares of a DWS Fund
           are not affected by the four roundtrip transaction limitation, but
           all redemptions remain subject to each fund's redemption fee policy
           (see "Redemption fees" described below).

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

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

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

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

           There is no assurance that these policies and procedures will be
           effective in limiting short-term and excessive trading in all cases.
           For example, the Advisor may not be able to effectively monitor,
           detect or limit short-term or excessive trading by underlying


74 | Policies You Should Know About
<PAGE>

           shareholders that occurs through omnibus accounts maintained by
           broker-dealers or other financial intermediaries. The Advisor reviews
           trading activity at the omnibus level to detect short-term or
           excessive trading. If the Advisor has reason to suspect that
           short-term or excessive trading is occurring at the omnibus level,
           the Advisor will contact the financial intermediary to request
           underlying shareholder level activity. Depending on the amount of
           fund shares held in such omnibus accounts (which may represent most
           of a fund's shares) short-term and/or excessive trading of fund
           shares could adversely affect long-term shareholders in a fund. If
           short-term or excessive trading is identified, the Advisor will take
           appropriate action.

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

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

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


                                            Policies You Should Know About  | 75
<PAGE>

           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 participants in certain group retirement
           plans whose processing systems are incapable of properly applying the
           redemption fee to underlying shareholders; (iii) transactions on
           behalf of a shareholder to return any excess IRA contributions to the
           shareholder; (iv) transactions on behalf of a shareholder to effect a
           required minimum distribution on an IRA; (v) 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; (vi)
           transactions on behalf of certain unaffiliated mutual funds operating
           as funds of funds; (vii) 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; (viii) transactions involving hardship of any registered
           shareholder; (ix) systematic transactions with pre-defined trade
           dates for purchases, exchanges or redemptions, such as automatic
           account rebalancing, or loan origination and repayments; (x)
           transactions involving shares purchased through the reinvestment of
           dividends or other distributions; (xi) transactions involving shares
           transferred from another account in the same fund or converted from
           another class of the same fund (e.g., shares converting from Class B
           to Class A) (the redemption fee period will carry over to the
           acquired shares); (xii) transactions initiated by a fund or
           administrator (e.g., redemptions for not meeting account minimums, to
           pay account fees funded by share redemptions, or in the event of the
           liquidation or merger of the fund); or (xiii) transactions in cases
           when there are legal or contractual limitations or restrictions on
           the imposition of the redemption fee (as determined by a fund or its
           agents in their sole discretion). It is the policy of the DWS funds
           to permit approved fund platform providers to execute transactions
           within the funds without the imposition of a redemption fee if such
           providers have implemented alternative measures that are determined
           by the Advisor to provide controls on short-term and excessive
           trading that are comparable to the DWS funds' policies.

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


76 | Policies You Should Know About
<PAGE>

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

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

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

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

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

           EACH FUND ACCEPTS PAYMENT FOR SHARES ONLY IN US DOLLARS by check,
           bank or Federal Funds wire transfer or by electronic bank transfer.
           Please note that a fund does not accept cash, money orders,
           traveler's checks, starter checks, third party checks (except checks
           for retirement plan asset transfers and rollovers or for Uniform
           Gifts to Minors Act/Uniform Transfers to Minors Act accounts), checks
           drawn on foreign banks or checks issued

THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

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


                                            Policies You Should Know About  | 77
<PAGE>

           by credit card companies or Internet-based companies. Thus, subject
           to the foregoing exceptions for certain third party checks, checks
           that are otherwise permissible must be drawn by the account holder on
           a domestic bank and must be payable to a fund.

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

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

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

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


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.



78 | Policies You Should Know About
<PAGE>

           trading on the New York Stock Exchange is restricted; 3) an emergency
           exists which makes the disposal of securities owned by a fund or the
           fair determination of the value of a fund's net assets not reasonably
           practicable; or 4) the SEC, by order, permits the suspension of the
           right of redemption. Redemption payments by wire may also be delayed
           in the event of a non-routine closure of the Federal Reserve wire
           payment system. For additional rights reserved by each fund, please
           see "Other rights we reserve."

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


           How each fund calculates share price

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


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


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


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

           WE TYPICALLY VALUE SECURITIES USING INFORMATION FURNISHED BY AN
           INDEPENDENT PRICING SERVICE OR MARKET QUOTATIONS, WHERE APPROPRIATE.
           However, we may use methods approved by a fund's Board, such as a
           fair valuation model, which are intended to reflect fair value when
           pricing service information or market quotations are not readily
           available or when a security's value or a meaningful portion of the
           value of a fund's portfolio is believed to have been materially
           affected by a significant event, such as a natural disaster, an
           economic event like a bankruptcy filing, or a substantial fluctuation
           in domestic or foreign markets that has occurred between the close of
           the exchange or market on which the security is principally traded
           (for example, a foreign exchange or market) and the close of the New
           York Stock Exchange. In such a case, a fund's value for a security is
           likely to be different from the last quoted market price or pricing
           service information. In addition, due to the subjective and variable
           nature of fair value pricing, it is possible that the value
           determined for a particular asset may be materially different


                                            Policies You Should Know About  | 79
<PAGE>

           from the value realized upon such asset's sale. It is expected that
           the greater the percentage of fund assets that is invested in non-US
           securities, the more extensive will be a fund's use of fair value
           pricing. This is intended to reduce a fund's exposure to "time zone
           arbitrage" and other harmful trading practices. (See "Market timing
           policies and procedures.")

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


           Other rights we reserve

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

           -  withdraw or suspend the offering of shares at any time

           -  withhold a portion of your distributions and redemption proceeds
              as federal income tax if we have been notified by the IRS that you
              are subject to backup withholding or if you fail to provide us
              with a correct taxpayer ID number and certain certifications or
              certification that you are exempt from backup withholding

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

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


80 | Policies You Should Know About
<PAGE>

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

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

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


                                            Policies You Should Know About  | 81
<PAGE>

UNDERSTANDING DISTRIBUTIONS AND TAXES

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

           DWS LifeCompass Retirement Fund and DWS LifeCompass 2015 Fund each
           intend to pay dividends and distributions to their shareholders
           quarterly, in March, June, September and December. DWS LifeCompass
           2020 Fund, DWS LifeCompass 2030 Fund and DWS LifeCompass 2040 Fund
           each intend to pay dividends and distributions annually in December.
           If necessary, each fund may do so at other times as well.

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

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

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



THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

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

82 | Understanding Distributions and Taxes
<PAGE>

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

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


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


           ANY DIRECT INVESTMENTS IN FOREIGN SECURITIES BY A FUND MAY BE SUBJECT
           TO FOREIGN WITHHOLDING TAXES. In that case, a fund's yield on those
           securities would generally be decreased. Shareholders of the fund
           generally will not be entitled to a credit or deduction with respect
           to foreign taxes paid by the fund or the underlying funds. In
           addition, any investments in foreign securities or foreign currencies
           may increase or accelerate a fund's recognition of ordinary income
           and may affect the timing or amount of the fund's distributions. If
           you invest in a fund through a taxable account, your after-tax return
           could be negatively impacted.

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


                                     Understanding Distributions and Taxes  | 83
<PAGE>

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

           For taxable years beginning before January 1, 2011, the maximum
           federal income tax rate imposed on long-term capital gains recognized
           by individuals and other noncorporate shareholders has been reduced
           to 15%. For more information, see the Statement of Additional
           Information, under "Taxes."

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

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

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

           The above discussion is applicable to shareholders who are US
           persons. If you are a non-US person, please consult your own tax
           advisor with respect to the US tax consequences to you of an
           investment in a fund.

           FUND OF FUNDS STRUCTURE. The use of a fund of funds structure could
           affect the amount, timing and type of distributions from the fund
           and, therefore, may increase the amount of taxes payable by
           shareholders.


84 | Understanding Distributions and Taxes
<PAGE>

           If the fund receives dividends from an underlying fund that qualifies
           as a regulated investment company and the underlying fund designates
           such dividends as qualified dividend income, then the fund may in
           turn designate that portion of its distributions derived from those
           dividends as qualified dividend income as well, provided the fund
           meets the holding period and other requirements with respect to
           shares of the underlying fund.


                                     Understanding Distributions and Taxes  | 85
<PAGE>

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


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

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


86 | Appendix
<PAGE>

                   DWS LifeCompass Retirement Fund - Class S



<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
                                                                    HYPOTHETICAL
------------------------------------------------------------------------------------------------
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER      ANNUAL FEES
              FEES AND        EXPENSE        FEES AND           FEES AND            AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
------------------------------------------------------------------------------------------------
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        0.81%              4.19%       $ 10,419.00        $    82.70
------------------------------------------------------------------------------------------------
   2           10.25%        1.01%              8.35%       $ 10,834.72        $   107.33
------------------------------------------------------------------------------------------------
   3           15.76%        1.01%             12.67%       $ 11,267.02        $   111.61
------------------------------------------------------------------------------------------------
   4           21.55%        1.01%             17.17%       $ 11,716.58        $   116.07
------------------------------------------------------------------------------------------------
   5           27.63%        1.01%             21.84%       $ 12,184.07        $   120.70
------------------------------------------------------------------------------------------------
   6           34.01%        1.01%             26.70%       $ 12,670.21        $   125.51
------------------------------------------------------------------------------------------------
   7           40.71%        1.01%             31.76%       $ 13,175.75        $   130.52
------------------------------------------------------------------------------------------------
   8           47.75%        1.01%             37.01%       $ 13,701.47        $   135.73
------------------------------------------------------------------------------------------------
   9           55.13%        1.01%             42.48%       $ 14,248.16        $   141.15
------------------------------------------------------------------------------------------------
  10           62.89%        1.01%             48.17%       $ 14,816.66        $   146.78
------------------------------------------------------------------------------------------------
  TOTAL                                                                        $ 1,218.10
------------------------------------------------------------------------------------------------
</TABLE>


DWS LifeCompass 2015 Fund - Class S




<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                  ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                       OF RETURN:
               0.00%                   $10,000                             5%
                                                                    HYPOTHETICAL
------------------------------------------------------------------------------------------------
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER         ANNUAL
              FEES AND        EXPENSE        FEES AND           FEES AND          FEES AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES          EXPENSES
------------------------------------------------------------------------------------------------
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        0.85%              4.15%       $ 10,415.00        $    86.76
------------------------------------------------------------------------------------------------
   2           10.25%        0.93%              8.39%       $ 10,838.89        $    98.83
------------------------------------------------------------------------------------------------
   3           15.76%        0.93%             12.80%       $ 11,280.03        $   102.85
------------------------------------------------------------------------------------------------
   4           21.55%        0.93%             17.39%       $ 11,739.13        $   107.04
------------------------------------------------------------------------------------------------
   5           27.63%        0.93%             22.17%       $ 12,216.91        $   111.40
------------------------------------------------------------------------------------------------
   6           34.01%        0.93%             27.14%       $ 12,714.14        $   115.93
------------------------------------------------------------------------------------------------
   7           40.71%        0.93%             32.32%       $ 13,231.61        $   120.65
------------------------------------------------------------------------------------------------
   8           47.75%        0.93%             37.70%       $ 13,770.13        $   125.56
------------------------------------------------------------------------------------------------
   9           55.13%        0.93%             43.31%       $ 14,330.58        $   130.67
------------------------------------------------------------------------------------------------
  10           62.89%        0.93%             49.14%       $ 14,913.83        $   135.99
------------------------------------------------------------------------------------------------
  TOTAL                                                                        $ 1,135.68
------------------------------------------------------------------------------------------------
</TABLE>



                                                                  Appendix  | 87
<PAGE>

                       DWS LifeCompass 2020 Fund - Class S



<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
                                                                    HYPOTHETICAL
------------------------------------------------------------------------------------------------
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER      ANNUAL FEES
              FEES AND        EXPENSE        FEES AND           FEES AND            AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
------------------------------------------------------------------------------------------------
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        0.85%              4.15%       $ 10,415.00        $    86.76
------------------------------------------------------------------------------------------------
   2           10.25%        1.09%              8.22%       $ 10,822.23        $   115.74
------------------------------------------------------------------------------------------------
   3           15.76%        1.09%             12.45%       $ 11,245.38        $   120.27
------------------------------------------------------------------------------------------------
   4           21.55%        1.09%             16.85%       $ 11,685.07        $   124.97
------------------------------------------------------------------------------------------------
   5           27.63%        1.09%             21.42%       $ 12,141.96        $   129.86
------------------------------------------------------------------------------------------------
   6           34.01%        1.09%             26.17%       $ 12,616.71        $   134.93
------------------------------------------------------------------------------------------------
   7           40.71%        1.09%             31.10%       $ 13,110.02        $   140.21
------------------------------------------------------------------------------------------------
   8           47.75%        1.09%             36.23%       $ 13,622.62        $   145.69
------------------------------------------------------------------------------------------------
   9           55.13%        1.09%             41.55%       $ 14,155.27        $   151.39
------------------------------------------------------------------------------------------------
  10           62.89%        1.09%             47.09%       $ 14,708.74        $   157.31
------------------------------------------------------------------------------------------------
  TOTAL                                                                        $ 1,307.13
------------------------------------------------------------------------------------------------
</TABLE>


DWS LifeCompass 2030 Fund - Class S




<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                  ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                       OF RETURN:
               0.00%                   $10,000                             5%
                                                                    HYPOTHETICAL
------------------------------------------------------------------------------------------------
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER         ANNUAL
              FEES AND        EXPENSE        FEES AND           FEES AND          FEES AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES          EXPENSES
------------------------------------------------------------------------------------------------
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        0.90%              4.10%       $ 10,410.00        $    91.85
------------------------------------------------------------------------------------------------
   2           10.25%        1.43%              7.82%       $ 10,781.64        $   151.52
------------------------------------------------------------------------------------------------
   3           15.76%        1.43%             11.67%       $ 11,166.54        $   156.93
------------------------------------------------------------------------------------------------
   4           21.55%        1.43%             15.65%       $ 11,565.19        $   162.53
------------------------------------------------------------------------------------------------
   5           27.63%        1.43%             19.78%       $ 11,978.06        $   168.33
------------------------------------------------------------------------------------------------
   6           34.01%        1.43%             24.06%       $ 12,405.68        $   174.34
------------------------------------------------------------------------------------------------
   7           40.71%        1.43%             28.49%       $ 12,848.56        $   180.57
------------------------------------------------------------------------------------------------
   8           47.75%        1.43%             33.07%       $ 13,307.26        $   187.01
------------------------------------------------------------------------------------------------
   9           55.13%        1.43%             37.82%       $ 13,782.33        $   193.69
------------------------------------------------------------------------------------------------
  10           62.89%        1.43%             42.74%       $ 14,274.36        $   200.61
------------------------------------------------------------------------------------------------
  TOTAL                                                                        $ 1,667.38
------------------------------------------------------------------------------------------------
</TABLE>



88 | Appendix
<PAGE>

                       DWS LifeCompass 2040 Fund - Class S



<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                  ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                       OF RETURN:
               0.00%                   $10,000                             5%
                                                                    HYPOTHETICAL
------------------------------------------------------------------------------------------------
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER         ANNUAL
              FEES AND        EXPENSE        FEES AND           FEES AND          FEES AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES          EXPENSES
------------------------------------------------------------------------------------------------
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        0.94%              4.06%       $ 10,406.00        $    95.91
------------------------------------------------------------------------------------------------
   2           10.25%        1.35%              7.86%       $ 10,785.82        $   143.04
------------------------------------------------------------------------------------------------
   3           15.76%        1.35%             11.80%       $ 11,179.50        $   148.27
------------------------------------------------------------------------------------------------
   4           21.55%        1.35%             15.88%       $ 11,587.55        $   153.68
------------------------------------------------------------------------------------------------
   5           27.63%        1.35%             20.10%       $ 12,010.50        $   159.29
------------------------------------------------------------------------------------------------
   6           34.01%        1.35%             24.49%       $ 12,448.88        $   165.10
------------------------------------------------------------------------------------------------
   7           40.71%        1.35%             29.03%       $ 12,903.27        $   171.13
------------------------------------------------------------------------------------------------
   8           47.75%        1.35%             33.74%       $ 13,374.24        $   177.37
------------------------------------------------------------------------------------------------
   9           55.13%        1.35%             38.62%       $ 13,862.40        $   183.85
------------------------------------------------------------------------------------------------
  10           62.89%        1.35%             43.68%       $ 14,368.37        $   190.56
------------------------------------------------------------------------------------------------
  TOTAL                                                                        $ 1,588.19
------------------------------------------------------------------------------------------------
</TABLE>



                                                                  Appendix  | 89
<PAGE>

TO GET MORE INFORMATION

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

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

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


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



<TABLE>
<S>                         <C>                                  <C>
SEC FILE NUMBER:

DWS Target Date Series      DWS LifeCompass Retirement Fund      811-8606
DWS Target Date Series            DWS LifeCompass 2015 Fund      811-8606
DWS Target Date Series            DWS LifeCompass 2020 Fund      811-8606
DWS Target Date Series            DWS LifeCompass 2030 Fund      811-8606
DWS Target Date Series            DWS LifeCompass 2040 Fund      811-8606
</TABLE>



(11/15/07) 80/81/82/84-2
[RECYCLE GRAPHIC APPEARS HERE]
                                                 [DWS SCUDDER LOGO APPEARS HERE]




<PAGE>

                             DWS TARGET DATE SERIES
                        (formerly DWS Allocation Series)





                         DWS LifeCompass Retirement Fund
                   (formerly DWS Conservative Allocation Fund)
                          Class A, Class B and Class C

                            DWS LifeCompass 2015 Fund
                     (formerly DWS Moderate Allocation Fund)
                          Class A, Class B and Class C

                            DWS LifeCompass 2020 Fund
                      (formerly DWS Growth Allocation Fund)
                          Class A, Class B and Class C

                            DWS LifeCompass 2030 Fund
                   (formerly DWS Growth Plus Allocation Fund)

                          Class A, Class B and Class C

                            DWS LifeCompass 2040 Fund

                               Class A and Class C



                       STATEMENT OF ADDITIONAL INFORMATION

                                November 15, 2007

This combined Statement of Additional Information is not a prospectus and should
be read in conjunction with the combined  prospectus dated November 15, 2007, as
amended from time to time, for DWS LifeCompass  Retirement Fund, DWS LifeCompass
2015  Fund,  DWS  LifeCompass  2020  Fund,  DWS  LifeCompass  2030  Fund and DWS
LifeCompass  2040 Fund  (each a "Fund" and  collectively  the  "Funds"),  each a
series of DWS Target Date Series (the "Trust").  Copies of the prospectus may be
obtained without charge by contacting DWS Scudder Distributors,  Inc., 222 South
Riverside Plaza, Chicago, Illinois 60606, 1-800-621-1148,  or from the firm from
which this Statement of Additional  Information was obtained,  and are available
along with other materials on the Securities and Exchange  Commission's Internet
Web site (http://www.sec.gov).

The financial  statements  that are part of the Annual Report to Shareholders of
each Fund,  dated August 31, 2007, are  incorporated by reference herein and are
deemed to be part of this Statement of Additional Information.

This Statement of Additional  Information is  incorporated by reference into the
combined prospectus.



<PAGE>


                                TABLE OF CONTENTS
                                                                            Page
                                                                            ----

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

INVESTMENT POLICIES AND TECHNIQUES FOR THE FUNDS...............................2

INVESTMENT POLICIES AND TECHNIQUES OF THE UNDERLYING DWS FUNDS................13
   Strategic Transactions and Derivatives.....................................51
   Portfolio Holdings Information.............................................60

MANAGEMENT OF THE FUNDS.......................................................61
   Investment Advisor.........................................................61
   Compensation of Portfolio Managers.........................................64
   Administrative Agreements..................................................68

FUND SERVICE PROVIDERS........................................................77
   Principal Underwriter......................................................77
   Independent Registered Public Accounting Firm and Reports to Shareholders..82
   Legal Counsel..............................................................82
   Custodian, Transfer Agent and Shareholder Service Agent....................82

PORTFOLIO TRANSACTIONS........................................................85

PURCHASE OR REDEMPTION OF SHARES..............................................90

DIVIDENDS....................................................................104

TAXES........................................................................105

NET ASSET VALUE..............................................................110

TRUSTEES AND OFFICERS........................................................110


TRUST ORGANIZATION...........................................................121

PROXY VOTING GUIDELINES......................................................123


FINANCIAL STATEMENTS.........................................................125

ADDITIONAL INFORMATION.......................................................125

RATINGS OF INVESTMENTS.......................................................126


                                       i
<PAGE>


                             INVESTMENT RESTRICTIONS

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

Each Fund has elected to be classified  as a  diversified  series of an open-end
investment management company.

As a matter of fundamental policy, each Fund may not:

(1)       borrow money,  except as permitted under the Investment Company Act of
          1940 (the "1940 Act"),  as amended,  and as interpreted or modified by
          regulatory authority having jurisdiction, from time to time;

(2)       issue senior  securities,  except as permitted  under the 1940 Act, as
          amended, and as interpreted or modified by regulatory authority having
          jurisdiction, from time to time;

(3)       engage in the business of  underwriting  securities  issued by others,
          except to the extent that a Fund may be deemed to be an underwriter in
          connection with the disposition of portfolio securities;

(4)       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; except
          that each Fund may  concentrate  in an Underlying  DWS Fund.  However,
          each   underlying  DWS  Fund  in  which  each  Fund  will  invest  may
          concentrate its investments in a particular industry;

(5)       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;

(6)       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; or

(7)       make loans except as permitted under the 1940 Act, as amended,  and as
          interpreted or modified by regulatory  authority having  jurisdiction,
          from time to time.

A  fundamental  policy may not be changed  without the approval of a majority of
the  outstanding  voting  securities  of a Fund  which,  under the 1940 Act,  as
amended,  and the rules  thereunder  and as used in this Statement of Additional
Information,  means  the  lesser  of (1) 67% or more  of the  voting  securities
present at such  meeting,  if the  holders  of more than 50% of the  outstanding
voting  securities of a Fund are present or  represented  by proxy,  or (2) more
than 50% of the outstanding voting securities of a Fund.

The  Trustees  of the  Trust  have  voluntarily  adopted  certain  policies  and
restrictions,  which are observed in the conduct of each Fund's  affairs.  These
represent  intentions  of the Trustees  based upon current  circumstances.  Such
non-fundamental  policies may be changed or amended by the Trustees of the Trust
without prior notice to or approval of shareholders.

As a matter of non-fundamental policy, each Fund currently does not intend to:

(a)      invest  in  companies  for the  purpose  of  exercising  management  or
         control;


                                       1
<PAGE>

(b)      borrow money in an amount  greater  than 5% of its total assets  except
         (i) for temporary or emergency purposes and (ii) by engaging in reverse
         repurchase   agreements,   dollar  rolls,   or  other   investments  or
         transactions  described in a Fund's registration statement which may be
         deemed to be borrowings;

The Funds will not purchase  illiquid  securities,  including  time deposits and
repurchase  agreements maturing in more than seven days if, as a result thereof,
more than 10% of a Fund's net assets valued at the time of the transaction would
be invested in such securities.

To meet federal tax  requirements for  qualification  as a regulated  investment
company,  each Fund  must  limit  its  investments  so that at the close of each
quarter  of its  taxable  year (1) no more  than  25% of its  total  assets  are
invested in the securities (other than US Government securities or securities of
a regulated  investment  company) of (a) 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 (b) in the securities of one or more qualified publicly
traded partnerships (as discussed in "Taxes" below), and (2) at least 50% of its
total assets is represented by cash, government securities,  securities of other
regulated investment companies, and other securities of any issuer that does not
represent  more than 5% of the  Fund's  assets or more than 10% of the  issuer's
outstanding voting securities.

                INVESTMENT POLICIES AND TECHNIQUES FOR THE FUNDS

General Investment Objectives and Policies

Except as otherwise  indicated,  each Fund's investment  objectives and policies
are not fundamental and may be changed without a vote of shareholders.  If there
is a change  in a Fund's  investment  objective,  shareholders  should  consider
whether  the Fund  remains  an  appropriate  investment  in light of their  then
current financial position and needs. There can be no assurance that each Fund's
objectives will be met.

The Funds are professionally managed portfolios which allocate their investments
among select funds in the DWS Family of Funds (the  "Underlying  DWS Funds") and
securities of non-affiliated investment companies (e.g., Exchange Traded Funds).
Descriptions  in  this  Statement  of  Additional  Information  of a  particular
investment  practice or technique in which the  Underlying  DWS Funds may engage
(such as short  selling,  hedging,  etc.) or a  financial  instrument  which the
Underlying DWS Funds may purchase (such as options,  etc.) are meant to describe
the spectrum of investments  that the Advisor in its discretion,  might,  but is
not  required  to, use in  managing a fund's  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 a fund,  but,  to the  extent
employed,  could  from  time  to  time  have  a  material  impact  on  a  fund's
performance.  It is possible that certain  investment  practices and  techniques
described  below  may not be  permissible  for a Fund  based  on its  investment
restrictions, as described herein, and in the Fund's applicable prospectus.

The Funds may each borrow  money for  temporary,  emergency  or other  purposes,
including investment leverage purposes, as determined by the Trustees.  The 1940
Act requires  borrowings  to have 300% asset  coverage.  The Funds may each also
enter into reverse repurchase agreements.

Exchange  Traded  Funds.  In addition to investing  in DWS Funds,  the Funds may
invest in Exchange  Traded  Funds  ("ETFs") up to the maximum  amount  allowable
under the 1940 Act, when the desired economic exposure to a particular market or
sector  is not  available  through  a DWS  Fund.  ETFs  are  typically  open-end
investment companies, unit investment trusts or depositary receipts, listed on a
stock  exchange.  The  Funds  might do so as a way of  gaining  exposure  to the
segment  of  the  equity  or  fixed-income  markets  represented  by  the  ETFs'
portfolio.  Each  Fund  will  indirectly  bear  its  proportionate  share of any
management or other fees by an ETF in which it invests.

For  example,  a Fund may  invest in a variety  of ETFs  which seek to track the
composition  and  performance  of specific  indexes or a specific  portion of an
index.  These index-based  investments hold substantially all of their assets in
securities  representing  their specific  index.  Accordingly,  the main risk of
investing in index-based


                                       2
<PAGE>

investments  is the  same as  investing  in a  portfolio  of  equity  securities
comprising  the  index.  The  market  prices  of  index-based  investments  will
fluctuate  in  accordance  with  both  changes  in the  market  value  of  their
underlying portfolio securities and due to supply and demand for the instruments
on the  exchanges on which they are traded (which may result in their trading at
a discount or premium to their NAVs).  Index-based investments may not replicate
exactly the performance of their  specified  index because of transaction  costs
and because of the temporary  unavailability of certain component  securities of
the index. In addition, an index-based investment tracking a specific sector may
be adversely  affected by the  performance  of that specific  sector or group of
industries on which it is based.

Examples of index-based ETFs include:

SPDRs(R):  SPDRs,  an acronym for "Standard & Poor's  Depositary  Receipts," are
based on the S&P 500  Composite  Stock Price Index.  They are issued by the SPDR
Trust,  a unit  investment  trust that  holds  shares of  substantially  all the
companies in the S&P 500 Index in substantially  the same weighting and seeks to
closely track the price performance and dividend yield of the Index.

MidCap  SPDRs(R):  MidCap SPDRs are based on the S&P MidCap 400 Index.  They are
issued by the MidCap SPDR Trust, a unit investment  trust that holds a portfolio
of securities  consisting of  substantially  all of the common stocks in the S&P
MidCap 400 Index in substantially  the same weighting and seeks to closely track
the price performance and dividend yield of the Index.

Select Sector SPDRs(R):  Select Sector SPDRs are based on a particular sector or
group of  industries  that are  represented  by a specified  Select Sector Index
within the Standard & Poor's Composite Stock Price Index. They are issued by The
Select Sector SPDR Trust, an open-end  management  investment  company with nine
portfolios  that each seeks to closely track the price  performance and dividend
yield of a particular Select Sector Index.

DIAMONDS(SM):  DIAMONDS are based on the Dow Jones Industrial Average(SM).  They
are issued by the DIAMONDS Trust, a unit investment trust that holds a portfolio
of all the component common stocks of the Dow Jones Industrial Average and seeks
to closely track the price performance and dividend yield of the Dow.

Nasdaq-100 Shares: Nasdaq-100 Shares are based on the Nasdaq 100 Index. They are
issued by the Nasdaq-100  Trust, a unit investment  trust that holds a portfolio
consisting of substantially  all of the securities,  in  substantially  the same
weighting,  as the component stocks of the Nasdaq-100 Index and seeks to closely
track the price performance and dividend yield of the Index.

In addition,  each Fund may allocate cash balances for cash management  purposes
or as part of its investment  strategy among  affiliated  funds  including money
market funds,  short-term bond funds and Cash Management QP Trust or one or more
affiliated entities as described below.

Investment of Uninvested  Cash  Balances.  The Funds may each have cash balances
that have not been invested in portfolio securities,  as appropriate,  or in the
underlying  portfolios  ("Uninvested  Cash").  Uninvested Cash may result from a
variety of sources,  including  dividends or interest received from investments,
unsettled  securities  transactions,   reserves  held  for  investment  strategy
purposes,   scheduled   maturity  of  investments,   liquidation  of  investment
securities to meet anticipated  redemptions and dividend payments,  and new cash
received from  investors.  In addition,  the Funds may invest a portion of their
assets in money market  securities  or other short term  obligations  as part of
their  investment  strategy.  Pursuant to an Exemptive  Order issued by the SEC,
each  Fund may use  Uninvested  Cash to  purchase  shares  of  affiliated  funds
including money market funds, short-term bond funds and Cash Management QP Trust
or one or more  future  entities  for which DIMA acts as  trustee or  investment
advisor  that  operate  as cash  management  investment  vehicles  and  that are
excluded from the definition of investment  company  pursuant to Section 3(c)(1)
or 3(c)(7) of the 1940 Act (collectively,  the "Central Funds") in excess of the
limitations  of Section  12(d)(1)  of the 1940 Act.  Investment  by each Fund in
shares  of the  Central  Funds  will be in  accordance  with  Fund's  investment
policies and restrictions as set forth in its registration statement.

Certain of the  Central  Funds  comply  with Rule 2a-7 under the Act.  The other
Central Funds are or will be short-term  bond funds that invest in  fixed-income
securities  and maintain a  dollar-weighted  average  maturity of three years or
less.  Each of the  Central  Funds will be managed  specifically  to  maintain a
highly liquid portfolio,  and access to them will enhance each Fund's ability to
manage Uninvested Cash.

                                       3
<PAGE>

Each Fund will invest  Uninvested  Cash in Central Funds only to the extent that
each Fund's aggregate direct investment in the Central Funds does not exceed 25%
of its total  assets in shares of the  Central  Funds,  which  would not include
investments  in the Central Funds that may be made by  underlying  portfolios in
which the Funds  invest.  Purchase and sales of shares of Central Funds are made
at net asset value.

Master/feeder Fund Structure. The Board of Trustees has the discretion to retain
the current  distribution  arrangement for the Funds while investing in a master
fund in a master/feeder fund structure as described below.

A master/feeder fund structure is one in which a fund (a "feeder fund"), instead
of investing  directly in a portfolio of securities,  invests most or all of its
investment  assets in a separate  registered  investment  company  (the  "master
fund") with  substantially  the same  investment  objective  and policies as the
feeder  fund.  Such a  structure  permits  the  pooling of assets of two or more
feeder funds,  preserving  separate  identities or distribution  channels at the
feeder  fund  level.  Based on the  premise  that  certain  of the  expenses  of
operating an investment  portfolio are  relatively  fixed,  a larger  investment
portfolio may eventually  achieve a lower ratio of operating expenses to average
net assets  through a  master/feeder  fund  structure.  An  existing  investment
company is able to convert to a feeder fund by selling  all of its  investments,
which  involves  brokerage  and other  transaction  costs and  realization  of a
taxable  gain or loss,  or by  contributing  its assets to the  master  fund and
avoiding  transaction  costs  and,  if  proper  procedures  are  followed,   the
realization of taxable gain or loss.

The Underlying DWS Funds

Each Fund will  purchase  or sell  shares in the  Underlying  DWS Funds to:  (a)
accommodate purchases and sales of the Fund's shares, (b) change the percentages
of the Fund's assets invested in each of the Underlying DWS Funds in response to
changing  market  conditions,  and (c) maintain or modify the  allocation of the
Fund's assets in accordance with the Fund's target date.

The managers will allocate Fund assets among  Underlying  DWS Funds based on the
Fund's target  investment  horizon,  current or expected market conditions or to
manage risk.  The  Underlying  DWS Funds have been selected to represent a broad
spectrum of investment options for the Funds.

Risk Factors of Underlying DWS Funds

In pursuing  their  investment  objectives,  each of the Underlying DWS Funds is
permitted investment  strategies in a wide range of investment  techniques.  The
Underlying DWS Funds' risks are determined by the nature of the securities  held
and the portfolio management strategies used by the Advisor. Further information
about the Underlying DWS Funds is contained in the  prospectuses  of such funds.
Because each Fund invests in certain of the Underlying  DWS Funds,  shareholders
of each  Fund  will be  affected  by the  portfolio  management  strategies  and
investment  policies of the  Underlying  DWS Funds in direct  proportion  to the
amount of assets the Fund allocates to each Underlying DWS Fund.

The following are the Underlying DWS Funds in which the Funds may invest.

DWS Blue Chip Fund. The fund seeks growth of capital and of income. Under normal
circumstances,  the fund invests at least 80% of net assets,  plus the amount of
any borrowings for investment  purposes,  in common stocks of large US companies
that are similar in size to the  companies  in the S&P 500 Index (as of December
31,  2006,  the S&P 500  Index  had a median  market  capitalization  of  $12.48
billion) and that the portfolio  managers  consider to be "blue chip" companies.
Blue chip  companies are large,  well-known  companies  that  typically  have an
established  earnings  and  dividends  history,  easy  access to  credit,  solid
positions in their industry and strong management. While the fund invests mainly
in US  common  stocks,  it  could  invest  up to 20% of net  assets  in  foreign
securities. The fund may also invest in other types of equity securities such as
preferred stocks or convertible securities.

DWS Capital Growth Fund. The fund seeks to provide  long-term growth of capital.
The fund  normally  invests  at least 65% of total  assets in  equities,  mainly
common stocks of US companies.  Although the fund can invest in companies of any
size, it generally focuses on established  companies that are similar in size to
the companies in the Standard & Poor's 500 Composite Stock Price Index (the "S&P
500 Index") or the Russell  1000(R)  Growth Index (as


                                       4
<PAGE>

of December 31, 2006, the S&P 500 Index and the Russell 1000(R) Growth Index had
median   market   capitalizations   of  $12.48   billion   and  $5.56   billion,
respectively).  Although the fund may invest in companies of any size,  the fund
intends to invest  primarily in  companies  whose  market  capitalizations  fall
within the normal range of these indexes.

DWS  Commodity  Securities  Fund.  The fund's  investment  objective  is capital
appreciation.  The fund seeks to achieve its investment objective by focusing on
commodities-related   securities  and   equity-related   securities,   including
commodities-related   structured   notes  and  similar   instruments,   Deutsche
Investment Management Americas Inc., the funds investment advisor,  believes are
undervalued but have favorable prospects for appreciation.

DWS  Disciplined  Market  Neutral  Fund.  The fund  seeks  capital  appreciation
independent  of stock market  direction.  It pursues its objective by investing,
under normal circumstances, in long and short positions of common stock of large
US companies. The managers buy, or take, long positions in common stock that the
managers  believe are undervalued  and sell, or take,  short positions in common
stock that the managers believe are overvalued.  The fund's investment  strategy
is designed to maintain  approximately equal dollar amounts invested in long and
short positions under normal circumstances.

DWS Disciplined Long/Short Growth Fund. The fund seeks capital appreciation. The
fund intends to hold approximately  80%-130% of its net assets in long positions
in stocks that the managers believe will outperform the market and approximately
0%-30% of its net assets in short positions in stocks that the managers  believe
will underperform the market. In addition,  the fund intends to borrow up to 30%
of its net assets for investment  purposes.  The fund's equity  investments  are
mainly  common  stocks,  but may also  include  other types of equities  such as
preferred stocks or convertible securities.

DWS Disciplined Long/Short Value Fund. The fund seeks capital appreciation.  The
fund intends to hold approximately  80%-130% of its net assets in long positions
in stocks that the managers believe will outperform the market and approximately
0%-30% of its net assets in short positions in stocks that the managers  believe
will underperform the market. In addition,  the fund intends to borrow up to 30%
of net assets for investment purposes.  The fund's equity investments are mainly
common  stocks,  but may also include  other types of equities such as preferred
stocks or convertible securities.

DWS Emerging  Markets Equity Fund. The fund seeks  long-term  growth of capital.
Under normal  circumstances,  the fund invests at least 80% of net assets,  plus
the  amount of any  borrowings  for  investment  purposes,  in  emerging  market
equities (equities traded mainly in emerging markets or issued by companies that
are  organized  in  emerging  markets  or have more than half of their  business
there).  The fund  invests  primarily  in  common  stocks.  The  fund  considers
"emerging  markets"  to include  any  country  that is defined as an emerging or
developing  economy  by any one of the  following:  The  International  Bank for
Reconstruction and Development (i.e., the World Bank), the International Finance
Corporation or the United Nations or its authorities.  The fund may invest up to
20% of net assets in equities from the US or other developed  markets.  The fund
may also invest up to 20% of net assets in US or emerging market debt securities
when portfolio management believes these securities may perform at least as well
as equities.  The fund's equity  investments  are mainly common stocks,  but may
also include  other types of equities  such as preferred  stocks or  convertible
securities.

DWS Emerging  Markets Fixed Income Fund.  The fund seeks to provide high current
income  and,   secondarily,   long-term  capital   appreciation.   Under  normal
circumstances,  the fund invests at least 80% of net assets,  plus the amount of
any borrowings for investment purposes, in high yield bonds (also known as "junk
bonds") and other debt  securities  issued by governments  and  corporations  in
emerging  market  countries  (i.e.,  the issuer is traded  mainly in an emerging
market,  is  organized  under the laws of an  emerging  market  country  or is a
company with more than half of its  business in emerging  markets) or the return
on which  is  derived  primarily  from  emerging  markets.  The  fund  considers
"emerging  markets"  to include  any  country  that is defined as an emerging or
developing  economy  by any one of the  following:  The  International  Bank for
Reconstruction and Development (i.e., the World Bank), the International Finance
Corporation or the United Nations or its authorities. Historically, the managers
have tended to emphasize Latin America, but may also invest in Asia, Africa, the
Middle East and Eastern  Europe.  To help manage risk, the fund invests at least
65% of total assets in US dollar-denominated  securities. The fund also does not
invest more than 40% of total assets in any one country.  The fund may invest up
to 20% of net assets in debt securities


                                       5
<PAGE>

from  developed  markets  and  up to 20% of net  assets  in US  debt  securities
including those that are rated below investment-grade.

DWS Equity 500 Index Fund. The fund seeks to replicate,  as closely as possible,
before the deduction of expenses,  the  performance of the Standard & Poor's 500
Composite Stock Price Index (the "S&P 500 Index"),  which  emphasizes  stocks of
large US companies.  The fund invests for capital appreciation,  not income; any
dividend and interest income is incidental to the pursuit of its objective.  The
fund is a feeder fund in a master/feeder fund arrangement.  The fund pursues its
investment  objective by investing all of its assets in a master portfolio,  DWS
Equity 500 Index  Portfolio,  with the same  investment  objective  as the fund.
Under  normal  circumstances,  the fund  through DWS Equity 500 Index  Portfolio
intends  to  invest  at  least  80% of its  assets,  determined  at the  time of
purchase, in stocks of companies included in the S&P 500 Index and in derivative
instruments, such as futures contracts and options, that provide exposure to the
stocks of companies in the S&P 500 Index.

DWS Equity Partners Fund. The fund seeks to achieve  long-term growth of capital
and,  secondarily,  current income.  The fund seeks to achieve its objectives by
investing  primarily in a diversified  portfolio of common stocks.  Under normal
circumstances,  the fund will invest at least 80% of its  assets,  valued at the
time the security is purchased, in a diversified portfolio of common stocks.

DWS Value  Builder  Fund.  The fund seeks to  maximize  total  return  through a
combination of long-term growth of capital and current income. The fund seeks to
achieve its objective by investing primarily in a portfolio of common stocks and
fixed-income securities. Under normal market conditions,  between 40% and 75% of
the fund's  assets  will be  invested  in common  stocks and at least 25% of the
fund's  assets  will  be  invested  in  fixed-income  securities.  In  selecting
investments for the fund, the fund's investment advisor and subadvisor determine
the  relative  percentages  of  assets  to be  invested  in  common  stocks  and
fixed-income  securities  based on  their  judgment  as to  general  market  and
economic conditions,  trends in yields and interest rates, and changes in fiscal
and monetary  policy.  In  addition,  the fund may invest up to 10% of its total
assets  in  equity  and  debt  securities  issued  by  foreign   governments  or
corporations.

DWS Communications  Fund. The fund seeks to maximize total return.  Under normal
circumstances,  the fund will  invest at least 80% of its net  assets,  plus the
amount  of any  borrowings  for  investment  purposes  (measured  at the time of
investment),  in securities of companies in the  communications  field. The fund
normally  focuses  on the  securities  of  companies  that  are  engaged  in the
research,   development,   manufacture  or  sale  of  communications   services,
technology,  equipment  or  products.  The fund may also  invest in  convertible
securities and in bonds and short-term cash equivalents.  Convertible securities
are bonds or  preferred  stocks that give  purchasers  the right to exchange the
convertible  security  for a specified  number of shares of a  company's  common
stock at specified  prices within a certain period of time.  Purchasers  receive
regular interest payments until they exercise their exchange right. The fund may
also invest up to 10% of its assets in stocks and other  securities of companies
not  publicly  traded in the United  States,  including  securities  of emerging
markets.

DWS Core Fixed Income Fund. The fund seeks to maximize  total return  consistent
with preservation of capital and prudent investment management, by investing for
both current income and capital appreciation.  Under normal  circumstances,  the
fund invests at least 80% of its assets,  determined at the time of purchase, in
fixed  income  securities.  Fixed  income  securities  include  those  of the US
Treasury,  as well as US government agencies and  instrumentalities,  corporate,
mortgage-backed  and asset-backed  securities,  taxable municipal and tax-exempt
municipal bonds and liquid Rule 144A securities.  The fund invests  primarily in
investment-grade  fixed income securities rated with the top three credit rating
categories.   The  fund  may   invest  up  to  20%  of  its   total   assets  in
investment-grade  fixed income  securities  rated with the fourth highest credit
rating  category.  The fund  may  invest  up to 25% of its  total  assets  in US
dollar-dominated  securities of foreign  issuers and  governments.  The fund may
hold up to 20% of its total assets in cash or money market  instruments in order
to maintain  liquidity,  or in the event the portfolio  managers  determine that
securities meeting the fund's investment objective are not readily available for
purchase.   The  fund's  investments  in  foreign  issuers  are  limited  to  US
dollar-denominated securities to avoid currency risk.

DWS Floating Rate Plus Fund. The fund seeks to provide high current income.  The
fund invests,  under normal  circumstances,  at least 80% of its total assets in
adjustable rate loans that have a senior right to payment  ("Senior


                                       6
<PAGE>

Loans") and other  floating rate debt  securities.  The fund may acquire  senior
loans of borrowers engaged in any industry,  but will invest no more than 25% of
its total assets in senior loans of borrowers and securities of other issuers in
any one industry. Under normal market conditions,  up to 20% of the fund's total
assets may be held in cash and other investments, including, but not limited to,
fixed-rate debt obligations, short- to medium-term notes, high-yield securities,
equity securities,  hybrid and synthetic loans, collateralized loan obligations,
and asset backed securities.

DWS Global Thematic Fund. The fund seeks long-term  growth of capital.  The fund
invests at least 65% of its total  assets in US and foreign  equities  (equities
issued by US and  foreign-based  companies).  Most of the  fund's  equities  are
common  stocks.  Although  the fund can invest in companies of any size and from
any country,  it generally  focuses on  established  companies in countries with
developed economies.

DWS Global Bond Fund.  The fund seeks total return,  with an emphasis on current
income;  capital  appreciation is a secondary goal. Under normal  circumstances,
the fund invests at least 80% of net assets,  plus the amount of any  borrowings
for investment  purposes,  in bonds of issuers from around the world,  including
the United  States.  The fund  normally  invests at least 65% of total assets in
investment-grade  bonds.  The  fund  can  buy  many  types  of  income-producing
securities,  among them US and foreign  government  bonds,  corporate  bonds and
mortgage- and asset-backed securities.

DWS Global Opportunities Fund. The fund seeks above-average capital appreciation
over the long  term.  The fund  invests  at least 65% of total  assets in common
stocks and other equities of small  companies  throughout  the world  (companies
with market  values  similar to the smallest 20% of the  Citigroup  Broad Market
Index).  While the fund may invest in  securities  in any country,  it generally
focuses on countries with developed economies (including the US). As of December
31,  2006,  companies  in  which  the  fund  invests  typically  have  a  market
capitalization  of between  $500 million and $5 billion at the time of purchase.
As part of the investment  process (and low turnover  strategy) the fund may own
stocks even though they  exceed the market  capitalization  level.  The fund may
invest up to 35% of total  assets in common  stocks and other  equities of large
companies  or in debt  securities  (of which 5% of net assets may be junk bonds,
i.e., grade BB/Ba and below).

DWS GNMA Fund. The fund seeks to produce a high level of income. It does this by
investing,  under  normal  circumstances,  at least 80% of net assets,  plus the
amount of any borrowings for  investment  purposes,  in "Ginnie Maes," which are
mortgage-backed  securities  that are  issued or  guaranteed  by the  Government
National Mortgage  Association  (GNMA).  The balance of the fund's assets may be
invested  in  securities   issued  by  the  US   government,   its  agencies  or
instrumentalities.  These securities may not be guaranteed by the US Treasury or
backed by the full faith and credit of the US government. The fund may also hold
up to 10% of its total net assets in uninvested  cash, cash  equivalents such as
money market securities,  repurchase  agreements or shares of money market funds
or short-term bond funds,  which  investments may not be issued or guaranteed by
the US government, its agencies or instrumentalities.

DWS Gold & Precious Metals Fund. The fund seeks maximum return (principal change
and income). The fund invests at least 80% of net assets, plus the amount of any
borrowings  for investment  purposes,  in common stocks and other equities of US
and foreign companies engaged in activities related to gold, silver, platinum or
other precious metals,  and in gold coin and bullion  directly.  These companies
may  be  involved  in  activities  such  as  exploration,  mining,  fabrication,
processing and  distribution.  While the fund invest mainly in common stocks, it
may invest up to 20% of net assets in high-quality  debt securities of companies
in precious metals and minerals operations,  and debt securities whose return is
linked to precious  metals  prices.  The fund's  equity  investments  are mainly
common stocks, but may also include other types of equities such as preferred or
convertible stocks.

DWS Europe Equity Fund. The fund seeks long-term growth of capital. Under normal
circumstances  the fund  invests  at least 80% of its total  assets in  European
common stocks and other  equities  (equities  that are traded mainly on European
markets or are issued by companies organized under the laws of Europe or do more
than half of their business there).  Although the fund may invest in equities of
any  size  or  European  country,   it  tends  to  focus  on  common  stocks  of
multinational   companies  in  industrialized   Western  and  Southern  European
countries  such as  France,  Italy,  Germany,  the  Netherlands  and the  United
Kingdom.  While most of the fund's equities are common


                                       7
<PAGE>

stock,  some may be other  types of  equities,  such as  convertible  stocks  or
preferred stocks.  The fund may invest up to 20% of its total assets in European
debt securities, including junk bonds (i.e., grade BB and below).

DWS Growth & Income Fund. The fund seeks  long-term  growth of capital,  current
income and growth of income.  The fund  invests at least 65% of total  assets in
equities, mainly common stocks. Although the fund can invest in companies of any
size and from any country, it invests primarily in large US companies.

DWS Health Care Fund. The fund seeks  long-term  growth of capital by investing,
under normal circumstances, at least 80% of total assets, plus the amount of any
borrowings for investment purposes,  in common stocks of companies in the health
care sector.  For purposes of the fund's 80% investment policy, to be considered
part of the health  care  sector,  companies  must commit at least half of their
assets to, or derive at least half of their  revenues or net income  from,  that
sector.  The  industries  in the health  care  sector  include  pharmaceuticals,
biotechnology,  medical  products and supplies,  and health care  services.  The
companies may be of any size. The fund will invest primarily in securities of US
companies, but may invest in foreign companies as well.

DWS High  Income  Fund.  The fund  seeks the  highest  level of  current  income
obtainable  from a diversified  portfolio of fixed income  securities  which the
fund's  investment  manager  considers  consistent  with  reasonable  risk. As a
secondary  objective,  the fund will seek capital gain where consistent with its
primary objective.  Under normal  circumstances,  this fund generally invests at
least 65% of net  assets,  plus the  amount  of any  borrowings  for  investment
purposes,  in junk bonds,  which are those rated below the fourth highest credit
rating  category  (i.e.,  grade BB/Ba and below).  Compared to  investment-grade
bonds, junk bonds may pay higher yields,  have higher volatility and higher risk
of default on payments of interest or  principal.  The fund may invest up to 50%
of total assets in bonds  denominated in US dollars or foreign  currencies  from
foreign issuers.

DWS High  Income  Plus Fund.  The fund  seeks  high  current  income  and,  as a
secondary objective,  capital  appreciation.  Under normal conditions,  the fund
invests at least 65% of its total assets in US dollar-denominated,  domestic and
foreign below investment grade fixed income  securities (junk bonds),  including
those whose  issuers are located in  countries  with new or emerging  securities
markets.  The fund considers an emerging  securities  market to be one where the
sovereign  debt issued by the  government in local currency terms is rated below
investment  grade. The fund's  investments in fixed income  securities may be of
any credit quality and may include  securities not paying interest currently and
securities  in  default.  The fund may  invest up to 25% of its total  assets in
non-US dollar denominated,  below investment-grade fixed income securities.  The
fund  may  invest  up to 35%  of its  total  assets  in  cash  or  money  market
instruments in order to maintain  liquidity,  or in the event that the portfolio
manager determines that securities meeting the fund's investment  objectives are
not readily available for purchase.  The fund may also purchase  securities on a
when-issued basis and engage in short sales.

DWS Dreman High  Return  Equity  Fund.  The fund seeks to achieve a high rate of
total return. Under normal  circumstances,  the fund invests at least 80% of net
assets,  plus the amount of any borrowings for  investment  purposes,  in equity
securities  (mainly  common  stocks).  The fund  focuses  on  stocks of large US
companies  that are similar in size to the companies in the S&P 500 Index (as of
January 31, 2007, the S&P 500 Index had a median market capitalization of $12.92
billion)  and that the  portfolio  managers  believe are  undervalued.  The fund
intends to invest  primarily in  companies  whose  market  capitalizations  fall
within the normal range of the Index.  Although the fund can invest in stocks of
any economic sector, at times it may emphasize the financial  services sector or
other sectors.  In fact, it may invest more than 25% of total assets in a single
sector. The fund may invest up to 20% of total assets in foreign securities. The
fund's equity  investments are mainly common stocks,  but may also include other
types of equities such as preferred or convertible stocks.

DWS Core Plus Income Fund.  The fund seeks to maximize  total return  consistent
with preservation of capital and prudent investment management, by investing for
both current income and capital  appreciation.  The fund primarily invests in US
dollar-denominated investment grade fixed income securities, including corporate
bonds, US government and agency bonds and mortgage- and asset-backed securities.
A significant  portion of the fund's assets may also be allocated  among foreign
investment  grade fixed  income  securities,  high yield bonds of US and foreign
issuers (including high yield bonds of issuers in countries with new or emerging
securities  markets),  or,  to  maintain  liquidity,  in  cash or  money  market
instruments.  The fund  normally  invests  at least 65% of total  assets in high
grade US  bonds  (those  considered  to be in the top  three  grades  of  credit
quality).  The  fund  may  invest  up to 25%  of its


                                       8
<PAGE>

total assets in foreign  investment  grade bonds (those  considered to be in the
top four grades of credit quality). In addition,  the fund may also invest up to
20% of total  assets in  securities  of US and  foreign  issuers  that are below
investment  grade  (rated  as low as the  sixth  credit  grade,  i.e.,  grade B,
otherwise  known as junk bonds),  including  investment  in US dollar or foreign
currency  denominated bonds of issuers located in countries with new or emerging
securities markets.

DWS  Inflation   Protected  Plus  Fund.  The  fund  seeks  to  provide   maximum
inflation-adjusted return, consistent with preservation of capital. Under normal
circumstances,  the fund will  invest at least 80% of its net  assets,  plus any
borrowings  for  investment  purposes,  in  inflation-indexed  bonds of  varying
maturities issued by the US government,  non-US  governments,  their agencies or
instrumentalities, and corporations and derivatives related to these securities.
The fund may  invest  the  remaining  portion  of its  assets in other  types of
fixed-income  securities,  cash or cash  equivalents.  In an  attempt to enhance
return, the fund also employs a global asset allocation strategy,  which invests
in  instruments  across  domestic and  international  fixed-income  and currency
markets.

DWS International  Fund. The fund seeks long-term growth of capital by investing
at least  65% of its  total  assets  in  foreign  equities  (equities  issued by
foreign-based companies and listed on foreign exchanges).  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).

DWS International Select Equity Fund. 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.  The fund  primarily  invests in the countries that make up the
Morgan Stanley Capital International Europe,  Australia and Ear East Index (MSCI
EAFE(R)  Index).  The MSCI EAFE(R) 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.  At least 50% of the fund's assets
will be invested in securities  that are  represented in the MSCI EAFE(R) Index.
However,  the  fund  may  invest  up to 50% of its  total  assets  in  non-Index
securities  of companies  located in the countries  that make up the Index.  The
fund's equity  investments are mainly common stocks,  but may also include other
types of equities  such as preferred or  convertible  stocks.  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.  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 15% of its
net assets in emerging markets.

DWS  International  Value  Opportunities  Fund. The fund seeks long-term capital
appreciation,  with  current  income  as a  secondary  objective.  Under  normal
circumstances,  the fund invests at least 80% of its assets,  determined  at the
time of purchase, in the stocks and other securities with equity characteristics
of companies in developed  countries  outside the United States.  Almost all the
companies in which the fund invests are based in the developed foreign countries
that make up the Morgan Stanley Capital International Europe,  Australia and Ear
East Index.  The fund may also invest a portion of its assets in companies based
in emerging markets of Latin America,  the Middle East, Europe,  Asia and Africa
if the  portfolio  managers  believe  that  their  return  potential  more  than
compensates for the extra risks associated with these markets. 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.

DWS Japan Equity Fund.  The fund seeks high capital  appreciation.  Under normal
circumstances, the fund seeks to achieve its objective by investing at least 80%
of its  assets,  measured  at the time a  security  is  purchased,  in  Japanese
securities  (securities issued by companies organized under the laws of Japan or
their  affiliates,  or by a company  that derives more than half of its revenues
from  Japan).  The fund invests  primarily in common  stocks of companies of any
size,  including  up to 30% of net assets in smaller  companies  that are traded
over-the-counter.

DWS Large Cap Value Fund. The fund seeks long-term  capital  appreciation,  with
current income as a secondary objective.  Under normal  circumstances,  the fund
invests  at least  80% of net  assets,  plus the  amount of any  borrowings  for
investment  purposes,  in common stocks and other equity  securities of large US
companies that are similar in size to the companies in the Russell 1000(R) Value
Index (as of January  31,  2007,  the Russell  1000(R)  Value Index had a median
market  capitalization of $5.46 billion) and that the portfolio managers believe
are undervalued.


                                       9
<PAGE>

These  are  typically  companies  that  have  been  sound  historically  but are
temporarily  out of favor.  The fund  intends to invest  primarily  in companies
whose market capitalizations fall within the normal range of the Index. Although
the fund can invest in stocks of any economic  sector (which is comprised of two
or more industries),  at times it may emphasize the financial services sector or
other sectors.  In fact, it may invest more than 25% of total assets in a single
sector. The fund may invest up to 20% of total assets in foreign securities. The
fund's equity  investments are mainly common stocks,  but may also include other
types of equities such as preferred or convertible stocks.

DWS Large Company  Growth Fund.  The fund seeks  long-term  growth of capital by
investing, under normal circumstances,  at least 80% of its net assets, plus the
amount of any borrowings for investment purposes, in large US companies that are
similar in size to the  companies  in the Russell  1000(R)  Growth  Index (as of
October  31,  2006,  the  Russell  1000(R)  Growth  Index  had a  median  market
capitalization of $5 billion). The fund intends to invest primarily in companies
whose market  capitalizations  fall within the normal range of the Index.  These
investments are in equities, mainly common stocks.

DWS Latin America Equity Fund. The fund seeks  long-term  capital  appreciation.
Under normal  circumstances,  the fund invests at least 80% of net assets,  plus
the amount of any borrowings for investment  purposes,  in Latin American common
stocks and other  equities  (equities  that are traded mainly on Latin  American
markets,  issued or  guaranteed  by a Latin  American  government or issued by a
company organized under the laws of a Latin American country or any company with
more than half of its business in Latin  America).  Latin  America is defined as
Mexico, Central America,  South America and the Spanish-speaking  islands of the
Caribbean.  Although  the fund may  invest in any  Latin  American  country,  it
expects  to invest  primarily  in  common  stocks of  established  companies  in
Argentina,  Brazil, Chile, Colombia,  Mexico, Panama and Peru. While most of the
fund's equities are common stocks, some may be other types of equities,  such as
convertible  stocks or  preferred  stocks.  The fund may invest up to 20% of net
assets in debt securities  including junk bonds (i.e.,  grade BB and below), 10%
of which may include securities rated B or lower.

DWS  Micro  Cap  Fund.  The  fund  seeks  capital  appreciation.   Under  normal
circumstances,  the fund invests at least 80% of its assets,  determined  at the
time of purchase, in stocks and other securities with equity  characteristics of
US micro capitalization companies. For the purposes of this 80% limitation,  the
micro  capitalization  equity  universe is defined as the bottom 5% of the total
domestic equity market  capitalization (at the time of initial investment) using
a minimum market capitalization of $10 million. The fund may invest up to 20% of
its total assets in the securities of foreign companies that would be considered
to be in the bottom 5% in terms of market capitalization in the US equity market
(subject to a $10 million  market  capitalization  minimum).  The fund's  equity
investment are mainly common stocks,  but may also include other types of equity
securities,  such as preferred  stocks or convertible  securities.  The fund may
invest up to 20% of its assets in high quality debt instruments and money market
instruments with remaining  maturities of one year or less, including repurchase
agreements.  The fund may invest up to 5% of its net  assets in  non-convertible
bonds and preferred stocks that the managers believe to be of high quality.

DWS Mid Cap Growth Fund. The fund seeks long-term  capital growth.  Under normal
circumstances,  the fund invests at least 80% of its assets,  determined  at the
time of purchase, in companies with market caps within the market capitalization
range  of  the  Russell  Mid  Cap  Growth  Index  or   securities   with  equity
characteristics  that provide  exposure to those  companies.  The fund's  equity
investments are mainly common stocks, but may also include other types of equity
securities  such as preferred  stocks or  convertible  securities.  The fund may
invest up to 20% of its assets in stocks and other securities of companies based
outside the US.

DWS Money  Market  Prime  Series -- DWS Cash  Investment  Trust.  The fund seeks
maximum current income to the extent consistent with stability of principal. The
fund seeks to achieve its goal of current  income by  investing  in high quality
money market securities and maintains a  dollar-weighted  average maturity of 90
days or less.  The fund may  invest  more than 25% of its  total  assets in bank
obligations.  The fund may invest up to 10% of its total  assets in other  money
market mutual funds in accordance with applicable regulations.

DWS Money Market Series -- Institutional  Shares. The fund is a feeder fund that
invests all of its assets in a master portfolio,  the Cash Management Portfolio,
which will invest directly in securities and other instruments.  The fund's goal
is to seek a high level of current  income  consistent  with  liquidity  and the
preservation of capital.  The


                                       10
<PAGE>

fund,  through the  Portfolio,  seeks to achieve its goal by  investing  in high
quality short-term money market instruments.

DWS RREEF Global Real Estate Securities Fund. The fund's investment objective is
to seek total  return  through a  combination  of current  income and  long-term
capital  appreciation.  The fund seeks to achieve  this  objective  by investing
primarily  in publicly  listed real estate  investment  trusts  (REITs) and real
estate operating  companies on a global basis. Under normal  circumstances,  the
fund  will  invest  at  least  80% of its net  assets,  plus the  amount  of any
borrowing for investment purposes (calculated at the time of any investment), in
the equity  securities of REITs and real estate  operating  companies  listed on
recognized stock exchanges around the world. Currently, the fund does not intend
to borrow for  investment  purposes.  A security will be considered  part of the
fund's  investment  universe  if  the  issuer  of  such  security  has a  market
capitalization  of at least $50 million  and,  in the  opinion of the  portfolio
managers,  at least 50% of its revenues or 50% of the market value of its assets
at the time its  securities  are  purchased  by the fund are  attributed  to the
ownership, construction, management or sale of real estate and it is listed on a
recognized public foreign or domestic stock exchange or traded over the counter.
The fund may also invest in unlisted  securities  provided such  securities  are
expected to be listed on a recognized  public stock  exchange or traded over the
counter  within six months from the time of investment.  In addition,  while the
fund does not currently plan to hedge international  currency risk, the fund may
engage in foreign  currency  transactions,  including  foreign  currency forward
contracts,  options,  swaps and other similar  transactions  in connection  with
investments in securities of non-US companies. The fund's equity investments are
mainly  common  stocks,  but may also  include  other types of equities  such as
preferred or convertible stocks.

DWS RREEF Real  Estate  Securities  Fund.  The fund's  investment  objective  is
long-term capital appreciation and current income. The fund invests primarily in
real estate  securities.  Under  normal  circumstances,  the fund will invest at
least 80% of its net assets,  plus the amount of any  borrowing  for  investment
purposes  (calculated at the time of any  investment),  in equity  securities of
real estate investment  trusts ("REITs") and real estate  companies.  The fund's
equity investments are mainly common stocks, but may also include other types of
equities such as preferred or convertible stocks.

DWS S&P 500 Index  Fund.  The fund seeks to  provide  investment  results  that,
before expenses, correspond to the total return of common stocks publicly traded
in the United  States,  as  represented  by the Standard & Poor's 500  Composite
Stock Price Index (S&P 500 Index).  The fund  invests for capital  appreciation,
not income; any dividend and interest income is incidental to the pursuit of its
objective.  The fund is a feeder fund in a master/feeder  fund arrangement.  The
fund pursues its  investment  objective by  investing  substantially  all of its
assets in a master portfolio, DWS Equity 500 Index Portfolio, which has the same
investment  objective and is subject to the same  investment  risks as the fund.
Under  normal  circumstances,  the fund  through DWS Equity 500 Index  Portfolio
intends  to  invest  at  least  80% of its  assets,  determined  at the  time of
purchase, in stocks of companies included in the S&P 500 Index and in derivative
instruments, such as futures contracts and options, that provide exposure to the
stocks of companies in the S&P 500 Index.

DWS Enhanced S&P 500 Index Fund. The fund seeks  long-term  growth and income by
investing  at least 80% of total assets in common  stocks of companies  that are
included  in the  Standard & Poor's 500  Composite  Stock  Price  Index (S&P 500
Index)  (as  of  March  31,  2007,  the  S&P  500  Index  had  a  median  market
capitalization  of $13  billion).  The  fund  intends  to  invest  primarily  in
companies whose market  capitalizations  fall within the normal range of the S&P
500  Index.  This Index is one of the most  widely  used  measures  of US equity
performance.  While most of the fund's  investments are common stocks,  the fund
may also invest up to 20% of total assets in  investment-grade  debt  securities
(i.e., grade BBB/Baa and higher).

DWS Short Duration Fund. The fund seeks to maximize total return consistent with
preservation of capital and prudent investment management, by investing for both
current income and capital appreciation.  Under normal  circumstances,  the fund
invests at least 80% of its assets, determined at the time of purchase, in fixed
income securities. The fund invests in US Treasury,  corporate,  mortgage-backed
and asset-backed  securities,  taxable municipal and tax-exempt municipal bonds.
The  fund  invests  primarily  in   investment-grade   short-term  fixed  income
securities  rated within the top three credit  rating  categories.  The fund may
invest up to 15% of its total assets in investment-grade fixed income securities
rated within the fourth highest credit rating  category.  The fund may invest up
to 25% of its  total  assets  in US  dollar-denominated  securities  of  foreign
issuers and governments.  The fund's


                                       11
<PAGE>

investments in foreign issuers are limited to US  dollar-denominated  securities
to avoid  currency risk. The fund may hold up to 20% of its total assets in cash
or money market instruments in order to maintain liquidity,  or in the event the
portfolio  managers  determine  that  securities  meeting the fund's  investment
objective are not otherwise readily available for purchase.  The fund may invest
up to 40% of its total assets in asset-backed securities.

DWS Short Duration Plus Fund. The fund's investment objective is to provide high
income   while  also   seeking  to  maintain  a  high  degree  of  stability  of
shareholders'  capital. The fund invests in securities of varying maturities and
normally seeks to maintain an average portfolio duration of no longer than three
years.  The fund invests,  under normal market  conditions,  at least 65% of its
total assets in fixed income securities  rated, at the time of purchase,  within
the top four long-term rating categories by a nationally recognized  statistical
rating  organization  (a "NRSRO")  (or, if  unrated,  determined  by us to be of
similar   quality)  The  fund  may  invest  up  to  10%  of  its  assets  in  US
dollar-denominated,  domestic and foreign  below  investment-grade  fixed income
securities (junk bonds) rated in the fifth and sixth long-term rating categories
by a  NRSRO  (or,  if  unrated,  determined  by us to  be of  similar  quality),
including  those whose  issuers are  located in  countries  with new or emerging
securities  markets.  The fund considers an emerging securities market to be one
where the sovereign  debt issued by the  government in local  currency  terms is
rated below  investment-grade.  A portion of high yield securities purchased for
the fund may consist of non-US dollar denominated,  below investment-grade fixed
income  securities.  The fund can invest up to 15% of its net assets in illiquid
securities.  In an  attempt to enhance  return,  the fund also  employs a global
allocation   strategy,   which  invests  in  instruments   across  domestic  and
international fixed income and currency markets.

DWS Small Cap Growth Fund. The fund seeks long-term capital growth. Under normal
circumstances,  the fund invests at least 80% of its assets,  determined  at the
time of purchase, in stocks and other securities with equity  characteristics of
US  smaller  capitalization  companies.  For  purposes  of this  80%  investment
limitation,  the small  capitalization  equity universe is defined as the bottom
20% of the total domestic equity market  capitalization  (at the time of initial
investment),  using a minimum market capitalization of $10 million. The fund may
invest up to 20% of its  assets in the  stocks  of  non-US  companies  and large
capitalization  stocks.  The fund  may also  invest  in  other  types of  equity
securities such as preferred stocks or convertible securities.

DWS Small Cap Core Fund.  The fund seeks to provide  long-term  capital  growth.
Under normal  circumstances,  the fund invests at least 80% of net assets,  plus
the amount of any borrowings for investment purposes,  in common stocks of small
US companies with potential for above-average  long-term  capital growth.  These
companies  are similar in size to the companies in the Russell 2000 Index (as of
December 31, 2006, the Russell 2000 Index had a median market  capitalization of
$657   million).   The  fund  intends  to  invest  in  companies   whose  market
capitalizations  fall within the normal range of the Russell  2000 Index.  While
the fund invests  primarily in common  stocks,  it may invest up to 20% of total
assets in US government  securities.  The fund may also invest in other types of
equity securities such as preferred stocks or convertible securities.

DWS Small  Cap Value  Fund.  The fund  seeks  long-term  growth  of  capital  by
investing,  under normal circumstances,  at least 90% of total assets, including
the amount of any  borrowings  for investment  purposes,  in undervalued  common
stocks of small US companies.  These are  companies  that are similar in size to
those in the Russell 2000 Value Index (as of October 31, 2006,  the Russell 2000
Value Index had a median market  capitalization of approximately  $643 million).
The fund intends to invest  primarily in companies whose market  capitalizations
fall within the normal range of the Russell 2000 Value Index.

DWS Dreman Concentrated Value Fund. The fund's investment objective is long-term
growth  of  capital.  The fund  seeks to  achieve  its  objective  by  investing
primarily in the common stocks of large  companies  that the portfolio  managers
believe are undervalued, but have favorable prospects for appreciation. The fund
is classified  as a  non-diversified  portfolio  and normally  invests in a core
position  of  common  stocks  (normally  20 to 25  stocks)  that  represent  the
portfolio managers' best ideas. The fund may hold a limited number of additional
positions  under unusual  market  conditions,  to  accommodate  large inflows or
outflows of cash, or to accumulate or reduce  existing  positions.  The fund may
invest up to 20% of total  assets in foreign  securities  and up to 10% of total
assets in high yield bonds ("Junk"  bonds).  The fund's equity  investments  are
mainly  common  stocks,  but may also  include  other types of equities  such as
preferred or convertible stocks.

                                       12
<PAGE>

DWS Dreman Mid Cap Value Fund. The fund seeks  long-term  capital  appreciation.
Under normal  circumstances,  the fund invests at least 80% of net assets,  plus
the  amount of any  borrowings  for  investment  purposes,  in common  stocks of
mid-cap companies that the portfolio managers believe are undervalued,  but have
favorable  prospects for  appreciation.  The fund defines  mid-cap  companies as
companies  that  have a market  capitalization  similar  to that of the  Russell
Midcap Value Index with a market  capitalization  which  usually  ranges from $1
billion to $20 billion. The fund may invest up to 20% of total assets in foreign
securities. The fund's equity investments are mainly common stocks, but may also
include other types of equities such as preferred or convertible stocks.

DWS Dreman Small Cap Value Fund. The fund seeks long-term capital  appreciation.
Under normal  circumstances,  the fund invests at least 80% of net assets,  plus
the amount of any  borrowings  for investment  purposes,  in undervalued  common
stocks of small US  companies,  which the fund  defines  as  companies  that are
similar in market  value to those in the  Russell  2000 Index (as of January 31,
2007,  the  Russell  2000  Index  had a  median  market  capitalization  of $664
million).  The fund  intends  to invest  primarily  in  companies  whose  market
capitalizations  fall  within  the  normal  range of the  Index.  While the fund
invests  mainly  in US  stocks,  it could  invest  up to 20% of total  assets in
foreign securities.  The fund's equity investments are mainly common stocks, but
may also  include  other  types of equities  such as  preferred  or  convertible
stocks.

DWS  Technology   Fund.   The  fund  seeks  growth  of  capital.   Under  normal
circumstances,  the fund invests at least 80% of net assets,  plus the amount of
any  borrowings for  investment  purposes,  in common stocks of companies in the
technology sector.  For purposes of the fund's 80% investment policy,  companies
in the  technology  sector  must  commit  at least  half of their  assets to the
technology  sector or derive at least half of their  revenues or net income from
that  sector.   Examples  of  industries   within  the  technology   sector  are
semiconductors, software, telecom equipment, computer/hardware, IT services, the
Internet  and health  technology.  The fund may invest in companies of any size.
While the fund  invests  mainly in US stocks,  it could  invest up to 35% of net
assets in foreign  securities.  The fund's equity  investments are mainly common
stocks,  but may also  include  other types of  equities  such as  preferred  or
convertible stocks.

         INVESTMENT POLICIES AND TECHNIQUES OF THE UNDERLYING DWS FUNDS

The Underlying Funds may engage in certain practices not described herein.

Adjustable  Rate  Securities.  The interest  rates paid on the  adjustable  rate
securities in which a fund invests  generally are readjusted at intervals of one
year or less to an increment over some predetermined  interest rate index. There
are three main  categories  of indices:  those based on US Treasury  securities,
those derived from a calculated  measure such as a cost of funds index and those
based on a moving average of mortgage  rates.  Commonly used indices include the
one-year,  three-year  and  five-year  constant  maturity  Treasury  rates,  the
three-month  Treasury  bill rate,  the  180-day  Treasury  bill  rate,  rates on
longer-term Treasury  securities,  the 11th District Federal Home Loan Bank Cost
of Funds,  the  National  Median  Cost of  Funds,  the  one-month,  three-month,
six-month or one-year London Interbank Offered Rate ("LIBOR"), the prime rate of
a specific bank or commercial  paper rates.  Some indices,  such as the one-year
constant maturity Treasury rate,  closely mirror changes in market interest rate
levels.  Others,  such as the 11th  District Home Loan Bank Cost of Funds index,
tend to lag behind  changes in market rate  levels and tend to be somewhat  less
volatile.

The  Mortgage-Backed  Securities  either issued or guaranteed by GNMA,  FHLMC or
FNMA  ("Certificates")  are called pass-through  Certificates because a pro rata
share of both regular interest and principal  payments (less GNMA's,  FHLMC's or
FNMA's fees and any  applicable  loan  servicing  fees),  as well as unscheduled
early prepayments on the underlying mortgage pool, are passed through monthly to
the holder of the Certificate (i.e., a fund). The principal and interest on GNMA
securities are guaranteed by GNMA and backed by the full faith and credit of the
US  Government.  FNMA  guarantees  full and timely  payment of all  interest and
principal,  while  FHLMC  guarantees  timely  payment of interest  and  ultimate
collection of principal.  Mortgage-Backed Securities from FNMA and FHLMC are not
backed by the full  faith and  credit of the United  States;  however,  they are
generally considered to offer minimal credit risks. The yields provided by these
Mortgage-Backed  Securities have historically exceeded the yields on other types
of US Government  Securities with comparable  maturities in large measure due to
the prepayment risk discussed below.

                                       13
<PAGE>

If prepayments of principal are made on the underlying  mortgages during periods
of rising interest rates, a fund generally will be able to reinvest such amounts
in securities  with a higher  current rate of return.  However,  a fund will not
benefit from  increases in interest rates to the extent that interest rates rise
to the point where they cause the current  coupon of adjustable  rate  mortgages
held as investments by a fund to exceed the maximum allowable annual or lifetime
reset  limits (or "cap  rates") for a  particular  mortgage.  Also, a fund's net
asset  value  could vary to the extent that  current  yields on  Mortgage-Backed
Securities  are  different  than market yields during  interim  periods  between
coupon reset dates.

During  periods of declining  interest  rates,  of course,  the coupon rates may
readjust downward, resulting in lower yields to a fund. Further, because of this
feature,  the value of  adjustable  rate  mortgages  is  unlikely to rise during
periods  of  declining   interest   rates  to  the  same  extent  as  fixed-rate
instruments.  As with other Mortgage-Backed  Securities,  interest rate declines
may result in  accelerated  prepayment of mortgages,  and the proceeds from such
prepayments must be reinvested at lower prevailing interest rates.

One  additional  difference  between  adjustable  rate  mortgages and fixed rate
mortgages is that for certain types of adjustable rate mortgage securities,  the
rate of amortization of principal,  as well as interest  payments,  can and does
change in  accordance  with  movements in a specified,  published  interest rate
index. The amount of interest due to an adjustable rate mortgage security holder
is  calculated  by adding a specified  additional  amount,  the "margin," to the
index, subject to limitations or "caps" on the maximum and minimum interest that
is charged to the  mortgagor  during the life of the  mortgage or to maximum and
minimum changes to that interest rate during a given period.

Advance  Refunded  Bonds.  DWS Floating  Rate Plus Fund may  purchase  Municipal
Securities that are subsequently  refunded by the issuance and delivery of a new
issue of bonds prior to the date on which the outstanding  issue of bonds can be
redeemed or paid. The proceeds from the new issue of bonds are typically  placed
in an escrow fund consisting of US Government  obligations  that are used to pay
the interest,  principal and call premium on the issue being refunded.  The Fund
may also purchase Municipal Securities that have been refunded prior to purchase
by a fund.

Asset-Backed Securities.  Asset backed securities may include pools of mortgages
("mortgage-backed  securities"),  loans, receivables or other assets. Payment of
principal and interest may be largely dependent upon the cash flows generated by
the assets backing the securities. For purposes of determining the percentage of
a fund's total assets  invested in securities of issuers having their  principal
business  activities in a particular  industry,  asset backed securities will be
classified separately,  based on the nature of the underlying assets,  according
to the  following  categories:  captive auto,  diversified,  retail and consumer
loans, captive equipment and business, business trade receivables,  nuclear fuel
and capital and mortgage lending.  Asset-backed securities present certain risks
that  are  not  presented  by  mortgage-backed   securities.   Primarily,  these
securities  may not have the  benefit of any  security  interest  in the related
assets.  Credit card  receivables  are  generally  unsecured and the debtors are
entitled  to the  protection  of a number of state and federal  consumer  credit
laws,  many of which give such debtors the right to set off certain amounts owed
on the credit cards,  thereby reducing the balance due. There is the possibility
that  recoveries on repossessed  collateral may not, in some cases, be available
to support  payments  on these  securities.  Asset-backed  securities  are often
backed by a pool of assets representing the obligations of a number of different
parties.  To lessen the effect of failures by obligors on  underlying  assets to
make payments,  the securities may contain elements of credit support which fall
into two  categories:  (i) liquidity  protection,  and (ii)  protection  against
losses resulting from ultimate  default by an obligor on the underlying  assets.
Liquidity  protection  refers to the  provision  of  advances,  generally by the
entity  administering the pool of assets, to ensure that the receipt of payments
on the underlying  pool occurs in a timely  fashion.  Protection  against losses
results from payment of the insurance  obligations  on at least a portion of the
assets in the pool. This protection may be provided through guarantees, policies
or letters of credit  obtained  by the  issuer or  sponsor  from third  parties,
through various means of structuring the transaction or through a combination of
such  approaches.  The funds will not pay any  additional  or separate  fees for
credit  support.  The  degree  of  credit  support  provided  for each  issue is
generally  based on historical  information  respecting the level of credit risk
associated  with the  underlying  assets.  Delinquency or loss in excess of that
anticipated or failure of the credit support could  adversely  affect the return
on an investment in such a security. The availability of asset-backed securities
may be affected by legislative or regulatory  developments.  It is possible that
such developments may require the funds to dispose of any then existing holdings
of such securities.

                                       14
<PAGE>

Asset-Indexed Securities. A fund may purchase asset-indexed securities which are
debt  securities   usually  issued  by  companies  in  precious  metals  related
businesses such as mining,  the principal amount,  redemption terms, or interest
rates of which are related to the market price of a specified  precious metal. A
fund  will  only  enter  into  transactions  in  publicly  traded  asset-indexed
securities.  Market prices of asset-indexed  securities will relate primarily to
changes in the market prices of the precious  metals to which the securities are
indexed rather than to changes in market rates of interest.  However,  there may
not be a perfect  correlation  between the price movements of the  asset-indexed
securities  and  the  underlying  precious  metals.   Asset-indexed   securities
typically  bear  interest or pay dividends at below market rates (and in certain
cases at nominal  rates).  A fund may purchase  asset-indexed  securities to the
extent permitted by law.

Auction  Rate  Securities.  Auction rate  securities  in which a fund may invest
consist  of  auction  rate  municipal  securities  and  auction  rate  preferred
securities  issued by closed-end  investment  companies that invest primarily in
municipal securities. Provided that the auction mechanism is successful, auction
rate  securities  usually permit the holder to sell the securities in an auction
at par value at specified intervals. The dividend is reset by "Dutch" auction in
which  bids are made by  broker-dealers  and  other  institutions  for a certain
amount of securities at a specified  minimum yield. The dividend rate set by the
auction is the lowest  interest  or  dividend  rate that  covers all  securities
offered  for sale.  While  this  process  is  designed  to permit  auction  rate
securities  to be traded at par value,  there is the risk that an  auction  will
fail due to insufficient  demand for the  securities.  Dividends on auction rate
preferred  securities  issued by a closed-end  fund may be  designated as exempt
from  federal  income  tax to the extent  they are  attributable  to  tax-exempt
interest  income  earned  by a fund  on the  securities  in  its  portfolio  and
distributed to holders of the preferred securities,  provided that the preferred
securities are treated as equity  securities for federal income tax purposes and
the  closed-end  fund  complies  with  certain  requirements  under the Internal
Revenue Code of 1986, as amended (the "Code").  A fund's  investments in auction
rate  preferred  securities of closed-end  funds are subject to  limitations  on
investments in other US registered investment  companies,  which limitations are
prescribed  by the 1940 Act.  These  limitations  include  prohibitions  against
acquiring  more than 3% of the voting  securities  of any other such  investment
company,  and investing more than 5% of a fund's assets in securities of any one
such investment company or more than 10% of its assets in securities of all such
investment companies.

Bank and Savings and Loan  Obligations.  These  obligations  include  negotiable
certificates  of  deposit,  bankers'  acceptances,  deposit  notes,  fixed  time
deposits  or other  short-term  bank  obligations.  Certificates  of deposit are
negotiable  certificates  evidencing  the  obligations  of a bank to repay funds
deposited  with  it for a  specified  period  of  time.  A fund  may  invest  in
certificates  of deposit of large  domestic  banks and their  foreign  branches,
large US regulated subsidiaries of large foreign banks (i.e., banks which at the
time of their most  recent  annual  financial  statements  show total  assets in
excess of $1 billion),  and of smaller banks as described below. Although a fund
recognizes  that  the  size of a bank  is  important,  this  fact  alone  is not
necessarily  indicative of its  creditworthiness.  Investment in certificates of
deposit issued by foreign  branches of domestic banks involves  investment risks
that are  different in some respects from those  associated  with  investment in
certificates of deposit issued by domestic branches of domestic banks, including
the possible  imposition of withholding  taxes on interest income,  the possible
adoption of foreign  governmental  restrictions which might adversely affect the
payment of principal  and  interest on such  certificates  of deposit,  or other
adverse  political  or  economic  developments.  In  addition,  it might be more
difficult  to obtain  and  enforce  a  judgment  against  a foreign  branch of a
domestic bank.

A fund may also invest in  certificates  of deposit  issued by banks and savings
and  loan  institutions  which  had,  at the time of their  most  recent  annual
financial  statements,  total assets of less than $1 billion,  provided that (i)
the principal  amounts of such  certificates of deposit are insured by an agency
of the US  Government,  (ii) at no time  will a fund  hold  more  than  $100,000
principal  amount of  certificates of deposit of any one such bank, and (iii) at
the time of  acquisition,  no more than 10% of a fund's assets (taken at current
value) are invested in certificates of deposit of such banks having total assets
not in excess of $1 billion.

Banker's acceptances are credit instruments evidencing the obligations of a bank
to  pay a  draft  drawn  on it by a  customer.  These  instruments  reflect  the
obligation  both of the bank and of the  drawer  to pay the face  amount  of the
instrument upon maturity.

Time deposits are non-negotiable  deposits  maintained in a banking  institution
for a specified  period of time at a stated  interest rate.  Time deposits which
may be held by a fund will not benefit from  insurance  from the Bank


                                       15
<PAGE>

Insurance Fund or the Savings  Association  Insurance Fund  administered  by the
Federal Deposit Insurance  Corporation.  Fixed time deposits may be withdrawn on
demand by the investor,  but may be subject to early  withdrawal  penalties that
vary with market conditions and the remaining maturity of the obligation.  Fixed
time  deposits  subject  to  withdrawal  penalties  maturing  in more than seven
calendar  days are subject to a fund's  limitation  on  investments  in illiquid
securities.

Bank Loans.  Bank loans are  typically  senior  debt  obligations  of  borrowers
(issuers) and as such, are  considered to hold a senior  position in the capital
structure of the  borrower.  These may include  loans which hold the most senior
position,  that hold an equal ranking with other senior debt, or loans that are,
in the judgment of the Advisor,  in the category of senior debt of the borrower.
This capital  structure  position  generally  gives the holders of these loans a
priority  claim  on some  or all of the  borrower's  assets  in the  event  of a
default. In most cases, these loans are either partially or fully collateralized
by the assets of a corporation,  partnership, limited liability company or other
business entity, or by cash flow that the Advisor believes has a market value at
the time of acquisition that equals or exceeds the principal amount of the loan.
These loans are often issued in connection with recapitalizations, acquisitions,
leveraged  buy-outs and  refinancings.  It is important to note that Moody's and
S&P may rate bank  loans  higher  than high  yield  bonds of the same  issuer to
reflect  their more  senior  position.  The fund may  invest in both  fixed- and
floating-rate loans. In addition, bank loans can trade either as an "assignment"
or "participation." When the Fund buys an assignment, it is essentially becoming
a party to the bank  agreement.  The vast majority of all trades are assignments
and would therefore  generally represent the preponderance of bank loans held by
the Fund.  In  certain  cases,  the Fund may buy bank  loans on a  participation
basis,  if for  example,  the  Fund  did not  want to  become  party to the bank
agreement.  However,  in all cases,  the Fund will not purchase bank loans where
Deutsche Bank, or an affiliate, serves as an agent bank.

Participations  and  assignments   involve  credit  risk,  interest  rate  risk,
liquidity  risk,  and the  risk of  being a  lender.  If the  Fund  purchases  a
participation, it may only be able to enforce its rights through the lender, and
may assume the credit risk of both the lender and the borrower.

Investments  in loans through  direct  assignment  of a financial  institution's
interests with respect to a loan may involve additional risks. For example, if a
loan is foreclosed, the purchaser could become part owner of any collateral, and
would bear the costs and liabilities associated with owning and disposing of the
collateral.  In addition,  it is at least  conceivable that under emerging legal
theories of lender liability, a purchaser could be held liable as a co-lender.

In the case of loans administered by a bank or other financial  institution that
acts as agent for all holders,  if assets held by the agent for the benefit of a
purchaser  are  determined  to be subject to the claims of the  agent's  general
creditors,  the  purchaser  might incur  certain  costs and delays in  realizing
payment on the loan or loan  participation  and could suffer a loss of principal
or interest.

In the case of loan  participations  where a bank or other  lending  institution
serves  as  financial  intermediary  between  a fund  and the  borrower,  if the
participation does not shift to the fund the direct debtor-creditor relationship
with the borrower, SEC interpretations  require the fund, in some circumstances,
to treat both the lending bank or other lending  institution and the borrower as
issuers for  purposes of the fund's  investment  policies.  Treating a financial
intermediary  as an issuer of  indebtedness  may  restrict  a fund's  ability to
invest in indebtedness related to a single financial intermediary, or a group of
intermediaries  engaged in the same industry,  even if the underlying  borrowers
represent many different companies and industries.

Borrowing.  As a matter of  fundamental  policy,  certain  funds will not borrow
money, except as permitted under the 1940 Act, and as interpreted or modified by
regulatory authority having  jurisdiction,  from time to time. While such funds'
Board of  Directors/Trustees  does not currently intend to borrow for investment
leveraging purposes,  if such a strategy were implemented in the future it would
increase  the  funds'  volatility  and the risk of loss in a  declining  market.
Borrowing  by a fund will  involve  special  risk  considerations.  Although the
principal of a fund's  borrowings  will be fixed,  a fund's assets may change in
value during the time a borrowing is outstanding,  thus  increasing  exposure to
capital risk.

                                       16
<PAGE>

DWS Disciplined  Long/Short  Growth Fund, DWS Disciplined  Long/Short Value Fund
and DWS Floating Rate Plus Fund may each borrow money from banks for  investment
purposes  to the extent  permitted  by the 1940 Act.  This  practice is known as
leverage. Currently, under the 1940 Act, the funds may borrow up to one-third of
their total assets  (including the amount  borrowed)  provided that it maintains
continuous  asset  coverage of 300% with  respect to such  borrowings  and sells
(within three days) sufficient portfolio holdings to restore such coverage if it
should decline to less than 300% due to market  fluctuations or otherwise,  even
if disadvantageous from an investment  standpoint.  The funds may borrow through
other means to the extent  permitted  by the 1940 Act. In addition to  borrowing
for leverage  purposes,  the funds also may borrow money to meet  redemptions in
order to avoid  forced,  unplanned  sales of portfolio  securities  or for other
temporary or emergency  purposes.  This allows the funds greater  flexibility to
buy and sell portfolio  securities for investment or tax considerations,  rather
than for cash flow considerations.

The use of borrowing by the funds involves special risk  considerations that may
not  be  associated   with  other  funds  having   similar   policies.   Because
substantially all of the funds' assets fluctuate in value,  whereas the interest
obligation  resulting  from a borrowing  may be fixed by the terms of the fund's
agreement with its lender,  the net asset value per share of the funds will tend
to increase  more when its portfolio  securities  increase in value and decrease
more when its portfolio securities decrease in value than would otherwise be the
case if the  funds  did  not  borrow  funds.  In  addition,  interest  costs  on
borrowings  may  fluctuate  with  changing  market  rates  of  interest  and may
partially  offset or exceed the return earned on borrowed  funds.  Under adverse
market  conditions,  the funds might have to sell  portfolio  securities to meet
interest  or  principal   payments  at  a  time  when   fundamental   investment
considerations  would not favor such sales. The interest that the funds must pay
on borrowed money, together with any additional fees to establish and maintain a
borrowing  facility,  are additional costs that will reduce or eliminate any net
investment  income  and may also  offset any  potential  capital  gains.  Unless
appreciation  and income,  if any, on assets acquired with borrowed funds exceed
the  costs of  borrowing,  the use of  leverage  will  diminish  the  investment
performance of the funds compared with what it would have been without leverage.

Brady Bonds. Brady Bonds are securities created through the exchange of existing
commercial bank loans to public and private entities in certain emerging markets
for  new   bonds  in   connection   with  debt   restructurings   under  a  debt
restructuring-plan  introduced by former US Secretary of the Treasury,  Nicholas
F.  Brady  (the  "Brady  Plan").   Brady  Plan  debt  restructurings  have  been
implemented in Argentina,  Brazil, Bulgaria, Costa Rica, the Dominican Republic,
Ecuador,  Jordan,  Mexico,  Nigeria, the Philippines,  Poland and Uruguay. Brady
Bonds have been issued fairly  recently,  and for that reason do not have a long
payment history.  Brady Bonds may be  collateralized  or  uncollateralized,  are
issued in various  currencies (but primarily the dollar) and are actively traded
in over-the-counter secondary markets. Dollar-denominated,  collateralized Brady
Bonds,  which may be  fixed-rate  bonds or  floating-rate  bonds,  are generally
collateralized  in full as to principal by US Treasury  zero coupon bonds having
the same maturity as the bonds. Interest payments on these Brady Bonds generally
are collateralized by cash or 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 that time and
is adjusted at regular  intervals  thereafter.  Brady Bonds are often  viewed as
having  three or four  valuation  components:  the  collateralized  repayment of
principal  at  final  maturity;   the  collateralized   interest  payments;  the
uncollateralized  interest  payments;  and  any  uncollateralized  repayment  of
principal at maturity (these  uncollateralized  amounts constitute the "residual
risk"). In light of the residual risk of Brady Bonds and the history of defaults
of countries  issuing  Brady Bonds,  with  respect to  commercial  bank loans by
public  and  private  entities,  investments  in Brady  Bonds  may be  viewed as
speculative.  Approximately  $152  billion in Brady  Bonds  have been  issued in
Africa,  Asia, Eastern Europe,  Latin America and the Middle East, with over 90%
of these Brady Bonds being denominated in US dollars.

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 funds 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

                                       17
<PAGE>

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.

Collateralized   Mortgage  Obligations   ("CMOs").   CMOs  are  hybrids  between
mortgage-backed bonds and mortgage pass-through  securities.  Similar to a bond,
interest and prepaid principal are paid, in most cases,  semiannually.  CMOs may
be collateralized by whole mortgage loans but are more typically  collateralized
by portfolios of mortgage pass-through  securities guaranteed by GNMA, FHLMC, or
Fannie Mae, and their income streams.

CMOs are  structured  into  multiple  classes,  each bearing a different  stated
maturity.  Actual  maturity  and average  life will  depend upon the  prepayment
experience  of  the  collateral.  CMOs  provide  for a  modified  form  of  call
protection  through a de facto  breakdown  of the  underlying  pool of mortgages
according  to how  quickly the loans are repaid.  Monthly  payment of  principal
received from the pool of underlying mortgages,  including prepayments, is first
returned to investors holding the shortest maturity class. Investors holding the
longer maturity  classes  receive  principal only after the first class has been
retired.  An investor is partially  guarded against a sooner than desired return
of principal  because of the  sequential  payments.  The prices of certain CMOs,
depending on their structure and the rate of prepayments,  can be volatile. Some
CMOs may also not be as liquid as other securities.

In a typical CMO transaction,  a corporation issues multiple series (e.g., A, B,
C, Z) of CMO bonds ("Bonds"). Proceeds of the Bond offering are used to purchase
mortgages or mortgage pass-through certificates  ("Collateral").  The Collateral
is pledged to a third party  trustee as security  for the Bonds.  Principal  and
interest  payments from the Collateral are used to pay principal on the Bonds in
the order A, B, C, Z. The  Series A, B, and C Bonds all bear  current  interest.
Interest  on the  Series Z Bond is  accrued  and added to  principal  and a like
amount is paid as principal on the Series A, B, or C Bond  currently  being paid
off. When the Series A, B, and C Bonds are paid in full,  interest and principal
on the Series Z Bond  begins to be paid  currently.  With some CMOs,  the issuer
serves as a conduit to allow loan originators (primarily builders or savings and
loan associations) to borrow against their loan portfolios.

The principal  risk of CMOs results from the rate of  prepayments  on underlying
mortgages  serving as collateral and from the structure of the deal. An increase
or decrease in prepayment rates will affect the yield, average life and price of
CMOs.

Commercial Paper. Subject to its investment  objectives and policies, a fund may
invest in commercial  paper issued by major  corporations  under the 1933 Act in
reliance on the exemption from registration afforded by Section 3(a)(3) thereof.
Such  commercial  paper may be issued only to finance current  transactions  and
must  mature  in nine  months  or  less.  Trading  of such  commercial  paper is
conducted primarily by institutional  investors through investment dealers,  and
individual  investor  participation  in the  commercial  paper  market  is  very
limited.  A fund also may invest in  commercial  paper issued in reliance on the
so-called "private  placement"  exemption from registration  afforded by Section
4(2) of the 1933 Act ("Section 4(2) paper"). Section 4(2) paper is restricted as
to  disposition  under the federal  securities  laws,  and  generally is sold to
institutional  investors  such as a fund who agree that they are  purchasing the
paper for investment and not with a view to public  distribution.  Any resale by
the purchaser must be in an exempt  transaction.  Section 4(2) paper normally is
resold  to  other  institutional  investors  like a fund  through  or  with  the
assistance of the issuer or investment  dealers who make a market in the Section
4(2)  paper,  thus  providing  liquidity.  The  Advisor  considers  the  legally
restricted  but  readily  saleable  Section  4(2) paper to be  liquid;  however,
pursuant to procedures approved by a fund's Board, if a particular investment in
Section  4(2) paper is not  determined  to be liquid,  that  investment  will be
included  within the  limitation of a fund on illiquid  securities.  The Advisor
monitors the liquidity of its  investments in Section 4(2) paper on a continuing
basis.

Common  Stocks.  Common  stock is issued by companies to raise cash for business
purposes  and  represents  a  proportionate  interest in the issuing  companies.
Therefore, a fund participates in the success or failure of any company in which
it holds stock.  The market values of common stock can fluctuate  significantly,
reflecting the business performance of the issuing company,  investor perception
and general economic and financial market  movements.  Despite the risk of price
volatility, however, common stocks have historically offered a greater potential
for long-term gain on investment,  compared to other classes of financial assets
such as bonds or cash equivalents,  although there can be no assurance that this
will be true in the future.

                                       18
<PAGE>

Convertible Securities.  A fund may invest in convertible  securities,  that is,
bonds,  notes,  debentures,  preferred  stocks  and other  securities  which are
convertible into common stock. Investments in convertible securities can provide
an  opportunity  for capital  appreciation  and/or income  through  interest and
dividend payments by virtue of their conversion or exchange features.

The convertible securities in which a fund may invest are either fixed income or
zero coupon debt  securities  which may be converted or exchanged at a stated or
determinable exchange ratio into underlying shares of common stock. The exchange
ratio for any particular  convertible security may be adjusted from time to time
due to stock splits,  dividends,  spin-offs,  other corporate  distributions  or
scheduled  changes  in the  exchange  ratio.  Convertible  debt  securities  and
convertible  preferred  stocks,  until converted,  have general  characteristics
similar to both debt and equity  securities.  Although  to a lesser  extent than
with debt securities generally, the market value of convertible securities tends
to decline as interest  rates  increase  and,  conversely,  tends to increase as
interest  rates  decline.  In addition,  because of the  conversion  or exchange
feature,  the market value of convertible  securities  typically  changes as the
market value of the underlying common stocks changes, and, therefore, also tends
to follow  movements  in the  general  market  for equity  securities.  A unique
feature of convertible  securities is that as the market price of the underlying
common stock declines,  convertible  securities tend to trade  increasingly on a
yield basis, and so may not experience  market value declines to the same extent
as the underlying  common stock.  When the market price of the underlying common
stock  increases,  the prices of the  convertible  securities  tend to rise as a
reflection of the value of the underlying common stock,  although  typically not
as much as the  underlying  common stock.  While no securities  investments  are
without risk,  investments in convertible  securities generally entail less risk
than investments in common stock of the same issuer.

As debt securities,  convertible  securities are investments which provide for a
stream of income (or in the case of zero coupon securities, accretion of income)
with  generally  higher  yields  than  common  stocks.   Convertible  securities
generally offer lower yields than non-convertible  securities of similar quality
because of their conversion or exchange features.

Of course,  like all debt  securities,  there can be no  assurance  of income or
principal payments because the issuers of the convertible securities may default
on their obligations.

Convertible   securities   generally  are  subordinated  to  other  similar  but
non-convertible  securities of the same issuer,  although  convertible bonds, as
corporate debt  obligations,  enjoy  seniority in right of payment to all equity
securities,  and  convertible  preferred stock is senior to common stock, of the
same issuer.  However,  because of the subordination feature,  convertible bonds
and  convertible  preferred  stock  typically  have lower  ratings  than similar
non-convertible securities. Convertible securities may be issued as fixed income
obligations that pay current income or as zero coupon notes and bonds, including
Liquid Yield Option Notes ("LYONs"(TM)).

Correlation of Gold and Gold Securities.  The underlying fund's advisor believes
that the value of the  securities  of firms  that  deal in gold will  correspond
generally,  over time,  with the prices of the  underlying  metal.  At any given
time,  however,  changes in the price of gold may not  strongly  correlate  with
changes  in the value of  securities  related  to gold,  which are  expected  to
constitute the principal part of a fund's assets.  In fact, there may be periods
in which the price of gold  stocks and gold will move in  different  directions.
The reason for this potential  disparity is that political and economic factors,
including  behavior  of the stock  market,  may have  differing  impacts on gold
versus gold stocks.

Corporate Obligations.  Investment in corporate debt obligations involves credit
and interest rate risk.  The value of  fixed-income  investments  will fluctuate
with changes in interest  rates and bond market  conditions,  tending to rise as
interest  rates decline and to decline as interest  rates rise.  Corporate  debt
obligations generally offer less current yield than securities of lower quality,
but lower-quality  securities generally have less liquidity,  greater credit and
market risk,  and as a result,  more price  volatility.  Longer-term  bonds are,
however, generally more volatile than bonds with shorter maturities.

Custodial  Receipts.  Custodial  receipts  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


                                       19
<PAGE>

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 (see "US Government Securities" above)
are  interests in accounts  sponsored  by the US Treasury.  Receipts are sold as
zero coupon securities; for more information, see "Zero Coupon Securities."

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.

Depositary  Receipts.  A fund may invest in  sponsored or  unsponsored  American
Depositary  Receipts ("ADRs"),  European  Depositary  Receipts ("EDRs"),  Global
Depositary  Receipts ("GDRs"),  International  Depositary  Receipts ("IDRs") and
other types of Depositary Receipts (which, together with ADRs, GDRs and IDRs are
hereinafter referred to as "Depositary  Receipts").  Depositary receipts provide
indirect  investment  in securities of foreign  issuers.  Prices of  unsponsored
Depositary  Receipts  may be more  volatile  than if they were  sponsored by the
issuer of the underlying securities.  Depositary Receipts may not necessarily be
denominated  in the same currency as the underlying  securities  into which they
may be  converted.  In  addition,  the  issuers  of  the  stock  of  unsponsored
Depositary  Receipts are not obligated to disclose  material  information in the
United  States  and,  therefore,  there may not be a  correlation  between  such
information and the market value of the Depositary Receipts. ADRs are Depositary
Receipts which are bought and sold in the United States and are typically issued
by a US bank or trust company which evidence ownership of underlying  securities
by a foreign corporation.  GDRs, IDRs and other types of Depositary Receipts are
typically issued by foreign banks or trust companies,  although they may also be
issued by United  States banks or trust  companies,  and  evidence  ownership of
underlying securities issued by either a foreign or a United States corporation.
Generally,  Depositary  Receipts in registered  form are designed for use in the
United  States  securities  markets and  Depositary  Receipts in bearer form are
designed for use in securities  markets outside the United States.  For purposes
of a fund's investment  policies,  a fund's  investments in ADRs, GDRs and other
types of Depositary  Receipts will be deemed to be investments in the underlying
securities.  Depositary Receipts, including those denominated in US dollars will
be subject to foreign currency exchange rate risk.  However,  by investing in US
dollar-denominated  ADRs rather than directly in foreign  issuers' stock, a fund
avoids  currency  risks during the  settlement  period.  In general,  there is a
large,  liquid  market in the  United  States for most  ADRs.  However,  certain
Depositary  Receipts  may not be  listed on an  exchange  and  therefore  may be
illiquid securities.

Direct Debt  Instruments.  DWS Floating Rate Plus Fund may invest in direct debt
instruments.  Direct  debt  instruments  are  interests  in  amounts  owed  by a
corporate,  governmental  or  other  borrower  to  lenders  (direct  loans),  to
suppliers of goods or services  (trade claims or other  receivables) or to other
parties.

When the fund participates in a direct loan it will be lending money directly to
an issuer.  Direct loans generally do not have an underwriter or agent bank, but
instead,  are  negotiated  between a company's  management  team and a lender or
group of lenders.  Direct loans  typically  offer better security and structural
terms than other types of high yield  securities.  Direct debt  obligations  are
often  the most  senior-obligations  in an  issuer's  capital  structure  or are
well-collateralized so that overall risk is lessened.

                                       20
<PAGE>

Trade claims are unsecured rights of payment arising from obligations other than
borrowed funds.  Trade claims include vendor claims and other  receivables  that
are   adequately   documented   and  available  for  purchase  from  high  yield
broker-dealers.  Trade claims  typically may sell at a discount.  In addition to
the risks otherwise associated with low-quality  obligations,  trade claims have
other  risks,  including  the  possibility  that the  amount of the claim may be
disputed by the obligor.  Trade claims normally would be considered illiquid and
pricing can be volatile.

Direct debt instruments  involve a risk of loss in case of default or insolvency
of the borrower.  The fund will rely primarily upon the  creditworthiness of the
borrower  and/or  the  collateral  for  payment of  interest  and  repayment  of
principal.  The value of the fund's  investments  may be  adversely  affected if
scheduled interest or principal payments are not made. Because most direct loans
will be secured,  there will be a smaller  risk of loss with  direct  loans than
with an investment in unsecured  high yield bonds or trade claims.  Indebtedness
of borrowers whose creditworthiness is poor involves substantially greater risks
and may be highly speculative. Borrowers that are in bankruptcy or restructuring
may never pay off their  indebtedness  or may pay only a small  fraction  of the
amount owed.  Investments in direct debt  instruments also involve interest rate
risk  and  liquidity  risk.  However,  interest  rate  risk is  lessened  by the
generally  short-term  nature of direct debt instruments and their interest rate
structure,  which typically floats. To the extent the direct debt instruments in
which the fund invests are considered  illiquid,  the lack of a liquid secondary
market (1) will have an  adverse  impact on the value of such  instruments,  (2)
will have an  adverse  impact on the  fund's  ability  to  dispose  of them when
necessary  to meet the  fund's  liquidity  needs or in  response  to a  specific
economic event, such as a decline in creditworthiness of the issuer, and (3) may
make it more difficult for the fund to assign a value of these  instruments  for
purposes of valuing the fund's portfolio and calculating its net asset value. In
order to lessen  liquidity  risk, the fund  anticipates  investing  primarily in
direct debt  instruments that are quoted and traded in the high yield market and
will not  invest in these  instruments  if it would  cause  more than 15% of the
fund's net assets to be  illiquid.  Trade  claims may also present a tax risk to
the fund.

The fund will not invest in trade claims if it effects the fund's  qualification
as a regulated  investment  company under  Subchapter M of the Internal  Revenue
Code.

Dollar Roll Transactions. Dollar roll transactions consist of the sale by a fund
to a bank or broker/dealer  (the  "counterparty")  of GNMA certificates or other
mortgage-backed  securities  together  with a  commitment  to purchase  from the
counterparty  similar,  but not  identical,  securities at a future date, at the
same price.  The  counterparty  receives all  principal  and interest  payments,
including  prepayments,  made on the  security  while it is the  holder.  A fund
receives a fee from the  counterparty  as  consideration  for entering  into the
commitment  to  purchase.  Dollar  rolls may be renewed over a period of several
months  with  a  different  purchase  and  repurchase  price  fixed  and a  cash
settlement  made  at each  renewal  without  physical  delivery  of  securities.
Moreover,  the  transaction  may  be  preceded  by a firm  commitment  agreement
pursuant to which a fund agrees to buy a security on a future date.

A fund will segregate  cash, US Government  securities or other liquid assets in
an amount sufficient to meet their purchase obligations under the transactions.

Dollar  rolls may be treated for  purposes of the 1940 Act, as  borrowings  of a
fund because  they  involve the sale of a security  coupled with an agreement to
repurchase.  A dollar roll involves costs to a fund.  For example,  while a fund
receives a fee as consideration for agreeing to repurchase the security,  a fund
forgoes the right to receive  all  principal  and  interest  payments  while the
counterparty  holds the security.  These payments to the counterparty may exceed
the fee received by a fund, thereby effectively  charging a fund interest on its
borrowing.  Further,  although  a fund  can  estimate  the  amount  of  expected
principal prepayment over the term of the dollar roll, a variation in the actual
amount of prepayment could increase or decrease the cost of a fund's borrowing.

The entry into dollar rolls involves  potential risks of loss that are different
from those related to the securities  underlying the transactions.  For example,
if the  counterparty  becomes  insolvent,  a fund's  right to purchase  from the
counterparty might be restricted. Additionally, the value of such securities may
change adversely before a fund is able to purchase them.  Similarly,  a fund may
be required to purchase  securities in connection with a dollar roll at a higher
price than may otherwise be available on the open market. Since, as noted above,
the counterparty is required to deliver a similar, but not identical security to
a fund, the security that a fund is required to buy under the dollar roll may be
worth less than an identical security. Finally, there can be no assurance that a
fund's use of the cash that it receives from a dollar roll will provide a return
that exceeds borrowing costs.

                                       21
<PAGE>

Equities as a result of workouts.  A fund may hold equity securities received in
an exchange or workout of distressed  lower-rated debt securities.  A distressed
security is a security that is in default or in risk of being in default.

Eurodollar  Instruments.  A fund may make investments in Eurodollar instruments.
Eurodollar  instruments are US  dollar-denominated  futures contracts or options
thereon  which are  linked  to the  London  Interbank  Offered  Rate  ("LIBOR"),
although  foreign  currency-denominated  instruments  are available from time to
time.  Eurodollar futures contracts enable purchasers to obtain a fixed rate for
the lending of funds and sellers to obtain a fixed rate for  borrowings.  A Fund
might use  Eurodollar  futures  contracts  and options  thereon to hedge against
changes in LIBOR, to which many interest rate swaps and fixed income instruments
are linked or for any other purpose.

Eurodollar  Obligations.  Eurodollar bank obligations are US  dollar-denominated
certificates  of deposit and time deposits issued outside the US capital markets
by foreign  branches of US banks and US branches  of foreign  banks.  Eurodollar
obligations  are  subject  to the same risks that  pertain to  domestic  issues,
notably credit risk,  market risk and liquidity risk.  Additionally,  Eurodollar
obligations are subject to certain sovereign risks.

Foreign  Currencies.  Because  investments  in foreign  securities  will usually
involve  currencies  of foreign  countries,  and because a fund may hold foreign
currencies  and  forward   foreign   currency   exchange   contracts   ("forward
contracts"),   futures  contracts,  options  on  futures  contracts  on  foreign
currencies and other currency-related  instruments, the value of the assets of a
fund as  measured  in US dollars may be affected  favorably  or  unfavorably  by
changes in foreign currency exchange rates and exchange control regulations, and
a  fund  may  incur  costs  in  connection  with  conversions   between  various
currencies.

The  strength  or  weakness  of  the  US  dollar  against  these  currencies  is
responsible for part of a fund's investment performance.  If the dollar falls in
value relative to the Japanese yen, for example,  the dollar value of a Japanese
stock held in the portfolio  will rise even though the price of the stock in yen
remains unchanged. Conversely, if the dollar rises in value relative to the yen,
the dollar value of the Japanese stock will fall.  Many foreign  currencies have
experienced significant devaluation relative to the dollar.

Although  a fund  values its assets  daily in terms of US  dollars,  it does not
intend to convert its holdings of foreign  currencies into US dollars on a daily
basis.  It will do so from time to time,  and  investors  should be aware of the
costs of currency conversion.  Although foreign exchange dealers do not charge a
fee for  conversion,  they do  realize  a profit  based on the  difference  (the
"spread")  between  the  prices at which they are  buying  and  selling  various
currencies. Thus, a dealer may offer to sell a foreign currency to a fund at one
rate,  while  offering a lesser rate of exchange  should a fund desire to resell
that currency to the dealer. A fund will conduct its foreign  currency  exchange
transactions  either on a spot (i.e., cash) basis at the spot rate prevailing in
the foreign currency exchange market, or through entering into forward contracts
(or options  thereon) to purchase or sell foreign  currencies.  (See  "Strategic
Transactions and Derivatives" below.)

Foreign Fixed Income Securities.  Since most foreign fixed income securities are
not rated,  a fund will invest in foreign fixed income  securities  based on the
underlying funds' advisor's analysis without relying on published ratings. Since
such  investments will be based upon the underlying  funds'  advisor's  analysis
rather than upon  published  ratings,  achievement  of a fund's goals may depend
more upon the abilities of the underlying funds' advisor than would otherwise be
the case.

The value of the foreign fixed income  securities  held by a fund,  and thus the
net asset value of a fund's shares, generally will fluctuate with (a) changes in
the perceived creditworthiness of the issuers of those securities, (b) movements
in interest  rates,  and (c) changes in the relative values of the currencies in
which a fund's  investments  in fixed income  securities  are  denominated  with
respect to the US Dollar.  The extent of the fluctuation  will depend on various
factors,  such as the average maturity of a fund's  investments in foreign fixed
income  securities,  and the extent to which a fund  hedges its  interest  rate,
credit and currency exchange rate risks. A longer average maturity  generally is
associated  with a  higher  level  of  volatility  in the  market  value of such
securities in response to changes in market conditions.

                                       22
<PAGE>

Investments in sovereign  debt,  including  Brady Bonds,  involve special risks.
Brady Bonds are debt securities  issued under a plan implemented to allow debtor
nations to restructure their outstanding  commercial bank indebtedness.  Foreign
governmental  issuers of debt or the  governmental  authorities that control the
repayment  of the debt may be  unable or  unwilling  to repay  principal  or pay
interest  when due.  In the event of  default,  there may be limited or no legal
recourse in that, generally, remedies for defaults must be pursued in the courts
of the defaulting party.  Political conditions,  especially a sovereign entity's
willingness  to  meet  the  terms  of  its  fixed  income  securities,   are  of
considerable  significance.  Also, there can be no assurance that the holders of
commercial bank loans to the same sovereign  entity may not contest  payments to
the holders of sovereign debt in the event of default under commercial bank loan
agreements.  In  addition,  there is no  bankruptcy  proceeding  with respect to
sovereign debt on which a sovereign has  defaulted,  and a fund may be unable to
collect  all or any  part  of its  investment  in a  particular  issue.  Foreign
investment  in certain  sovereign  debt is  restricted  or controlled to varying
degrees,  including  requiring  governmental  approval for the  repatriation  of
income, capital or proceed of sales by foreign investors.  These restrictions or
controls may at times limit or preclude foreign  investment in certain sovereign
debt or increase the costs and expenses of a fund.  Sovereign debt may be issued
as part of debt  restructuring  and such debt is to be  considered  speculative.
There is a history of defaults with respect to  commercial  bank loans by public
and private  entities  issuing  Brady  Bonds.  All or a portion of the  interest
payments  and/or  principal  repayment  with  respect  to  Brady  Bonds  may  be
uncollateralized.

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

In addition, foreign securities may be subject to the risk of nationalization or
expropriation   of  assets,   imposition  of  currency   exchange   controls  or
restrictions on the  repatriation of foreign  currency,  confiscatory  taxation,
political or  financial  instability  and  diplomatic  developments  which could
affect  the  value of the  fund's  investments  in  certain  foreign  countries.
Governments   of  many   countries  have  exercised  and  continue  to  exercise
substantial  influence  over many  aspects of the  private  sector  through  the
ownership or control of many  companies,  including some of the largest in these
countries.  As  a  result,  government  actions  in  the  future  could  have  a
significant  effect on economic  conditions which may adversely affect prices of
certain   portfolio   securities.   There  is  also  generally  less  government
supervision and regulation of stock  exchanges,  brokers,  and listed  companies
than in the US.  Dividends or interest on, or proceeds from the sale of, foreign
securities  may be subject  to foreign  withholding  taxes,  and  special US tax
considerations  may apply.  Moreover,  foreign economies may differ favorably or
unfavorably  from the US economy in such  respects  as growth of gross  national
product, rate of inflation, capital reinvestment,  resource self-sufficiency and
balance of payments position.

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

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

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

                                       23
<PAGE>

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

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

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

The risk  also  exists  that an  emergency  situation  may  arise in one or more
emerging  markets as a result of which trading of securities may cease or may be
substantially  curtailed and prices for a fund's  securities in such markets may
not be readily  available.  A fund may suspend  redemption of its shares for any
period during which an emergency exists,  as determined by the SEC.  Accordingly
if a fund believes that appropriate  circumstances exist, it will promptly apply
to the SEC for a determination  that an emergency is present.  During the period
commencing from a fund's  identification of such condition until the date of the
SEC action,  a fund's  securities in the affected markets will be valued at fair
value determined in good faith by or under the direction of a fund's Board.

Foreign  Securities.  Investments in foreign securities involves certain special
considerations,  including  those  set  forth  below,  which  are not  typically
associated   with  investing  in  US  securities  and  which  may  favorably  or
unfavorably affect a fund's performance.  As foreign companies are not generally
subject to uniform  accounting,  auditing  and  financial  reporting  standards,
practices and requirements comparable to those applicable to domestic companies,
there may be less publicly  available  information  about a foreign company than
about a domestic company. Many foreign stock markets, while growing in volume of
trading  activity,  have  substantially  less  volume  than the New  York  Stock
Exchange,  Inc. (the  "Exchange"),  and securities of some foreign companies are
less liquid and more volatile than securities of domestic companies.  Similarly,
volume and  liquidity in most foreign bond markets is less than in the US and at
times,  volatility  of price can be  greater  than in the US.  Further,  foreign
markets  have  different  clearance  and  settlement  procedures  and in certain
markets  there have been times when  settlements  have been  unable to keep pace
with the volume of securities transactions,  making it difficult to conduct such
transactions. Delays in settlement could result in temporary periods when assets
of a fund are  uninvested  and no return is earned  thereon.  The inability of a
fund to make intended security purchases due to settlement  problems could cause
a fund to miss  attractive  investment  opportunities.  Inability  to dispose of
portfolio securities due to settlement problems either could result in losses to
a fund due to subsequent  declines in value of the  portfolio  security or, if a
fund has  entered  into a  contract  to sell the  security,  could  result  in a
possible liability to the purchaser. Payment for securities without delivery may
be required in certain foreign markets.  Fixed commissions on some foreign stock
exchanges  are generally  higher than  negotiated  commissions  on US exchanges,
although a fund will  endeavor to achieve the most  favorable net results on its
portfolio transactions.  Further, a fund may encounter difficulties or be unable
to pursue  legal  remedies  and obtain  judgments  in foreign  courts.  There is
generally less  government  supervision  and regulation of business and industry
practices, stock exchanges,  brokers and listed companies than in the US. It may
be more difficult for a fund's agents to keep currently informed about corporate
actions such as stock  dividends or other matters which may affect the prices of
portfolio securities. Communications between the US and foreign countries may be
less  reliable  than  within  the  US,  thus  increasing  the


                                       24
<PAGE>

risk of delayed  settlements of portfolio  transactions  or loss of certificates
for  portfolio  securities.   In  addition,  with  respect  to  certain  foreign
countries,  there is the possibility of expropriation or confiscatory  taxation,
political or social instability,  or diplomatic  developments which could affect
US investments in those countries.  Moreover,  individual  foreign economies may
differ  favorably or unfavorably  from the US economy in such respects as growth
of gross national product,  rate of inflation,  capital  reinvestment,  resource
self-sufficiency  and balance of payments  position.  The  management  of a fund
seeks to mitigate the risks associated with the foregoing considerations through
diversification and continuous professional management.

Gold or Precious  Metals  Custody.  Gold and other precious metals held by or on
behalf of a fund may be held on  either an  allocated  or an  unallocated  basis
inside or  outside  the US.  Placing  gold or  precious  metals in an  allocated
custody  account  gives the fund a direct  interest  in  specified  gold bars or
precious metals,  whereas an unallocated  deposit does not and instead gives the
Fund a right only to compel  the  counterparty  to deliver a specific  amount of
gold or precious metals, as applicable.  Consequently, a fund could experience a
loss if the counterparty to an unallocated  deposit arrangement becomes bankrupt
or fails to deliver the gold or precious metals as requested.  An allocated gold
or precious  metals  custody  account  also  involves  the risk that the gold or
precious  metals will be stolen or damaged while in transit.  Both allocated and
unallocated  arrangements  require a fund as seller to  deliver,  either by book
entry or physically,  the gold or precious metals sold in advance of the receipt
of payment.

High Yield/High  Risk Bonds. A fund may also purchase debt securities  which are
rated below  investment-grade  (commonly referred to as "junk bonds"),  that is,
rated below Baa by Moody's or below BBB by S&P and unrated  securities judged to
be of equivalent  quality as determined by the underlying fund's advisor.  These
securities  usually entail greater risk (including the possibility of default or
bankruptcy  of the  issuers  of  such  securities),  generally  involve  greater
volatility  of price and risk to principal  and income,  and may be less liquid,
than securities in the higher rating  categories.  The lower the ratings of such
debt  securities,  the more their  risks  render  them like  equity  securities.
Securities  rated D may be in default  with  respect to payment of  principal or
interest.

Issuers of such high yield  securities  often are highly  leveraged  and may not
have available to them more  traditional  methods of financing.  Therefore,  the
risk  associated  with  acquiring the  securities  of such issuers  generally is
greater than is the case with higher rated  securities.  For example,  during an
economic  downturn  or a  sustained  period of  rising  interest  rates,  highly
leveraged  issuers of high yield  securities  may experience  financial  stress.
During such periods, such issuers may not have sufficient revenues to meet their
interest  payment  obligations.   The  issuer's  ability  to  service  its  debt
obligations may also be adversely affected by specific  corporate  developments,
or the issuer's inability to meet specific projected business forecasts,  or the
unavailability  of  additional  financing.  The risk of loss from default by the
issuer is significantly greater for the holders of high yield securities because
such  securities  are generally  unsecured and are often  subordinated  to other
creditors  of the  issuer.  Prices  and  yields of high  yield  securities  will
fluctuate over time and, during periods of economic  uncertainty,  volatility of
high  yield  securities  may  adversely  affect a fund's  net  asset  value.  In
addition,  investments  in high yield zero coupon or pay-in-kind  bonds,  rather
than  income-bearing  high yield securities,  may be more speculative and may be
subject to greater fluctuations in value due to changes in interest rates.

A fund may have difficulty  disposing of certain high yield  securities  because
they may have a thin trading market. Because not all dealers maintain markets in
all high yield securities, a fund anticipates that such securities could be sold
only to a limited number of dealers or  institutional  investors.  The lack of a
liquid  secondary  market may have an adverse  effect on the market  price and a
fund's  ability  to  dispose  of  particular  issues  and may also  make it more
difficult  for a fund to obtain  accurate  market  quotations  for  purposes  of
valuing a fund's assets.  Market quotations generally are available on many high
yield  issues  only from a limited  number of  dealers  and may not  necessarily
represent  firm  bids of such  dealers  or  prices  for  actual  sales.  Adverse
publicity and investor perceptions may decrease the values and liquidity of high
yield  securities.  These  securities  may  also  involve  special  registration
responsibilities,   liabilities   and  costs,   and   liquidity   and  valuation
difficulties.

Credit  quality in the  high-yield  securities  market can change  suddenly  and
unexpectedly,  and even recently issued credit ratings may not fully reflect the
actual risks posed by a particular high-yield security. For these reasons, it is
generally the policy of the underlying fund's advisor not to rely exclusively on
ratings issued by established  credit rating  agencies,  but to supplement  such
ratings with its own  independent  and on-going  review of credit  quality.  The
achievement of a fund's  investment  objective by investment in such  securities
may be more dependent on the


                                       25
<PAGE>

underlying  fund's advisor's credit analysis than is the case for higher quality
bonds.  Should the rating of a portfolio security be downgraded,  the underlying
funds' advisor will  determine  whether it is in the best interests of a fund to
retain or dispose of such security.

Prices  for   high-yield   may  be  affected  by   legislative   and  regulatory
developments.  Also, Congress has from time to time considered legislation which
would restrict or eliminate the corporate tax deduction for interest payments in
these  securities and regulate  corporate  restructurings.  Such legislation may
significantly depress the prices of outstanding securities of this type.

A portion of the high-yield  acquired by a fund will be purchased upon issuance,
which may involve  special  risks  because the  securities  so acquired  are new
issues. In such instances a fund may be a substantial purchaser of the issue and
therefore have the  opportunity  to participate in structuring  the terms of the
offering.  Although  this may  enable a fund to seek to protect  itself  against
certain of such risks, the  considerations  discussed herein would  nevertheless
remain applicable.

Illiquid  Securities and Restricted  Securities.  A fund may purchase securities
that are subject to legal or  contractual  restrictions  on resale  ("restricted
securities").  Generally  speaking,  restricted  securities  may be sold  (i) to
qualified  institutional buyers; (ii) in a privately negotiated transaction to a
limited number of purchasers;  (iii) in limited  quantities after they have been
held for a specified  period of time and other conditions are met pursuant to an
exemption  from  registration;  or  (iv)  in  a  public  offering  for  which  a
registration statement is in effect under the Securities Act of 1933, as amended
(the "1933 Act").  Issuers of  restricted  securities  may not be subject to the
disclosure and other investor  protection  requirements that would be applicable
if their securities were publicly traded.

Restricted  securities  are often  illiquid,  but they may also be  liquid.  For
example,  restricted securities that are eligible for resale under Rule 144A are
often deemed to be liquid.

Each fund's Board has approved  guidelines for use by its advisor in determining
whether a security  is liquid or  illiquid.  Among the  factors  an advisor  may
consider in reaching  liquidity  decisions relating to Rule 144A securities are:
(1) the  frequency  of trades  and quotes  for the  security;  (2) the number of
dealers  wishing  to  purchase  or sell the  security  and the  number  of other
potential purchasers;  (3) dealer undertakings to make a market in the security;
and (4) the nature of the security and the nature of the market for the security
(i.e.,  the time  needed to dispose of the  security,  the method of  soliciting
offers, and the mechanics of the transfer.  Issuers of restricted securities may
not be subject to the disclosure and other investor protection  requirement that
would  be  applicable  if  their  securities  were  publicly  traded.   Where  a
registration  statement is required for the resale of restricted  securities,  a
fund may be required to bear all or part of the  registration  expenses.  A fund
may be deemed to be an "underwriter"  for purposes of the 1933 Act, when selling
restricted  securities to the public and, in such event, a fund may be liable to
purchasers of such  securities  if the  registration  statement  prepared by the
issuer is materially inaccurate or misleading.

A fund may also purchase securities that are not subject to legal or contractual
restrictions  on resale,  but that are deemed  illiquid.  Such securities may be
illiquid, for example, because there is a limited trading market for them.

A fund may be unable to sell a restricted or illiquid security.  In addition, it
may be more  difficult to determine a market  value for  restricted  or illiquid
securities.  Moreover,  if adverse market  conditions were to develop during the
period between a fund's  decision to sell a restricted or illiquid  security and
the point at which a fund is  permitted  or able to sell such  security,  a fund
might  obtain a price  less  favorable  than the price  that  prevailed  when it
decided to sell.

Impact of Large  Redemptions  and  Purchases of Fund Shares.  From time to time,
shareholders  of a Fund or an Underlying DWS Fund (which may include  affiliated
and/or  non-affiliated  registered investment companies that invest in a Fund or
an Underlying DWS Fund) may make  relatively  large  redemptions or purchases of
fund shares.  These  transactions may cause a 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 a fund's  performance  to the extent  that a fund may be  required to
sell securities or invest cash at times when it would not


                                       26
<PAGE>

otherwise do so. These  transactions  could also  accelerate the  realization of
taxable  income if sales of securities  resulted in capital gains and could also
increase transaction costs, which may impact a fund's expense ratio.

Indexed Securities. A fund may invest in indexed securities,  the value of which
is linked to currencies, interest rates, commodities, indices or other financial
indicators ("reference instruments"). Most indexed securities have maturities of
three years or less.

Indexed  securities  differ from other types of debt  securities in which a fund
may invest in several  respects.  First, the interest rate or, unlike other debt
securities,  the principal amount payable at maturity of an indexed security may
vary based on changes in one or more specified reference instruments, such as an
interest rate compared with a fixed interest rate or the currency exchange rates
between  two  currencies  (neither  of which need be the  currency  in which the
instrument is denominated).  The reference instrument need not be related to the
terms of the indexed security.  For example, the principal amount of a US dollar
denominated  indexed security may vary based on the exchange rate of two foreign
currencies.  An indexed security may be positively or negatively  indexed;  that
is, its value may increase or decrease if the value of the reference  instrument
increases.  Further,  the change in the principal amount payable or the interest
rate of an indexed security may be a multiple of the percentage change (positive
or negative) in the value of the underlying reference instrument(s).

Investment in indexed  securities  involves  certain  risks.  In addition to the
credit risk of the  security's  issuer and the normal risks of price  changes in
response  to  changes  in  interest  rates,  the  principal  amount  of  indexed
securities  may  decrease  as a result  of  changes  in the  value of  reference
instruments.  Further,  in the case of certain  indexed  securities in which the
interest  rate is linked to a reference  instrument,  the  interest  rate may be
reduced to zero, and any further  declines in the value of the security may then
reduce the principal amount payable on maturity. Finally, indexed securities may
be  more  volatile  than  the  reference  instruments   underlying  the  indexed
securities.

Inflation-Indexed  Instruments. A fund may purchase inflation-indexed securities
issued by the US Treasury,  US government agencies and  instrumentalities  other
than the US Treasury,  and entities  other than the US Treasury or US government
agencies and instrumentalities.

Inflation-indexed  bonds are fixed income  securities or other instruments whose
principal value is periodically adjusted according to the rate of inflation. Two
structures  are common.  The US Treasury and some other  issuers use a structure
that accrues  inflation  on either a current or lagged basis into the  principal
value of the bond.  Most other issuers pay out the price index  accruals as part
of a semi-annual coupon.

Inflation-indexed  securities issued by the US Treasury have maturities of five,
ten or  thirty  years,  although  it is  possible  that  securities  with  other
maturities will be issued in the future. The US Treasury securities pay interest
on a semi-annual  basis,  equal to a fixed percentage of the  inflation-adjusted
principal amount.  For example,  if a Fund purchased an  inflation-indexed  bond
with a par value of $1,000  and a 3% real rate of return  coupon  (payable  1.5%
semi-annually),  and calculated  inflation over the first six months was 1%, the
mid-year  value of the bond would be $1,010 and the first  semi-annual  interest
payment would be $15.15 ($1,010 times 1.5%). If calculated  inflation during the
second half of the year resulted in the whole year's inflation  equaling 3%, the
end of year  value  of the bond  would  be  $1,030  and the  second  semi-annual
interest payment would be $15.45 ($1,030 times 1.5%).

If the periodic  adjustment rate measuring  inflation falls, the principal value
of inflation-indexed  bonds will be adjusted downward,  and,  consequently,  the
interest  payable  on these  securities  (calculated  with  respect to a smaller
principal  amount) will be reduced.  Repayment of the original bond principal on
maturity (as adjusted for  inflation)  is  guaranteed in the case of US Treasury
inflation-indexed bonds, even during a period of deflation. However, the current
market value of the bonds is not guaranteed and will fluctuate.  A fund may also
invest in other  inflation  related  bonds that may or may not provide a similar
guarantee.  If a guarantee of principal is not provided,  the adjusted principal
value of the bond repaid at maturity may be less than the original principal. In
addition,  if a  fund  purchases  inflation-indexed  bonds  offered  by  foreign
issuers,  the rate of inflation  measured by the foreign inflation index may not
be correlated to the rate of inflation in the US.

The value of  inflation-indexed  bonds is  expected  to change  in  response  to
changes in real interest  rates.  Real interest  rates, in turn, are tied to the
relationship   between  nominal  interest  rates  and  the  rate  of  inflation.
Therefore,


                                       27
<PAGE>

if inflation  were to rise at a faster rate than nominal  interest  rates,  real
interest   rates   might   decline,   leading  to  an   increase   in  value  of
inflation-indexed  bonds. In contrast,  if nominal interest rates increased at a
faster  rate than  inflation,  real  interest  rates  might  rise,  leading to a
decrease  in  value  of  inflation-indexed  bonds.  There  can be no  assurance,
however,  that the value of inflation-indexed  bonds will be directly correlated
to changes in interest rates.

While these securities are expected to be protected from long-term  inflationary
trends,  short-term  increases in inflation  may lead to a decline in value.  If
interest  rates rise due to reasons other than  inflation  (for example,  due to
changes in currency  exchange  rates),  investors in these securities may not be
protected  to the  extent  that the  increase  is not  reflected  in the  bond's
inflation measure.

In  general,  the  measure  used to  determine  the  periodic  adjustment  of US
inflation-indexed  bonds  is  the  Consumer  Price  Index  for  Urban  Consumers
("CPI-U"), which is calculated monthly by the US Bureau of Labor Statistics. The
CPI-U is a measurement  of changes in the cost of living,  made up of components
such as housing,  food,  transportation and energy. The inflation  adjustment to
the securities  references this index with a three month lag.  Inflation-indexed
bonds  issued  by a foreign  government  are  generally  adjusted  to  reflect a
comparable inflation index calculate by the applicable government.  There can be
no  assurance  that the CPI-U or any  foreign  inflation  index will  accurately
measure  the  real  rate of  inflation  in the  prices  of goods  and  services.
Moreover,  there can be no  assurance  that the rate of  inflation  in a foreign
country will be correlated to the rate of inflation in the US.  Finally,  income
distributions  of  a  fund  are  likely  to  fluctuate  more  than  those  of  a
conventional bond fund.

The  taxation  of  inflation-indexed  US Treasury  securities  is similar to the
taxation of  conventional  bonds.  Both  interest  payments  and the  difference
between original principal and the inflation-adjusted  principal will be treated
as interest  income  subject to  taxation.  Interest  payments  are taxable when
received or accrued. The inflation adjustment to the principal is subject to tax
in the year the  adjustment  is made,  not at maturity of the security  when the
cash from the repayment of principal is received.  If an upward  adjustment  has
been  made  (which  typically  should  happen),  investors  in  non-tax-deferred
accounts  will pay taxes on this  amount  currently.  Decreases  in the  indexed
principal  can be  deducted  only from  current or  previous  interest  payments
reported as income.

Inflation-indexed  US Treasury  securities  therefore have a potential cash flow
mismatch   to  an   investor,   because   investors   must  pay   taxes  on  the
inflation-adjusted  principal before the repayment of principal is received.  It
is  possible  that,   particularly  for  high  income  tax  bracket   investors,
inflation-indexed  US Treasury  securities would not generate enough income in a
given year to cover the tax liability they could create.  This is similar to the
current tax treatment for zero-coupon  bonds and other discount  securities.  If
inflation-indexed  US Treasury  securities  are sold prior to maturity,  capital
losses or gains are realized in the same manner as traditional bonds.

Inflation-indexed securities are designed to offer a return linked to inflation,
thereby  protecting  future  purchasing  power of the  money  invested  in them.
However, inflation-indexed securities provide this protected return only if held
to maturity.  In  addition,  inflation-indexed  securities  may not trade at par
value.  Real interest  rates (the market rate of interest  less the  anticipated
rate of inflation)  change over time as a result of many  factors,  such as what
investors  are  demanding as a true value for money.  When real rates do change,
inflation-indexed securities prices will be more sensitive to these changes than
conventional  bonds,  because these securities were sold originally based upon a
real interest rate that is no longer prevailing.  Should market expectations for
real interest  rates rise,  the price of  inflation-indexed  securities  and the
share  price of a Fund may fall.  Investors  in the fund  should be  prepared to
accept not only this share price  volatility  but also the possible  adverse tax
consequences it may cause.

An  investment  in  securities  featuring  inflation-adjusted  principal  and/or
interest  involves factors not associated with more traditional  fixed-principal
securities. Such factors include the possibility that the inflation index may be
subject  to  significant  changes,  that  changes  in the  index  may or may not
correlate to changes in interest rates generally or changes in other indices, or
that the  resulting  interest  may be greater or less than that payable on other
securities of similar  maturities.  In the event of sustained  deflation,  it is
possible that the amount of semiannual interest payments, the inflation-adjusted
principal  of the  security  and the  value  of the  stripped  components,  will
decrease.  If any of these possibilities are realized,  a Fund's net asset value
could be negatively affected.

Interfund Borrowing and Lending Program. Each fund has received exemptive relief
from the Securities and Exchange Commission (the "SEC"), which permits the funds
to  participate  in  an  interfund-lending   program  among


                                       28
<PAGE>

certain  investment  companies  advised by the  Advisor.  The  interfund-lending
program  allows the  participating  funds to borrow money from and loan money to
each other for  temporary  or  emergency  purposes.  The program is subject to a
number of  conditions  designed to ensure fair and  equitable  treatment  of all
participating  funds,  including  the  following:  (1) no fund may borrow  money
through the program  unless it receives a more  favorable  interest  rate than a
rate  approximating  the  lowest  interest  rate at which  bank  loans  would be
available to any of the participating  funds under a loan agreement;  and (2) no
fund may lend money  through  the program  unless it  receives a more  favorable
return than that available from an investment in repurchase  agreements  and, to
the extent applicable, money market cash sweep arrangements. In addition, a fund
may participate in the program only if and to the extent that such participation
is consistent  with a fund's  investment  objectives and policies (for instance,
money market  funds would  normally  participate  only as lenders and tax exempt
funds only as borrowers).  Interfund loans and borrowings may extend  overnight,
but could  have a maximum  duration  of seven  days.  Loans may be called on one
day's notice. A fund may have to borrow from a bank at a higher interest rate if
an interfund loan is called or not renewed.  Any delay in repayment to a lending
fund could result in a lost  investment  opportunity  or additional  costs.  The
program is subject to the  oversight  and  periodic  review of the Boards of the
participating  funds. To the extent the funds are actually  engaged in borrowing
through the interfund  lending  program,  such  borrowings will comply with each
fund's non-fundamental policies.

Inverse Floaters.  A fund may invest in inverse  floaters.  Inverse floaters are
debt  instruments  with a  floating  rate of  interest  that  bears  an  inverse
relationship to changes in short-term market interest rates. Investments in this
type of  security  involve  special  risks as compared  to  investments  in, for
example,  a fixed rate municipal  security.  A fund could lose money and its NAV
could  decline if  movements  in  interest  rates are  incorrectly  anticipated.
Moreover,  the markets for securities of this type may be less developed and may
have less liquidity than the markets for more traditional municipal securities.

Investing in Emerging Markets. A fund's investments in foreign securities may be
in developed  countries or in countries  considered by a fund's  advisor to have
developing or "emerging" markets, which involves exposure to economic structures
that are  generally  less diverse and mature than in the United  States,  and to
political  systems that may be less  stable.  A  developing  or emerging  market
country can be considered  to be a country that is in the initial  stages of its
industrialization  cycle.  Currently,  emerging markets  generally include every
country in the world other than the United States, Canada, Japan, Australia, New
Zealand,  Hong Kong,  Singapore and most Western European countries.  Currently,
investing in many emerging  markets may not be desirable or feasible  because of
the lack of adequate custody arrangements for a fund's assets, overly burdensome
repatriation  and  similar  restrictions,  the  lack  of  organized  and  liquid
securities   markets,   unacceptable   political  risks  or  other  reasons.  As
opportunities to invest in securities in emerging  markets  develop,  a fund may
expand and further broaden the group of emerging markets in which it invests. In
the past,  markets of developing  or emerging  market  countries  have been more
volatile than the markets of developed  countries;  however,  such markets often
have  provided  higher rates of return to investors.  The advisor  believes that
these characteristics may be expected to continue in the future.

Most emerging  securities markets have substantially less volume and are subject
to less governmental supervision than US securities markets.  Securities of many
issuers in emerging markets may be less liquid and more volatile than securities
of  comparable  domestic  issuers.  In  addition,  there is less  regulation  of
securities  exchanges,  securities dealers, and listed and unlisted companies in
emerging markets than in the US.

Emerging markets also have different clearance and settlement procedures, and in
certain markets there have been times when  settlements  have not kept pace with
the volume of  securities  transactions.  Delays in  settlement  could result in
temporary  periods when a portion of the assets of a fund is  uninvested  and no
return is earned  thereon.  The  inability of a fund to make  intended  security
purchases  due to  settlement  problems  could  cause a fund to miss  attractive
investment  opportunities.  Inability to dispose of portfolio  securities due to
settlement  problems  could result  either in losses to a fund due to subsequent
declines in value of the  portfolio  security  or, if a fund has entered  into a
contract  to sell the  security,  could  result  in  possible  liability  to the
purchaser.   Costs  associated  with  transactions  in  foreign  securities  are
generally higher than costs associated with transactions in US securities.  Such
transactions  also involve  additional costs for the purchase or sale of foreign
currency.

Certain emerging markets require prior  governmental  approval of investments by
foreign  persons,  limit the  amount  of  investment  by  foreign  persons  in a
particular  company,  limit the investment by foreign persons only to a specific

                                       29
<PAGE>

class of securities of a company that may have less advantageous rights than the
classes  available for purchase by  domiciliaries of the countries and/or impose
additional  taxes  on  foreign  investors.  Certain  emerging  markets  may also
restrict  investment  opportunities in issuers in industries deemed important to
national interest.

Certain emerging markets may require governmental  approval for the repatriation
of investment income,  capital or the proceeds of sales of securities by foreign
investors.  In  addition,  if a  deterioration  occurs in an  emerging  market's
balance of payments  or for other  reasons,  a country  could  impose  temporary
restrictions on foreign capital remittances.  A fund could be adversely affected
by delays in, or a refusal to grant,  any  required  governmental  approval  for
repatriation  of  capital,  as  well  as by the  application  to a  fund  of any
restrictions on investments.

In the course of investment in emerging  markets,  a fund will be exposed to the
direct or indirect consequences of political, social and economic changes in one
or more emerging  markets.  While a fund will manage its assets in a manner that
will seek to minimize the exposure to such risks, there can be no assurance that
adverse political,  social or economic changes will not cause a fund to suffer a
loss of value in respect of the securities in a fund's portfolio.

The risk  also  exists  that an  emergency  situation  may  arise in one or more
emerging  markets as a result of which trading of securities may cease or may be
substantially  curtailed and prices for a fund's  securities in such markets may
not be readily  available.  A fund may suspend  redemption of its shares for any
period during which an emergency exists,  as determined by the SEC.  Accordingly
if a fund believes that appropriate circumstances exist, it may apply to the SEC
for a determination  that an emergency is present.  During the period commencing
from a fund's identification of such condition until the date of the SEC action,
a fund's  securities  in the  affected  markets  will be  valued  at fair  value
determined in good faith by or under the direction of a fund's Board.

Volume  and  liquidity  in most  foreign  markets  are less than in the US,  and
securities  of many foreign  companies  are less liquid and more  volatile  than
securities of comparable US companies.  Fixed commissions on foreign  securities
exchanges  are generally  higher than  negotiated  commissions  on US exchanges,
although a fund  endeavors  to achieve  the most  favorable  net  results on its
portfolio  transactions.  There is generally  less  government  supervision  and
regulation of business and industry practices,  securities  exchanges,  brokers,
dealers  and listed  companies  than in the US Mail  service  between the US and
foreign  countries  may be slower or less  reliable  than  within  the US,  thus
increasing the risk of delayed settlements of portfolio  transactions or loss of
certificates for certificated portfolio securities. In addition, with respect to
certain  emerging  markets,   there  is  the  possibility  of  expropriation  or
confiscatory   taxation,   political  or  social   instability,   or  diplomatic
developments  which  could  affect a  fund's  investments  in  those  countries.
Moreover,   individual   emerging  market  economies  may  differ  favorably  or
unfavorably  from the US economy in such  respects  as growth of gross  national
product, rate of inflation, capital reinvestment,  resource self-sufficiency and
balance of payments position.

A fund may have limited legal recourse in the event of a default with respect to
certain debt  obligations  it holds.  If the issuer of a  fixed-income  security
owned by a fund defaults, a fund may incur additional expenses to seek recovery.
Debt obligations issued by emerging market country  governments differ from debt
obligations  of private  entities;  remedies from  defaults on debt  obligations
issued by emerging  market  governments,  unlike those on private debt,  must be
pursued  in the  courts of the  defaulting  party  itself.  A fund's  ability to
enforce its rights against private issuers may be limited. The ability to attach
assets to  enforce a  judgment  may be  limited.  Legal  recourse  is  therefore
somewhat diminished. Bankruptcy, moratorium and other similar laws applicable to
private issuers of debt obligations may be substantially different from those of
other  countries.  The  political  context,  expressed  as  an  emerging  market
governmental issuer's willingness to meet the terms of the debt obligation,  for
example, is of considerable  importance.  In addition, no assurance can be given
that the holders of commercial bank debt may not contest payments to the holders
of  debt  obligations  in the  event  of  default  under  commercial  bank  loan
agreements.

Income from  securities  held by a fund could be reduced by a withholding tax at
the source or other taxes  imposed by the emerging  market  countries in which a
fund makes its  investments.  A fund's net asset  value may also be  affected by
changes in the rates or methods of taxation  applicable to a fund or to entities
in which a fund has invested. The Advisor will consider the cost of any taxes in
determining  whether to acquire any particular  investments,  but can provide no
assurance that the taxes will not be subject to change.

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<PAGE>

Many  emerging  markets  have  experienced  substantial,  and, in some  periods,
extremely  high  rates  of  inflation  for  many  years.   Inflation  and  rapid
fluctuations  in  inflation  rates  have had and may  continue  to have  adverse
effects on the  economies  and  securities  markets of certain  emerging  market
countries. In an attempt to control inflation, wage and price controls have been
imposed in certain  countries.  Of these countries,  some, in recent years, have
begun to control inflation through prudent economic policies.

Emerging market governmental issuers are among the largest debtors to commercial
banks,  foreign  governments,  international  financial  organizations and other
financial  institutions.  Certain emerging market governmental  issuers have not
been able to make  payments of interest on or principal of debt  obligations  as
those  payments  have  come due.  Obligations  arising  from past  restructuring
agreements  may  affect  the  economic  performance  and  political  and  social
stability of those issuers.

Governments  of many emerging  market  countries  have exercised and continue to
exercise  substantial  influence over many aspects of the private sector through
the ownership or control of many companies, including some of the largest in any
given  country.  As a result,  government  actions  in the  future  could have a
significant  effect on economic  conditions in emerging markets,  which in turn,
may adversely affect companies in the private sector,  general market conditions
and  prices  and yields of  certain  of the  securities  in a fund's  portfolio.
Expropriation,  confiscatory taxation,  nationalization,  political, economic or
social instability or other similar  developments have occurred  frequently over
the  history of certain  emerging  markets and could  adversely  affect a fund's
assets should these conditions recur.

The  ability of  emerging  market  country  governmental  issuers to make timely
payments  on their  obligations  is  likely  to be  influenced  strongly  by the
issuer's balance of payments,  including export  performance,  and its access to
international  credits and  investments.  An emerging  market whose  exports are
concentrated  in a few  commodities  could be  vulnerable  to a  decline  in the
international   prices   of  one  or  more  of  those   commodities.   Increased
protectionism  on the part of an emerging  market's  trading partners could also
adversely  affect the country's  exports and diminish its trade account surplus,
if any. To the extent that emerging  markets  receive payment for its exports in
currencies other than dollars or non-emerging market currencies,  its ability to
make debt payments  denominated  in dollars or  non-emerging  market  currencies
could be affected.

Another factor bearing on the ability of emerging market countries to repay debt
obligations is the level of international reserves of the country.  Fluctuations
in the level of these  reserves  affect the amount of foreign  exchange  readily
available  for  external  debt  payments  and thus  could  have a bearing on the
capacity  of  emerging   market   countries  to  make  payments  on  these  debt
obligations.

To the extent that an emerging  market country cannot  generate a trade surplus,
it must  depend on  continuing  loans  from  foreign  governments,  multilateral
organizations or private commercial banks, aid payments from foreign governments
and inflows of foreign investment. The access of emerging markets to these forms
of external  funding may not be certain,  and a withdrawal  of external  funding
could  adversely  affect the capacity of emerging  market  country  governmental
issuers  to make  payments  on  their  obligations.  In  addition,  the  cost of
servicing  emerging  market  debt  obligations  can be  affected  by a change in
international  interest  rates  since the  majority of these  obligations  carry
interest rates that are adjusted periodically based upon international rates.

Investment Company Securities. A fund may acquire securities of other investment
companies  to the  extent  consistent  with  its  investment  objective  and the
limitations of the 1940 Act. A fund will indirectly bear its proportionate share
of any  management  fees  and  other  expenses  paid  by such  other  investment
companies.

For example,  a fund may invest in a variety of investment  companies which seek
to track the  composition  and  performance  of  specific  indexes or a specific
portion of an index.  These  index-based  investments hold  substantially all of
their assets in securities representing their specific index.  Accordingly,  the
main risk of investing in index-based  investments is the same as investing in a
portfolio  of equity  securities  comprising  the index.  The  market  prices of
index-based  investments  will fluctuate in accordance  with both changes in the
market  value of their  underlying  portfolio  securities  and due to supply and
demand for the  instruments on the exchanges on which they are traded (which may
result in their  trading at a discount  or premium to their  NAVs).  Index-based
investments  may not replicate  exactly the performance of their specified index
because of  transaction  costs and because of the  temporary


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<PAGE>

unavailability  of certain  component  securities of the index. In addition,  an
index-based  investment  tracking a specific sector may be adversely affected by
the  performance  of that specific  sector or group of industries on which it is
based.

Investment-Grade  Bonds.  When the Advisor believes that it is appropriate to do
so  in   order  to   achieve   a  fund's   objectives,   a  fund  may   purchase
"investment-grade"  bonds, which are those rated Aaa, Aa, A or Baa by Moody's or
AAA, AA, A or BBB by S&P or, if unrated,  judged to be of equivalent  quality as
determined  by the  Advisor.  Moody's  considers  bonds  it  rates  Baa to  have
speculative elements as well as investment-grade characteristics.  To the extent
that a fund invests in higher-grade securities, a fund will not be able to avail
itself of  opportunities  for  higher  income  which may be  available  at lower
grades.

The principal  risks involved with  investments  in bonds include  interest rate
risk, credit risk and pre-payment risk.  Interest rate risk refers to the likely
decline in the value of bonds as  interest  rates rise.  Generally,  longer-term
securities are more susceptible to changes in value as a result of interest-rate
changes than are shorter-term securities. Credit risk refers to the risk that an
issuer of a bond may  default  with  respect  to the  payment of  principal  and
interest.  The  lower  a bond  is  rated,  the  more  it is  considered  to be a
speculative or risky  investment.  Pre-payment risk is commonly  associated with
pooled debt  securities,  such as  mortgage-backed  securities  and asset backed
securities,  but may affect other debt  securities as well.  When the underlying
debt obligations are prepaid ahead of schedule,  the return on the security will
be lower than expected.  Pre-payment  rates usually increase when interest rates
are falling.

IPO Risk.  Securities  issued  through  an  initial  public  offering  (IPO) can
experience an immediate drop in value if the demand for the securities  does not
continue to support the  offering  price.  Information  about the issuers of IPO
securities is also difficult to acquire since they are new to the market and may
not have lengthy operating histories.  The fund may engage in short-term trading
in connection with its IPO investments, which could produce higher trading costs
and  adverse  tax  consequences.  The number of  securities  issued in an IPO is
limited,  so it is likely that IPO securities will represent a smaller component
of a fund's  portfolio  as the  fund's  assets  increase  (and  thus have a more
limited effect on the fund's performance).

Lending of Portfolio  Securities.  A fund may lend its investment  securities to
approved institutional borrowers,  including those 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,  a  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 a fund. A 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 a 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 a fund at any time,  and (d) a fund
receives reasonable interest on the loan (which may include a 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 a fund's  delegate  after a
commercially  reasonable review of relevant facts and  circumstances,  including
the creditworthiness of the borrower.

At the  present  time,  the staff of the SEC does not  object  if an  investment
company pays reasonable negotiated fees in connection with loaned securities, so
long as such  fees are set  forth in a  written  contract  and  approved  by the
investment company's Board of Directors/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 a fund may
be invested in a money  market fund  managed by a fund's  advisor (or one of its
affiliates).

Letters  of   Credit.   Municipal   obligations,   including   certificates   of
participation,  commercial paper and other short-term obligations, may be backed
by an  irrevocable  letter of credit of a bank which assumes the  obligation for

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<PAGE>

payment of principal  and  interest in the event of default by the issuer.  Only
banks which, in the opinion of the Advisor, are of investment quality comparable
to other permitted investments of a fund may be used for letter of credit backed
investments.

Loan   Participations  and  Assignments.   A  fund  may  invest  in  fixed-  and
floating-rate loans ("Loans") arranged through private  negotiations  between an
issuer  of  emerging   market  debt   instruments  and  one  or  more  financial
institutions  ("Lenders").  A fund's  investments  in Loans are expected in most
instances to be in the form of  participations in Loans  ("Participations")  and
assignments   of  portions  of  Loans   ("Assignments")   from  third   parties.
Participations typically will result in a fund having a contractual relationship
only with the  Lender and not with the  borrower.  A fund will have the right to
receive  payments of  principal,  interest  and any fees to which it is entitled
only from the Lender  selling  the  Participation  and only upon  receipt by the
Lender  of the  payments  from  the  borrower.  In  connection  with  purchasing
Participations, a fund generally will have no right to enforce compliance by the
borrower  with the terms of the loan  agreement  relating  to the Loan,  nor any
rights of set-off against the borrower, and a fund may not directly benefit from
any collateral  supporting the Loan in which it has purchased the Participation.
As a result,  a fund will  assume the credit risk of both the  borrower  and the
Lender that is selling the Participation.  In the event of the insolvency of the
Lender selling a  Participation,  a fund may be treated as a general creditor of
the Lender  and may not  benefit  from any  set-off  between  the Lender and the
borrower. A fund will acquire  Participations only if the Lender interpositioned
between a fund and the borrower is determined by the Advisor to be creditworthy.

When a fund purchases  Assignments  from Lenders,  it will acquire direct rights
against the  borrower on the Loan.  Because  Assignments  are  arranged  through
private  negotiations  between  potential  assignees  and  potential  assignors,
however,  the rights and  obligations  acquired by a fund as the purchaser of an
Assignment  may differ  from,  and may be more limited  than,  those held by the
assigning Lender.

A fund may have difficulty disposing of Assignments and Participations.  Because
no liquid market for these obligations typically exists, a fund anticipates that
these  obligations  could be sold  only to a  limited  number  of  institutional
investors.  The lack of a liquid secondary market will have an adverse effect on
a fund's  ability to dispose of particular  Assignments or  Participations  when
necessary to meet a fund's liquidity needs or in response to a specific economic
event, such as a deterioration in the creditworthiness of the borrower. The lack
of a liquid secondary market for Assignments and Participations may also make it
more difficult for a fund to assign a value to those  securities for purposes of
valuing a fund's portfolio and calculating its net asset value.

Maintenance  of $1.00 Net Asset Value,  Credit  Quality and Portfolio  Maturity.
Pursuant  to Rule  2a-7 of the  1940  Act,  money  market  funds  effect  sales,
redemptions and repurchases at the net asset value per share, normally $1.00. In
fulfillment  of their  responsibilities  under  that  Rule,  a fund's  Board has
approved  policies  established  by a fund's  Advisor  reasonably  calculated to
prevent a fund's net asset  value per share  from  deviating  from $1.00  except
under  unusual  or   extraordinary   circumstances   and  a  fund's  Board  will
periodically  review the Advisor's  operations  under such policies at regularly
scheduled  Board  meetings.  Those policies  include a weekly  monitoring by the
Advisor  of  unrealized  gains  and  losses  in a  fund's  portfolio,  and  when
necessary,  in an effort to avoid deviation,  taking corrective action,  such as
adjusting the maturity of the  portfolio,  or, if possible,  realizing  gains or
losses to  offset  in part  unrealized  losses  or  gains.  The  result of those
policies  may be that the yield on shares of a fund will be lower  than would be
the case if the  policies  were not in effect.  Such  policies  also provide for
certain action to be taken with respect to portfolio securities which experience
a downgrade in rating or suffer a default.

Securities  eligible for  investment  by a fund are those  securities  which are
generally rated (or issued by an issuer with comparable securities rated) in the
highest  short-term  rating  category by at least two rating services (or by one
rating  service,  if no other rating  agency has issued a rating with respect to
that  security).   These  securities  are  known  as  "first  tier  securities."
Securities  generally rated (or issued by an issuer with  comparable  securities
rated) in the top two  categories  by at least two rating  agencies  (or one, if
only one rating  agency has rated the  security)  which do not  qualify as first
tier securities are known as "second tier  securities." To ensure diversity of a
fund's  investments,  a fund will not invest more than 5% of its total assets in
the  securities of a single issuer,  other than the US  Government.  A fund may,
however, invest more than 5% of its total assets in the first tier securities of
a single  issuer  for a period  of up to three  business  days  after  purchase,
although a fund may not make more than one such  investment  at any time  during
such  period.  A fund  may not  invest  more  than  5% of its  total  assets  in
securities which


                                       33
<PAGE>

were second tier  securities  when acquired by a fund.  Further,  a fund may not
invest more than the greater of (1) 1% of its total  assets,  or (2) one million
dollars,  in the securities of a single issuer which were second tier securities
when acquired by a fund.

The assets of a fund  consist  entirely of cash items and  investments  having a
stated  maturity  date of 397  calendar  days or less from the date of  purchase
(including  investment  in  repurchase  agreements,  in which case  maturity  is
measured  by  the  repurchase  date,  without  respect  to the  maturity  of the
obligation).  The term "Government securities," as used herein, means securities
issued or  guaranteed  as to  principal  or interest by the US  Government,  its
agencies or  instrumentalities.  The portfolio of a fund will be managed so that
the average maturity of all instruments (on a dollar-weighted  basis) will be 90
days or  less.  The  average  maturity  of a fund  will  vary  according  to the
management's  appraisal of money market  conditions.  A fund will invest only in
securities  determined  by or under  the  direction  of the  Board to be of high
quality with minimal credit risks.

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

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

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

Mining and  Exploration.  The  business  of gold  mining by its nature  involves
significant  risks and  hazards,  including  environmental  hazards,  industrial
accidents, labor disputes, discharge of toxic chemicals, fire, drought, flooding
and natural acts. The  occurrence of any of these hazards can delay  production,
increase  production costs and result in liability to the operator of the mines.
A mining  operation  may become  subject to  liability  for  pollution  or other
hazards  against which it has not insured or cannot insure,  including  those in
respect of past mining activities for which it was not responsible.

Exploration  for gold and  other  precious  metals  is  speculative  in  nature,
involves many risks and  frequently is  unsuccessful.  There can be no assurance
that any mineralisation  discovered will result in an increase in the proven and
probable reserves of a mining operation.  If reserves are developed, it can take
a number of years from the initial  phases of  drilling  and  identification  of
mineralisation  until  production  is  possible,  during which time the economic
feasibility of production may change.  Substantial  expenditures are required to
establish  ore  reserves  properties  and to  construct  mining  and  processing
facilities.  As a result of these uncertainties,  no assurance can be given that
the  exploration  programs  undertaken  by a particular  mining  operation  will
actually result in any new commercial mining.

Mortgage-Backed Securities and Mortgage Pass-Through Securities. Mortgage-backed
securities are interests in pools of mortgage  loans,  including  mortgage loans
made by savings and loan  institutions,  mortgage bankers,  commercial banks and
others.  Pools  of  mortgage  loans  are  assembled  as  securities  for sale to
investors by various governmental,  government-related and private organizations
as further described below.  Underlying  mortgages may be of a variety of types,
including adjustable rate, conventional 30-year, graduated payment and 15-year.

A decline  in  interest  rates  may lead to a faster  rate of  repayment  of the
underlying  mortgages,  and may  expose a fund to a lower  rate of  return  upon
reinvestment.  To the extent that such mortgage-backed  securities are held by a

                                       34
<PAGE>

fund, the prepayment right will tend to limit to some degree the increase in net
asset value of a fund because the value of the  mortgage-backed  securities held
by a fund may not  appreciate  as  rapidly  as the  price of  non-callable  debt
securities. Mortgage-backed securities are subject to the risk of prepayment and
the risk that the underlying loans will not be repaid.  Because principal may be
prepaid  at any  time,  mortgage-backed  securities  may  involve  significantly
greater price and yield volatility than traditional debt securities.

When  interest  rates rise,  mortgage  prepayment  rates tend to  decline,  thus
lengthening  the life of a  mortgage-related  security and  increasing the price
volatility of that security, affecting the price volatility of a fund's shares.

Interests in pools of mortgage-backed securities differ from other forms of debt
securities,  which  normally  provide for periodic  payment of interest in fixed
amounts with principal  payments at maturity or specified  call dates.  Instead,
these  securities  provide a monthly payment which consists of both interest and
principal  payments.  In effect,  these  payments  are a  "pass-through"  of the
monthly  payments made by the individual  borrowers on their mortgage loans, net
of any fees  paid to the  issuer or  guarantor  of such  securities.  Additional
payments are caused by  repayments of principal  resulting  from the sale of the
underlying property,  refinancing or foreclosure, net of fees or costs which may
be incurred. Some mortgage-related  securities (such as securities issued by the
Government  National Mortgage  Association  ("GNMA")) are described as "modified
pass-through."  These securities  entitle the holder to receive all interest and
principal  payments  owed on the  mortgage  pool,  net of certain  fees,  at the
scheduled  payment dates  regardless  of whether or not the  mortgagor  actually
makes the payment.

The principal  governmental  guarantor of  mortgage-related  securities is GNMA.
GNMA is a wholly  owned US  Government  corporation  within  the  Department  of
Housing and Urban  Development.  GNMA is authorized to guarantee,  with the full
faith and credit of the US  Government,  the timely  payment  of  principal  and
interest on securities issued by institutions  approved by GNMA (such as savings
and loan  institutions,  commercial  banks and  mortgage  bankers) and backed by
pools of FHA-insured or VA-guaranteed mortgages.  These guarantees,  however, do
not apply to the market value or yield of  mortgage-backed  securities or to the
value of fund shares.  Also,  GNMA  securities  often are purchased at a premium
over the  maturity  value  of the  underlying  mortgages.  This  premium  is not
guaranteed and will be lost if prepayment occurs.

Government-related  guarantors (i.e., not backed by the full faith and credit of
the US  Government)  include  Fannie  Mae and the  Federal  Home  Loan  Mortgage
Corporation ("FHLMC").  Fannie Mae is a  government-sponsored  corporation owned
entirely by private  stockholders.  It is subject to general  regulation  by the
Secretary of Housing and Urban  Development.  Fannie Mae purchases  conventional
(i.e., not insured or guaranteed by any government agency) mortgages from a list
of approved seller/servicers which include state and federally chartered savings
and loan associations,  mutual savings banks, commercial banks and credit unions
and  mortgage  bankers.   Pass-through  securities  issued  by  Fannie  Mae  are
guaranteed as to timely  payment of principal and interest by Fannie Mae but are
not backed by the full faith and credit of the US Government.

FHLMC is a corporate  instrumentality  of the US  Government  and was created by
Congress  in 1970 for the purpose of  increasing  the  availability  of mortgage
credit for  residential  housing.  Its stock is owned by the twelve Federal Home
Loan Banks.  FHLMC issues  Participation  Certificates  ("PCs") which  represent
interests in  conventional  mortgages  from FHLMC's  national  portfolio.  FHLMC
guarantees the timely payment of interest and ultimate  collection of principal,
but PCs are not backed by the full faith and credit of the US Government.

Commercial  banks,  savings and loan  institutions,  private mortgage  insurance
companies,  mortgage  bankers and other  secondary  market  issuers  also create
pass-through  pools  of  conventional  mortgage  loans.  Such  issuers  may,  in
addition,  be the originators and/or servicers of the underlying  mortgage loans
as well as the guarantors of the mortgage-related  securities.  Pools created by
such  non-governmental  issuers  generally  offer a higher rate of interest than
government and government-related  pools because there are no direct or indirect
government or agency guarantees of payments. However, timely payment of interest
and  principal of these pools may be supported by various  forms of insurance or
guarantees,  including  individual  loan,  title,  pool and hazard insurance and
letters of credit.  The  insurance  and  guarantees  are issued by  governmental
entities,  private  insurers  and  the  mortgage  poolers.  Such  insurance  and
guarantees and the creditworthiness of the issuers thereof will be considered in
determining  whether  a  mortgage-related  security  meets a  fund's  investment
quality  standards.  There can be no  assurance  that the  private  insurers  or
guarantors can meet their obligations under the insurance  policies or guarantee
arrangements.  A


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<PAGE>

fund may buy  mortgage-related  securities  without insurance or guarantees,  if
through  an   examination   of  the  loan   experience   and  practices  of  the
originators/servicers and poolers, the underlying fund's advisor determines that
the  securities  meet a fund's quality  standards.  Although the market for such
securities is becoming increasingly liquid, securities issued by certain private
organizations may not be readily marketable.

Mortgage Dollar Rolls. A fund may enter into mortgage  "dollar rolls" in which a
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, a fund forgoes principal and interest paid on the securities.  A 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. A fund may
enter into both covered and  uncovered  rolls.  At the time a Fund enters into a
dollar roll  transaction,  it will segregate with an approved  custodian 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 its value is maintained.

Municipal  Securities.  A fund may  invest  to a  limited  extent  in  municipal
securities.  Municipal  securities consist of bonds, notes and other instruments
issued  by or on  behalf  of  states,  territories  and  possessions  of  the US
(including the District of Columbia) and their political subdivisions,  agencies
or  instrumentalities,  the  interest  on which is exempt from  regular  federal
income tax (i.e., excluded from gross income for federal income tax purposes but
not necessarily  exempt from the federal  alternative  minimum tax or from state
and local  taxes).  Municipal  securities  may also be issued on a taxable basis
(i.e., the interest on such securities is not exempt from regular federal income
tax).

Municipal  securities  are  often  issued to obtain  funds  for  various  public
purposes,  including the construction of a wide range of public  facilities such
as bridges, highways, housing, hospitals, mass transportation,  schools, streets
and water and sewer works. Other public purposes for which municipal  securities
may be issued include  refunding  outstanding  obligations,  obtaining funds for
general  operating  expenses,  and  obtaining  funds  to  lend to  other  public
institutions  and  facilities.   Municipal   securities  also  include  "private
activity" or industrial  development  bonds, which are issued by or on behalf of
public  authorities  to provide  financing  aid to acquire sites or construct or
equip  facilities   within  a  municipality  for  privately  or  publicly  owned
corporations.

The  two  principal   classifications  of  municipal   securities  are  "general
obligations" and "revenue  obligations".  General obligations are secured by the
issuer's  pledge of its full faith and credit for the payment of  principal  and
interest although the characteristics and enforcement of general obligations may
vary  according  to  the  law  applicable  to  the  particular  issuer.  Revenue
obligations,  which  include,  but are not limited to, private  activity  bonds,
resource  recovery bonds,  certificates of participation  and certain  municipal
notes,  are not backed by the credit and taxing  authority of the issuer and are
payable solely from the revenues derived from a particular  facility or class of
facilities  or, in some cases,  from the  proceeds of a special  excise or other
specific revenue source. Nevertheless, the obligations of the issuer may also be
backed by a letter of credit,  guarantee or insurance.  General  obligations and
revenue  obligations may be issued in a variety of forms,  including  commercial
paper,  fixed,  variable and floating  rate  securities,  tender  option  bonds,
auction rate bonds and capital appreciation bonds.

In addition to general obligations and revenue obligations,  there are a variety
of hybrid and special  types of municipal  securities.  There are also  numerous
differences  in the  credit  backing of  municipal  securities  both  within and
between these two principal classifications.

For the purpose of applying a fund's investment restrictions, the identification
of the issuer of a municipal  security which is not a general obligation is made
by the Advisor based on the characteristics of the municipal security,  the most
important  of which is the  source of funds for the  payment  of  principal  and
interest on such securities.

One or a small number of institutional  investors such as a fund may purchase an
entire  issue of  municipal  securities.  Thus,  the issue may not be said to be
publicly  offered.  Unlike some  securities  that are not  publicly  offered,  a

                                       36
<PAGE>

secondary  market exists for many  municipal  securities  that were not publicly
offered initially and such securities can be readily marketable.

The obligations of an issuer to pay the principal of and interest on a municipal
security are subject to the provisions of bankruptcy,  insolvency and other laws
affecting the rights and remedies of creditors,  such as the Federal  Bankruptcy
Act,  and laws,  if any,  that may be enacted by Congress or state  legislatures
extending  the time for payment of  principal  or  interest  or  imposing  other
constraints  upon  the  enforcement  of such  obligations.  There  is  also  the
possibility  that,  because  of  litigation  or other  conditions,  the power or
ability of the issuer to pay when due  principal  of or  interest on a municipal
security may be materially affected.

Municipal  Leases,   Certificates  of  Participation  and  other   Participation
Interests.  A  municipal  lease  is an  obligation  in the  form of a  lease  or
installment  purchase  contract that is issued by a state or local government to
acquire  equipment and  facilities.  Income from such  obligations  is generally
exempt from state and local  taxes in the state of issuance  (as well as regular
federal  income tax).  Municipal  leases  frequently  involve  special risks not
normally  associated  with  general  obligation  or  revenue  bonds.  Leases and
installment  purchase or conditional  sale contracts (which normally provide for
title to the leased asset to pass  eventually to the  governmental  issuer) have
evolved as a means for  governmental  issuers to acquire  property and equipment
without meeting the constitutional  and statutory  requirements for the issuance
of debt. The debt issuance  limitations are deemed to be inapplicable because of
the  inclusion in many leases or contracts of  `non-appropriation'  clauses that
relieve the governmental  issuer of any obligation to make future payments under
the lease or  contract  unless  money is  appropriated  for such  purpose by the
appropriate legislative body on a yearly or other periodic basis. Thus, a fund's
investment  in  municipal  leases will be subject to the  special  risk that the
governmental issuer may not appropriate funds for lease payments.

In addition,  such leases or contracts may be subject to the temporary abatement
of payments in the event the issuer is prevented from  maintaining  occupancy of
the leased premises or utilizing the leased equipment.  Although the obligations
may be secured by the leased  equipment or  facilities,  the  disposition of the
property in the event of  nonappropriation or foreclosure might prove difficult,
time consuming and costly, and result in an unsatisfactory or delayed recoupment
of a fund's original investment.

Certificates of participation represent undivided interests in municipal leases,
installment  purchase  contracts  or other  instruments.  The  certificates  are
typically  issued by a trust or other entity that has received an  assignment of
the payments to be made by the state or political  subdivision under such leases
or installment purchase contracts.

Certain  municipal lease  obligations and certificates of  participation  may be
deemed  illiquid  for the  purpose of a fund's  limitations  on  investments  in
illiquid  securities.  Other  municipal lease  obligations  and  certificates of
participation  acquired by a fund may be determined by the Advisor,  pursuant to
guidelines adopted by the Trustees of the Trust, to be liquid securities for the
purpose  of a fund's  limitation  on  investments  in  illiquid  securities.  In
determining  the liquidity of municipal lease  obligations  and  certificates of
participation, the Advisor will consider a variety of factors including: (1) the
willingness  of  dealers  to bid for the  security;  (2) the  number of  dealers
willing to purchase  or sell the  obligation  and the number of other  potential
buyers;  (3) the frequency of trades or quotes for the  obligation;  and (4) the
nature of the marketplace trades. In addition, the Advisor will consider factors
unique  to  particular  lease  obligations  and  certificates  of  participation
affecting the marketability thereof. These include the general  creditworthiness
of the issuer, the importance to the issuer of the property covered by the lease
and the likelihood that the  marketability  of the obligation will be maintained
throughout the time the obligation is held by a fund. A fund may not invest more
than 5% of its net assets in municipal leases.

A fund may purchase  participations in municipal securities held by a commercial
bank or other financial institution. Such participations provide a fund with the
right to a pro rata undivided interest in the underlying  municipal  securities.
In  addition,  such  participations  generally  provide a fund with the right to
demand  payment,  on not more than  seven days  notice,  of all or any part of a
fund's participation interest in the underlying municipal security, plus accrued
interest.

Municipal Notes. Municipal securities in the form of notes generally are used to
provide for short-term  capital needs, in anticipation of an issuer's receipt of
other revenues or financing, and typically have maturities of up to


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<PAGE>

three  years.  Such  instruments  may include Tax  Anticipation  Notes,  Revenue
Anticipation Notes, Bond Anticipation Notes, Tax and Revenue  Anticipation Notes
and Construction  Loan Notes.  Tax Anticipation  Notes are issued to finance the
working capital needs of governments. Generally, they are issued in anticipation
of various tax  revenues,  such as income,  sales,  property,  use and  business
taxes,  and are payable from these specific future taxes.  Revenue  Anticipation
Notes are issued in  expectation  of receipt of other kinds of revenue,  such as
federal  revenues  available  under  federal  revenue  sharing  programs.   Bond
Anticipation  Notes are issued to provide interim financing until long-term bond
financing can be arranged.  In most cases,  the long-term bonds then provide the
funds needed for  repayment  of the notes.  Tax and Revenue  Anticipation  Notes
combine  the  funding  sources  of  both  Tax  Anticipation  Notes  and  Revenue
Anticipation  Notes.  Construction  Loan Notes are sold to provide  construction
financing.  These  notes are secured by  mortgage  notes  insured by the Federal
Housing Authority; however, the proceeds from the insurance may be less than the
economic  equivalent  of the payment of  principal  and interest on the mortgage
note if there has been a  default.  The  obligations  of an issuer of  municipal
notes are generally  secured by the anticipated  revenues from taxes,  grants or
bond financing. An investment in such instruments, however, presents a risk that
the  anticipated  revenues  will not be received or that such  revenues  will be
insufficient to satisfy the issuer's payment obligations under the notes or that
refinancing will be otherwise unavailable.

Other Asset-Backed  Securities.  The  securitization  techniques used to develop
mortgage-backed  securities  are now being  applied to a broad  range of assets.
Through the use of trusts and special  purpose  corporations,  various  types of
assets, including automobile loans, computer leases and credit card receivables,
are  being   securitized  in   pass-through   structures   similar  to  mortgage
pass-through  structures  or in a  structure  similar to the CMO  structure.  In
general, the collateral  supporting these securities is of shorter maturity than
mortgage  loans and is less likely to experience  substantial  prepayments  with
interest rate fluctuations.

Several types of asset-backed securities have already been offered to investors,
including  Certificates  of Automobile  Receivables(SM)  ("CARS(SM)").  CARS(SM)
represent  undivided  fractional  interests in a trust whose assets consist of a
pool of motor vehicle retail  installment sales contracts and security interests
in the vehicles  securing the  contracts.  Payments of principal and interest on
CARS(SM) are passed through monthly to certificate  holders,  and are guaranteed
up to certain amounts and for a certain time period by a letter of credit issued
by a financial  institution  unaffiliated  with the trustee or originator of the
trust. An investor's  return on CARS(SM) may be affected by early  prepayment of
principal on the underlying vehicle sales contracts.  If the letter of credit is
exhausted,  the trust may be prevented  from  realizing the full amount due on a
sales contract because of state law  requirements  and restrictions  relating to
foreclosure  sales  of  vehicles  and  the  obtaining  of  deficiency  judgments
following  such sales or because of  depreciation,  damage or loss of a vehicle,
the  application of federal and state  bankruptcy and insolvency  laws, or other
factors.  As a result,  certificate holders may experience delays in payments or
losses if the letter of credit is exhausted.

Asset-backed  securities  present  certain  risks  that  are  not  presented  by
mortgage-backed securities. Primarily, these securities may not have the benefit
of any security  interest in the related  assets.  Credit card  receivables  are
generally  unsecured and the debtors are entitled to the  protection of a number
of state and federal  consumer  credit laws, many of which give such debtors the
right to set off certain amounts owed on the credit cards,  thereby reducing the
balance due. There is the possibility that recoveries on repossessed  collateral
may not, in some cases, be available to support payments on these securities.

Asset-backed  securities are often backed by a pool of assets  representing  the
obligations of a number of different  parties.  To lessen the effect of failures
by obligors on underlying  assets to make  payments,  the securities may contain
elements  of credit  support  which  fall  into two  categories:  (i)  liquidity
protection,  and (ii) protection  against losses resulting from ultimate default
by an obligor  on the  underlying  assets.  Liquidity  protection  refers to the
provision of advances, generally by the entity administering the pool of assets,
to ensure that the receipt of payments on the underlying pool occurs in a timely
fashion.  Protection  against  losses  results  from  payment  of the  insurance
obligations on at least a portion of the assets in the pool. This protection may
be provided  through  guarantees,  policies or letters of credit obtained by the
issuer or sponsor from third parties,  through  various means of structuring the
transaction or through a combination of such approaches. A fund will not pay any
additional or separate  fees for credit  support.  The degree of credit  support
provided for each issue is generally based on historical  information respecting
the level of credit risk associated with the underlying  assets.  Delinquency or
loss in excess of that  anticipated  or  failure  of the  credit  support  could
adversely affect the return on an investment in such a security.

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<PAGE>

A fund may also invest in residual interests in asset-backed securities.  In the
case of asset-backed  securities  issued in a pass-through  structure,  the cash
flow generated by the underlying  assets is applied to make required payments on
the securities and to pay related  administrative  expenses.  The residual in an
asset-backed  security  pass-through  structure  represents  the interest in any
excess cash flow remaining  after making the foregoing  payments.  The amount of
residual cash flow resulting from a particular issue of asset-backed  securities
will depend on,  among  other  things,  the  characteristics  of the  underlying
assets,  the coupon rates on the  securities,  prevailing  interest  rates,  the
amount of administrative  expenses and the actual  prepayment  experience on the
underlying assets. Asset-backed security residuals not registered under the 1933
Act may be subject to certain  restrictions  on  transferability.  In  addition,
there may be no liquid market for such securities.

The  availability of  asset-backed  securities may be affected by legislative or
regulatory  developments.  It is possible that such  developments  may require a
fund to dispose of any then-existing holdings of such securities.

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

Pre-Refunded  Municipal  Securities.  The principal of and interest on municipal
securities  that have been  pre-refunded  are no longer  paid from the  original
revenue source for the securities.  Instead,  after  pre-refunding the source of
such payments of the principal of and interest on these securities are typically
paid from an escrow fund  consisting of obligations  issued or guaranteed by the
US  Government.  The assets in the escrow fund are derived  from the proceeds of
refunding  bonds  issued  by  the  same  issuer  as the  pre-refunded  municipal
securities. Issuers of municipal securities use this advance refunding technique
to obtain  more  favorable  terms with  respect to  securities  that are not yet
subject to call or  redemption  by the issuer.  For example,  advance  refunding
enables an issuer to refinance debt at lower market interest rates,  restructure
debt to improve cash flow or eliminate restrictive covenants in the indenture or
other governing instrument for the pre-refunded  municipal securities.  However,
except for a change in the revenue  source  from which  principal  and  interest
payments are made, the pre-refunded  municipal  securities remain outstanding on
their  original  terms  until  they  mature  or  are  redeemed  by  the  issuer.
Pre-refunded  municipal  securities  are  usually  purchased  at a  price  which
represents a premium over their face value.

Private  Activity  Bonds.  Certain  types  of  municipal  securities,  generally
referred to as industrial  development  bonds (and referred to under current tax
law as private activity bonds), are issued by or on behalf of public authorities
to obtain funds for privately-operated housing facilities, airport, mass transit
or port  facilities,  sewage  disposal,  solid waste disposal or hazardous waste
treatment or disposal  facilities and certain local facilities for water supply,
gas or electricity. Other types of industrial development bonds, the proceeds of
which  are  used for the  construction,  equipment,  repair  or  improvement  of
privately operated industrial or commercial facilities, may constitute municipal
securities,  although the current federal tax laws place substantial limitations
on the size of such issues.  The interest from certain  private  activity  bonds
owned by a fund (including a fund's distributions attributable to such interest)
may be a preference item for purposes of the alternative minimum tax.

Privatized Enterprises. Investments in foreign securities may include securities
issued  by  enterprises   that  have  undergone  or  are  currently   undergoing
privatization.  The  governments of certain  foreign  countries have, to varying
degrees,  embarked on privatization  programs  contemplating  the sale of all or
part of their  interests  in state  enterprises.  A  fund's  investments  in the
securities  of  privatized   enterprises   may  include   privately   negotiated
investments in a government or  state-owned or controlled  company or enterprise
that has not yet  conducted  an  initial  equity  offering,  investments  in the
initial  offering of equity  securities  of a state  enterprise  or former state
enterprise and investments in the securities of a state enterprise following its
initial equity offering.

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<PAGE>

In certain  jurisdictions,  the ability of foreign entities,  such as a fund, to
participate in privatizations may be limited by local law, or the price or terms
on which a fund may be able to  participate  may be less  advantageous  than for
local investors.  Moreover, there can be no assurance that governments that have
embarked on  privatization  programs will continue to divest their  ownership of
state  enterprises,  that  proposed  privatizations  will be  successful or that
governments will not re-nationalize enterprises that have been privatized.

In the case of the  enterprises in which a fund may invest,  large blocks of the
stock of those  enterprises may be held by a small group of  stockholders,  even
after  the  initial  equity  offerings  by those  enterprises.  The sale of some
portion or all of those blocks could have an adverse  effect on the price of the
stock of any such enterprise.

Prior to making an initial  equity  offering,  most state  enterprises or former
state  enterprises go through an internal  reorganization  or  management.  Such
reorganizations  are made in an attempt to better  enable these  enterprises  to
compete in the private sector. However,  certain reorganizations could result in
a  management  team  that does not  function  as well as an  enterprise's  prior
management and may have a negative effect on such enterprise.  In addition,  the
privatization  of an  enterprise  by its  government  may occur over a number of
years,  with the  government  continuing to hold a  controlling  position in the
enterprise even after the initial equity offering for the enterprise.

Prior to privatization, most of the state enterprises in which a fund may invest
enjoy the protection of and receive  preferential  treatment from the respective
sovereigns  that own or control them.  After making an initial equity  offering,
these   enterprises   may  no  longer  have  such  protection  or  receive  such
preferential  treatment and may become subject to market  competition from which
they were  previously  protected.  Some of these  enterprises may not be able to
operate  effectively in a competitive market and may suffer losses or experience
bankruptcy due to such competition.

Precious  Metals.  DWS  Gold &  Precious  Metals  Fund  "concentrates"  (for the
purposes  of the 1940 Act) its  assets in  securities  related  to gold and gold
bullion and coins,  which means that as a matter of fundamental  policy,  at all
times,  the fund invests at least 25% of total assets in  securities  related to
gold and in gold  directly.  As a result,  the fund may be  subject  to  greater
market fluctuation than a fund which has securities representing a broader range
of investment  alternatives.  In addition,  when market conditions warrant,  the
fund reserves the freedom to  concentrate  its assets in  securities  related to
other precious  metals and in those metals  directly.  The fund may invest up to
25% of its assets in wholly-owned  subsidiaries of the corporation  which invest
in gold,  silver,  platinum and palladium  bullion and in gold and silver coins.
The  subsidiaries  will incur expenses for the storage and insurance of precious
metals purchased.  However,  the subsidiaries may realize capital gains from the
sale of metals and may pay distributions to the fund from such gains. Currently,
Scudder Precious Metals, Inc. is the Corporation's only subsidiary.  Investments
in  precious  metals and in precious  metals-related  securities  and  companies
involve a  relatively  high  degree of risk.  Prices of gold and other  precious
metals  can be  influenced  by a  variety  of  global  economic,  financial  and
political  factors and may fluctuate  markedly over short periods of time. Among
other  things,  precious  metals values can be affected by changes in inflation,
investment speculation,  metal sales by governments or central banks, changes in
industrial and commercial demand,  and any governmental  restrictions on private
ownership of gold or other precious metals.

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

Certain REITs have relatively  small market  capitalizations,  which may tend to
increase the  volatility of the market price of their  securities.  Furthermore,
REITs  are  dependent  upon   specialized   management   skills,   have  limited

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<PAGE>

diversification and are,  therefore,  subject to risks inherent in operating and
financing a limited  number of  projects.  REITs are also  subject to heavy cash
flow dependency, defaults by borrowers and the possibility of failing to qualify
for tax-free pass-through of income under the Internal Revenue Code of 1986 (the
"Code"),   as  amended,   and  to  maintain   exemption  from  the  registration
requirements of the 1940 Act. By investing in REITs indirectly through the fund,
a shareholder will bear not only his or her proportionate  share of the expenses
of a fund, but also,  indirectly,  similar  expenses of the REITs.  In addition,
REITs  depend  generally  on  their  ability  to  generate  cash  flow  to  make
distributions to shareholders.

Repurchase  Agreements.  A fund may invest in repurchase  agreements pursuant to
its investment guidelines.  In a repurchase agreement, a fund acquires ownership
of a security and simultaneously  commits to resell that security to the seller,
typically a bank or broker/dealer.

A repurchase  agreement  provides a means for a fund to earn income on funds for
periods as short as overnight.  It is an  arrangement  under which the purchaser
(i.e., a fund) acquires a security  ("Obligation") and the seller agrees, at the
time of sale,  to  repurchase  the  Obligation  at a  specified  time and price.
Securities  subject to a repurchase  agreement are held in a segregated  account
and the value of such securities is kept at least equal to the repurchase  price
on a daily basis.  The repurchase  price may be higher than the purchase  price,
the difference being income to a fund, or the purchase and repurchase prices may
be the same,  with  interest  at a stated rate due to a fund  together  with the
repurchase  price  upon  repurchase.  In either  case,  the  income to a fund is
unrelated to the interest rate on the  Obligation  itself.  Obligations  will be
held by the custodian or in the Federal Reserve Book Entry System.

It is not clear  whether a court would  consider the  Obligation  purchased by a
fund  subject to a  repurchase  agreement  as being  owned by a fund or as being
collateral for a loan by a fund to the seller.  In the event of the commencement
of  bankruptcy  or  insolvency  proceedings  with  respect  to the seller of the
Obligation before repurchase of the Obligation under a repurchase  agreement,  a
fund may encounter delay and incur costs before being able to sell the security.
Delays may involve  loss of interest or decline in price of the  Obligation.  If
the court characterizes the transaction as a loan and a fund has not perfected a
security  interest  in the  Obligation,  a fund may be  required  to return  the
Obligation to the seller's estate and be treated as an unsecured creditor of the
seller. As an unsecured creditor,  a fund would be at risk of losing some or all
of the principal and income involved in the  transaction.  As with any unsecured
debt  Obligation  purchased for a fund,  the Advisor seeks to reduce the risk of
loss through  repurchase  agreements  by analyzing the  creditworthiness  of the
obligor,  in this case the  seller  of the  Obligation.  Apart  from the risk of
bankruptcy or insolvency proceedings, there is also the risk that the seller may
fail to repurchase the Obligation,  in which case a fund may incur a loss if the
proceeds  to a fund of the sale to a third  party are less  than the  repurchase
price.  However,  if the market value  (including  interest)  of the  Obligation
subject to the  repurchase  agreement  becomes  less than the  repurchase  price
(including interest), a fund will direct the seller of the Obligation to deliver
additional  securities  so that the market  value  (including  interest)  of all
securities  subject  to the  repurchase  agreement  will  equal  or  exceed  the
repurchase price.

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

Reverse  Repurchase  Agreements.  A fund  may  enter  into  "reverse  repurchase
agreements,"  which are repurchase  agreements in which a fund, as the seller of
the  securities,  agrees to  repurchase  such  securities  at an agreed time and
price.  A fund  maintains a segregated  account in connection  with  outstanding
reverse  repurchase  agreements.  A fund  will  enter  into  reverse  repurchase
agreements only when the advisor  believes that the interest income to be earned
from the investment of the proceeds of the transaction  will be greater than the
interest expense of the transaction. Such transactions may increase fluctuations
in the market  value of fund assets and its yield and may be viewed as a form of
leverage.

Securities  Backed by  Guarantees.  A fund may  invest in  securities  backed by
guarantees from banks, insurance companies and other financial  institutions.  A
money  market  fund's  ability to maintain a stable  share price may depend upon
such  guarantees,   which  are  not  supported  by  federal  deposit  insurance.
Consequently,  changes in the


                                       41
<PAGE>

credit quality of these  institutions could have an adverse impact on securities
they have  guaranteed  or backed,  which could cause losses to a fund and affect
its share price.

Securities with Put Rights. A fund may enter into put transactions  with respect
to  obligations  held in its portfolio  with  broker/dealers  pursuant to a rule
under the 1940 Act, and with commercial banks.

The right of a fund to exercise a put is unconditional and unqualified. A put is
not transferable by a fund,  although a fund may sell the underlying  securities
to a third party at any time.  If necessary  and  advisable,  a fund may pay for
certain puts either separately in cash or by paying a higher price for portfolio
securities  that are acquired  subject to such a put (thus reducing the yield to
maturity otherwise available for the same securities).  A fund expects, however,
that puts  generally  will be  available  without  the  payment of any direct or
indirect consideration.

A fund may  enter  into  puts only with  banks or  broker/dealers  that,  in the
opinion of the advisor,  present minimal credit risks.  The ability of a fund to
exercise a put will  depend on the ability of the bank or  broker/dealer  to pay
for the  underlying  securities at the time the put is  exercised.  In the event
that a bank or  broker/dealer  should default on its obligation to repurchase an
underlying  security,  a fund might be unable to recover all or a portion of any
loss sustained from having to sell the security elsewhere.

A fund  intends to enter into puts  solely to  maintain  liquidity  and does not
intend to exercise its rights  thereunder  for trading  purposes.  The puts will
only be for  periods  of  substantially  less  than the  life of the  underlying
security.  The  acquisition  of a put will not affect the valuation by a fund of
the  underlying  security.  The actual put will be valued at zero in determining
net asset value of a fund.  Where a fund pays directly or indirectly  for a put,
its cost will be reflected in realized gain or loss when the put is exercised or
expires. If the value of the underlying  security  increases,  the potential for
unrealized  or realized  gain is reduced by the cost of the put. The maturity of
an obligation purchased by a fund will not be considered shortened by any put to
which such obligation is subject.

Senior Loans.  DWS Floating  Rate Plus Fund may invest in Senior  Loans.  Senior
Loans are direct  obligations of corporations or other business entities and are
generally  arranged by banks or other commercial  lending  institutions and made
generally to finance internal growth, mergers,  acquisitions,  stock repurchases
and leveraged buyouts. Senior Loans may include restrictive covenants which must
be maintained by the borrower. Such covenants, in addition to the timely payment
of interest and principal,  may include mandatory prepayment  provisions arising
from free cash flow,  restrictions on dividend payments and usually state that a
borrower must maintain specific minimum financial ratios as well as establishing
limits on total debt. A breach of covenant, which is not waived by the agent, is
normally  an event of  acceleration,  i.e.,  the agent has the right to call the
outstanding  Senior Loan.  In addition,  loan  covenants  may include  mandatory
prepayment  provisions stemming from free cash flow. Free cash flow is cash that
is in excess of capital expenditures plus debt service requirements of principal
and  interest.  The free cash flow shall be applied to prepay the Senior Loan in
an order of maturity described in the loan documents. Under certain interests in
Senior  Loans,  the fund may have an obligation  to make  additional  loans upon
demand by the  borrower.  The fund intends to reserve  against  such  contingent
obligations by segregating  sufficient assets in high quality  short-term liquid
investments or borrowing to cover such obligations.

The  fund's  investment  in  Senior  Loans may take the form of  purchase  of an
assignment  or a portion of a Senior Loan from a third party  ("assignment")  or
acquiring a participation in a Senior Loan ("participation"). The fund may pay a
fee  or  forego  a  portion  of  interest  payments  to  the  lender  selling  a
participation or assignment under the terms of such participation or assignment.
When the fund is a purchaser of an assignment,  it typically succeeds to all the
rights and  obligations  under the loan  agreement of the  assigning  lender and
becomes a lender under the loan agreement  with the same rights and  obligations
as the assigning  lender.  Assignments  are,  however,  arranged through private
negotiations between potential assignees and potential assignors, and the rights
and  obligations  acquired by the purchaser of an assignment may be more limited
than  those  held  by  the  assigning  lender.  The  fund  may  also  invest  in
participations  in Senior  Loans.  With respect to any given  Senior  Loan,  the
rights of the fund when it acquires a participation may be more limited than the
rights of the  original  lenders or of  investors  who  acquire  an  assignment.
Participations may entail certain risks relating to the  creditworthiness of the
parties from which the participations are obtained.


                                       42
<PAGE>


In a typical  interest in a Senior Loan, the agent  administers the loan and has
the right to monitor the collateral. The agent is also required to segregate the
principal  and interest  payments  received  from the borrower and to hold these
payments for the benefit of the lenders. The fund normally looks to the agent to
collect and distribute principal of and interest on a Senior Loan.  Furthermore,
the fund looks to the agent to use normal credit remedies,  such as to foreclose
on  collateral;  monitor  credit loan  covenants;  and notify the lenders of any
adverse  changes  in the  borrower's  financial  condition  or  declarations  of
insolvency.  In the event of a default by the borrower,  it is possible,  though
unlikely, that the fund could receive a portion of the borrower's collateral. If
the fund receives collateral other than cash, such collateral will be liquidated
and the cash received from such  liquidation will be available for investment as
part of the  fund's  portfolio.  At times the fund may also  negotiate  with the
agent regarding the agent's exercise of credit remedies under a Senior Loan. The
agent is  compensated  for these services by the borrower as is set forth in the
loan  agreement.  Such  compensation  may take the form of a fee or other amount
paid upon the making of the Senior Loan and/or an ongoing fee or other amount.

The loan  agreement in  connection  with Senior Loans sets forth the standard of
care to be exercised by the agents on behalf of the lenders and usually provides
for the  termination  of the agent's agency status in the event that it fails to
act  properly,  becomes  insolvent,  enters  FDIC  receivership,  or if not FDIC
insured,  enters into bankruptcy or if the agent resigns.  In the event an agent
is unable to perform its  obligations as agent,  another lender would  generally
serve in that capacity.

The fund believes  that the  principal  credit risk  associated  with  acquiring
Senior Loans from another lender is the credit risk associated with the borrower
of the  underlying  Senior  Loan.  The fund may incur  additional  credit  risk,
however,  when the fund acquires a  participation  in a Senior Loan from another
lender  because the fund must assume the risk of insolvency or bankruptcy of the
other  lender from which the Senior Loan was  acquired.  However,  in  acquiring
Senior  Loans,  the fund  conducts an analysis and  evaluation  of the financial
condition of each such lender.  The fund has taken the following  measures in an
effort to reduce such risks. The fund will only acquire participations in Senior
Loans  if  the  lender  selling  the   participation,   and  any  other  persons
interpositioned  between the fund and the lender,  at the time of investment has
outstanding  debt or deposit  obligations  rated investment grade (BBB or A-3 or
higher by Standards & Poor's  Ratings  Group  ("S&P") or Baa or P-3 or higher by
Moody's  Investors  Service  ("Moody's"))  or determined by the Advisor to be of
comparable quality. Long-term debt rated BBB by S&P is regarded by S&P as having
adequate  capacity to pay  interest  and repay  principal  and debt rated Baa by
Moody's is regarded by Moody's as a medium grade obligation, i.e., it is neither
highly protected nor poorly secured. Commercial paper rated A-1 by S&P indicates
that the degree of safety  regarding  timely  payment is considered by S&P to be
either  overwhelming or very strong and issues of commercial paper rated Prime-1
by Moody's are considered by Moody's to have a superior ability for repayment of
senior short-term debt obligations.

Senior Loans,  unlike certain bonds,  usually do not have call protection.  This
means that interests comprising the Fund's portfolio,  while having a stated one
to ten-year  term,  may be prepaid,  often without  penalty.  The fund generally
holds  Senior Loans to maturity  unless it has become  necessary to sell them to
adjust the fund's  portfolio in accordance with the Advisor's view of current or
expected economic or specific industry or borrower conditions.

Senior Loans frequently  require full or partial prepayment of a loan when there
are asset sales or a securities  issuance.  Prepayments on Senior Loans may also
be made by the borrower at its  election.  The rate of such  prepayments  may be
affected by, among other things,  general business and economic  conditions,  as
well as the financial status of the borrower.  Prepayment would cause the actual
duration of a Senior Loan to be shorter than its stated maturity. Prepayment may
be deferred by the fund. This should,  however,  allow the Fund to reinvest in a
new loan and recognize as income any unamortized loan fees. This may result in a
new facility fee payable to the Fund.

Because  interest rates paid on these Senior Loans  periodically  fluctuate with
the market,  it is expected that the prepayment  and a subsequent  purchase of a
new Senior Loan by the fund will not have a material adverse impact on the yield
of the portfolio. See "Portfolio Transactions."

Under a Senior Loan,  the borrower  generally  must pledge as collateral  assets
which may  include  one or more of the  following:  cash;  accounts  receivable;
inventory; property, plant and equipment; both common and preferred stock in its
subsidiaries;  trademarks,  copyrights,  patent rights; and franchise value. The
fund may also receive guarantees as


                                       43
<PAGE>

a form of collateral.  In some  instances,  a Senior Loan may be secured only by
stock in a borrower or its affiliates.  The fund may also invest in Senior Loans
not  secured  by any  collateral.  The  market  value of the  assets  serving as
collateral  (if any)  will,  at the time of  investment,  in the  opinion of the
Advisor, equal or exceed the principal amount of the Senior Loan. The valuations
of these  assets may be  performed  by an  independent  appraisal.  If the agent
becomes aware that the value of the collateral has declined,  the agent may take
action as it deemed  necessary  for the  protection of its own interests and the
interests of the other lenders,  including,  for example, giving the borrower an
opportunity to provide additional  collateral or accelerating the loan. There is
no assurance,  however, that the borrower would provide additional collateral or
that the  liquidation  of the existing  collateral  would satisfy the borrower's
obligation  in the event of nonpayment  of scheduled  interest or principal,  or
that such collateral could be readily liquidated.

The fund may be required to pay and may receive  various fees and commissions in
the process of purchasing,  selling and holding Senior Loans.  The fee component
may include any, or a combination of, the following elements:  arrangement fees,
non-use fees, facility fees, letter of credit fees and ticking fees. Arrangement
fees are paid at the  commencement of a loan as compensation  for the initiation
of the  transaction.  A non-use fee is paid based upon the amount  committed but
not used  under  the  loan.  Facility  fees are  on-going  annual  fees  paid in
connection  with a loan.  Letter of credit  fees are paid if a loan  involves  a
letter of credit.  Ticking fees are paid from the initial commitment  indication
until loan closing if for an extended  period.  The amount of fees is negotiated
at the time of transaction.

If legislation or state or federal regulators impose additional  requirements or
restrictions  on the ability of  financial  institutions  to make loans that are
considered highly leveraged  transactions,  the availability of Senior Loans for
investment by the fund may be adversely affected. In addition, such requirements
or  restrictions  could  reduce or eliminate  sources of  financing  for certain
borrowers. This would increase the risk of default. If legislation or federal or
state regulators require financial  institutions to dispose of Senior Loans that
are considered  highly  leveraged  transactions  or subject such Senior Loans to
increased regulatory scrutiny, financial institutions may determine to sell such
Senior  Loans.  Such sales could  result in prices  that,  in the opinion of the
Advisor, do not represent fair value. If the fund attempts to sell a Senior Loan
at a time when a financial institution is engaging in such a sale, the price the
fund could get for the Senior Loan may be adversely affected.

Short  Sales.  When  DWS  Disciplined   Market  Neutral  Fund,  DWS  Disciplined
Long/Short  Growth  Fund,  DWS  Disciplined  Long/Short  Value Fund or DWS RREEF
Global Real Estate  Securities Fund takes a long position,  it purchases a stock
outright.  When a fund takes a short  position,  it sells at the current  market
price a stock it does not own but has borrowed in  anticipation  that the market
price of the stock will  decline.  To  complete,  or close  out,  the short sale
transaction,  a fund buys the same  stock in the  market  and  returns it to the
lender.  The  price at such time may be more or less than the price at which the
security was sold by a fund. Until the security is replaced,  a fund is required
to pay the lender  amounts  equal to any  dividends  or  interest,  which accrue
during  the  period of the  loan.  To borrow  the  security,  a fund may also be
required to pay a premium,  which would  increase the cost of the security sold.
The  proceeds of the short sale will be  retained  by the broker,  to the extent
necessary to meet the margin  requirements,  until the short  position is closed
out. A fund makes money when the market  price of the  borrowed  stock goes down
and a fund is able to  replace  it for less than it earned by  selling it short.
Alternatively  if the price of the stock goes up after the short sale and before
the short position is closed, a fund will lose money because it will have to pay
more to  replace  the  borrowed  stock than it  received  when it sold the stock
short.

A fund may not always be able to close out a short position at a particular time
or at an acceptable price. A lender may request that the borrowed  securities be
returned  to it on  short  notice,  and a fund  may  have  to buy  the  borrowed
securities at an  unfavorable  price.  If this occurs at a time that other short
sellers of the same  security also want to close out their  positions,  a "short
squeeze" can occur.  A short  squeeze  occurs when demand is greater than supply
for the stock sold short.  A short squeeze makes it more likely that a fund will
have to cover its short sale at an unfavorable  price.  If that happens,  a fund
will lose some or all of the  potential  profit from,  or even incur a loss as a
result of, the short sale.

Until a fund closes its short position or replaces the borrowed security, a fund
will  designate  liquid assets it owns (other than the short sales  proceeds) as
segregated  assets to the books of the broker  and/or its custodian in an amount
equal to its  obligation to purchase the securities  sold short,  as required by
the 1940  Act.  The  amount  segregated  in


                                       44
<PAGE>

this manner will be increased or decreased each business day equal to the change
in market value of a fund's  obligation to purchase the security sold short.  If
the lending broker requires a fund to deposit additional collateral (in addition
to the short sales proceeds that the broker holds during the period of the short
sale),  which may be as much as 50% of the value of the  securities  sold short,
the amount of the  additional  collateral  may be  deducted in  determining  the
amount of cash or liquid  assets a fund is  required to  segregate  to cover the
short sale  obligation  pursuant to the 1940 Act. The amount  segregated must be
unencumbered by any other  obligation or claim than the obligation that is being
covered. Each fund believes that short sale obligations that are covered, either
by an offsetting  asset or right (acquiring the security sold short or having an
option to purchase  the  security  sold short at exercise  price that covers the
obligation),  or by a  fund's  segregated  asset  procedures  (or a  combination
thereof),  are not senior securities under the 1940 Act and are not subject to a
fund's  borrowing  restrictions.  This  requirement to segregate assets limits a
fund's  leveraging  of its  investments  and the  related  risk of  losses  from
leveraging.  A fund  also is  required  to pay the  lender of the  security  any
dividends or interest that accrues on a borrowed  security  during the period of
the loan.  Depending on the  arrangements  made with the broker or custodian,  a
fund may or may not receive any payments  (including  interest) on collateral it
has deposited with the broker.

Short  sales  involve  the risk  that a fund will  incur a loss by  subsequently
buying a security  at a higher  price than the price at which a fund  previously
sold  the  security  short.  Any  loss  will  be  increased  by  the  amount  of
compensation,  interest or dividends, and transaction costs a fund must pay to a
lender of the security. In addition, because a fund's loss on a short sale stems
from increases in the value of the security sold short, the extent of such loss,
like the price of the  security  sold  short,  is  theoretically  unlimited.  By
contrast, a fund's loss on a long position arises from decreases in the value of
the  security  held by a fund  and  therefore  is  limited  by the  fact  that a
security's value cannot drop below zero.

The use of short sales,  in effect,  leverages a fund's  portfolio,  which could
increase a fund's  exposure  to the  market,  magnify  losses and  increase  the
volatility of returns.

Although  a fund's  share  price  may  increase  if the  securities  in its long
portfolio  increase  in value  more  than the  securities  underlying  its short
positions,  a fund's share price may decrease if the  securities  underlying its
short  positions  increase  in  value  more  than  the  securities  in its  long
portfolio.

While  the  Advisor  has  extensive   experience   managing   mutual  funds  and
institutional  accounts,  it has not previously  managed a long/short  strategy.
Although  the  Adviser  believes  that  its  stock  selection  strategy  will be
effective in selecting short  positions,  there is no assurance that the Adviser
will be successful in applying this approach to a long/short strategy.

Short Sales Against the Box. A fund may make short sales of common stocks if, at
all times when a short position is open, a fund owns the stock or owns preferred
stocks or debt  securities  convertible  or  exchangeable,  without  payment  of
further  consideration,  into the shares of common stock sold short. Short sales
of this kind are referred to as short sales "against the box." The broker/dealer
that  executes a short sale  generally  invests cash  proceeds of the sale until
they are paid to a fund.  Arrangements  may be made  with the  broker/dealer  to
obtain a portion of the interest earned by the broker on the investment of short
sale  proceeds.  A fund  will  segregate  the  common  stock or  convertible  or
exchangeable  preferred  stock or debt  securities in a special account with the
custodian.  Uncertainty  regarding the tax effects of short sales of appreciated
investments  may limit the  extent to which a fund may enter  into  short  sales
against the box.

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

                                       45
<PAGE>

Sovereign Debt.  Investment in sovereign debt can involve a high degree of risk.
The governmental entity that controls the repayment of sovereign debt may not be
able or willing to repay the  principal  and/or  interest when due in accordance
with the terms of such debt. A governmental  entity's  willingness or ability to
repay  principal  and interest due in a timely  manner may be affected by, among
other factors, its cash flow situation,  the extent of its foreign reserves, the
availability  of sufficient  foreign  exchange on the date a payment is due, the
relative  size of the  debt  service  burden  to the  economy  as a  whole,  the
governmental  entity's  policy toward the  International  Monetary Fund, and the
political   constraints  to  which  a   governmental   entity  may  be  subject.
Governmental  entities  may also be  dependent  on expected  disbursements  from
foreign governments, multilateral agencies and others abroad to reduce principal
and  interest  arrearages  on their debt.  The  commitment  on the part of these
governments,  agencies and others to make such  disbursements may be conditioned
on a governmental  entity's  implementation  of economic reforms and/or economic
performance  and the timely  service of such  debtor's  obligations.  Failure to
implement  such reforms,  achieve such levels of economic  performance  or repay
principal  or  interest  when due may result in the  cancellation  of such third
parties commitments to lend funds to the governmental  entity, which may further
impair such  debtor's  ability or  willingness  to service its debts in a timely
manner. Consequently, governmental entities may default on their sovereign debt.
Holders of sovereign debt may be requested to participate in the rescheduling of
such debt and to extend  further  loans to  governmental  entities.  There is no
bankruptcy  proceeding by which  sovereign debt on which  governmental  entities
have defaulted may be collected in whole or in part.

Stand-by Commitments.  A stand-by commitment is a right acquired by a fund, when
it purchases a municipal  obligation  from a broker,  dealer or other  financial
institution  ("seller"),  to  sell  up to the  same  principal  amount  of  such
securities  back to the  seller,  at a  fund's  option,  at a  specified  price.
Stand-by  commitments  are also known as  "puts."  The  exercise  by a fund of a
stand-by  commitment is subject to the ability of the other party to fulfill its
contractual commitment.

Stand-by  commitments  acquired by a fund will have the following features:  (1)
they will be in writing and will be physically held by a fund's custodian; (2) a
fund's right to exercise them will be unconditional  and  unqualified;  (3) they
will be entered into only with sellers which in the Advisor's  opinion present a
minimal  risk  of  default;  (4)  although  stand-by  commitments  will  not  be
transferable, municipal obligations purchased subject to such commitments may be
sold to a third party at any time,  even though the  commitment is  outstanding;
and (5) their exercise price will be (i) a fund's  acquisition  cost  (excluding
any accrued interest which a fund paid on their acquisition), less any amortized
market premium or plus any amortized original issue discount during the period a
fund owned the  securities,  plus (ii) all  interest  accrued on the  securities
since the last interest payment date.

A fund expects that stand-by commitments generally will be available without the
payment  of any direct or  indirect  consideration.  However,  if  necessary  or
advisable,  a fund will pay for stand-by commitments,  either separately in cash
or by paying a higher price for portfolio  securities which are acquired subject
to the commitments.

It is difficult to evaluate the likelihood of use or the potential  benefit of a
stand-by commitment.  Therefore,  it is expected that the Advisor will determine
that stand-by commitments  ordinarily have a "fair value" of zero, regardless of
whether any direct or indirect  consideration was paid.  However,  if the market
price of the  security  subject  to the  stand-by  commitment  is less  than the
exercise  price of the stand-by  commitment,  such security  will  ordinarily be
valued at such exercise price. Where a fund has paid for a stand-by  commitment,
its cost will be  reflected as  unrealized  depreciation  for the period  during
which the commitment is held.

The Advisor  understands  that the IRS has issued a favorable  revenue ruling to
the effect that, under specified circumstances,  a registered investment company
will be the owner of tax-exempt municipal  obligations acquired subject to a put
option.  The Service has also issued private letter rulings to certain taxpayers
(which do not  serve as  precedent  for  other  taxpayers)  to the  effect  that
tax-exempt  interest received by a regulated  investment company with respect to
such  obligations  will be  tax-exempt  in the hands of the  company  and may be
distributed to its shareholders as  exempt-interest  dividends.  The Service has
subsequently  announced that it will not ordinarily issue advance ruling letters
as to the identity of the true owner of property in cases  involving the sale of
securities or participation  interests therein if the purchaser has the right to
cause the security,  or the participation  interest therein,  to be purchased by
either the seller or a third party.  A fund intends to take the position that it
owns any municipal  obligations  acquired  subject to a stand-by  commitment and
that tax-exempt interest earned with respect to such


                                       46
<PAGE>

municipal  obligations  will be tax-exempt  in its hands.  There is no assurance
that the Service will agree with such position in any particular case.

Supranational Entities.  Supranational entities are international  organizations
designated   or  supported  by   governmental   entities  to  promote   economic
reconstruction or development and international banking institutions and related
government agencies.  Examples include the International Bank for Reconstruction
and Development  (the World Bank),  the European Coal and Steel  Community,  The
Asian  Development Bank and the InterAmerican  Development Bank.  Obligations of
supranational  entities  are  backed  by the  guarantee  of one or more  foreign
governmental parties which sponsor the entity.

Synthetic Investments.  In certain circumstances,  a fund may wish to obtain the
price  performance  of a security  without  actually  purchasing the security in
circumstances  where, for example,  the security is illiquid,  or is unavailable
for direct  investment  or  available  only on less  attractive  terms.  In such
circumstances,  a  fund  may  invest  in  synthetic  or  derivative  alternative
investments ("Synthetic Investments") that are based upon or otherwise relate to
the economic performance of the underlying securities. Synthetic Investments may
include swap transactions,  notes or units with variable redemption amounts, and
other similar instruments and contracts.  Synthetic Investments typically do not
represent  beneficial  ownership  of the  underlying  security,  usually are not
collateralized  or otherwise secured by the counterparty and may or may not have
any credit enhancements  attached to them.  Accordingly,  Synthetic  Investments
involve  exposure  not  only  to  the  creditworthiness  of  the  issuer  of the
underlying  security,  changes in exchange rates and future governmental actions
taken by the jurisdiction in which the underlying  security is issued,  but also
to the  creditworthiness and legal standing of the counterparties  involved.  In
addition, Synthetic Investments typically are illiquid.

Tax-Exempt  Commercial  Paper.  Issues of tax-exempt  commercial paper typically
represent short-term,  unsecured, negotiable promissory notes. These obligations
are issued by state and local  governments and their agencies to finance working
capital needs of municipalities or to provide interim construction financing and
are  paid  from  general  revenues  of  municipalities  or are  refinanced  with
long-term debt. In most cases,  tax-exempt commercial paper is backed by letters
of credit,  lending  agreements,  note  repurchase  agreements  or other  credit
facility agreements offered by banks or other institutions.

TBA  Purchase  Commitments.  A 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 a fund's  other  assets.  Unsettled  TBA purchase  commitments  are
valued at the current market value of the underlying securities.

Tender Option Bonds.  A tender  option bond is a municipal  security  (generally
held pursuant to a custodial  arrangement) having a relatively long maturity and
bearing interest at a fixed rate substantially higher than prevailing short-term
tax-exempt rates. The bond is typically issued in conjunction with the agreement
of a third party, such as a bank,  broker-dealer or other financial institution,
pursuant to which such institution  grants the security  holders the option,  at
periodic  intervals,  to tender their  securities to the institution and receive
the face value thereof.

As consideration for providing the option,  the financial  institution  receives
periodic fees equal to the  difference  between the bond's fixed coupon rate and
the  rate,  as  determined  by a  remarketing  or  similar  agent at or near the
commencement of such period,  that would cause the securities,  coupled with the
tender option,  to trade at par on the date of such  determination.  Thus, after
payment of this fee, the security holder  effectively  holds a demand obligation
that bears interest at the prevailing short-term tax-exempt rate.

However,  an institution  will not be obligated to accept  tendered bonds in the
event of certain  defaults  or a  significant  downgrade  in the  credit  rating
assigned to the issuer of the bond.  The  liquidity of a tender option bond is a
function  of the  credit  quality  of both the  bond  issuer  and the  financial
institution  providing  liquidity.  Tender  option bonds are deemed to be liquid
unless, in the opinion of the Advisor, the credit quality of the bond issuer and
the  financial  institution  is  deemed,  in light of a  fund's  credit  quality
requirements,  to be inadequate.  A fund intends to invest only in tender option
bonds the interest on which will,  in the opinion of bond  counsel,  counsel for
the issuer of interests


                                       47
<PAGE>

therein or counsel  selected  by the  Advisor,  be exempt from  regular  federal
income tax.  However,  because there can be no assurance that the IRS will agree
with such counsel's  opinion in any particular case, there is a risk that a fund
will not be  considered  the owner of such tender option bonds and thus will not
be entitled to treat such  interest as exempt from such tax.  Additionally,  the
federal  income tax  treatment of certain  other  aspects of these  investments,
including  the proper tax  treatment of tender  option bonds and the  associated
fees,  in relation to various  regulated  investment  company tax  provisions is
unclear.  A fund  intends  to  manage  its  portfolio  in a manner  designed  to
eliminate or minimize any adverse impact from the tax rules  applicable to these
investments.

Third Party Puts. A fund may purchase  long-term fixed rate bonds that have been
coupled with an option granted by a third party financial institution allowing a
fund at specified  intervals  to tender (or "put") the bonds to the  institution
and receive the face value thereof (plus  accrued  interest).  These third party
puts are available in several  different  forms, may be represented by custodial
receipts or trust  certificates  and may be combined with other features such as
interest  rate swaps.  A fund receives a short-term  rate of interest  (which is
periodically  reset),  and the interest rate differential  between that rate and
the  fixed  rate on the  bond is  retained  by the  financial  institution.  The
financial  institution  granting the option does not provide credit enhancement,
and in the  event  that  there is a  default  in the  payment  of  principal  or
interest,  or downgrading of a bond or a loss of the bond's  tax-exempt  status,
the put option will terminate automatically,  the risk to a fund will be that of
holding  such a long-term  bond and the  weighted  average  maturity of a fund's
portfolio would be adversely affected.

These bonds coupled with puts may present the same tax issues as are  associated
with Stand-By Commitments.  As with any Stand-By Commitments acquired by a fund,
a fund  intends  to take the  position  that it is the  owner  of any  municipal
obligation  acquired subject to a third-party put, and that tax-exempt  interest
earned with respect to such  municipal  obligations  will be  tax-exempt  in its
hands.  There is no assurance  that the IRS will agree with such position in any
particular case. Additionally, the federal income tax treatment of certain other
aspects of these  investments,  including  the treatment of tender fees and swap
payments,  in relation to various regulated investment company tax provisions is
unclear.  However,  the advisor  seeks to manage a fund's  portfolio in a manner
designed to minimize any adverse impact from these investments.

Trust Preferred  Securities.  A fund may invest in Trust  Preferred  Securities,
which are hybrid  instruments  issued by a special  purpose  trust (the "Special
Trust"),  the entire equity  interest of which is owned by a single issuer.  The
proceeds of the issuance to the Fund of Trust Preferred Securities are typically
used to purchase a junior  subordinated  debenture,  and distributions  from the
Special  Trust are funded by the  payments  of  principal  and  interest  on the
subordinated debenture.

If payments on the underlying junior subordinated debentures held by the Special
Trust are deferred by the debenture  issuer,  the debentures would be treated as
original issue discount ("OID")  obligations for the remainder of their term. As
a  result,  holders  of Trust  Preferred  Securities,  such as a fund,  would be
required to accrue  daily for  Federal  income tax  purposes  their share of the
stated interest and the de minimis OID on the debentures  (regardless of whether
a fund receives any cash distributions from the Special Trust), and the value of
Trust  Preferred  Securities  would  likely  be  negatively  affected.  Interest
payments on the underlying junior subordinated  debentures typically may only be
deferred if dividends are  suspended on both common and  preferred  stock of the
issuer. The underlying junior  subordinated  debentures  generally rank slightly
higher in terms of payment priority than both common and preferred securities of
the issuer,  but rank below other  subordinated  debentures and debt securities.
Trust Preferred  Securities may be subject to mandatory prepayment under certain
circumstances.  The  market  values of Trust  Preferred  Securities  may be more
volatile than those of conventional debt securities.  Trust Preferred Securities
may be issued in reliance on Rule 144A under the 1933 Act, and, unless and until
registered,  are  restricted  securities;  there can be no  assurance  as to the
liquidity  of Trust  Preferred  Securities  and the  ability of holders of Trust
Preferred Securities, such as a fund, to sell their holdings.

US   Government   Securities.   There   are   two   broad   categories   of   US
Government-related debt instruments:  (a) direct obligations of the US Treasury,
and (b) securities issued or guaranteed by US Government agencies.

Examples of direct  obligations  of the US Treasury are Treasury  Bills,  Notes,
Bonds and other debt securities issued by the US Treasury. These instruments are
backed  by the  "full  faith and  credit"  of the  United  States.  They  differ
primarily in interest rates, the length of maturities and the dates of issuance.
Treasury bills have original maturities


                                       48
<PAGE>

of one year or less. Treasury notes have original maturities of one to ten years
and Treasury bonds generally have original maturities of greater than ten years.

Some  agency  securities  are  backed by the full faith and credit of the United
States (such as Maritime Administration Title XI Ship Financing Bonds and Agency
for  International  Development  Housing Guarantee Program Bonds) and others are
backed only by the rights of the issuer to borrow from the US Treasury  (such as
Federal Home Loan Bank Bonds and Federal National Mortgage  Association  Bonds),
while still others,  such as the securities of the Federal Farm Credit Bank, are
supported only by the credit of the issuer. With respect to securities supported
only by the credit of the issuing agency or by an additional line of credit with
the US  Treasury,  there is no  guarantee  that the US  Government  will provide
support  to such  agencies  and  such  securities  may  involve  risk of loss of
principal and interest.

US Government  Securities  may include "zero coupon"  securities  that have been
stripped  by  the  US  Government  of  their  unmatured   interest  coupons  and
collateralized  obligations  issued or guaranteed  by a US Government  agency or
instrumentality.

Interest rates on US Government  obligations may be fixed or variable.  Interest
rates on variable rate obligations are adjusted at regular  intervals,  at least
annually,  according to a formula  reflecting  then current  specified  standard
rates, such as 91-day US Treasury bill rates.  These adjustments  generally tend
to reduce fluctuations in the market value of the securities.

The government  guarantee of the US Government  Securities in a fund's portfolio
does not guarantee the net asset value of the shares of a fund. There are market
risks  inherent in all  investments in securities and the value of an investment
in a fund will  fluctuate  over time.  Normally,  the value of investments in US
Government  Securities  varies  inversely  with changes in interest  rates.  For
example,  as  interest  rates  rise the value of  investments  in US  Government
Securities  will tend to  decline,  and as  interest  rates  fall the value of a
fund's  investments  will tend to  increase.  In  addition,  the  potential  for
appreciation  in the event of a decline  in  interest  rates may be  limited  or
negated   by   increased   principal   prepayments   with   respect  to  certain
Mortgage-Backed  Securities,  such as  GNMA  Certificates.  Prepayments  of high
interest  rate  Mortgage-Backed  Securities  during times of declining  interest
rates will tend to lower the return of a fund and may even result in losses to a
fund if some securities were acquired at a premium.  Moreover, during periods of
rising interest rates,  prepayments of  Mortgage-Backed  Securities may decline,
resulting in the extension of a fund's average portfolio maturity.  As a result,
a fund's portfolio may experience  greater  volatility  during periods of rising
interest rates than under normal market conditions.

Variable  and  Floating  Rate  Instruments.  A fund may  invest in  variable  or
floating  rate  instruments  and  variable  rate demand  instruments,  including
variable amount master demand notes.  These  instruments  will normally  involve
industrial  development  or revenue bonds that provide that the rate of interest
is set as a specific  percentage  of a  designated  base rate (such as the prime
rate) at a major  commercial  bank.  In  addition,  the  interest  rate on these
securities may be reset daily, weekly or on some other reset period and may have
a floor or ceiling on interest rate changes. When holding such an instrument,  a
Fund can demand payment of the obligation at all times or at stipulated dates on
short notice (not to exceed 30 days) at par plus accrued interest.

Debt  instruments  purchased  by a fund may be  structured  to have  variable or
floating  interest rates.  These  instruments may include variable amount master
demand notes that permit the  indebtedness  to vary in addition to providing for
periodic  adjustments  in the  interest  rates.  The Advisor  will  consider the
earning  power,  cash  flows  and other  liquidity  ratios  of the  issuers  and
guarantors  of such  instruments  and, if the  instrument is subject to a demand
feature,  will  continuously  monitor their financial ability to meet payment on
demand. Where necessary to ensure that a variable or floating rate instrument is
equivalent  to  the  quality  standards  applicable  to a  fund's  fixed  income
investments, the issuer's obligation to pay the principal of the instrument will
be backed  by an  unconditional  bank  letter or line of  credit,  guarantee  or
commitment  to lend.  Any bank  providing  such a bank  letter,  line of credit,
guarantee or loan commitment  will meet a fund's  investment  quality  standards
relating to investments in bank obligations.  The Advisor will also continuously
monitor the creditworthiness of issuers of such instruments to determine whether
a fund should continue to hold the investments.

                                       49
<PAGE>

The absence of an active secondary market for certain variable and floating rate
notes could make it  difficult to dispose of the  instruments,  and a fund could
suffer a loss if the issuer  defaults  or during  periods in which a fund is not
entitled to exercise its demand rights.

Variable  and  floating  rate  instruments  held by a fund will be  subject to a
fund's limitation on investments in illiquid  securities when a reliable trading
market for the instruments does not exist and the fund may not demand payment of
the principal amount of such instruments within seven days.

Warrants.  The holder of a warrant has the right, until the warrant expires,  to
purchase a given number of shares of a particular  issuer at a specified  price.
Such  investments  can  provide a greater  potential  for profit or loss than an
equivalent  investment  in the  underlying  security.  Prices of warrants do not
necessarily  move,  however,  in  tandem  with  the  prices  of  the  underlying
securities and are, therefore, considered speculative investments.  Warrants pay
no  dividends  and confer no rights  other than a purchase  option.  Thus,  if a
warrant held by a fund were not exercised by the date of its expiration,  a fund
would lose the entire purchase price of the warrant.

When-Issued  Securities.  A fund may from time to time purchase  equity and debt
securities on a "when-issued,"  "delayed  delivery" or "forward delivery" basis.
The price of such securities, which may be expressed in yield terms, is fixed at
the time the  commitment  to purchase is made,  but delivery and payment for the
securities  takes place at a later date.  During the period between purchase and
settlement,  no payment is made by a fund to the issuer and no interest  accrues
to a fund.  When a fund purchases such  securities,  it immediately  assumes the
risks of ownership, including the risk of price fluctuation.  Failure to deliver
a security purchased on this basis may result in a loss or missed opportunity to
make an alternative investment.

To the extent that assets of a fund are held in cash pending the settlement of a
purchase of securities,  a fund would earn no income.  While such securities may
be sold prior to the  settlement  date, a fund intends to purchase them with the
purpose  of  actually  acquiring  them  unless  a  sale  appears  desirable  for
investment  reasons.  At the time a fund  makes the  commitment  to  purchase  a
security on this basis,  it will record the transaction and reflect the value of
the  security  in  determining  its net asset  value.  The  market  value of the
securities may be more or less than the purchase price.

Zero Coupon Securities.  A fund may invest in zero coupon securities,  which pay
no cash  income  and are  sold at  substantial  discounts  from  their  value at
maturity.  When  held to  maturity,  their  entire  income,  which  consists  of
accretion of  discount,  comes from the  difference  between the issue price and
their value at maturity.  Zero coupon  securities  are subject to greater market
value  fluctuations  from  changing  interest  rates  than debt  obligations  of
comparable  maturities which make current distributions of interest (cash). Zero
coupon  securities which are convertible into common stock offer the opportunity
for capital  appreciation  as increases  (or  decreases) in market value of such
securities  closely  follow the movements in the market value of the  underlying
common stock. Zero coupon  convertible  securities  generally are expected to be
less volatile than the underlying  common stocks as they usually are issued with
maturities  of 15 years or less and are issued with  options  and/or  redemption
features  exercisable  by the holder of the  obligation  entitling the holder to
redeem the obligation and receive a defined cash payment.

Zero coupon securities include municipal securities,  securities issued directly
by the US Treasury,  and US Treasury bonds or notes and their unmatured interest
coupons and receipts for their underlying principal  ("coupons") which have been
separated by their holder,  typically a custodian  bank or investment  brokerage
firm, from the underlying  principal (the "corpus") of the US Treasury security.
A number of securities  firms and banks have  stripped the interest  coupons and
receipts and then resold them in  custodial  receipt  programs  with a number of
different names,  including  Treasury Income Growth Receipts  ("TIGRS(TM)")  and
Certificate  of Accrual on Treasuries  ("CATS(TM)").  The underlying US Treasury
bonds and notes  themselves are held in book-entry  form at the Federal  Reserve
Bank or, in the case of bearer securities (i.e.,  unregistered  securities which
are owned ostensibly by the bearer or holder thereof), in trust on behalf of the
owners  thereof.  Counsel to the  underwriters  of these  certificates  or other
evidences  of  ownership of the US Treasury  securities  have stated  that,  for
federal  tax and  securities  purposes,  in  their  opinion  purchasers  of such
certificates,  such as a fund, most likely will be deemed the beneficial  holder
of the  underlying  US  Government  securities.  A fund intends to adhere to the
current SEC staff position that  privately  stripped  obligations


                                       50
<PAGE>

should not be considered US Government securities for the purpose of determining
if a fund is "diversified" under the 1940 Act.

The US Treasury has facilitated transfers of ownership of zero coupon securities
by accounting  separately  for the beneficial  ownership of particular  interest
coupon and corpus  payments on Treasury  securities  through the Federal Reserve
book-entry record-keeping system. The Federal Reserve program, as established by
the Treasury Department, is known as "STRIPS" or "Separate Trading of Registered
Interest and Principal of Securities."  Under the STRIPS program, a fund will be
able  to have  its  beneficial  ownership  of zero  coupon  securities  recorded
directly  in the  book-entry  record-keeping  system  in lieu of  having to hold
certificates  or other  evidences  of ownership  of the  underlying  US Treasury
securities.

When US Treasury  obligations  have been  stripped of their  unmatured  interest
coupons  by the  holder,  the  principal  or corpus  is 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.  Once  stripped  or  separated,  the  corpus and  coupons  may be sold
separately.  Typically,  the coupons are sold  separately  or grouped with other
coupons with like  maturity  dates and sold bundled in such form.  Purchasers of
stripped  obligations   acquire,  in  effect,   discount  obligations  that  are
economically identical to the zero coupon securities that the Treasury sells.

Strategic Transactions and Derivatives

A fund may, but is not required to, utilize various other investment  strategies
as described  below for a variety of purposes,  such as hedging  various  market
risks,   managing  the  effective  maturity  or  duration  of  the  fixed-income
securities in a fund's  portfolio or enhancing  potential gain. These strategies
may be executed through the use of derivative contracts.

In the course of pursuing these investment  strategies,  a fund may purchase and
sell  exchange-listed and  over-the-counter  put and call options on securities,
equity and fixed-income indices and other instruments, purchase and sell futures
contracts and options thereon,  enter into various  transactions  such as swaps,
caps, floors, collars,  currency forward contracts,  currency futures contracts,
currency swaps or options on currencies,  or currency  futures and various other
currency  transactions  (collectively,  all  the  above  are  called  "Strategic
Transactions").  In addition,  certain  Strategic  Transactions may also include
additional   techniques,   instruments  or  strategies  that  are  permitted  as
regulatory  changes  occur.  Strategic  Transactions  may be used without  limit
(subject  to  certain  limits  imposed  by the 1940 Act) to  attempt  to protect
against  possible  changes in the market  value of  securities  held in or to be
purchased for a fund's portfolio  resulting from securities  markets or currency
exchange rate fluctuations, to protect a fund's unrealized gains in the value of
its  portfolio  securities,  to  facilitate  the  sale  of such  securities  for
investment  purposes,  to manage the effective  maturity or duration of a fund's
portfolio,  to establish a position in the  derivatives  markets as a substitute
for  purchasing  or  selling  particular  securities  or for any  other  purpose
permitted by applicable  law. Some  Strategic  Transactions  may also be used to
enhance potential gain. Any or all of these investment techniques may be used at
any time  and in any  combination,  and  there is no  particular  strategy  that
dictates the use of one technique  rather than another,  as use of any Strategic
Transaction is a function of numerous variables including market conditions. The
ability of a fund to utilize  these  Strategic  Transactions  successfully  will
depend on the Advisor's  ability to predict  pertinent market  movements,  which
cannot be assured.  Strategic Transactions will not be used to alter fundamental
investment purposes and characteristics of a fund.

Strategic  Transactions,  including derivative contracts,  have risks associated
with them  including  possible  default by the other  party to the  transaction,
illiquidity and, to the extent the Advisor's view as to certain market movements
is incorrect,  the risk that the use of such Strategic Transactions could result
in losses  greater  than if they had not been used.  Use of put and call options
may  result  in  losses  to a fund,  force  the sale or  purchase  of  portfolio
securities  at  inopportune  times or for prices higher than (in the case of put
options)  or lower than (in the case of call  options)  current  market  values,
limit the amount of  appreciation a fund can realize on its investments or cause
a fund  to  hold a  security  it  might  otherwise  sell.  The  use of  currency
transactions  can result in a fund  incurring  losses as a result of a number of
factors   including  the   imposition  of  exchange   controls,   suspension  of
settlements,  or the inability to deliver or receive a specified  currency.  The
use of  options  and  futures  transactions  entails  certain  other  risks.  In
particular,  the  variable  degree of  correlation  between  price  movements of
futures  contracts and price  movements in the related  portfolio  position of a
fund  creates  the  possibility  that losses on the  hedging  instrument  may be
greater


                                       51
<PAGE>

than gains in the value of a fund's position.  In addition,  futures and options
markets  may not be liquid in all  circumstances  and  certain  over-the-counter
options may have no markets.  As a result, in certain markets,  a fund might not
be able to close out a transaction  without incurring  substantial losses, if at
all.  Although the use of futures and options  transactions  for hedging  should
tend to  minimize  the risk of loss due to a decline  in the value of the hedged
position,  at the same time they tend to limit any  potential  gain which  might
result from an increase in value of such position. Other Strategic Transactions,
such as forward  contracts and swaps, are also subject to similar risks.  Losses
resulting from the use of Strategic  Transactions  would reduce net asset value,
and  possibly  income,  and such  losses  can be greater  than if the  Strategic
Transactions had not been utilized.

Combined Transactions.  A fund may enter into multiple  transactions,  including
multiple options transactions,  multiple futures transactions, multiple currency
transactions  (including forward currency  contracts) and multiple interest rate
transactions and any combination of futures, options, currency and interest rate
transactions   ("component"   transactions),   instead  of  a  single  Strategic
Transaction,  as part of a single or combined  strategy  when, in the opinion of
the  advisor,  it is in the  best  interests  of a fund  to do  so.  A  combined
transaction  will usually  contain  elements of risk that are present in each of
its component transactions.  Although combined transactions are normally entered
into based on the advisor's  judgment that the combined  strategies  will reduce
risk or otherwise  more  effectively  achieve the desired  portfolio  management
goal, it is possible that the  combination  will instead  increase such risks or
hinder achievement of the portfolio management objective.

Commodities-Linked   Derivative  Instruments.   A  fund  intends  to  invest  in
commodities-linked  derivative  instruments,  in particular in structured notes.
The value of a  commodities-linked  derivative  instrument typically is based on
the price movements of a physical  commodity,  a commodity  futures  contract or
commodity index, or some other readily  measurable  economic variable  dependent
upon changes in the value of  commodities  or the  commodities  markets.  A fund
invests in commodities-linked derivative investments that are hybrid instruments
excluded  from  regulation  under  the  Commodity  Exchange  Act and  the  rules
thereunder, so that a fund will not be considered a "commodity pool." A fund may
invest  up to  40%  of  its  total  assets  in  qualifying  hybrid  instruments.
Additionally,  from time to time the fund may invest in other hybrid instruments
that do not qualify for exemption from regulation  under the Commodity  Exchange
Act.

A fund will invest in derivative debt  instruments  with principal and/or coupon
payments linked to the value of commodities, commodity futures contracts, or the
performance   of   commodity   indices.   These  are   "commodities-linked"   or
"index-linked"  notes.  They are  sometimes  referred to as  "structured  notes"
because the terms of the debt  instrument may be structured by the issuer of the
note and the purchaser of the note, such as a fund. These notes may be issued by
banks, brokerage firms, insurance companies and other corporations.

The  values of these  notes  will rise and fall in  response  to  changes in the
underlying  commodity or related index or investment.  These notes expose a fund
economically  to  movements  in  commodity  prices,  but a  particular  note  is
primarily a debt obligation. These notes also are subject to credit and interest
rate risks that in general affect the value of debt  securities.  Therefore,  at
the  maturity of the note,  a fund may receive  more or less  principal  than it
originally invested. A fund might receive interest payments on the note that are
more or less than the stated  coupon  interest rate  payments.  To try to reduce
this risk, a fund does not expect to invest more than 40% of its total assets in
structured  notes under whose terms the potential loss,  either at redemption or
maturity,  exceeds 50% of the face value of the notes. That amount is calculated
at the time of investment.

The  structured  notes a fund  enters  into are  expected  to involve  leverage,
meaning that the value of the instrument will be calculated as a multiple of the
upward or  downward  price  movement  of the  underlying  index.  The  prices of
commodity-linked  instruments may move in different  directions than investments
in traditional  equity and debt  securities in periods of rising  inflation.  Of
course,  there can be no guarantee  that a fund's  commodity-linked  investments
would not be correlated with  traditional  financial assets under any particular
market conditions.

Commodity-linked  structured  notes  may  be  issued  by US and  foreign  banks,
brokerage firms,  insurance  companies and other  corporations.  These notes are
debt  securities of the issuer and so, in addition to fluctuating in response to
changes  in the  underlying  commodity  index,  will be  subject  to credit  and
interest rate risks that typically affect debt securities.

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<PAGE>

The  commodity-linked  instruments  a fund  invests  in may be wholly  principal
protected,  partially principal protected or offer no principal protection. With
a wholly  principal  protected  instrument,  a fund will receive at maturity the
greater of the par value of the note or the increase in value of the  underlying
index. Partially protected instruments may suffer some loss of principal up to a
specified limit if the underlying index declines in value during the term of the
instrument.  For instruments without principal protection,  there is a risk that
the instrument  could lose all of its value if the index declines  sufficiently.
The Advisor's decision on whether and to what extent to use principal protection
depends in part on the cost of the  protection.  In  addition,  the ability of a
fund to take advantage of any protection feature depends on the creditworthiness
of the issuer of the instrument.

Although  a fund  itself  will not be  leveraged,  some of the  commodity-linked
instruments the fund may hold will involve leverage. The fund will not invest in
an  instrument  if, at the time of  purchase,  (1) that  instrument's  "leverage
ratio" exceeds 300% of the price increase (or decrease) in the underlying  index
or (2) the fund's  "portfolio  leverage  ratio" exceeds 150%. What this means is
that for an instrument with a "leverage  factor" of 300%, a 1% gain (or loss) in
the  underlying  index  would  result in a 3% gain (or loss) in the value of the
instrument. "Portfolio leverage ratio" is defined as the average (mean) leverage
ratio of all instruments in a fund's portfolio, weighted by the market values of
such instruments or, in the case of futures contracts, their notional value.

Derivative  strategies  and the  writing of  uncovered  (or  so-called  "naked")
options are speculative and may hurt a Fund's performance. A fund may attempt to
hedge its  investments  in order to mitigate  risk, but it is not required to do
so. The benefits to be derived from the fund's  derivatives and options strategy
are dependent upon the Advisor's ability to discern pricing  inefficiencies  and
predict trends in the commodities and other markets, which decisions could prove
to be inaccurate.  This requires different skills and techniques than predicting
changes in the price of individual stocks or fixed-income securities,  and there
can be no assurance that the use of this strategy will be successful.

General  Characteristics of Options. Put options and call options typically have
similar structural  characteristics and operational  mechanics regardless of the
underlying  instrument on which they are purchased or sold.  Thus, the following
general  discussion relates to each of the particular types of options discussed
in greater  detail below.  In addition,  many Strategic  Transactions  involving
options  require  segregation of fund assets in special  accounts,  as described
below under "Use of Segregated and Other Special Accounts."

A put option gives the purchaser of the option,  upon payment of a premium,  the
right to sell, and the writer the  obligation to buy, the  underlying  security,
commodity,  index,  currency or other  instrument  at the  exercise  price.  For
instance,  a fund's  purchase of a put option on a security might be designed to
protect its holdings in the underlying  instrument (or, in some cases, a similar
instrument)  against a substantial  decline in the market value by giving a fund
the right to sell such  instrument at the option  exercise price. A call option,
upon payment of a premium,  gives the  purchaser of the option the right to buy,
and the seller the obligation to sell, the underlying instrument at the exercise
price.  A fund's  purchase  of a call option on a  security,  financial  future,
index,  currency or other instrument might be intended to protect a fund against
an  increase  in the  price of the  underlying  instrument  that it  intends  to
purchase  in the  future  by  fixing  the  price at which it may  purchase  such
instrument.  An American  style put or call option may be  exercised at any time
during  the  option  period  while a  European  style put or call  option may be
exercised only upon expiration or during a fixed period prior thereto. A fund is
authorized to purchase and sell  exchange  listed  options and  over-the-counter
options  ("OTC  options").  Exchange  listed  options  are issued by a regulated
intermediary such as the Options Clearing Corporation ("OCC"),  which guarantees
the  performance  of the  obligations  of  the  parties  to  such  options.  The
discussion  below uses the OCC as an example,  but is also  applicable  to other
financial intermediaries.

With certain exceptions, OCC issued and exchange listed options generally settle
by physical  delivery of the  underlying  security or currency,  although in the
future cash  settlement  may become  available.  Index  options  and  Eurodollar
instruments are cash settled for the net amount,  if any, by which the option is
"in-the-money"  (i.e., where the value of the underlying  instrument exceeds, in
the case of a call  option,  or is less than,  in the case of a put option,  the
exercise  price of the option) at the time the option is exercised.  Frequently,
rather than taking or making delivery of the underlying  instrument  through the
process of  exercising  the option,  listed  options are closed by entering into
offsetting  purchase or sale transactions that do not result in ownership of the
new option.

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<PAGE>

A fund's ability to close out its position as a purchaser or seller of an OCC or
exchange listed put or call option is dependent,  in part, upon the liquidity of
the option market. Among the possible reasons for the absence of a liquid option
market on an exchange are: (i) insufficient trading interest in certain options;
(ii) restrictions on transactions  imposed by an exchange;  (iii) trading halts,
suspensions or other restrictions  imposed with respect to particular classes or
series of  options or  underlying  securities  including  reaching  daily  price
limits;  (iv)  interruption of the normal  operations of the OCC or an exchange;
(v) inadequacy of the facilities of an exchange or OCC to handle current trading
volume;  or (vi) a decision by one or more exchanges to discontinue  the trading
of options  (or a  particular  class or series of  options),  in which event the
relevant market for that option on that exchange would cease to exist,  although
outstanding  options on that exchange would generally continue to be exercisable
in accordance with their terms.

The hours of trading for listed  options may not coincide  with the hours during
which the underlying  financial  instruments are traded.  To the extent that the
option   markets  close  before  the  markets  for  the   underlying   financial
instruments,  significant  price  and  rate  movements  can  take  place  in the
underlying markets that cannot be reflected in the option markets.

OTC  options  are  purchased  from  or  sold to  securities  dealers,  financial
institutions  or  other  parties  ("Counterparties")  through  direct  bilateral
agreement with the Counterparty.  In contrast to exchange listed options,  which
generally have standardized terms and performance mechanics, all the terms of an
OTC option, including such terms as method of settlement,  term, exercise price,
premium,  guarantees and security, are set by negotiation of the parties. A fund
will only sell OTC options (other than OTC currency options) that are subject to
a buy-back  provision  permitting a fund to require the Counterparty to sell the
option  back to a fund at a formula  price  within  seven days.  A fund  expects
generally  to enter  into OTC  options  that  have cash  settlement  provisions,
although it is not required to do so.

Unless the  parties  provide  for it,  there is no central  clearing or guaranty
function in an OTC option.  As a result,  if the  Counterparty  fails to make or
take delivery of the security,  currency or other  instrument  underlying an OTC
option  it has  entered  into  with a fund or  fails  to make a cash  settlement
payment due in  accordance  with the terms of that option,  a fund will lose any
premium  it paid  for the  option  as well  as any  anticipated  benefit  of the
transaction.  Accordingly,  the Advisor must assess the creditworthiness of each
such Counterparty or any guarantor or credit  enhancement of the  Counterparty's
credit to  determine  the  likelihood  that the terms of the OTC option  will be
satisfied. A fund will engage in OTC option transactions only with US government
securities  dealers  recognized  by the  Federal  Reserve  Bank  of New  York as
"primary  dealers"  or  broker/dealers,  domestic  or  foreign  banks  or  other
financial  institutions which have received (or the guarantors of the obligation
of which have  received) a short-term  credit rating of A-1 from S&P or P-1 from
Moody's or an  equivalent  rating  from any  nationally  recognized  statistical
rating organization ("NRSRO") or, in the case of OTC currency transactions,  are
determined to be of equivalent  credit quality by the Advisor.  The staff of the
SEC  currently  takes the position  that OTC options  purchased  by a fund,  and
portfolio securities "covering" the amount of a fund's obligation pursuant to an
OTC option sold by it (the cost of the sell-back plus the  in-the-money  amount,
if any) are  illiquid,  and are subject to a fund's  limitation  on investing no
more than 15% of its net assets in illiquid securities.

If a fund sells a call  option,  the  premium  that it  receives  may serve as a
partial hedge,  to the extent of the option  premium,  against a decrease in the
value of the  underlying  securities  or  instruments  in its  portfolio or will
increase a fund's income. The sale of put options can also provide income.

A fund may purchase and sell call  options on  securities  including US Treasury
and agency  securities,  mortgage-backed  securities,  foreign  sovereign  debt,
corporate debt securities,  equity securities (including convertible securities)
and  Eurodollar  instruments  that  are  traded  on US  and  foreign  securities
exchanges  and in the  over-the-counter  markets,  and  on  securities  indices,
currencies  and futures  contracts.  All calls sold by a fund must be  "covered"
(i.e., a fund must own the securities or futures  contract  subject to the call)
or must meet the asset segregation  requirements  described below as long as the
call is outstanding.  Even though a fund will receive the option premium to help
protect it against loss, a call sold by a fund exposes a fund during the term of
the option to possible loss of opportunity to realize appreciation in the market
price of the underlying  security or instrument and may require a fund to hold a
security or instrument which it might otherwise have sold.

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<PAGE>

A fund may purchase and sell put options on securities including US Treasury and
agency securities, mortgage-backed securities, foreign sovereign debt, corporate
debt  securities,  equity  securities  (including  convertible  securities)  and
Eurodollar  instruments  (whether  or not it holds the above  securities  in its
portfolio),  and on securities  indices,  currencies and futures contracts other
than futures on individual  corporate debt and individual equity  securities.  A
fund will not sell put options if, as a result,  more than 50% of a fund's total
assets would be required to be  segregated  to cover its  potential  obligations
under such put  options  other than those with  respect to futures  and  options
thereon. In selling put options,  there is a risk that a fund may be required to
buy the underlying security at a disadvantageous price above the market price.

General  Characteristics  of Futures. A fund may enter into futures contracts or
purchase  or sell  put and  call  options  on such  futures  as  hedges  against
anticipated  interest rate, currency or equity market changes,  and for duration
management,  risk  management  and  return  enhancement  purposes.  Futures  are
generally  bought and sold on the  commodities  exchanges  where they are listed
with payment of initial and variation  margin as described  below. The sale of a
futures  contract  creates a firm  obligation  by the seller,  to deliver to the
buyer the specific type of financial  instrument called for in the contract at a
specific  future  time for a  specified  price  (or,  with  respect  to  certain
instruments,  such as index  futures and  Eurodollar  instruments,  the net cash
amount)  and a firm  obligation  by the buyer to deliver  the  specified  price.
Options on futures contracts are similar to options on securities except that an
option on a futures  contract  gives the  purchaser  the right in return for the
premium paid to assume a position in a futures contract and obligates the seller
to deliver such position.

A fund's use of futures and options thereon will in all cases be consistent with
applicable  regulatory  requirements and in particular the rules and regulations
of the Commodity  Futures  Trading  Commission and will be entered into for bona
fide hedging, risk management (including duration management) or other portfolio
and return enhancement  management  purposes.  Typically,  maintaining a futures
contract  or  selling  an  option  thereon  requires  a fund to  deposit  with a
financial  intermediary  as security  for its  obligations  an amount of cash or
other specified  assets (initial  margin) which initially is typically 1% to 10%
of the face amount of the  contract  (but may be higher in some  circumstances).
Additional  cash or assets  (variation  margin) may be required to be  deposited
thereafter  on a  daily  basis  as the  mark to  market  value  of the  contract
fluctuates. The purchase of an option on financial futures involves payment of a
premium for the option without any further  obligation on the part of a fund. If
a fund  exercises  an option on a futures  contract it will be obligated to post
initial margin (and  potential  subsequent  variation  margin) for the resulting
futures  position  just as it would  for any  position.  Futures  contracts  and
options thereon are generally settled by entering into an offsetting transaction
but  there  can be no  assurance  that  the  position  can be  offset  prior  to
settlement at an advantageous price, nor that delivery will occur.

A fund will not enter into a futures  contract  or related  option  (except  for
closing transactions) if, immediately  thereafter,  the sum of the amount of its
initial margin and premiums on open futures  contracts and options thereon would
exceed 5% of a fund's total assets  (taken at current  value);  however,  in the
case of an  option  that  is  in-the-money  at the  time  of the  purchase,  the
in-the-money  amount may be  excluded  in  calculating  the 5%  limitation.  The
segregation  requirements  with respect to futures contracts and options thereon
are described below.

Hedging  Strategies.  A 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) US Treasury and Eurodollar
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 a fund's  investment  objective and
policies.  Among  other  purposes,  these  hedging  strategies  may be  used  to
effectively  maintain  desired  portfolio  duration or to protect against market
risk should a fund change its investments  among different types of fixed income
securities.

A 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 or other  economic  factors  in using a hedging
strategy,  a 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 a fund;

                                       55
<PAGE>

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 a fund's  ability to  purchase or sell
         portfolio  investments at advantageous times due to the need for a fund
         to maintain "cover" or to segregate securities; and

o        the  possibility  that a 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  options,  futures  and  currency  exchange
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 far exceed the value of the futures
contracts  sold by a Fund,  an increase  in the value of the  futures  contracts
could only  mitigate,  but not  totally  offset,  the  decline in the value of a
Fund's assets.

To the extent that a fund engages in the strategies  described above, a 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 a fund may be unable to close out a  position
without incurring  substantial  losses, if at all. A fund is also subject to the
risk of default by a counterparty to an off-exchange transaction.

Options on  Securities  Indices  and Other  Financial  Indices.  A fund also may
purchase and sell call and put options on securities indices and other financial
indices and in so doing can achieve many of the same objectives it would achieve
through  the sale or  purchase  of options  on  individual  securities  or other
instruments.  Options on  securities  indices  and other  financial  indices are
similar to options on a security or other  instrument  except that,  rather than
settling by physical delivery of the underlying instrument,  they settle by cash
settlement,  i.e.,  an option on an index gives the holder the right to receive,
upon exercise of the option, an amount of cash if the closing level of the index
upon which the option is based exceeds,  in the case of a call, or is less than,
in the case of a put, the exercise  price of the option  (except if, in the case
of an OTC option, physical delivery is specified).  This amount of cash is equal
to the excess of the closing  price of the index over the exercise  price of the
option,  which  also may be  multiplied  by a formula  value.  The seller of the
option is  obligated,  in return for the premium  received,  to make delivery of
this  amount.  The  gain or loss on an  option  on an  index  depends  on  price
movements in the instruments making up the market,  market segment,  industry or
other  composite  on which the  underlying  index is based,  rather  than  price
movements in  individual  securities,  as is the case with respect to options on
securities.

Currency  Transactions.   A  fund  may  engage  in  currency  transactions  with
Counterparties  primarily in order to hedge,  or manage the risk of the value of
portfolio holdings denominated in particular  currencies against fluctuations in
relative  value.  Currency  transactions  include  forward  currency  contracts,
exchange listed currency futures, exchange listed and OTC options on currencies,
and currency swaps. A forward currency contract involves a privately  negotiated
obligation  to purchase or sell (with  delivery  generally  required) a specific
currency at a future  date,  which may be any fixed number of days from the date
of the contract  agreed upon by the  parties,  at a price set at the time of the
contract.  A currency  swap is an agreement to exchange  cash flows based on the
notional  difference  among two or more currencies and operates  similarly to an
interest  rate swap,  which is described  below.  A fund may enter into currency
transactions with  Counterparties  which have received (or the guarantors of the
obligations  which  have  received)  a  credit  rating  of  A-1 or P-1 by S&P or
Moody's, respectively, or that have an equivalent rating from a NRSRO or (except
for OTC currency  options) are determined to be of equivalent  credit quality by
the underlying fund's advisor.

A fund's dealings in forward currency contracts and other currency  transactions
such as futures, options, options on futures and swaps generally will be limited
to hedging involving either specific  transactions or portfolio positions except
as described below.  Transaction hedging is entering into a currency transaction
with respect to specific  assets or liabilities of a fund,  which will generally
arise in connection with the purchase or sale of its portfolio securities or the
receipt  of income  therefrom.  Position  hedging  is  entering  into a currency
transaction  with  respect  to  portfolio  security  positions   denominated  or
generally quoted in that currency.

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<PAGE>

A fund generally will not enter into a transaction to hedge currency exposure to
an extent greater,  after netting all transactions  intended wholly or partially
to offset other  transactions,  than the aggregate  market value (at the time of
entering into the  transaction) of the securities held in its portfolio that are
denominated or generally quoted in or currently  convertible into such currency,
other than with respect to proxy hedging or cross hedging as described below, as
applicable.

A fund may also cross-hedge currencies by entering into transactions to purchase
or sell one or more currencies that are expected to decline in value relative to
other  currencies  to  which  a fund  has or in  which  a fund  expects  to have
portfolio exposure.

To reduce  the  effect of  currency  fluctuations  on the value of  existing  or
anticipated  holdings of portfolio  securities,  a fund may also engage in proxy
hedging.  Proxy  hedging  is often  used when the  currency  to which the fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar. Proxy
hedging  entails  entering into a commitment or option to sell a currency  whose
changes in value are  generally  considered  to be  correlated  to a currency or
currencies  in which  some or all of a fund's  portfolio  securities  are or are
expected  to be  denominated,  in  exchange  for US  dollars.  Currency  hedging
involves some of the same risks and  considerations  as other  transactions with
similar instruments. Currency transactions can result in losses to a fund if the
currency being hedged  fluctuates in value to a degree or in a direction that is
not  anticipated.  Further,  there is the risk  that the  perceived  correlation
between  various  currencies may not be present or may not be present during the
particular time that a fund is engaging in proxy hedging.  If a fund enters into
a currency hedging  transaction,  a fund will comply with the asset  segregation
requirements described below.

Risks of  Currency  Transactions.  Currency  transactions  are  subject to risks
different from those of other portfolio  transactions.  Because currency control
is of great  importance  to the  issuing  governments  and  influences  economic
planning and policy, purchases and sales of currency and related instruments can
be  negatively  affected  by  government  exchange  controls,   blockages,   and
manipulations or exchange restrictions imposed by governments.  These can result
in losses to a fund if it is unable to deliver or receive  currency  or funds in
settlement of obligations  and could also cause hedges it has entered into to be
rendered  useless,  resulting  in full  currency  exposure as well as  incurring
transaction  costs.  Buyers and sellers of  currency  futures are subject to the
same risks that apply to the use of futures generally.  Further, settlement of a
currency  futures  contract for the purchase of most  currencies must occur at a
bank  based in the  issuing  nation.  Trading  options  on  currency  futures is
relatively  new,  and the ability to establish  and close out  positions on such
options is subject to the maintenance of a liquid market which may not always be
available.  Currency  exchange rates may fluctuate based on factors extrinsic to
that country's economy.

Eurodollar  Instruments.  A fund may make investments in Eurodollar instruments.
Eurodollar  instruments are US  dollar-denominated  futures contracts or options
thereon  which are  linked  to the  London  Interbank  Offered  Rate  ("LIBOR"),
although  foreign  currency-denominated  instruments  are available from time to
time.  Eurodollar futures contracts enable purchasers to obtain a fixed rate for
the lending of funds and sellers to obtain a fixed rate for  borrowings.  A fund
might use  Eurodollar  futures  contracts  and options  thereon to hedge against
changes in LIBOR, to which many interest rate swaps and fixed income instruments
are linked.

Risks of Strategic  Transactions  Outside the US. When conducted outside the US,
Strategic  Transactions may not be regulated as rigorously as in the US, may not
involve a clearing mechanism and related guarantees, and are subject to the risk
of  governmental  actions  affecting  trading  in,  or the  prices  of,  foreign
securities,  currencies and other instruments.  The value of such positions also
could be adversely affected by: (i) other complex foreign  political,  legal and
economic  factors,  (ii) lesser  availability than in the US of data on which to
make trading  decisions,  (iii) delays in a fund's  ability to act upon economic
events  occurring in foreign markets during  non-business  hours in the US, (iv)
the  imposition of different  exercise and  settlement  terms and procedures and
margin requirements than in the US, and (v) lower trading volume and liquidity.

Swaps, Caps, Floors and Collars.  Among the Strategic  Transactions into which a
fund may enter  are  interest  rate,  currency,  index  and other  swaps and the
purchase or sale of related  caps,  floors and collars.  A fund expects to enter
into these transactions primarily to preserve a return or spread on a particular
investment  or  portion  of  its   portfolio,   to  protect   against   currency
fluctuations,  as a  duration  management  technique,  to  protect  against  any
increase in the price of  securities a fund  anticipates  purchasing  at a later
date or to enhance  returns.  A fund will not sell  interest rate


                                       57
<PAGE>

caps or floors where it does not own securities or other  instruments  providing
the income  stream a fund may be obligated to pay.  Interest  rate swaps involve
the exchange by a fund with another party of their respective commitments to pay
or receive interest,  e.g., an exchange of floating rate payments for fixed rate
payments with respect to a notional  amount of principal.  A currency swap is an
agreement to exchange cash flows on a notional  amount of two or more currencies
based on the  relative  value  differential  among  them and an index swap is an
agreement to swap cash flows on a notional amount based on changes in the values
of the  reference  indices.  The  purchase of a cap  entitles  the  purchaser to
receive payments on a notional  principal amount from the party selling such cap
to the extent that a specified  index exceeds a  predetermined  interest rate or
amount.  The purchase of a floor entitles the purchaser to receive payments on a
notional principal amount from the party selling such floor to the extent that a
specified index falls below a predetermined interest rate or amount. A collar is
a  combination  of a cap and a floor that  preserves a certain  return  within a
predetermined range of interest rates or values.

Swaps will be  entered in 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
instrument, with each fund receiving or paying, as the case may be, only the net
amount of the two payments.  Each fund will not enter into any swap,  cap, floor
or collar transaction unless, at the time of entering into such transaction, the
unsecured  long-term  debt  of  the  Counterparty,   combined  with  any  credit
enhancements,  is rated at least A by S&P or Moody's or has an equivalent rating
from another NRSRO or is determined  to be of equivalent  credit  quality by the
Advisor.  If  there  is a  default  by the  Counterparty,  each  fund  may  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.  Caps,  floors and collars are more recent  innovations  for
which  standardized   documentation  has  not  yet  been  fully  developed  and,
accordingly, they are less liquid than swaps.

A credit  default swap is a contract  between a buyer and a seller of protection
against a pre-defined  credit event.  The buyer of protection  pays the seller a
fixed regular fee provided  that no event of default on an underlying  reference
obligation has occurred.  If an event of default occurs, the seller must pay the
buyer the full notional  value,  or "par value," of the reference  obligation in
exchange for the reference obligation.  Credit default swaps are used as a means
of "buying" credit protection,  i.e., attempting to mitigate the risk of default
or  credit  quality  deterioration  in some  portion  of a fund's  holdings,  or
"selling" credit protection,  i.e., attempting to gain exposure to an underlying
issuer's  credit  quality  characteristics  without  directly  investing in that
issuer.  Where a fund is a seller  of credit  protection,  it  effectively  adds
leverage to its portfolio  because,  in addition to its total net assets, a fund
would be subject to  investment  exposure on the notional  amount of the swap. A
fund will only sell credit  protection  with respect to  securities  in which it
would be  authorized  to invest  directly.  A fund  currently  considers  credit
default  swaps to be  illiquid  and treats the market  value of the  contract as
illiquid for purposes of determining  compliance  with a fund's  restrictions on
investing in illiquid securities.

If a fund is a buyer of a credit default swap and no event of default occurs,  a
fund will lose its investment and recover nothing. However, if a fund is a buyer
and an event of default  occurs,  a fund will receive the full notional value of
the reference obligation that may have little or no value. As a seller, the fund
receives  a fixed rate of income  through  the term of the  contract  (typically
between six months and three years), provided that there is no default event. If
an event of  default  occurs,  the seller  must pay the buyer the full  notional
value of the reference  obligation.  Credit default swaps involve  greater risks
than if the fund had invested in the reference obligation directly.

A fund may use credit  default swaps to gain  exposure to particular  issuers or
particular  markets  through  investments in portfolios of credit default swaps,
such  as  Dow  Jones  CDX.NA.HY  certificates.   By  investing  in  certificates
representing  interests in a basket of credit default swaps,  the fund is taking
credit risk with respect to an entity or group of entities and providing  credit
protection  to the swap  counterparties.  For example,  the CDX EM is a tradable
basket of 19 credit  default  swaps on country  credits which seeks to replicate
the returns on the indices of a broad group of emerging markets  countries.  The
credits  are a subset of the  countries  represented  by the  JPMorgan  Emerging
Markets Bond Index Global  Diversified.  By purchasing  interests in CDX EM, the
fund is gaining emerging markets  exposure through a single  investment.  Unlike
other types of credit  default  swaps which are generally  considered  illiquid,
credit default swap certificates generally can be sold within seven days and are
not subject to the fund's restrictions on investing in illiquid securities.

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Use of Segregated and Other Special Accounts. Most Strategic  Transactions,  and
certain other instruments (such as reverse repurchase  agreements,  dollar rolls
and when-issued securities),  expose the Fund to an obligation to another party.
The Fund will comply with SEC  guidelines  regarding  cover for these  Strategic
Transactions  and instruments and will, if the guidelines so require,  segregate
on its books cash or liquid assets in the prescribed amount as determined daily.
The Fund may also enter into offsetting  transactions or own positions  covering
its  obligations.  Although  this SAI  describes  certain  permitted  methods of
segregating assets or otherwise "covering" such transactions for these purposes,
such  descriptions  are not intended to be  exhaustive.  The Fund may cover such
transactions  using other methods currently or in the future permitted under the
1940 Act,  the rules and  regulations  thereunder,  or orders  issued by the SEC
thereunder. For these purposes, interpretations and guidance provided by the SEC
staff may be taken into  account  when deemed  appropriate  by the Fund.  To the
extent that a Fund covers its commitment  under Strategic  Transactions and such
other  instruments,  including by segregation  of liquid  assets,  entering into
offsetting  transactions  or owning  positions  covering its  obligations,  such
Strategic  Transactions  and  instruments  will  not  be  considered  a  "senior
security"  by the  Fund and  therefore  will not be  subject  to the 300%  asset
coverage requirement otherwise applicable to borrowings by the Fund.

Assets  used as cover  cannot be sold while the  position  in the  corresponding
Strategic Transaction or other such instrument is open, unless they are replaced
with other appropriate assets. As a result, the commitment of a large portion of
the Fund's assets to cover in accounts could impede portfolio  management or the
Fund's ability to meet redemption requests or other current obligations.

Global Asset Allocation  Strategy ("GAA  Strategy").  In connection with the GAA
Strategy and in addition to the securities described above, a fund may invest in
indexed  securities,   futures  contracts  on  securities  indices,   securities
representing  securities of foreign issuers (e.g., ADRs, GDRs and EDRs), options
on stocks, options on futures contracts,  foreign currency exchange transactions
and options on foreign currencies.  These are discussed below, to the extent not
already described above.

Indexed  Securities.  The indexed  securities in which a fund may invest include
debt  securities  whose value at  maturity is  determined  by  reference  to the
relative  prices of various  currencies  or to the price of a stock  index.  The
value of such securities depends on the price of foreign currencies,  securities
indices  or other  financial  values  or  statistics.  These  securities  may be
positively or negatively indexed;  that is, their value may increase or decrease
if the underlying instrument appreciates.

Securities  Representing  Securities of Foreign Issuers. A fund's investments in
the  securities of foreign  issuers may be made directly or in the form of ADRs,
GDRs, also referred to as International  Depositary  Receipts or "IDRs", EDRs or
other  similar  securities  representing  securities of foreign  issuers.  These
securities  may not  necessarily  be  denominated  in the same  currency  as the
securities  they  represent,  and while designed for use as  alternatives to the
purchase of the underlying  securities in their national markets and currencies,
are subject to the same risks as the foreign securities to which they relate.

ADRs  are  receipts,  typically  issued  by a US bank or  trust  company,  which
evidence  ownership of underlying  securities  issued by a foreign  corporation.
EDRs,  which  are  sometimes  referred  to as  Continental  Depository  Receipts
("CDRs"), are receipts issued in Europe, and GDRs or IDRs are issued outside the
United States.  EDRs (CDRs) and GDRs (IDRs) are typically issued by non-US banks
and trust  companies  and  evidence  ownership  of either  foreign  or  domestic
securities.  Generally,  ADRs in  registered  form  are  designed  for use in US
securities markets,  and EDRs (CDRs) and GDRs (IDRs) in bearer form are designed
for use in European and non-US securities markets, respectively. For purposes of
a fund's investment  policies,  depository receipts generally are deemed to have
the same  classification  as the underlying  securities they represent.  Thus, a
depository  receipt  representing  ownership  of common stock will be treated as
common stock.

ADRs are publicly traded on exchanges or  over-the-counter  in the United States
and are issued through "sponsored" or "unsponsored" arrangements. In a sponsored
ADR arrangement, the foreign issuer assumes the obligation to pay some or all of
the depository's transaction fees, whereas under an unsponsored arrangement, the
foreign issuer assumes no obligations and the depository's  transaction fees are
paid directly by the ADR holders. In addition,  less information is available in
the United States about an unsponsored ADR than about a sponsored ADR.

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Investments  in foreign  securities  incur higher costs than  investments  in US
securities,  including higher costs in making securities transactions as well as
foreign  government  taxes which may reduce the investment  return of A fund. In
addition,  foreign  investments  may  include  risks  associated  with  currency
exchange rates,  less complete  information  about  additional  companies,  less
market liquidity and political instability.

Portfolio Holdings Information

In addition to the public disclosure of Fund portfolio holdings through required
Securities and Exchange  Commission  ("SEC") quarterly  filings, a Fund may make
its portfolio holdings information publicly available on the DWS Funds' Web site
as  described  in  each  Fund's  prospectus.  Each  Fund  does  not  disseminate
non-public  information  about  portfolio  holdings  except in  accordance  with
policies and procedures adopted by each Fund.

Each 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 and each of their  respective  affiliates  and
advisers who require access to this  information to fulfill their duties to each
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 each Fund's
procedures.  This non-public  information may also be disclosed,  subject to the
requirements described below, to securities lending agents,  financial printers,
proxy voting firms, mutual fund analysts and rating and tracking agencies, or to
shareholders in connection with in-kind redemptions  (collectively,  "Authorized
Third Parties").

Prior to any disclosure of each Fund's non-public portfolio holdings information
to Authorized  Third Parties,  a person  authorized by each Fund's Trustees must
make a good faith determination in light of the facts then known that a Fund has
a legitimate business purpose for providing the information, that the disclosure
is in the  best  interest  of each  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 each Fund or DeAM for disclosing non-public holdings
information.  Periodic  reports  regarding these  procedures will be provided to
each 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 each Fund and
information  derived therefrom,  including,  but not limited to, how each 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 each Fund's
holdings could not be derived from such information.

Registered  investment  companies  that are subadvised by DeAM may be subject to
different portfolio holdings disclosure policies,  and neither DeAM nor a Fund's
Trustees  exercise  control over such policies.  In addition,  separate  account
clients of DeAM have access to their portfolio holdings and are not subject to a
fund's portfolio  holdings  disclosure policy. The portfolio holdings of some of
the funds  subadvised by DeAM and some of the separate  accounts managed by DeAM
may substantially overlap with the portfolio holdings of a Fund.

DeAM also  manages  certain  unregistered  commingled  trusts and creates  model
portfolios,  the portfolio holdings of which may substantially  overlap with the
portfolio  holdings of a Fund. To the extent that investors in these  commingled
trusts  or  recipients  of model  portfolio  holdings  information  may  receive
portfolio  holdings  information  of their  trust or of a model  portfolio  on a
different basis from that on which fund portfolio  holdings  information is made
public,  DeAM has implemented  procedures  reasonably designed to encourage such
investors and recipients to keep such information  confidential,  and to prevent
those investors from trading on the basis of non-public holdings information.

There is no assurance that a Fund's  policies and procedures with respect to the
disclosure  of  portfolio  holdings  information  will  protect  a Fund from the
potential  misuse of portfolio  holdings  information  by those in possession of
that information.

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                             MANAGEMENT OF THE FUNDS

Investment Advisor

Deutsche Investment Management Americas Inc. ("DIMA" or the "Advisor"), which is
part of Deutsche Asset Management  ("DeAM"),  is the investment advisor for each
Fund, with headquarters at 345 Park Avenue,  New York, New York 10154. Under the
supervision  of the Board of  Trustees  of the Trust,  DIMA  makes  each  Fund's
investment  decisions,  buys and sells  securities  for the  Funds and  conducts
research that leads to these purchase and sale  decisions.  The Advisor  manages
each Fund's  daily  investment  and  business  affairs  subject to the  policies
established  by the  Trust's  Board of  Trustees.  The  Funds'  Advisor  is also
responsible  for  selecting  brokers and dealers and for  negotiating  brokerage
commissions  and dealer  charges.  The  Advisor's  duties are  described in more
detail below.  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.

DeAM is the  marketing  name in the US for the asset  management  activities  of
Deutsche Bank AG, DIMA, DeAM, Deutsche Bank Trust Company Americas and DWS Trust
Company. DeAM is a global asset management organization that offers a wide range
of investing  expertise and resources,  including hundreds of portfolio managers
and analysts and an office  network  that reaches the world's  major  investment
centers.  This well-resourced  global investment platform brings together a wide
variety of experience and investment insight, across industries,  regions, asset
classes and investing  styles.  DIMA is an indirect,  wholly owned subsidiary of
Deutsche Bank AG. Deutsche Bank AG is a major global banking institution that is
engaged in a wide range of financial services,  including investment management,
mutual fund,  retail,  private and commercial  banking,  investment  banking and
insurance.  The term "DWS Scudder" is the designation  given to the products and
services provided by DIMA and its affiliates to the DWS Mutual Funds.

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.

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

Certain  investments  may be  appropriate  for a Fund and also for other clients
advised by the Advisor.  Investment  decisions  for a Fund and other clients are
made with a view to achieving their respective  investment  objectives and after
consideration  of such factors as their current  holdings,  availability of cash
for  investment  and the  size of their  investments  generally.  Frequently,  a
particular  security  may be bought or sold for only one client or in  different
amounts  and at  different  times for more  than one but less than all  clients.
Likewise,  a particular  security may be bought for one or more clients when one
or more other clients are selling the security. In addition,  purchases or sales
of the same  security  may be made for two or more  clients on the same day.  In
such event,  such  transactions  will be allocated among the clients in a manner
believed by the Advisor to be equitable to each. In some cases,  this  procedure
could have an adverse effect on the price or amount of the securities  purchased
or sold by a Fund.  Purchase  and sale  orders for a Fund may be  combined  with
those of other  clients of the  Advisor in the  interest of  achieving  the most
favorable net results to a Fund.

Pursuant to the investment  management agreement (the "Agreement"),  the Advisor
provides  continuing  investment  management  of the  assets  of the  Funds.  In
addition to the  investment  management of the assets of the Funds,  the Advisor
determines the  investments to be made for each 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 each  Fund's  policies as
stated in its  Prospectuses  and SAIs, or as adopted by each Fund's  Board.  The
Advisor  will  also  monitor,   to  the  extent  not  monitored  by  the  Funds'
administrator or other agent, each Fund's compliance with its investment and tax
guidelines  and other  compliance  policies.  The  Advisor  provides  investment
counsel for many


                                       61
<PAGE>

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 Advisor  provides  assistance to the Funds' Board in valuing the  securities
and other  instruments held by each Fund, to the extent  reasonably  required by
valuation policies and procedures that may be adopted by a Fund.

Pursuant to the  Agreement,  (unless  otherwise  provided in the agreement or as
determined by the Funds' Board and to the extent  permitted by applicable  law),
the  Advisor  pays the  compensation  and  expenses  of all the  Board  members,
officers,  and executive employees of the Funds,  including each Fund's share of
payroll taxes, who are affiliated persons of the Advisor.

The Agreement provides that each 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 Funds, the Funds' custodian, or other agents of the Funds;
taxes and governmental  fees; fees and expenses of the Funds'  accounting agent,
custodian,  sub-custodians,  depositories, transfer agents, dividend reimbursing
agents and registrars;  payment for portfolio  pricing or valuation  services to
pricing agents,  accountants,  bankers and other specialists,  if any; brokerage
commissions or other costs of acquiring or disposing of any portfolio securities
or  other   instruments  of  the  Funds;  and  litigation   expenses  and  other
extraordinary  expenses  not  incurred  in the  ordinary  course  of the  Funds'
business.

The  Agreement  allows the  Advisor  to  delegate  any of its  duties  under the
Agreement to a subadvisor, subject to a majority vote of the Board of the Funds,
including a majority of the Board who are not  interested  persons of the Funds,
and, if required by  applicable  law,  subject to a majority vote of each Fund's
shareholders.

The  Agreement  provides  that the Advisor  shall not be liable for any error of
judgment or mistake of law or for any loss  suffered by the Funds in  connection
with  matters  to which the  agreement  relates,  except a loss  resulting  from
willful malfeasance, bad faith or gross negligence on the part of the Advisor in
the  performance of its duties or from reckless  disregard by the Advisor of its
obligations  and duties under the agreement.  The Agreement may be terminated at
any time,  without payment of penalty,  by either party or by vote of a majority
of the outstanding voting securities of a Fund on 60 days' written notice.

The Agreement with respect to the DWS  LifeCompass  2040 Fund was first approved
by the Board on October 19, 2007.  The  Agreement  for the  remaining  Funds was
renewed by the Board on September 17, 2007. The current  Agreement for each Fund
will continue in effect until  September 30, 2008, and  thereafter  from year to
year only if its  continuance is approved  annually by the vote of a majority of
those Trustees who are not parties to such  Agreements or interested  persons of
the Advisor or the Fund,  cast in person at a meeting  called for the purpose of
voting on such  approval,  and either by a vote of the Board or of a majority of
the outstanding voting securities of the respective Fund.

The Funds do not directly bear any management fees,  although the Funds directly
bear  other  Fund fees and  expenses.  In  addition,  shareholders  of the Funds
indirectly bear their pro rata share of the cost of operating the Underlying DWS
Funds in which  the Funds  invest  in their  capacity  as a  shareholder  of the
Underlying DWS Funds.

Through December 31, 2006, the Advisor has contractually  agreed to waive all or
a portion of its management  fee and reimburse or pay operating  expenses of the
DWS LifeCompass  Retirement Fund to the extent  necessary to maintain the fund's
operating  expenses at ratios no higher than 0.55%, 1.30% and 1.30% for Class A,
Class B and Class C shares,  respectively,  excluding  certain  expenses such as
extraordinary expenses,  proxy, taxes, brokerage,  interest,  organizational and
offering expenses and indirect expenses of underlying DWS funds.

Effective   January  1,  2007  through   December  14,  2007,  the  Advisor  has
contractually  agreed  to  waive  all or a  portion  of its  management  fee and
reimburse or pay operating  expenses of the DWS  LifeCompass  Retirement Fund to
the extent  necessary  to maintain  the fund's  operating  expenses at ratios no
higher  than  0.67%,  1.42% and  1.42% for Class A,  Class B and Class C shares,
respectively,  excluding certain expenses such as extraordinary expenses,


                                       62
<PAGE>

proxy,  taxes,  brokerage,  interest,  organizational  and offering expenses and
indirect expenses of underlying DWS funds.

Effective  November  15,  2007  through  November  30,  2008,  the  Advisor  has
contractually  agreed  to  waive  all or a  portion  of its  management  fee and
reimburse or pay operating  expenses of the DWS  LifeCompass  Retirement Fund to
the extent  necessary to maintain the fund's total operating  expenses at 0.52%,
1.27% and 1.27% for Class A, Class B and Class C shares, respectively, excluding
certain expenses such as extraordinary expenses, taxes, brokerage,  interest and
indirect expenses of underlying DWS funds.

Through December 31, 2006, the Advisor has contractually  agreed to waive all or
a portion of its management  fee and reimburse or pay operating  expenses of the
DWS  LifeCompass  2015 Fund to the  extent  necessary  to  maintain  the  fund's
operating  expenses at ratios no higher than 0.55%, 1.30% and 1.30% for Class A,
Class B and Class C shares,  respectively,  excluding  certain  expenses such as
extraordinary expenses,  proxy, taxes, brokerage,  interest,  organizational and
offering expenses and indirect expenses of underlying DWS funds.

Effective   January  1,  2007  through   December  14,  2007,  the  Advisor  has
contractually  agreed  to  waive  all or a  portion  of its  management  fee and
reimburse  or pay  operating  expenses of the DWS  LifeCompass  2015 Fund to the
extent necessary to maintain the fund's  operating  expenses at ratios no higher
than  0.65%,  1.40%  and  1.40%  for  Class  A,  Class  B and  Class  C  shares,
respectively,  excluding certain expenses such as extraordinary expenses, proxy,
taxes,  brokerage,  interest,  organizational and offering expenses and indirect
expenses of underlying DWS funds.

Effective  November  15,  2007  through  November  30,  2008,  the  Advisor  has
contractually  agreed  to  waive  all or a  portion  of its  management  fee and
reimburse  or pay  operating  expenses of the DWS  LifeCompass  2015 Fund to the
extent necessary to maintain the fund's total operating expenses at 0.48%, 1.23%
and  1.23% for Class A,  Class B and  Class C  shares,  respectively,  excluding
certain expenses such as extraordinary expenses, taxes, brokerage,  interest and
indirect expenses of underlying DWS funds.

Through December 31, 2006, the Advisor has contractually  agreed to waive all or
a portion of its management  fee and reimburse or pay operating  expenses of the
DWS  LifeCompass  2020 Fund to the  extent  necessary  to  maintain  the  fund's
operating  expenses at ratios no higher than 0.55%, 1.30% and 1.30% for Class A,
Class B and Class C shares,  respectively,  excluding  certain  expenses such as
extraordinary expenses,  proxy, taxes, brokerage,  interest,  organizational and
offering expenses and indirect expenses of underlying DWS funds.

Effective   January  1,  2007  through   December  14,  2007,  the  Advisor  has
contractually  agreed  to  waive  all or a  portion  of its  management  fee and
reimburse  or pay  operating  expenses of the DWS  LifeCompass  2020 Fund to the
extent necessary to maintain the fund's  operating  expenses at ratios no higher
than  0.65%,  1.40%  and  1.40%  for  Class  A,  Class  B and  Class  C  shares,
respectively,  excluding certain expenses such as extraordinary expenses, proxy,
taxes,  brokerage,  interest,  organizational and offering expenses and indirect
expenses of underlying DWS funds.

Effective  November  15,  2007  through  November  30,  2008,  the  Advisor  has
contractually  agreed  to  waive  all or a  portion  of its  management  fee and
reimburse  or pay  operating  expenses of the DWS  LifeCompass  2020 Fund to the
extent necessary to maintain the fund's total operating expenses at 0.49%, 1.24%
and  1.24% for Class A,  Class B and  Class C  shares,  respectively,  excluding
certain expenses such as extraordinary expenses, taxes, brokerage,  interest and
indirect expenses of underlying DWS funds.

Through September 30, 2007, the Advisor has contractually agreed to waive all or
a portion of its management  fee and reimburse or pay operating  expenses of the
DWS  LifeCompass  2030 Fund to the  extent  necessary  to  maintain  the  fund's
operating  expenses at ratios no higher than 0.55%, 1.30% and 1.30% for Class A,
Class B and Class C shares,  respectively,  excluding  certain  expenses such as
extraordinary expenses,  proxy, taxes, brokerage,  interest,  organizational and
offering expenses and indirect expenses of underlying DWS funds.

Effective   October  1,  2007  through   December  14,  2007,  the  Advisor  has
contractually  agreed  to  waive  all or a  portion  of its  management  fee and
reimburse  or pay  operating  expenses of the DWS  LifeCompass  2030 Fund to the
extent necessary to maintain the fund's  operating  expenses at ratios no higher
than  0.75%,  1.50%  and  1.50%  for  Class  A,  Class  B and  Class  C  shares,
respectively,  excluding certain expenses such as extraordinary expenses,


                                       63
<PAGE>

proxy,  taxes,  brokerage,  interest,  organizational  and offering expenses and
indirect expenses of underlying DWS funds.

Effective  November  15,  2007  through  November  30,  2008,  the  Advisor  has
contractually  agreed  to  waive  all or a  portion  of its  management  fee and
reimburse  or pay  operating  expenses of the DWS  LifeCompass  2030 Fund to the
extent necessary to maintain the fund's total operating expenses at 0.45%, 1.20%
and  1.20% for Class A,  Class B and  Class C  shares,  respectively,  excluding
certain expenses such as extraordinary expenses, taxes, brokerage,  interest and
indirect expenses of underlying DWS funds.

Through November 30, 2008, the Advisor has contractually  agreed to waive all or
a portion of its management  fee and reimburse or pay operating  expenses of the
DWS LifeCompass  2040 Fund to the extent  necessary to maintain the fund's total
operating  expenses  at  0.49%  and  1.24%  for  Class  A and  Class  C  shares,
respectively,  excluding certain expenses such as extraordinary expenses, taxes,
brokerage,  interest,  and acquired funds  (underlying  funds) fees and expenses
(estimated at 0.70%).

In  addition,  in 2006 the  Board and  shareholders  approved  a new  subadvisor
approval policy for the Funds (the "Subadvisor Approval Policy"). The Subadvisor
Approval  Policy  permits  the  Advisor,  subject to the  approval of the Board,
including a majority of its  independent  board members,  to appoint and replace
subadvisors and to amend  sub-advisory  contracts without obtaining  shareholder
approval.  Under the  Subadvisor  Approval  Policy,  the  Board,  including  its
independent  board  members,  will  continue  to  evaluate  and  approve all new
sub-advisory  contracts  between the Advisor and any subadvisor,  as well as all
changes to any existing  subadvisory  contract.  The Funds cannot  implement the
Subadvisor  Approval Policy without the SEC either adopting revisions to current
rules (as it proposed to do in October  2003) or  granting  the Funds  exemptive
relief  from  existing  rules.  The Funds 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  Funds  and its  shareholders  are  adequately  protected
whenever the Advisor acts under the Subadvisor  Approval  Policy,  including any
shareholder notice requirements.

The Advisor may enter into  arrangements with affiliates and third party service
providers to perform  various  administrative,  back-office  and other  services
relating to client accounts.  Such service providers may be located in the US or
in non-US jurisdictions.

Compensation of Portfolio Managers

Each  Fund has been  advised  that the  Advisor  seeks to offer  its  investment
professionals  competitive  short-term  and  long-term  compensation.  Portfolio
managers and research professionals are paid (i) fixed base salaries,  which are
linked to job function,  responsibilities  and financial  services industry peer
comparison  and (ii)  variable  compensation,  which  is  linked  to  investment
performance, individual contributions to the team and DWS Scudder's and Deutsche
Bank's  financial  results.  Variable  compensation  may  include  a cash  bonus
incentive and  participation in a variety of long-term equity programs  (usually
in the form of Deutsche Bank equity).

Bonus  and  long-term   incentives   comprise  a  greater  proportion  of  total
compensation as an investment  professional's  seniority and compensation levels
increase.  Top performing  investment  professionals  earn a total  compensation
package  that is highly  competitive,  including  a bonus that is a multiple  of
their base  salary.  The amount of equity  awarded  under the  long-term  equity
programs is generally based on the individual's total  compensation  package and
may  comprise  from  0%-40%  of  the  total  compensation  award.  As  incentive
compensation increases,  the percentage of compensation awarded in Deutsche Bank
equity also increases. Certain senior investment professionals may be subject to
a mandatory diverting of a portion of their equity compensation into proprietary
mutual funds that they manage.

To  evaluate  its  investment  professionals,  the  Advisor  uses a  Performance
Management  Process.   Objectives  evaluated  by  the  process  are  related  to
investment  performance and generally take into account peer group and benchmark
related data.  The ultimate goal of this process is to link the  performance  of
investment  professionals  with  client  investment  objectives  and to  deliver
investment   performance   that  meets  or  exceeds  clients'  risk  and


                                       64
<PAGE>

return objectives. When determining total compensation,  the Advisor considers a
number of quantitative and qualitative factors such as:

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

o        Qualitative  measures include  adherence to the investment  process and
         individual  contributions  to  the  process,  among  other  things.  In
         addition, the Advisor assesses compliance, risk management and teamwork
         skills.

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

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

Fund Ownership of Portfolio Managers

The following table shows the dollar range of shares owned  beneficially  and of
record by each member of each Fund's  portfolio  management team in each 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 each Fund's most
recent fiscal year end.

<TABLE>
<CAPTION>
                        DWS
                    LifeCompass       DWS                                                  DWS        Dollar Range of
Name of Portfolio   Retirement    LifeCompass    DWS LifeCompass    DWS LifeCompass    LifeCompass     All DWS Fund
Manager                Fund        2015 Fund        2020 Fund          2030 Fund        2040 Fund      Shares Owned
-------                ----        ---------        ---------          ---------        ---------      ------------

<S>                     <C>            <C>              <C>        <C>       <C>           <C>      <C>        <C>
Inna Okounkova          $0             $0               $0         $10,001 - $50,000       $0       $100,001 - $500,000
Robert Wang             $0             $0       $10,001 - $50,000          $0              $0       $100,001 - $500,000

Conflicts of Interest

In addition to managing the assets of each Fund, each Fund's portfolio  managers
may have responsibility for managing other client accounts of the Advisor or its
affiliates.  The tables below show, for each portfolio  manager,  the number and
asset size of (1) SEC registered  investment companies (or series thereof) other
than the Fund, (2) pooled investment vehicles that are not registered investment
companies and (3) other  accounts  (e.g.,  accounts  managed for  individuals or
organizations)  managed by each  portfolio  manager.  The  tables  also show the
number of  performance  based fee  accounts,  as well as the total assets of the
accounts for which the advisory fee is based on the  performance of the account.
This information is provided as of each Fund's most recent fiscal year end.

                                       65
<PAGE>

DWS LifeCompass Retirement Fund

Other SEC Registered Investment Companies Managed:

                                      Number of         Total Assets of    Number of Investment
                                      Registered          Registered         Company Accounts       Total Assets of
                                      Investment          Investment               with           Performance-Based
Name of Portfolio Manager             Companies            Companies       Performance-Based Fee     Fee Accounts
-------------------------             ---------            ---------       ---------------------     ------------

Inna Okounkova                            12             $4,362,540,484              0                    $0
Robert Wang                               39            $14,721,012,193              0                    $0

DWS LifeCompass 2015 Fund

Other SEC Registered Investment Companies Managed:

                                      Number of         Total Assets of    Number of Investment
                                      Registered          Registered         Company Accounts       Total Assets of
                                      Investment          Investment               with           Performance-Based
Name of Portfolio Manager             Companies            Companies       Performance-Based Fee     Fee Accounts
-------------------------             ---------            ---------       ---------------------     ------------

Inna Okounkova                            12             $4,185,098,403              0                    $0
Robert Wang                               39            $14,543,570,111              0                    $0

DWS LifeCompass 2020 Fund

Other SEC Registered Investment Companies Managed:

                                      Number of         Total Assets of    Number of Investment
                                      Registered          Registered         Company Accounts       Total Assets of
                                      Investment          Investment               with           Performance-Based
Name of Portfolio Manager             Companies            Companies       Performance-Based Fee     Fee Accounts
-------------------------             ---------            ---------       ---------------------     ------------

Inna Okounkova                            12             $4,191,521,872              0                    $0
Robert Wang                               39            $14,549,993,580              0                    $0

DWS LifeCompass 2030 Fund

Other SEC Registered Investment Companies Managed:

                                      Number of         Total Assets of    Number of Investment
                                      Registered          Registered         Company Accounts       Total Assets of
                                      Investment          Investment               with           Performance-Based
Name of Portfolio Manager             Companies            Companies       Performance-Based Fee     Fee Accounts
-------------------------             ---------            ---------       ---------------------     ------------

Inna Okounkova                            12             $4,472,947,692              0                    $0
Robert Wang                               39            $14,831,419,401              0                    $0


                                       66
<PAGE>

DWS LifeCompass 2040 Fund

Other SEC Registered Investment Companies Managed:

                                      Number of         Total Assets of    Number of Investment
                                      Registered          Registered         Company Accounts       Total Assets of
                                      Investment          Investment               with           Performance-Based
Name of Portfolio Manager             Companies            Companies       Performance-Based Fee     Fee Accounts
-------------------------             ---------            ---------       ---------------------     ------------

Inna Okounkova                            13             $4,512,758,109              0                    $0
Robert Wang                               40            $14,871,229,818              0                    $0

DWS LifeCompass Retirement Fund, DWS LifeCompass 2015 Fund, DWS LifeCompass 2020
Fund, DWS LifeCompass 2030 Fund, DWS LifeCompass 2040 Fund

Other Pooled Investment Vehicles Managed:

                                                                              Number of Pooled
                                      Number of                              Investment Vehicle
                                       Pooled          Total Assets of         Accounts with        Total Assets of
                                     Investment       Pooled Investment      Performance-Based    Performance-Based
Name of Portfolio Manager             Vehicles             Vehicles                 Fee              Fee Accounts
-------------------------             --------             --------                 ---              ------------

Inna Okounkova                              4             $333,508,513               0                          $0
Robert Wang                                18             $542,869,078               2                $257,589,096

DWS LifeCompass Retirement Fund, DWS LifeCompass 2015 Fund, DWS LifeCompass 2020
Fund, DWS LifeCompass 2030 Fund, DWS LifeCompass 2040 Fund

Other Accounts Managed:

                                                                              Number of Other
                                                                               Accounts with      Total Assets of
                                      Number of     Total Assets of Other   Performance- Based      Performance-
Name of Portfolio Manager          Other Accounts          Accounts                 Fee          Based Fee Accounts
-------------------------          --------------          --------                 ---          ------------------

Inna Okounkova                              0                       $0               0                        $0
Robert Wang                                40           $8,919,864,979               2              $148,708,705
</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 Funds.  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 Funds
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 each Fund and also for other
         clients advised by the Advisor, including other client accounts managed
         by each Fund's portfolio management team. Investment decisions for each
         Fund  and  other  clients  are  made  with a view  to  achieving  their
         respective  investment  objectives



                                       67
<PAGE>

         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 each 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 each Fund.  Purchase and
         sale orders for each Fund may be combined  with those of other  clients
         of the Advisor in the  interest of  achieving  the most  favorable  net
         results to each 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 each Fund may
         manage other mutual funds and separate  accounts on a long-short basis.
         The  simultaneous  management  of long  and  short  portfolios  creates
         potential  conflicts  of  interest  including  the risk that short sale
         activity could adversely  affect the market value of the long positions
         (and vice versa),  the risk arising from sequential  orders in long and
         short  positions,  and the risks  associated  with  receiving  opposing
         orders at the same time.  The Advisor has  adopted  procedures  that it
         believes are reasonably  designed to mitigate these potential conflicts
         of  interest.  Included in these  procedures  are  specific  guidelines
         developed to ensure fair and equitable  treatment for all clients whose
         accounts  are managed by each Fund's  portfolio  management  team.  The
         Advisor and the portfolio  management team have established  monitoring
         procedures,  a protocol for supervisory  reviews, as well as compliance
         oversight to ensure that  potential  conflicts of interest  relating to
         this type of activity are properly addressed.

The Advisor is owned by Deutsche Bank AG, a  multi-national  financial  services
company.  Therefore,  the Advisor is affiliated  with a variety of entities that
provide, and/or engage in commercial banking, insurance,  brokerage,  investment
banking,  financial  advisory,  broker-dealer  activities  (including  sales and
trading),  hedge funds, real estate and private equity investing, in addition to
the provision of investment  management services to institutional and individual
investors.  Since  Deutsche  Bank AG, its  affiliates,  directors,  officers and
employees (the "Firm") are engaged in businesses  and have interests  other than
managing  asset  management  accounts,   such  other  activities  involve  real,
potential or apparent  conflicts of interest.  These  interests  and  activities
include potential  advisory,  transactional  and financial  activities and other
interests  in  securities  and  companies  that may be  directly  or  indirectly
purchased  or sold by the Firm for its  clients'  advisory  accounts.  These are
considerations  of which  advisory  clients  should be aware and which may cause
conflicts that could be to the disadvantage of the Advisor's  advisory  clients.
The Advisor has  instituted  business and  compliance  policies,  procedures and
disclosures  that are  designed to identify,  monitor and mitigate  conflicts of
interest and, as appropriate, to report them to the Fund's Board.

Administrative Agreements

Each Fund has entered into an administrative services agreement with the Advisor
(the  "Administrative  Services  Agreement"),  pursuant  to  which  the  Advisor
provides administrative services to each Fund including, among others, providing
the Funds with personnel, preparing and making required filings on behalf of the
Funds, maintaining


                                       68
<PAGE>

books  and  records  for  the  Funds,  and  monitoring  the  valuation  of  Fund
securities.   For  all  services  provided  under  the  Administrative  Services
Agreement, each Fund pays the Advisor a fee, computed daily and paid monthly, of
the greater of 0.100% of the Funds' average daily net assets or $50,000.

Under the  Administrative  Services  Agreement,  the Advisor is  obligated  on a
continuous  basis to provide  such  administrative  services as the Board of the
Funds reasonably deems necessary for the proper administration of the Funds. The
Advisor  provides the Funds with  personnel;  arranges for the  preparation  and
filing of each Fund's tax  returns;  prepares  and  submits  reports and meeting
materials to the Board and the  shareholders;  prepares and files updates to the
Funds'  prospectuses  and statements of additional  information as well as other
reports required to be filed by the SEC; maintains each Fund's records; provides
the Funds 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 each  Fund;  assists in the
resolution  of  accounting  issues  that may arise  with  respect  to the Funds;
establishes  and monitors each Fund's  operating  expense  budgets;  reviews and
processes each Fund's bills;  assists in determining the amount of dividends and
distributions  available to be paid by the Funds, 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.

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

For the year ended August 31, 2007, DIMA received $145,630,  $321,480,  $323,731
and $50,000 (of which  $50,000 was waived) as  compensation  for  administrative
services provided to DWS LifeCompass Retirement Fund, DWS LifeCompass 2015 Fund,
DWS LifeCompass 2020 Fund and DWS LifeCompass 2030 Fund, respectively.

Prior to June 1, 2006, DWS Scudder Fund Accounting Corporation ("DWS-SFAC"), Two
International Place, Boston, Massachusetts,  02110, a subsidiary of the Advisor,
was  responsible  for  determining net asset value per share and maintaining the
portfolio  and  general  accounting  records  for the Funds.  From April 1, 2004
through May 31, 2006,  each Fund paid DWS-SFAC an annual fee equal to 0.0250% of
the first $150  million of average  daily net assets,  0.0075% of such assets in
excess of $150 million and 0.0045% of such assets in excess of $1 billion,  plus
holding and transaction charges for this service.  For the period from September
1, 2005  through May 31, 2006,  the amount  charged to the Funds by DWS-SFAC for
accounting   services  aggregated   $26,070,   $41,612,   $40,543  and  $73,346,
respectively,  for the DWS LifeCompass  Retirement  Fund, DWS  LifeCompass  2015
Fund, DWS LifeCompass 2020 Fund and DWS LifeCompass 2030 Fund. In addition,  the
Advisor waived accounting fees of $73,346 for DWS LifeCompass 2030 Fund. For the
period  from June 1, 2006  through  August  31,  2006,  DIMA  received  $34,584,
$75,255,  $75,059  and  $12,500  as  compensation  for  administration  services
provided to DWS  LifeCompass  Retirement  Fund, DWS  LifeCompass  2015 Fund, DWS
LifeCompass 2020 Fund and DWS LifeCompass 2030 Fund,  respectively.  DIMA waived
$12,500 of administration services fees for DWS LifeCompass 2030 Fund.

For the year ended August 31, 2005,  the amount charged to the Funds by DWS-SFAC
for  accounting  services  aggregated  $43,008,  $39,484,  $37,651 and  $78,965,
respectively,  for the DWS LifeCompass  Retirement  Fund, DWS  LifeCompass  2015
Fund, DWS LifeCompass 2020 Fund and DWS LifeCompass 2030 Fund. In addition,  the
Advisor waived accounting fees of $78,965 for DWS LifeCompass 2030 Fund.

Because DWS LifeCompass 2040 has not commenced operations as of the date of this
Statement  of  Additional  Information,  it does  not  have  any  administrative
services fee information to report.

                                       69
<PAGE>

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.

Fees and Expenses of Underlying DWS Funds

As noted above,  the Funds will bear their pro rata share of the  Underlying DWS
Funds' fees and expenses. In addition, certain Underlying DWS Funds impose a fee
upon the redemption or exchange of shares held for less than one year. The fees,
which  amount to 2% of the net  asset  value of the  shares  being  redeemed  or
exchanged, are assessed and retained by the Underlying DWS Funds for the benefit
of the  remaining  shareholders.  The fee is  intended  to  encourage  long-term
investment in the  Underlying  DWS Fund. The fee is not a deferred sales charge,
is not a commission  paid to the Advisor or its  subsidiary and does not benefit
the Advisor in any way.  Each such  Underlying  DWS Fund  reserves  the right to
modify the terms of or terminate  this fee at any time. As a shareholder of such
Underlying  DWS Funds,  the Funds will be  subject  to such fees.  Under  normal
market conditions,  the Funds will seek to avoid taking action that would result
in the imposition of such a fee.  However,  in the event that a fee is incurred,
the net  assets of the Fund would be reduced by the amount of such fees that are
assessed  and  retained  by the  Underlying  DWS Funds for the  benefit of their
shareholders.

The  management  fees and total  operating  expenses of the Underlying DWS Funds
during  their most  recent  fiscal  year as  reflected  in the funds'  currently
effective  prospectuses are described in the following table.  Reimbursement and
or waiver arrangements applicable to certain Underlying DWS Funds caused the net
fees and/or expenses for those funds to be lower than the values below.

<TABLE>
<CAPTION>
                                                                          Management                           Net
Name of Fund                                        Fiscal Year End        Fees (%)      Total Expenses     Expenses
------------                                        ---------------        --------      --------------     --------
<S>                                                      <C>                 <C>              <C>
DWS Blue Chip Fund                                       10/31               0.56             0.68            N/A
DWS Capital Growth Fund(1)                                9/30              0.56*             0.74            0.73
DWS Commodity Securities Fund(2)                          6/30              1.05+             1.36            1.25
DWS Disciplined Market Neutral Fund(3)                    8/31              1.35+             1.94            1.74
DWS Disciplined Long/Short Growth Fund(4)                 4/30              1.10+             3.52            2.36
DWS Disciplined Long/Short Value Fund(5)                  4/30              1.10+             3.40            2.31
DWS Emerging Markets Equity Fund(6)                      10/31              1.12**            1.60            1.55
DWS Emerging Markets Fixed Income Fund(7)                10/31              0.77*             1.14            N/A
DWS Equity 500 Index Fund(8) (9)                         12/31             0.18***            0.21            N/A
DWS Equity Partners Fund                                  5/31              0.83+             0.89            N/A
DWS Value Builder Fund                                    3/31              0.79**            0.88            N/A
DWS Communications Fund(10) (11)                         12/31              1.00**            1.14            N/A
DWS Core Fixed Income Fund(12) (13)                      10/31              0.50*             0.62            N/A
DWS Floating Rate Plus Fund(14)                           4/30              0.75+             1.20            1.05
DWS Global Thematic Fund(15)                              8/31              0.99*             1.28            N/A
DWS Global Bond Fund(16)                                 10/31              0.77*             1.29            1.06
DWS Global Opportunities Fund(17)                        10/31              1.12*             1.34            N/A
DWS GNMA Fund(18)                                         9/30              0.42*             0.57            N/A
DWS Gold & Precious Metals Fund(19)                      10/31              1.01**            1.25            N/A
DWS Europe Equity Fund(20)                               10/31              0.75*             0.90            N/A
DWS Growth & Income Fund(21)                             12/31              0.45*             0.51            N/A
DWS Health Care Fund                                      5/31              0.87+             1.09            N/A
DWS High Income Fund                                      9/30               0.54             0.67            N/A
DWS High Income Plus Fund(22) (23)                       10/31              0.60+             0.73            0.65
DWS Dreman Concentrated Value Fund(24) (25)              10/31               0.80             1.38            1.09
DWS Dreman Mid Cap Value Fund(2 6)                       10/31               0.75             1.37            1.00
DWS Dreman High Return Equity Fund(2 7)                  11/30               0.68             0.74            N/A



                                       70
<PAGE>

                                                                          Management                           Net
Name of Fund                                        Fiscal Year End        Fees (%)      Total Expenses     Expenses
------------                                        ---------------        --------      --------------     --------

DWS Core Plus Income Fund                                 1/31              0.55*             0.73            N/A
DWS Inflation Protected Plus Fund(28) (29)                9/30              0.59+             1.31            0.75
DWS International Fund                                    8/31              0.69*             0.84            N/A
DWS International Select Equity Fund(30)                 10/31              0.81*             1.07            N/A
DWS International Value Opportunities Fund(31)            8/31              0.90+             1.31            N/A
DWS Japan Equity Fund                                     8/31              0.95**            1.31            N/A
DWS Large Cap Value Fund (32)                            11/30               0.52             0.57            0.66
DWS Large Company Growth Fund                             7/31              0.71*             0.80            N/A
DWS Latin America Equity Fund(33)                        10/31              1.22*             1.52            N/A
DWS Micro Cap Fund(34)                                    9/30              1.35**            1.72            1.38
DWS Mid Cap Growth Fund(35)                               9/30              0.72+             1.00            N/A
DWS Money Market Prime Series - DWS Cash                  7/31               0.26             0.91            N/A
Investment Trust (36)
DWS Money Market Series --  Institutional                 12/31             0.23****           0.24            0.15
Shares(37)
DWS RREEF Global Real Estate Securities Fund(38)         12/31              1.10+             1.28            N/A
DWS RREEF Real Estate Securities Fund(39)                12/31              0.48**            0.55            N/A
DWS S&P 500 Index Fund (40) (41)                         12/31             0.18***            0.45            0.44
DWS Enhanced S&P 500 Index Fund(42)                       2/28              0.52+             1.05            N/A
DWS Short Duration Fund43 (44)                           10/31              0.50**            0.82            0.72
DWS Short Duration Plus Fund(4)(5)                        9/30              0.60**            0.79            N/A
DWS Small Cap Growth Fund(46)                             9/30              0.75+             0.83            N/A
DWS Small Cap Core Fund(47)                               9/30              0.77*             1.20            N/A
DWS Small Cap Value Fund                                  7/31              0.77*             1.02            N/A
DWS Dreman Small Cap Value Fund(48)                      11/30               0.72             0.85            N/A
DWS Technology Fund(49)                                  10/31               0.56             0.65            N/A
</TABLE>

*        Restated on an annualized  basis to reflect approved changes which took
         effect on June 1, 2006. Includes 0.10% administration fee.

**       Restated on an annualized  basis to reflect approved changes which took
         effect on July 1, 2006. Includes 0.10% administration fee.

***      Includes 0.10% administration fee for the fund and 0.03% administration
         fee for the master portfolio.

****     Restated on an annualized  basis to reflect fee changes that took place
         on July 27, 2007. The fee includes a 0.03% Portfolio administration fee
         and a 0.10% fund administration fee.

+        Includes 0.10% administration fee.

(1)      Through  November 30,  2008,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         operating  expenses of the fund to the extent necessary to maintain the
         fund's total operating expenses at a ratio no higher than 0.72% for the
         Institutional   Class  shares,   excluding  certain  expenses  such  as
         extraordinary expenses, taxes, brokerage,  interest, and organizational
         and offering expenses.

(2)      Through  September 30, 2008,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         certain  operating  expenses  of the fund to the  extent  necessary  to
         maintain the fund's total operating expenses at 1.25% for Institutional
         Class  shares,   excluding   certain


                                       71
<PAGE>

         expenses such as extraordinary expenses, taxes, brokerage, interest and
         organizational and offering expenses.

(3)      Through  September  30, 2007,  the Advisor has agreed to waive all or a
         portion of its management  fee and reimburse or pay operating  expenses
         of the fund to the  extent  necessary  to  maintain  the  fund's  total
         operating expenses at 1.45% for Institutional  Class shares,  excluding
         certain expenses such as extraordinary  expenses,  taxes, brokerage and
         interest,  organizational and offering expenses (limited to 0.10%), and
         dividend expenses on short sales (estimated at 0.19%).

(4)      Through July 31, 2008, the Advisor has agreed to waive all or a portion
         of its  management  fee and reimburse or pay operating  expenses of the
         fund to the extent  necessary to maintain  the fund's  total  operating
         expenses at 1.20% for  Institutional  Class shares,  excluding  certain
         expenses such as extraordinary expenses, taxes, brokerage and interest,
         leverage expenses and dividend expenses on short sales.

(5)      Through July 31, 2008, the Advisor has agreed to waive all or a portion
         of its  management  fee and reimburse or pay operating  expenses of the
         fund to the extent  necessary to maintain  the fund's  total  operating
         expenses at 1.20% for  Institutional  Class shares,  excluding  certain
         expenses such as extraordinary expenses, taxes, brokerage and interest,
         leverage expenses and dividend expenses on short sales

(6)      Through April 13, 2009, the Advisor has  contractually  agreed to waive
         all or a portion of its  management  fee and reimburse or pay operating
         expenses of the fund to the extent  necessary  to  maintain  the fund's
         total operating expenses at 1.55% for Class S shares, excluding certain
         expenses such as extraordinary expenses,  taxes,  brokerage,  interest,
         proxy, and organizational and offering expenses.

(7)      Through  September 30, 2007,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         operating  expenses of the fund to the extent necessary to maintain the
         fund's  total  annual  operating  expenses at 1.14% for Class S shares,
         excluding  certain  expenses  such as  extraordinary  expenses,  taxes,
         brokerage,  interest,  proxy, and organizational and offering expenses.
         Although  there can be no  assurances  that the current  waiver/expense
         reimbursement arrangement will be maintained beyond September 30, 2007,
         the Advisor has committed to review the  continuance of  waiver/expense
         reimbursement arrangements by September 30, 2007.

(8)      Through  September 30, 2007,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         certain operating  expenses of the fund,  including  expenses allocated
         from the  Portfolio,  to the extent  necessary  to  maintain  the total
         operating expenses at 0.40% for Institutional  Class shares,  excluding
         certain  expenses such as  extraordinary  expenses,  taxes,  brokerage,
         interest,  proxy and  organizational  and offering  expenses.  Although
         there   can  be  no   assurances   that  the   current   waiver/expense
         reimbursement arrangement will be maintained beyond September 30, 2007,
         the Advisor has committed to review the  continuance of  waiver/expense
         reimbursement arrangements by September 30, 2007.

(9)      Effective  October 1, 2006, the Advisor has agreed to voluntarily waive
         a portion of its fees and reimburse or pay certain  operating  expenses
         for the fund,  including expenses allocated from the Portfolio,  to the
         extent necessary to maintain the total operating  expenses at 0.10% for
         Institutional   Class  shares,   excluding  certain  expenses  such  as
         extraordinary   expenses,   taxes,  brokerage,   interest,   proxy  and
         organizational  and  offering   expenses.   This  voluntary  waiver  or
         reimbursement  may be  terminated  at any  time  at the  option  of the
         Advisor.

(10)     Effective October 1, 2006, the Advisor has voluntarily  agreed to waive
         all or a portion of its fees and reimburse  expenses so that the fund's
         total operating expenses will not exceed 1.18% for Institutional  Class
         shares,  excluding  certain  expenses such as  extraordinary  expenses,
         taxes,  brokerage,  interest,  proxy and  organizational  and  offering
         expenses.  The Advisor,  at its  discretion,  may revise or discontinue
         this arrangement at any time.

                                       72
<PAGE>

(11)      Through  September 30, 2007, the Advisor has  contractually  agreed to
          waive all or a portion  of its  management  fee and  reimburse  or pay
          certain  operating  expenses  of the fund to the extent  necessary  to
          maintain   the  fund's   total   operating   expenses   at  1.47%  for
          Institutional  Class  shares,   excluding  certain  expenses  such  as
          extraordinary  expenses,   taxes,  brokerage,   interest,   proxy  and
          organizational  and  offering  expenses.  Although  there  can  be  no
          assurances that the current waiver/expense  reimbursement  arrangement
          will  be  maintained  beyond  September  30,  2007,  the  Advisor  has
          committed to review the  continuance of  waiver/expense  reimbursement
          arrangements by September 30, 2007.

(12)      Through  September 30, 2007, the Advisor has  contractually  agreed to
          waive all or a portion  of its  management  fee and  reimburse  or pay
          operating expenses of the fund to the extent necessary to maintain the
          fund's  operating  expenses at 0.74% for  Institutional  Class shares,
          excluding  certain  expenses such as  extraordinary  expenses,  taxes,
          brokerage,  interest,  proxy and organizational and offering expenses.
          Although  there can be no assurances  that the current  waiver/expense
          reimbursement  arrangements  will be maintained  beyond  September 30,
          2007,  the  Advisor  has  committed  to  review  the   continuance  of
          waiver/expense reimbursement arrangements by September 30, 2007.

(13)      Effective October 1, 2006, 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  0.55%  for  Institutional  Class  shares,   excluding  certain
          expenses such as extraordinary expenses,  taxes, brokerage,  interest,
          proxy and organizational and offering expenses.  This voluntary waiver
          or  reimbursement  may be  terminated at any time at the option of the
          Advisor.

(14)      Through  September 30, 2008, the Advisor has  contractually  agreed to
          waive all or a portion  of its  management  fee and  reimburse  or pay
          operating expenses of the fund to the extent necessary to maintain the
          fund's  total  operating  expenses  at 0.95% for  Institutional  Class
          shares,  excluding  certain expenses such as  extraordinary  expenses,
          taxes,   brokerage  and  interest,  and  organizational  and  offering
          expenses (limited to 0.10%) on net assets.

(15)      Through  September 30, 2007,  the Advisor has agreed to waive all or a
          portion of its management fee and reimburse or pay operating  expenses
          of the fund to the extent  necessary to maintain the fund's  operating
          expenses at 1.28%,  excluding  certain  expenses such as extraordinary
          expenses,  taxes, proxy,  brokerage,  interest, and organizational and
          offering  expenses.  Although  there  can be no  assurances  that  the
          current  waiver/expense  reimbursement  arrangement will be maintained
          beyond  September  30, 2007,  the advisor has  committed to review the
          continuance of waiver/expense  reimbursement arrangements by September
          30, 2007.

(16)      Through  February 29, 2008,  the Advisor has  contractually  agreed to
          waive all or a portion  of its  management  fee and  reimburse  or pay
          operating expenses of the fund to the extent necessary to maintain the
          fund's total annual operating expenses at a ratio no higher than 1.06%
          for Class S shares,  excluding  certain expenses such as extraordinary
          expenses,  taxes, brokerage,  interest,  proxy, and organizational and
          offering expenses.

(17)      Through  September 30, 2007, the Advisor has  contractually  agreed to
          waive all or a portion  of its  management  fee and  reimburse  or pay
          operating expenses of the fund to the extent necessary to maintain the
          fund's total operating expenses at 1.40% for Class S shares, excluding
          certain expenses such as  extraordinary  expenses,  taxes,  brokerage,
          interest,  proxy, and organizational  and offering expenses.  Although
          there can be no assurances  that the current fee  waiver/reimbursement
          arrangement will be maintained  beyond September 30, 2007, the Advisor
          has  committed  to  review  the  continuance  of  waiver/reimbursement
          arrangements by September 30, 2007.

(18)      Through  September 30, 2007, the Advisor has  contractually  agreed to
          waive all or a portion  of its  management  fee and  reimburse  or pay
          certain  operating  expenses   (excluding  certain  expenses  such  as
          extraordinary expenses, taxes, brokerage,  interest and organizational
          and offering  expenses) to the extent necessary to maintain the annual
          expenses  of Class S shares at 0.56% of the Fund's  average  daily net
          assets.  Although  there can be no  assurances  that the  current  fee
          waiver/expense  reimbursement


                                       73
<PAGE>

         arrangement  will be maintained  beyond September 30, 2007, the Advisor
         has committed to review the continuance of waiver/expense reimbursement
         arrangements by September 30, 2007.

(19)     Through  September 30, 2007,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         operating  expenses of the fund to the extent necessary to maintain the
         fund's total operating expenses at 1.29% for Class S, excluding certain
         expenses such as extraordinary expenses,  taxes,  brokerage,  interest,
         organizational  and offering  expenses,  and proxy  expenses.  Although
         there  can  be  no  assurances  that  the  current  fee  waiver/expense
         reimbursement arrangement will be maintained beyond September 30, 2007,
         the Advisor has committed to review the  continuance of  waiver/expense
         reimbursement arrangements by September 30, 2007.

(20)     Through March 13, 2008, the Advisor has  contractually  agreed to waive
         all or a portion of its  management  fee and reimburse or pay operating
         expenses of the fund to the extent  necessary  to  maintain  the fund's
         total  operating  expenses  at 1.11% for  Institutional  Class  shares,
         excluding  certain  expenses  such as  extraordinary  expenses,  taxes,
         brokerage, interest, proxy, and organizational and offering expenses.

(21)     Through May 1, 2008, the Advisor has contractually  agreed to waive all
         or a portion  of its  management  fee and  reimburse  or pay  operating
         expenses of the fund to the extent  necessary  to  maintain  the fund's
         total  annual  operating  expenses  at a ratio no higher than 0.58% for
         Institutional   Class  shares,   excluding  certain  expenses  such  as
         extraordinary expenses,  taxes, brokerage,  interest and organizational
         and offering expenses.

(22)     Through  September 30, 2007,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         operating  expenses of the fund to the extent necessary to maintain the
         fund's  total  operating  expenses  at 0.50%  for  Institutional  Class
         shares,  excluding  certain  expenses such as  extraordinary  expenses,
         taxes,  brokerage,  interest,  proxy and  organizational  and  offering
         expenses.

(23)     Through May 15, 2008, the Advisor has contractually agreed to waive all
         or a portion  of its  management  fee and  reimburse  or pay  operating
         expenses of the fund to the extent  necessary  to  maintain  the fund's
         total  operating  expenses  at 0.65% for  Institutional  Class  shares,
         excluding  certain  expenses  such as  extraordinary  expenses,  taxes,
         brokerage,  interest,  and  organizational  and  offering  expenses and
         proxy.

(24)     Through  September 30, 2007,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         certain  operating  expenses  of the fund to the  extent  necessary  to
         maintain the fund's total operating expenses at 0.91% for Institutional
         Class shares excluding certain expenses such as extraordinary expenses,
         taxes, brokerage, interest and organizational and offering expenses.

(25)     From  October 1, 2007  through  February  29,  2008,  the  Advisor  has
         contractually  agreed to waive all or a portion of its  management  fee
         and  reimburse  or pay  certain  operating  expenses of the Fund to the
         extent  necessary to maintain the Fund's  total  operating  expenses at
         ratio no higher than 1.09% for  Institutional  Class  shares  excluding
         certain  expenses such as  extraordinary  expenses,  taxes,  brokerage,
         interest and organizational and offering expenses.

(26)     Through  February 28,  2009,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         certain  operating  expenses  of the Fund to the  extent  necessary  to
         maintain the Fund's total operating expenses at 1.00% excluding certain
         expenses such as extraordinary expenses, taxes, brokerage, interest and
         organizational and offering expenses.

(27)     Through October 20, 2009, the Advisor has contractually agreed to waive
         all or a portion of its  management  fee and  reimburse  or pay certain
         operating  expenses of the Fund to the extent necessary to maintain the
         Fund's  total  operating  expenses  at 0.83%  for  Institutional  Class
         shares,  excluding  certain  expenses such as  extraordinary  expenses,
         taxes, brokerage, interest and organizational and offering expenses.

                                       74
<PAGE>

(28)      The Advisor has  contractually  agreed  through  September 30, 2007 to
          waive a  portion  of its fees and  reimburse  expenses  so that  total
          annual  operating  expenses will not exceed 0.65%,  excluding  certain
          expenses such as extraordinary expenses,  taxes,  brokerage,  interest
          and organizational and offering expenses and proxy expenses.

(29)      The Advisor has contractually agreed through January 31, 2008 to waive
          a portion of its fees and  reimburse  expenses  so that  total  annual
          operating  expenses will not exceed 0.75%,  excluding certain expenses
          such  as  extraordinary  expenses,  taxes,  brokerage,   interest  and
          organizational and offering expenses and proxy expenses.

(30)      The Advisor has  contractually  agreed  through  September 30, 2007 to
          waive a portion of its fees and reimburse  expenses to maintain  total
          annual  operating  expenses at 0.92% for  Institutional  Class shares,
          excluding  certain  expenses such as  extraordinary  expenses,  taxes,
          brokerage,  interest,  proxy and organizational and offering expenses.
          Although  there can be no assurances  that the current  waiver/expense
          reimbursement  arrangement  will be  maintained  beyond  September 30,
          2007,  the  Advisor  has  committed  to  review  the   continuance  of
          waiver/expense reimbursement arrangements by September 30, 2007.

(31)      Through  September 30, 2007, the Advisor has  contractually  agreed to
          waive all or a portion  of its  management  fee and  reimburse  or pay
          operating expenses of the fund to the extent necessary to maintain the
          fund's  total  operating  expenses  at 1.26% for  Institutional  Class
          shares,  excluding  certain expenses such as  extraordinary  expenses,
          taxes, brokerage, interest, and organizational and offering expenses.

(32)      Through March 31, 2008, the Advisor has contractually  agreed to waive
          all or a portion of its  management  fee and  reimburse or pay certain
          operating expenses of the Fund to the extent necessary to maintain the
          fund's  total  operating  expenses  at 0.65% for  Institutional  Class
          shares,  excluding  certain expenses such as  extraordinary  expenses,
          taxes, brokerage, interest and organizational and offering expenses.

(33)      Through  September 30, 2007, the Advisor has  contractually  agreed to
          waive all or a portion  of its  management  fee and  reimburse  or pay
          operating expenses of the fund to the extent necessary to maintain the
          fund's total operating expenses at 1.60% for Class S shares, excluding
          certain expenses such as  extraordinary  expenses,  taxes,  brokerage,
          interest,  proxy and organizational  and offering  expenses.  Although
          there  can  be  no   assurances   that  the   current   waiver/expense
          reimbursement  arrangement  will be  maintained  beyond  September 30,
          2007,  the  Advisor  has  committed  to  review  the   continuance  of
          waiver/expense reimbursement arrangements by September 30, 2007.

(34)      The Advisor has agreed through  January 31, 2008 to waive a portion of
          its fee and reimburse  expenses so that total annual operating expense
          will not  exceed  1.38%  for  Institutional  Class  shares,  excluding
          certain expenses such as  extraordinary  expenses,  taxes,  brokerage,
          interest, organization and offering expenses, and proxy expenses.

(35)      The Advisor has contractually  agreed to waive their fees or reimburse
          expenses until January 31, 2009 so that total operating  expenses will
          not exceed 1.00%,  excluding  certain  expenses such as  extraordinary
          expenses,  interest,  brokerage,  taxes,  organizational  and offering
          expenses, and proxy.

(36)      For three  years  from the  commencement  of  operations  of the share
          class, the Advisor has contractually  agreed to waive all or a portion
          of its management  fee and reimburse or pay operating  expenses of the
          fund to the extent  necessary  to  maintain  the fund's  total  annual
          operating  expenses at ratios no higher than 0.96% for Class A shares,
          1.67%  for Class B shares  and  1.60%  for  Class C shares,  excluding
          certain expenses such as extraordinary expenses,  taxes, brokerage and
          interest,  taxes.(37)  Through July 29, 2010,  the  administrator  has
          contractually  agreed to waive all or a portion of its  administration
          fee and reimburse or pay operating  expenses of the fund to the extent
          necessary  to  maintain  the fund's  operating  expenses  at 0.15% for
          Institutional Shares, excluding certain expenses such as extraordinary
          expenses,  taxes,  proxy,  brokerage,  interest and organizational and
          offering expenses.

                                       75
<PAGE>

(38)     Through  September 30, 2007,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         operating  expenses of the fund to the extent necessary to maintain the
         fund's  total  operating  expenses  at 1.35%  for  Institutional  Class
         shares,  excluding  certain  expenses such as  extraordinary  expenses,
         taxes,  brokerage,  interest,  proxy and  organizational  and  offering
         expenses.  Although  there  can  be  no  assurances  that  the  current
         waiver/expense  reimbursement  arrangement  will be  maintained  beyond
         September 30, 2007, the Advisor has committed to review the continuance
         of waiver/expense reimbursement arrangements by September 30, 2007.

(39)     Through June 30, 2007,  the Advisor has  contractually  agreed to waive
         all or a portion of its  management  fee and  reimburse  or pay certain
         operating  expenses of the fund to the extent necessary to maintain the
         fund's  total  operating  expenses  at 1.35%  for  Institutional  Class
         shares,  excluding  certain  expenses such as  extraordinary  expenses,
         taxes,  brokerage,  interest,  proxy and  organizational  and  offering
         expenses.

(40)     Through  September 30, 2007,  the Advisor has  contractually  agreed to
         waive  all or a  portion  of its  fees  and  reimburse  or pay  certain
         operating  expenses of the fund,  including expenses allocated from the
         Portfolio,  to the extent  necessary  to maintain  the total  operating
         expenses at 0.39% for Class S shares,  excluding  certain expenses such
         as  extraordinary  expenses,  taxes,  brokerage,  interest,  proxy  and
         organizational and offering expenses.

(41)     Effective  October 1, 2007  through  April 30,  2008,  the  Advisor has
         contractually  agreed  to  waive  all  or a  portion  of its  fees  and
         reimburse or pay certain  operating  expenses  for the fund,  including
         expenses allocated from the Portfolio, so that total operating expenses
         will not exceed 0.44% for Class S shares,  excluding  certain  expenses
         such as extraordinary expenses,  taxes, brokerage,  interest, proxy and
         organizational and offering expenses.

(42)     Through  September 30, 2007,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         operating  expenses of the fund to the extent necessary to maintain the
         fund's total operating expenses at 0.96% for Class S shares,  excluding
         certain  expenses such as  extraordinary  expenses,  taxes,  brokerage,
         interest,  proxy, and organizational  and offering  expenses.  Although
         there   can  be  no   assurances   that  the   current   waiver/expense
         reimbursements  arrangements  will be maintained  beyond  September 30,
         2007,  the  Advisor  is  committed  to review the  continuance  of such
         waiver/expense reimbursements arrangements by September 30, 2007.

(43)     Through  February 28,  2009,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         operating  expenses of the fund to the extent necessary to maintain the
         fund's  total  operating  expenses  at a ratio no higher than 0.72% for
         Institutional   Class  shares,   excluding  certain  expenses  such  as
         extraordinary   expenses,   taxes,  brokerage,   interest,   proxy  and
         organizational and offering expenses.

(44)     Effective  October 1, 2006, 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 0.45% for Institutional Class shares, excluding certain expenses
         such as extraordinary expenses,  taxes, brokerage,  interest, proxy and
         organizational  and  offering   expenses.   This  voluntary  waiver  or
         reimbursement  may be  terminated  at any  time  at the  option  of the
         advisor.

(45)     The Advisor has  contractually  agreed  through  September  30, 2007 to
         waive a portion of its fees and reimburse expenses so that total annual
         operating expenses will not exceed 0.86% for Class S shares,  excluding
         certain  expenses such as  extraordinary  expenses,  taxes,  brokerage,
         interest and  organizational  and offering expenses and proxy expenses.
         Although  there can be no  assurances  that the current  waiver/expense
         reimbursement arrangement will be maintained beyond September 30, 2007,
         the  Advisor  is   committed   to  review  the   continuance   of  such
         waiver/expense reimbursement arrangements by September 30, 2007.

                                       76
<PAGE>

(46)      The Advisor has contractually  agreed to waive their fees or reimburse
          expenses until January 31, 2010 so that total operating  expenses will
          not exceed 1.00%  excluding  certain  expenses  such as  extraordinary
          expenses,  interest,  brokerage,  taxes,  organizational  and offering
          expenses and proxy expenses.

(47)      Through  September 30, 2007, the Advisor has  contractually  agreed to
          waive all or a portion  of its  management  fee and  reimburse  or pay
          operating expenses of the fund to the extent necessary to maintain the
          fund's total annual operating expenses at a ratio no higher than 1.09%
          for Class S shares,  excluding  certain expenses such as extraordinary
          expenses,  taxes, brokerage,  interest and organizational and offering
          expenses.  Although  there  can  be no  assurances  that  the  current
          waiver/expense  reimbursement  arrangement  will be maintained  beyond
          September   30,  2007,   the  Advisor  has  committed  to  review  the
          continuance of waiver/expense  reimbursement arrangements by September
          30, 2007.

(48)      Through August 18, 2007, the Advisor has contractually agreed to waive
          all or a portion of its  management  fee and  reimburse or pay certain
          operating expenses of the Fund to the extent necessary to maintain the
          Fund's  total  operating  expenses  at 0.92% for  Institutional  Class
          shares,  excluding  certain expenses such as  extraordinary  expenses,
          taxes, brokerage, interest and organizational and offering expenses.

(49)      Through  December 31, 2007,  the Advisor has  contractually  agreed to
          waive all or a portion  of its  management  fee and  reimburse  or pay
          operating expenses of the fund to the extent necessary to maintain the
          fund's total operating  expenses at 0.63% for the Institutional  Class
          shares,  excluding  certain expenses such as  extraordinary  expenses,
          taxes,  brokerage,  interest and organizational and offering expenses.
          Although  there can be no assurances  that the current  waiver/expense
          reimbursement arrangement will be maintained beyond December 31, 2007,
          the Advisor has committed to review the continuance of  waiver/expense
          reimbursement arrangements by December 31, 2007.

The Advisor may serve as advisor to other funds with  investment  objectives and
policies  similar  to those  of a Fund  that  may  have  different  distribution
arrangements or expenses, which may affect performance.

Codes of Ethics

The Funds,  the Advisor and the Funds'  principal  underwriter have each adopted
codes of ethics under Rule 17j-1 under the 1940 Act. Board members,  officers of
the Trust and employees of the Advisor and principal  underwriter  are permitted
to make personal securities  transactions,  including transactions in securities
that  may be  purchased  or held  by the  Funds,  subject  to  requirements  and
restrictions  set forth in the applicable Code of Ethics.  The Advisor's Code of
Ethics  contains  provisions and  requirements  designed to identify and address
certain  conflicts of interest  between personal  investment  activities and the
interests  of the  Funds.  Among  other  things,  the  Advisor's  Code of Ethics
prohibits  certain types of  transactions  absent prior  approval,  imposes time
periods  during  which  personal   transactions  may  not  be  made  in  certain
securities,  and requires the submission of duplicate broker  confirmations  and
quarterly reporting of securities transactions. Additional restrictions apply to
portfolio  managers,  traders,  research  analysts  and others  involved  in the
investment  advisory  process.  Exceptions to these and other  provisions of the
Advisor's Code of Ethics may be granted in particular circumstances after review
by appropriate personnel.

                             FUND SERVICE PROVIDERS

Principal Underwriter

Pursuant to an Underwriting and Distribution  Services Agreement  ("Distribution
Agreement"),  DWS Scudder  Distributors,  Inc. ("DWS-SDI" or the "Distributor"),
222 South Riverside Plaza, Chicago, Illinois 60606, an affiliate of the Advisor,
is the principal  underwriter and distributor for the Class A, Class B and Class
C shares of each Fund and acts as agent of each Fund in the continuous  offering
of its shares.  The  Distribution  Agreement for each Fund, dated April 5, 2002,
was last approved by the Trustees on September 17, 2007.

The Distribution Agreement initially remained in effect until September 30, 2002
and continues in effect from year to year thereafter so long as such continuance
is approved for each class at least  annually by a vote of the Board of


                                       77
<PAGE>

Trustees of each Fund,  including the Trustees who are not interested persons of
each  Fund  and  who  have no  direct  or  indirect  financial  interest  in the
Agreement.  Each Distribution Agreement automatically terminates in the event of
its assignment and may be terminated for a class at any time without  penalty by
each Fund or by  DWS-SDI  upon 60 days'  notice.  Termination  by each Fund with
respect to a class may be by vote of (i) a majority of the Board members who are
not interested persons of each Fund and who have no direct or indirect financial
interest in the Distribution  Agreement,  or (ii) a "majority of the outstanding
voting securities" of the class of each Fund, as defined under the 1940 Act. All
material  amendments  must be  approved  by the Board of  Trustees in the manner
described  above  with  respect  to  the  continuation  of  the  Agreement.  The
provisions concerning continuation,  amendment and termination of a Distribution
Agreement are on a series by series and class-by-class basis.

DWS-SDI  bears  all  of its  expenses  of  providing  services  pursuant  to the
Distribution Agreement,  including the payment of any commissions. The Fund pays
the cost for the  prospectus and  shareholder  reports to be typeset and printed
for existing shareholders,  and DWS-SDI, as principal underwriter,  pays for the
printing and distribution of copies thereof used in connection with the offering
of shares to prospective  investors.  DWS-SDI also pays for supplementary  sales
literature  and  advertising  costs.  As indicated  under  "Purchase of Shares,"
DWS-SDI retains the sales charge upon the purchase of Class A shares and pays or
allows  concessions  or  discounts  to firms for the sale of the Funds'  shares.
DWS-SDI  receives no  compensation  from the Funds as principal  underwriter for
Class A  shares.  DWS-SDI  receives  compensation  from the  Funds as  principal
underwriter for Class B and Class C shares.

Shareholder and  administrative  services are provided to each Fund on behalf of
Class A, Class B and Class C shareholders under a Shareholder Services Agreement
(the "Services  Agreement") with DWS-SDI.  The Services  Agreement  continues in
effect from year to year so long as such continuance is approved for the Fund at
least  annually by a vote of the Board of the  applicable  Fund,  including  the
Board members who are not interested  persons of the Fund and who have no direct
or indirect financial interest in the Services Agreement. The Services Agreement
automatically terminates in the event of its assignment and may be terminated at
any time  without  penalty  by the  Fund or by  DWS-SDI  upon 60  days'  notice.
Termination  with  respect  to the  Class A, B or C shares of a Fund may be by a
vote of (i) the majority of the Board members of the Fund who are not interested
persons of the Fund and who have no direct or indirect financial interest in the
Services Agreement, or (ii) a "majority of the outstanding voting securities" of
the Class A, B or C shares,  respectively,  as defined  under the 1940 Act.  The
Services Agreement may not be amended for a class to increase materially the fee
to be paid by the Fund without approval of a majority of the outstanding  voting
securities of such class of the Fund,  and all material  amendments  must in any
event be approved by the Board of  Trustees in the manner  described  above with
respect to the continuation of the Services Agreement.

Under  the  Services   Agreement,   DWS-SDI  may  provide  or  appoint   various
broker-dealer  firms and other  service or  administrative  firms  ("firms")  to
provide  information  and services to investors  in a Fund.  Typically,  DWS-SDI
appoints  firms that provide  services  and  facilities  for their  customers or
clients who are  investors in a Fund.  Firms  appointed by DWS-SDI  provide such
office space and equipment,  telephone  facilities and personnel as is necessary
or beneficial  for providing  information  and services to their  clients.  Such
services and assistance may include,  but are not limited to,  establishing  and
maintaining   accounts  and   records,   processing   purchase  and   redemption
transactions, answering routine inquiries regarding a Fund, providing assistance
to clients in changing dividend and investment options, account designations and
addresses and such other administrative services as may be agreed upon from time
to time and permitted by applicable statute, rule or regulation.

DWS-SDI bears all of its expenses of providing  those  services  pursuant to the
Services Agreement,  including the payment of a service fee to firms (as defined
above).  As  indicated  under  "Rule  12b-1  Plans,"  below,   DWS-SDI  receives
compensation from the Funds for its services under the Services Agreement.

Rule 12b-1 Plans

Each Fund has  adopted a plan  pursuant to Rule 12b-1 under the 1940 Act (each a
"Rule 12b-1  Plan") that  provides for fees payable as an expense of the Class B
shares  and  Class C shares  that are used by  DWS-SDI  to pay for  distribution
services for those classes.  Pursuant to each Rule 12b-1 Plan,  shareholder  and
administrative  services  are provided to the  applicable  Fund on behalf of its
Class A, B and C shareholders under each Fund's Services


                                       78
<PAGE>

Agreement  with  DWS-SDI.  Because  12b-1 fees are paid out of Fund assets on an
ongoing basis, they will, over time,  increase the cost of an investment and may
cost more than other types of sales charges.

Expenses  of the Funds paid in  connection  with the Rule  12b-1  Plans for each
class of shares include  advertising  and  literature,  prospectus  printing for
prospective investors, marketing and sales expenses,  miscellaneous expenses and
interest  expenses.  A portion of the marketing and sales and operating expenses
could be considered overhead expenses.

The Rule  12b-1  distribution  plans  for  Class B and  Class C  shares  provide
alternative methods for paying sales charges and may help Funds grow or maintain
asset levels to provide  operational  efficiencies and economies of scale.  Rule
12b-1  service  plans  provide  compensation  to DWS-SDI or  intermediaries  for
post-sales  servicing.  Since  each  Distribution  Agreement  provides  for fees
payable as an expense of the Class B shares and the Class C shares that are used
by DWS-SDI to pay for distribution and services for those classes, the agreement
is  approved  and  reviewed  separately  for the Class B shares  and the Class C
shares in  accordance  with Rule 12b-1 under the 1940 Act,  which  regulates the
manner in which an  investment  company may,  directly or  indirectly,  bear the
expenses of  distributing  its shares.  The  Distribution  Agreement  may not be
amended to increase the fee to be paid by a Fund with respect to a class without
approval by a majority of the outstanding voting securities of such class of the
Fund. Similarly,  the Services Agreement is approved and reviewed separately for
the Class A shares,  Class B shares and Class C shares in  accordance  with Rule
12b-1.

If a Rule 12b-1 Plan is terminated in accordance with its terms,  the obligation
of the  applicable  Fund to make payments to DWS-SDI  pursuant to the Rule 12b-1
Plan will  cease  and the Fund will not be  required  to make any  payments  not
previously accrued past the termination date. Thus, there is no legal obligation
for a Fund to pay any expenses  incurred by DWS-SDI  other than fees  previously
accrued  and payable  under a Rule 12b-1 Plan,  if for any reason the Rule 12b-1
Plan is  terminated  in  accordance  with its terms.  Future fees under the Rule
12b-1  Plan may or may not be  sufficient  to  cover  DWS-SDI  for its  expenses
incurred. On the other hand, under certain circumstances,  DWS-SDI might collect
in the  aggregate  over  certain  periods more in fees under the Rule 12b-1 Plan
than it has expended  over that same period in providing  distribution  services
for a Fund. In connection with Class B shares, for example,  if shares of a Fund
were to  appreciate  (resulting  in greater  asset base against which Rule 12b-1
fees are charged) and sales of the Fund's  shares were to decline  (resulting in
lower  expenditures  by DWS-SDI  under the Rule 12b-1 Plan),  fees payable could
exceed expenditures.  This may also happen over certain periods shorter than the
life of the Rule 12b-1 Plan  simply due to the timing of  expenses  incurred  by
DWS-SDI that is not matched to the timing of revenues  received  (e.g.,  a sales
commission may be paid by DWS-SDI  related to an investment in year 1, while the
Rule 12b-1 fee to DWS-SDI  related to that  investment  may accrue during year 1
through year 6 prior to  conversion of the  investment to Class A shares).  As a
result,  if DWS-SDI's  expenses are less than the Rule 12b-1 fees,  DWS-SDI will
retain its full fees and make a profit.

Distribution  Services:  Class B and Class C Shares.  For its services under the
Distribution  Agreement,  DWS-SDI  receives  a fee from each Fund under its Rule
12b-1 Plan,  payable  monthly,  at the annual rate of 0.75% of average daily net
assets of the Fund attributable to its Class B shares. This fee is accrued daily
as an expense of Class B shares.  DWS-SDI also receives any contingent  deferred
sales charges paid with respect to Class B shares. DWS-SDI currently compensates
firms for sales of Class B shares at a commission rate of 3.75%.

For its services under the Distribution  Agreement,  DWS-SDI receives a fee from
each Fund under its Rule 12b-1  Plan,  payable  monthly,  at the annual  rate of
0.75% of average  daily net assets of the Fund  attributable  to Class C shares.
This fee is accrued  daily as an expense  of Class C shares.  DWS-SDI  currently
advances  to firms the  first  year  distribution  fee at a rate of 0.75% of the
purchase price of Class C shares.  Effective January 1, 2006,  DWS-SDI no longer
advances the first year distribution fee to firms for sales of Class C shares to
employer sponsored  employee benefit plans using the OmniPlus  subaccount record
keeping system made  available  through ADP, Inc. under an alliance with DWS-SDI
and its  affiliates.  For periods after the first year,  DWS-SDI  currently pays
firms for sales of Class C shares a distribution fee, payable  quarterly,  at an
annual rate of 0.75% of net assets attributable to Class C shares maintained and
serviced by the firm.  This fee  continues  until  terminated  by DWS-SDI or the
applicable  Fund.  DWS-SDI also receives any  contingent  deferred sales charges
paid with respect to Class C shares.

                                       79
<PAGE>

Shareholder  Services.  For its services under the Services  Agreement,  DWS-SDI
receives a  shareholder  services  fee from each Fund  under a Rule 12b-1  Plan,
payable  monthly,  at an  annual  rate of up to 0.25% of the  average  daily net
assets of Class A, B and C shares of that Fund.

With respect to Class A Shares of a Fund,  DWS-SDI pays each firm a service fee,
payable  quarterly,  at an annual  rate of up to 0.25% of the net assets in Fund
accounts  that it  maintains  and services  attributable  to Class A shares of a
Fund,  commencing with the month after  investment.  With respect to Class B and
Class C shares of a Fund,  DWS-SDI  currently  advances to firms the  first-year
service  fee at a rate of up to 0.25%  of the  purchase  price  of such  shares.
Effective January 1, 2006, DWS-SDI no longer advances the first year service fee
to firms for  sales of Class C shares to  employer  sponsored  employee  benefit
plans using the OmniPlus subaccount record keeping system made available through
ADP, Inc. under an alliance with DWS-SDI and its  affiliates.  For periods after
the first year,  DWS-SDI  currently intends to pay firms a service fee at a rate
of up to  0.25%  (calculated  monthly  and  paid  quarterly)  of the net  assets
attributable  to Class B and Class C shares of a Fund maintained and serviced by
the firm. Firms to which service fees may be paid include affiliates of DWS-SDI.
In  addition  DWS-SDI  may,  from time to time,  pay  certain  firms from it own
resources additional amounts for ongoing administrative  services and assistance
provided to their customers and clients who are shareholders of a Fund.

DWS-SDI also may provide  some of the above  services and may retain any portion
of the fee under the Services  Agreement not paid to firms to compensate  itself
for shareholder or administrative functions performed for a Fund. Currently, the
shareholder  services  fee payable to DWS-SDI is payable at an annual rate of up
to 0.25% of net  assets  based  upon Fund  assets in  accounts  for which a firm
provides  administrative  services and at the annual rate of 0.15% of net assets
based upon Fund assets in accounts  for which there is no firm of record  (other
than DWS-SDI) listed on a Fund's records. The effective shareholder services fee
rate to be charged  against all assets of each Fund while this  procedure  is in
effect will depend upon the  proportion  of Fund assets that is held in accounts
for  which a firm of record  provides  shareholder  services.  The Board of each
Fund,  in its  discretion,  may approve  basing the fee to DWS-SDI at the annual
rate of 0.25% on all Fund assets in the future.

Certain  Trustees or officers of the Funds are also Directors or officers of the
Advisor or DWS-SDI, as indicated under "Officers and Trustees."

Expenses  of the Funds paid in  connection  with the Rule  12b-1  Plans for each
class of shares are set forth below.  A portion of the  marketing  and sales and
operating expenses shown below could be considered overhead expenses.  Since DWS
LifeCompass  2040 Fund has not yet  commenced  operations as of the date of this
Statement of Additional Information,  the Fund does not have any Rule 12b-1 data
to report.

                                       80
<PAGE>

<TABLE>
<CAPTION>
                          Compensation to Underwriter and Firms
                                   for Calendar Year 2006

                                         12b-1 Fees                             Compensation
                       12b-1 Fees       (Shareholder     Compensation Paid     Paid by DWS-SDI
                     (Distribution     Servicing Fee)        by DWS-SDI         to Firms from
                     Fee) Paid to          Paid            to Firms from        Shareholder
                        DWS-SDI          to DWS-SDI       Distribution Fee      Servicing Fee
                        -------          ----------       ----------------      -------------
<S>                      <C>                      <C>                    <C>            <C>
DWS LifeCompass Retirement Fund
  Class A                       NA            $779                   NA              $90,510
  Class B                  $53,199            $181              $29,074              $16,050
  Class C                  $75,276             $16           $85,086(1)              $21,066

DWS LifeCompass 2015 Fund
  Class A                       NA          $1,318                   NA             $233,310
  Class B                 $182,357            $417              $82,371              $43,192
  Class C                 $247,283             $76          $260,199(1)              $60,942

DWS LifeCompass 2020 Fund
  Class A                       NA          $1,462                   NA             $192,278
  Class B                 $217,432            $280             $129,532              $50,383
  Class C                 $261,793             $69          $279,936(1)              $66,301

DWS LifeCompass 2030 Fund
  Class A                        NA           $663                   NA              $29,156
  Class B                   $19,020            $31              $31,391               $5,275
  Class C                   $52,597            $41           $61,921(1)              $11,663







                                         Other Distribution Expenses Paid by
                                         Underwriter for Calendar Year 2006
                         Advertising,
                            Sales,
                          Literature
                             and                                         Postage
                         Promotional     Prospectus    Marketing and      and         Interest
                          Materials       Printing     Sales Expenses    Mailing      Expenses
                          ---------       --------     --------------    -------      --------

DWS LifeCompass Retirement Fund
  Class A                        NA             NA             NA           NA            NA
  Class B                        $0             $0             $0           $0        $7,062
  Class C                        $0             $0             $0           $0            $0

DWS LifeCompass 2015 Fund
  Class A                        NA             NA              NA          NA            NA
  Class B                        $0             $0              $0          $0       $10,606
  Class C                        $0             $0              $0          $0            $0

DWS LifeCompass 2020 Fund
  Class A                        NA             NA              NA          NA            NA
  Class B                        $0             $0              $0          $0       $17,579
  Class C                        $0             $0              $0          $0            $0

DWS LifeCompass 2030 Fund
  Class A                        NA             NA              NA          NA            NA
  Class B                        $0             $0              $0          $0        $3,680
  Class C                        $0             $0              $0          $0            $0
</TABLE>

(1) Adjusted to include sales commission expense  inadvertently omitted for June
2005 to September 2006.


                                       81
<PAGE>


Independent Registered Public Accounting Firm and Reports to Shareholders

The financial  highlights of each Fund included in the Funds' prospectus and the
Financial  Statements  incorporated by reference in this Statement of Additional
Information  have been so included or  incorporated  by reference in reliance on
the report of PricewaterhouseCoopers LLP, 125 High Street, Boston, Massachusetts
02110, an independent  registered public accounting firm, given on the authority
of said firm as  experts  in  auditing  and  accounting.  PricewaterhouseCoopers
audits the financial  statements of the Funds and provides other audit,  tax and
related services.  Shareholders will receive annual audited financial statements
and semi-annual unaudited financial statements.

Legal Counsel

Ropes & Gray LLP, One International Place,  Boston,  Massachusetts 02110, serves
as legal counsel to each Fund and its Independent Trustees.

Custodian, Transfer Agent and Shareholder Service Agent

State Street Bank and Trust  Company (the  "Custodian"  or "SSB"),  225 Franklin
Street, Boston, Massachusetts 02110, as custodian, has custody of all securities
and cash of the Funds. The Custodian  attends to the collection of principal and
income, and payment for and collection of proceeds of securities bought and sold
by the Funds.  The custodian's fee may be reduced by certain earnings credits in
favor of each Fund.

DWS Scudder Investment Service Company  ("DWS-SISC" or the "Transfer Agent") 210
West 10th  Street,  Kansas  City,  Missouri,  64105-2005,  an  affiliate  of the
Advisor,  is the Funds'  transfer agent and dividend paying agent for the Funds'
Class A, B and C Shares.

The Transfer  Agent receives an annual service fee for each account of the Fund,
based on the type of account.  For open retail  accounts,  the fee is a flat fee
ranging from $20.00 to $27.50 per account,  for open  wholesale  money funds the
fee is $32.50 per account, while for certain retirement accounts serviced on the
recordkeeping system of ADP, Inc., the fee is a flat fee up to $3.46 per account
(as of October  2006,  indexed to  inflation)  plus an asset  based fee of up to
0.25% of  average  net  assets.  1/12th of the  annual  service  charge for each
account is  charged  and  payable to the  Transfer  Agent each  month.  A fee is
charged for any account  which at any time during the month had a share  balance
in the  Fund.  Smaller  fees are also  charged  for  closed  accounts  for which
information  must be retained on the Transfer Agent's system for up to 18 months
after closing for tax reporting purposes.

Certain  out-of-pocket  expenses  incurred  by  the  Transfer  Agent,  including
expenses of printing and mailing  routine fund  disclosure  documents,  costs of
record retention and transaction  processing costs are reimbursed by the Fund or
are paid  directly  by the  Fund.  Certain  additional  out-of-pocket  expenses,
including costs of computer  hardware and software,  third party  record-keeping
and processing of proxy statements,  may only be reimbursed by the Fund with the
prior approval of the Fund's Board.

Effective April 1, 2007, DWS Scudder Investments Service Company is the Transfer
Agent for all classes of all DWS funds.

DWS LifeCompass  Retirement Fund: For the fiscal year ended August 31, 2005, the
amount  charged by SISC  aggregated  $102,652 (of which $63,961 was not imposed)
for Class A shares;  $31,457  (of which  $22,311  was not  imposed)  for Class B
shares and $13,082 (of which $5,651 was not imposed) for Class C shares. For the
fiscal year ended August 31,  2006,  the amount  charged by DWS-SISC  aggregated
$142,349 (of which  $102,514  was waived) for Class A shares,  $29,015 (of which
$22,729 was waived) for Class B shares, $15,606 (of which $9,149 was waived) for
Class C shares. For the fiscal year ended August 31, 2007, the amount charged by
SISC aggregated $66,681 (of which $5,317 was waived) for Class A shares,  $6,185
for Class B shares and $10,917 (of which $6,237 was waived) for Class C shares.

                                       82
<PAGE>

DWS LifeCompass 2015 Fund: For the fiscal year ended August 31, 2005, the amount
charged by SISC  aggregated  $382,845  (of which  $197,067  was not imposed) for
Class A shares;  $46,711 (of which  $10,338 was not  imposed) for Class B shares
and $27,913 for Class C shares.  For the fiscal year ended August 31, 2006,  the
amount  charged by DWS-SISC  aggregated  $403,301 (of which $199,517 was waived)
for Class A shares,  $52,718  (of which  $12,169 was waived) for Class B shares,
$43,958 (of which  $1,359 was  waived)  for Class C shares.  For the fiscal year
ended August 31, 2007, the amount charged by SISC aggregated  $210,437 (of which
$42,756 was waived) for Class A shares, $39,304 (of which $8,526 was waived) for
Class B shares and $40,834 (of which $6,019 was waived) for Class C shares.

DWS LifeCompass 2020 Fund: For the fiscal year ended August 31, 2005, the amount
charged by DWS-SISC  aggregated $223,455 (of which $109,889 was not imposed) for
Class A shares;  $70,507 (of which  $35,092 was not  imposed) for Class B shares
and  $46,530  (of which  $16,533 was not  imposed)  for Class C shares.  For the
fiscal year ended August 31,  2006,  the amount  charged by DWS-SISC  aggregated
$222,493 (of which  $115,739  was waived) for Class A shares,  $56,508 (of which
$26,728 was waived)  for Class B shares,  $48,439 (of which  $15,012 was waived)
for Class C shares.  For the fiscal  year  ended  August  31,  2007,  the amount
charged by SISC  aggregated  $208,044 (of which  $48,894 was waived) for Class A
shares, $51,119 (of which $17,294 was waived) for Class B shares and $56,192 (of
which $17,223 was waived) for Class C shares.

DWS  LifeCompass  2030 Fund:  For the fiscal  period ended August 31, 2005,  the
amount charged by DWS-SISC  aggregated  $5,366 (of which $5,366 was not imposed)
for Class A shares;  $1,492 (of which $1,492 was not imposed) for Class B shares
and $1,908 (of which $1,073 was not imposed) for Class C shares.  For the fiscal
year ended August 31, 2006,  the amount charged by DWS-SISC  aggregated  $20,169
(of which  $18,381 was waived) for Class A shares,  $5,220 (of which  $4,314 was
waived)  for Class B shares,  $11,308  (of which  $9,426 was waived) for Class C
shares.  For the fiscal year ended August 31, 2007,  the amount  charged by SISC
aggregated $30,445 (of which $28,937 was waived) for Class A shares,  $7,457 (of
which  $7,457 was waived)  for Class B shares and $14,368 (of which  $14,368 was
waived) for Class C shares.

DWS LifeCompass 2040 Fund: Because the Fund has not yet commenced  operations as
of the date of this Statement of Additional Information,  the Fund does not have
any historical transfer agency fee information to report.

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

The Funds, 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 held in an
omnibus account.

Regulatory Matters and Legal Proceedings

On December 21, 2006,  Deutsche Asset Management  ("DeAM")  settled  proceedings
with the  Securities and Exchange  Commission  ("SEC") and the New York Attorney
General on behalf of Deutsche  Asset  Management,  Inc.  ("DAMI") and DIMA,  the
investment advisors to many of the DWS Scudder funds,  regarding  allegations of
improper  trading of fund  shares at DeAM and at the legacy  Scudder  and Kemper
organizations prior to their acquisition by DeAM in April 2002. These regulators
alleged that although the prospectuses for certain funds in the regulators' view
indicated  that the funds did not permit market  timing,  DAMI and DIMA breached
their  fiduciary  duty to those  funds in that their  efforts  to limit  trading
activity in the funds were not effective at certain times.  The regulators  also
alleged that DAMI and DIMA  breached  their  fiduciary  duty to certain funds by
entering into certain market timing  arrangements with investors.  These trading
arrangements  originated  in  businesses  that  existed  prior to the  currently
constituted  DeAM  organization,  which  came  together  as a result of  various
mergers of the legacy Scudder,  Kemper and Deutsche fund groups,  and all of the
arrangements were terminated prior to the start of the regulatory investigations
that  began in the summer of 2003.  No  current  DeAM  employee  approved  these
trading arrangements.  Under the terms of the settlements, DAMI and DIMA neither
admitted nor denied any wrongdoing.

                                       83
<PAGE>

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 funds and/or 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")  announced  final  agreements  in  which  Deutsche  Investment
Management Americas Inc. ("DIMA"),  Deutsche Asset Management, Inc. ("DAMI") and
Scudder  Distributors,  Inc. ("DWS-SDI") (now known as DWS Scudder Distributors,
Inc.)  settled  administrative  proceedings  regarding  disclosure  of brokerage
allocation  practices in connection  with sales of the Scudder Funds' (now known
as the DWS Scudder Funds) shares during  2001-2003.  The agreements with the SEC
and NASD are reflected in orders which state, among other things,  that DIMA and
DAMI failed to disclose potential conflicts of interest to the funds' Boards and
to  shareholders   relating  to  DWS-SDI's  use  of  certain  funds'   brokerage
commissions to reduce revenue sharing costs to broker-dealer  firms with whom it
had  arrangements to market and distribute  Scudder Fund shares.  These directed
brokerage practices were discontinued in October 2003.

Under the terms of the  settlements,  in which DIMA,  DAMI and  DWS-SDI  neither
admitted  nor denied any of the  regulators'  findings,  DIMA,  DAMI and DWS-SDI
agreed to pay  disgorgement,  prejudgment  interest  and civil  penalties in the
total amount of $19.3 million. The portion of the settlements distributed to the
funds was approximately $17.8 million and was paid to the funds as prescribed by
the settlement  orders based upon the amount of brokerage  commissions from each
fund used to satisfy revenue sharing  agreements  with  broker-dealers  who sold
fund shares.

As part of the  settlements,  DIMA,  DAMI and DWS-SDI  also agreed to  implement
certain measures and undertakings relating to revenue sharing payments including
making  additional  disclosures  in the funds'


                                       84
<PAGE>

Prospectuses  or  Statements of  Additional  Information,  adopting or modifying
relevant  policies and  procedures and providing  regular  reporting to the fund
Boards.

Additional  information announced by DeAM regarding the terms of the settlements
is available at www.dws-scudder.com/regulatory_settlements.

The matters alleged in the regulatory  settlements described above also serve as
the general basis of a number of private class action lawsuits involving the DWS
funds. These lawsuits name as defendants various persons,  including certain DWS
funds,  the  funds'  investment  advisors  and  their  affiliates,  and  certain
individuals,  including  in some cases fund  Trustees/Directors,  officers,  and
other parties.  Each DWS fund's  investment  advisor has agreed to indemnify the
applicable  DWS funds in connection  with these  lawsuits,  or other lawsuits or
regulatory actions that may be filed making similar allegations.

Based on currently available information, the funds' investment advisors believe
the likelihood that the pending lawsuits will have a material adverse  financial
impact on a DWS fund is remote and such  actions  are not  likely to  materially
affect their ability to perform  under their  investment  management  agreements
with the DWS funds.

                             PORTFOLIO TRANSACTIONS

Portfolio Transactions of the Underlying DWS Funds

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.

                                       85
<PAGE>

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

                                       86
<PAGE>

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.

Money  market  instruments  are normally  purchased  in  principal  transactions
directly from the issuer or from an underwriter  or market maker.  There usually
are no brokerage commissions paid by a fund for such purchases.  During the last
three fiscal years each fund paid no portfolio brokerage commissions.  Purchases
from  underwriters will include a commission or concession paid by the issuer to
the  underwriter,  and  purchases  from  dealers  serving as market  makers will
include the spread between the bid and asked prices.

During  the last  three  fiscal  years,  none of the  Funds  paid any  brokerage
commissions.

Each Fund is required to identify  any  securities  of its  "regular  brokers or
dealers"  (as such term is defined in the 1940 Act) that each Fund has  acquired
during the most recent  fiscal year.  As of August 31,  2007,  each Fund did not
hold securities of its regular brokers or dealers.

Portfolio Turnover

Portfolio  turnover  rate is  defined  by the SEC as the ratio of the  lesser of
sales or purchases to the monthly average value of such securities  owned during
the year,  excluding all securities  whose  remaining  maturities at the time of
acquisition were one year or less.

Higher levels of activity by a fund result in higher  transaction  costs and may
also  result  in  taxes on  realized  capital  gains  to be borne by the  fund's
shareholders.  Purchases and sales are made whenever necessary, in the Advisor's
discretion, to meet a fund's objective.

Portfolio turnover rates for the two most recent fiscal periods are as follows:

<TABLE>
<CAPTION>
                                                                        FY 2007        FY 2006
                                                                       Portfolio      Portfolio     FY 2005 Portfolio
                                                           Fiscal       Turnover    Turnover Rate    Turnover Rate
Name of Fund                                              Year End    Rate (%)(1)      (%)(1),(2)          (%)(2)
------------                                              --------    -----------      ----------          ------
<S>                                                         <C>            <C>            <C>              <C>
DWS LifeCompass Retirement Fund                             8/31           21             69               55
DWS LifeCompass 2015 Fund                                   8/31           21             52               35



                                       87
<PAGE>

                                                                        FY 2007        FY 2006
                                                                       Portfolio      Portfolio     FY 2005 Portfolio
                                                           Fiscal       Turnover    Turnover Rate    Turnover Rate
Name of Fund                                              Year End    Rate (%)(1)      (%)(1,2)          (%)(2)
Name of Fund                                              Year End    Rate (%)(1)      (%)(1),(2)          (%)(2)
------------                                              --------    -----------      ----------          ------

DWS LifeCompass 2020 Fund                                   8/31           22             59               31
DWS LifeCompass 2030 Fund                                   8/31           20             63               28*
DWS LifeCompass 2040 Fund                                   8/31         NA(a)          NA(a)             NA(a)
DWS Blue Chip Fund                                          10/31        NA(3)           259               329
DWS Capital Growth Fund                                     9/30         NA(3)            15               19
DWS Commodity Securities Fund                               6/30          117             80               36*
DWS Disciplined Market Neutral Fund                         8/31         450**          NA(b)             NA(b)
DWS Disciplined Long/Short Growth Fund                      4/30          229           NA(c)             NA(c)
DWS Disciplined Long/Short Value Fund                       4/30          227           NA(c)             NA(c)
DWS Large Cap Value Fund                                    11/30        NA(3)            76               56
DWS Emerging Markets Equity Fund                            10/31        NA(3)           145               126
DWS Emerging Markets Fixed Income Fund                      10/31        NA(3)           224               283
DWS Equity 500 Index Fund                                   12/31        NA(3)            4                 9
DWS Equity Partners Fund                                    5/31           13             10               11
DWS Value Builder Fund                                      3/31           11             19               17
DWS Communications Fund                                     12/31        NA(3)            27               21
DWS Core Fixed Income Fund                                  10/31        NA(3)          166(f)          162(f)(g)
DWS Floating Rate Plus Fund                                 4/30         NA(d)          NA(d)             NA(d)
DWS Global Thematic Fund                                    8/31          151            143               54
DWS Global Bond Fund                                        10/31        NA(3)           183               224
DWS Global Opportunities Fund                               10/31        NA(3)            29               31
DWS GNMA Fund                                               9/30         NA(3)          81(f)             105f)
DWS Gold & Precious Metals Fund                             10/31        NA(3)            69               53
DWS Europe Equity Fund                                      10/31        NA(3)           203               168
DWS Growth & Income Fund                                    9/30         NA(3)           101               98
DWS Health Care Fund                                        5/31           31             56               61
DWS High Income Fund                                        9/30         NA(3)           100               113
DWS High Income Plus Fund                                   10/31        NA(3)           100             109(g)
DWS Dreman Concentrated Value Fund                          11/30        NA(3)            38              5(h)
DWS Dreman High Return Equity Fund                          11/30        NA(3)            32                9
DWS Dreman Mid Cap Value Fund                               11/30        NA(3)            34              10(i)
DWS Core Plus Income Fund                                   1/31         150(f)         184(f)           156(f)
DWS Inflation Protected Plus Fund                           9/30         NA(3)           331               28*
DWS International Fund                                      8/31          110             76               57
DWS International Select Equity Fund                        10/31        NA(3)          140(g)           122(g)
DWS International Value Opportunities Fund                  8/31          127           7**(j)             --
DWS Japan Equity Fund                                       8/31           52            105               60
DWS Large Company Growth Fund                               7/31           23             16               20
DWS Large Cap Value Fund                                    11/30        NA(3)            76               56
DWS Latin America Equity Fund                               10/31        NA(3)            70               73
DWS Micro Cap Fund                                          9/30         NA(3)           100               108
DWS Mid Cap Growth Fund                                     9/30         NA(3)            53               83
DWS Money  Market  Prime  Series - DWS Cash                 7/31         --              --                 --
    Investment Trust (4)
DWS Money Market Series -- Institutional Shares (4)         12/31        --              --                 --
DWS RREEF Global Real Estate Securities Fund                12/31       28**(e)         NA(e)             NA(e)
DWS RREEF Real Estate Securities Fund                       12/31        NA(3)            60              66(g)
DWS S&P 500 Index Fund                                      12/31        NA(3)            4                 9
DWS Enhanced S&P 500 Index Fund                             2/28           81             85               64
DWS Short Duration Fund                                     10/31        NA(3)           198               161



                                       88
<PAGE>

                                                                        FY 2007        FY 2006
                                                                       Portfolio      Portfolio     FY 2005 Portfolio
                                                           Fiscal       Turnover    Turnover Rate    Turnover Rate
Name of Fund                                              Year End    Rate (%)(1)      (%)(1),(2)          (%)(2)
------------                                              --------    -----------      ----------          ------

DWS Short Duration Plus Fund                                9/30         NA(3)          129(k)             298
DWS Small Cap Growth Fund                                   9/30         NA(3)            74               119
DWS Small Cap Core Fund                                     9/30         NA(3)           205               198
DWS Small Cap Value Fund                                    7/31          109            117               90
DWS Dreman Small Cap Value Fund                             11/30        NA(3)            48               67
DWS Technology Fund                                         10/31        NA(3)            58               114
</TABLE>

(1)      As of each Underlying DWS Fund's most recent fiscal reporting period.

(2)      As of each Underlying DWS Fund's previous fiscal reporting period.

(3)      Fund has not yet filed its  fiscal  year  2007  financial  information,
         therefore information for fiscal year 2006 and 2005 are included.

(4)      DWS Money Market Series -- Institutional  Shares is a money market fund
         and by definition does not have a portfolio turnover rate.

*        Annualized

**       Not Annualized

(a)      Fund has not commenced  operations as of the date of this  Statement of
         Additional Information.

(b)      Commenced operations on October 16, 2006.

(c)      Commenced operations on November 16, 2006.

(d)      Commenced operations on June 29, 2007.

(e)      Commenced operations on July 5, 2006.

(f)      The  portfolio   turnover   rates   including   mortgage   dollar  roll
         transactions  were 289% and 300% for the periods  ended  September  30,
         2006  and 2005 for DWS GNMA  Fund;  151%,  196% and 190% for the  years
         ended January 31, 2007, 2006 and 2005 for DWS Core Plus Income Fund and
         173% and 177% for the years  ended  October  31,  2006 and 2005 for DWS
         Core Fixed Income Fund.

(g)      Excludes  portfolio  securities  delivered  as a result  of  processing
         redemption in-kind transactions.

(h)      Commenced operations on June 2, 2005.

(i)      Commenced operations on August 2, 2005.

(j)      Commenced operations on July 5, 2006.

(k)      On January 13, 2006,  the Scudder  Limited-Duration  Plus Portfolio was
         closed.  This  ratio  includes  the  purchase  and  sale  of  portfolio
         securities of the DWS Short Duration Plus Fund as a stand-alone fund in
         addition to the Scudder Limited-Duration Plus Portfolio.

For certain  Underlying DWS Funds, the increase in portfolio  turnover rates for
the  most  recent  fiscal  year was due to the  general  market  conditions  and
increased volatility.

                                       89
<PAGE>

                        PURCHASE OR REDEMPTION OF SHARES

General Information

Policies and procedures affecting  transactions in Fund shares can be changed at
any  time  without  notice,  subject  to  applicable  law.  Transactions  may be
contingent  upon proper  completion of application  forms and other documents by
shareholders  and their  receipt by the  Fund's  agents.  Transaction  delays in
processing (and changing account features) due to circumstances within or beyond
the  control  of the Fund and its  agents  may  occur.  Shareholders  (or  their
financial  service firms) are responsible for all losses and fees resulting from
bad checks,  cancelled orders or the failure to consummate transactions effected
pursuant to instructions reasonably believed to be genuine.

If  a  distribution   check  is  returned  to  the  Fund,  or  its  agents,   as
undeliverable;  such  distribution will be reinvested in shares of the same Fund
and class at the next  determined  net asset value after receipt by the Fund, or
its agents, of the returned distribution check.

Orders will be confirmed at a price based on the net asset value  (including any
applicable sales charge) of the Fund next determined after receipt in good order
by DWS-SDI of the order  accompanied  by payment.  However,  orders  received by
dealers or other  financial  services  firms prior to the  determination  of net
asset value and received in good order by DWS-SDI prior to the  determination of
net asset value will be  confirmed  at a price based on the net asset value next
determined after receipt by DWS-SDI ("trade date").

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 a fund's shares,
including higher minimum investments,  and may assess transaction or other fees.
Firms may arrange  with their  clients for other  investment  or  administrative
services.  Such firms may independently  establish and charge additional amounts
to their  clients for such  services.  Firms also may hold the Fund's  shares in
nominee or street  name as agent for and on behalf of their  customers.  In such
instances, the Fund's Transfer Agent will have no information with respect to or
control over the accounts of specific shareholders. Such shareholders may obtain
access to their  accounts and  information  about their accounts only from their
firm. Certain of these firms may receive  compensation from the Fund through the
Shareholder  Service Agent for  record-keeping  and other  expenses  relating to
these nominee  accounts.  In addition,  certain  privileges  with respect to the
purchase and  redemption of shares or the  reinvestment  of dividends may not be
available  through such firms.  Some firms may participate in a program allowing
them  access  to  their  clients'  accounts  for  servicing  including,  without
limitation,  transfers of  registration  and  dividend  payee  changes;  and may
perform functions such as generation of confirmation statements and disbursement
of cash  dividends.  Such firms,  including  affiliates of DWS-SDI,  may receive
compensation  from a Fund  through  the  Shareholder  Service  Agent  for  these
services.

The Funds have authorized one or more financial service institutions,  including
certain members of the Financial Industry  Regulatory  Authority ("FINRA") other
than  the  Distributor  ("financial  institutions"),   to  accept  purchase  and
redemption orders for each Fund's shares.  Such financial  institutions may also
designate other parties, including plan administrator intermediaries,  to accept
purchase and redemption  orders on each Fund's  behalf.  Orders for purchases or
redemptions  will be deemed to have been received by a Fund when such  financial
institutions or, if applicable,  their  authorized  designees accept the orders.
Subject  to  the  terms  of  the  contract  between  a Fund  and  the  financial
institution,  ordinarily  orders  will be priced at each  Fund's net asset value
next computed after  acceptance by such financial  institution or its authorized
designees and accepted by a Fund.  Further,  if purchases or redemptions of each
Fund's  shares are arranged and  settlement  is made at an  investor's  election
through any other authorized financial  institution,  that financial institution
may, at its discretion, charge a fee for that service. The Board of Trustees and
the  Distributor,  also a Fund's  principal  underwriter,  each has the right to
limit the amount of  purchases  by, and to refuse to sell to,  any  person.  The
Trustees and the  Distributor may suspend or terminate the offering of shares of
a Fund at any time for any reason.

                                       90
<PAGE>

DWS-SDI,  the Funds'  distributor,  has adopted an  Incentive  Plan (the "Plan")
covering   wholesalers   that  are  regional  vice   presidents   ("DWS  Scudder
Wholesalers"). Generally, DWS Scudder Wholesalers market shares of the DWS funds
to your financial advisor, who in turn may recommend that you purchase shares of
a DWS fund. The Plan is an incentive  program that combines a monthly  incentive
component  with a  quarterly  strategic  bonus  component.  Under the Plan,  DWS
Scudder  Wholesalers  will  receive a monetary  monthly  incentive  based on the
amount of sales generated from their marketing of the funds,  and that incentive
will differ depending on the product category of the fund. Each fund is assigned
to one of  four  product  categories  --  "Core,"  "Strategic,"  "Satellite"  or
"Non-CSS"  -- taking into  consideration,  among  other  things,  the  following
criteria,  where  applicable:

o        The fund's 3 year performance;

o        The fund's Morningstar rating;

o        Market size for the fund category;

o        The fund's size, including sales and redemptions of the fund's shares;

o        The length of time the fund's Portfolio Managers have managed the fund;
         and

o        The fund's consistency with DWS Scudder's branding.

This  information  and other factors are  presented to a committee  comprised of
representatives  from  various  groups  within  DWS  Scudder,  who  review  on a
quarterly basis the funds assigned to each product category described above, and
make any  changes to those  assignments  at that time.  No one  factor,  whether
positive or negative,  determines a fund's  placement in a given  category;  all
these factors together are considered, and the designation of funds in the Core,
Strategic and Satellite categories represents management's judgment based on the
above criteria.  In addition,  management may consider a fund's profile over the
course  of  several  review  periods  before  making  a change  to its  category
assignment.  These category assignments will be posted quarterly to the DWS fund
Web site at  www.dws-scudder.com,  approximately one month after the end of each
quarter.  DWS Scudder Wholesalers will receive the highest compensation for Core
and Strategic funds,  less for Satellite funds and the lowest for Non-CSS funds.
The level of compensation among these categories may differ significantly.

In the normal course of business,  DWS Scudder will from time to time  introduce
new funds into the DWS family of funds. As a general rule, all new funds will be
placed in the  Strategic  compensation  category  for a  minimum  period of four
consecutive quarters, and DWS Scudder Wholesalers will be paid at a rate that is
equivalent to that of the Core Fund  category.  After that four quarter  period,
each fund in the Strategic category will be reviewed by the committee and either
assigned to one of the three  categories  or  continued  as a Strategic  at that
time.

The prospect of receiving,  or the receipt of, additional  compensation by a DWS
Scudder  Wholesaler  under the Plan may provide an incentive to favor  marketing
the Core,  Strategic  or  Satellite  funds  over the  Non-CSS  funds.  The Plan,
however,  will not change the price that you pay for shares of the fund. The DWS
Scudder  Compliance  Department  monitors DWS Scudder Wholesaler sales and other
activity  in an  effort  to  detect  unusual  activity  in  the  context  of the
compensation  structure under the Plan. However,  investors may wish to take the
Plan  and the  product  category  of the  fund  into  account  when  considering
purchasing a fund or evaluating any recommendations relating to fund shares.

Telephone  and  Electronic  Transaction  Procedures.  Shareholders  have various
telephone,  Internet,  wire and other electronic privileges available. A 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.

                                       91
<PAGE>

QuickBuy and QuickSell. QuickBuy and QuickSell permits the transfer of money via
the Automated Clearing House System (minimum $50, maximum $250,000) from or to a
shareholder's bank, savings and loan, or credit union account in connection with
an additional  purchase or redemption of Fund shares.  Shares purchased by check
or through  QuickBuy and QuickSell or Direct  Deposit may not be redeemed  under
this privilege  until such shares have been owned for at least 10 calendar days.
QuickBuy and  QuickSell  cannot be used with  passbook  savings  accounts or for
certain tax-deferred plans such as IRAs.

Share  Pricing.  Purchases  will be filled without sales charge at the net asset
value per share next computed  after receipt of the  application  in good order.
Net asset  value  normally  will be  computed  for each class as of the close of
regular  trading on the New York Stock  Exchange  (the  "Exchange")  on each day
during which the Exchange is open for trading.  Orders  received after the close
of regular  trading on the Exchange will be executed at the next business  day's
net asset value.  If the order has been placed by a member of FINRA,  other than
the Distributor,  it is the  responsibility of the member broker,  rather than a
Fund,  to  forward  the  purchase  order to the  Transfer  Agent by the close of
regular trading on the Exchange.

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

o        Traditional,  Roth and Education IRAs. This includes Savings  Incentive
         Match Plan for  Employees  of Small  Employers  ("SIMPLE"),  Simplified
         Employee Pension Plan ("SEP") IRA accounts and prototype documents.

o        403(b)(7)  Custodial  Accounts.  This  type  of plan  is  available  to
         employees of most non-profit organizations.

o        Prototype  money  purchase  pension  and  profit-sharing  plans  may be
         adopted by employers.

Brochures  describing these plans as well as model defined benefit plans, target
benefit plans,  457 plans,  401(k) plans,  simple 401(k) plans and materials for
establishing them are available from the Shareholder Service Agent upon request.
Additional fees and transaction policies and procedures may apply to such plans.
Investors  should  consult with their own tax  advisors  before  establishing  a
retirement plan.

Purchases

The Funds  reserve the right to withdraw all or any part of the offering made by
their prospectuses and to reject purchase orders for any reason. Also, from time
to time, a 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
prospectus.

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

Financial Services Firms' Compensation. Banks and other financial services firms
may provide  administrative  services  related to order placement and payment to
facilitate  transactions in shares of a Fund for their clients,  and DWS-SDI may
pay  them a  transaction  fee up to the  level  of the  discount  or  commission
allowable or payable to dealers.

DWS-SDI may,  from time to time,  pay or allow to firms a 1%  commission  on the
amount  of  shares  of a Fund  sold  under  the  following  conditions:  (i) the
purchased  shares are held in a DWS  Scudder  IRA  account,  (ii) the shares are
purchased as a direct "roll over" of a distribution from a qualified  retirement
plan account  maintained on the


                                       92
<PAGE>

subaccount  record keeping system  maintained for DWS  Scudder-branded  plans by
ADP,  Inc.  under  an  alliance  with  DWS-SDI  and its  affiliates,  (iii)  the
registered  representative placing the trade is a member of Executive Council, a
group of persons  designated by DWS-SDI in acknowledgment of their dedication to
the employee  benefit plan area; and (iv) the purchase is not otherwise  subject
to a commission.

In addition to the discounts or commissions described herein and the prospectus,
DWS-SDI,  the Advisor or its affiliates may pay or allow  additional  discounts,
commissions or promotional  incentives,  in the form of cash, to firms that sell
shares of a Fund. In some instances, such amounts may be offered only to certain
firms that sell or are expected to sell during  specified  time periods  certain
minimum amounts of shares of the Fund, or other Funds underwritten by DWS-SDI.

Upon  notice to all  dealers,  DWS-SDI  may  re-allow  to dealers up to the full
applicable Class A sales charge during periods and for transactions specified in
such notice and such re-allowances may be based upon attainment of minimum sales
levels. During periods when 90% or more of the sales charge is re-allowed,  such
dealers  may be deemed to be  underwriters  as that term is  defined in the 1933
Act.

DWS-SDI may at its discretion  compensate  investment dealers or other financial
services  firms in  connection  with the sale of Class A shares  of the Funds in
accordance  with the Large  Order NAV  Purchase  Privilege  and one of the three
compensation schedules as follows:

<TABLE>
<CAPTION>
                                                      Compensation Schedule #2:
Compensation Schedule #1:                                    DWS Scudder                 Compensation Schedule #3:
Retail Sales and DWS Scudder Flex Plan(1)                Retirement Plans(2)            DWS Scudder Choice Plan(3)
--------------------------------------                   ----------------               -----------------------
                                 As a Percentage                   As a Percentage                     As a Percentage
                                        of           Amount of      of Net Asset    Amount of Shares    of Net Asset
Amount of Shares Sold            Net Asset Value    Shares Sold         Value             Sold              Value
---------------------            ---------------    -----------         -----             ----              -----
<S>                                    <C>                <C>            <C>              <C>                    <C>
                                                       Over $3                            All
$1 million to $3 million              1.00%            million         0.00%-0.50%        amounts           1.00%

Over $3 million to $50 million        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, DWS-SDI will
         consider the cumulative  amount invested by the purchaser in a Fund and
         other  DWS  Funds  including   purchases   pursuant  to  the  "Combined
         Purchases,"  "Letter  of Intent"  and  "Cumulative  Discount"  features
         referred to below.

(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 DWS-SDI and its
         affiliates.

(3)      DWS-SDI compensates UBS Financial at the rate 0.50%.

DWS-SDI  compensates  firms for sales of Class B shares at the time of sale at a
commission  rate of up to 3.75%  of the  amount  of  Class B  shares  purchased.
DWS-SDI is  compensated  by the Fund for services as  distributor  and principal
underwriter for Class B shares.  Except as provided below,  for sales of Class C
shares,  DWS-SDI advances to firms the first year  distribution fee at a rate of
0.75% of the  purchase  price of such shares,  and, for periods  after the first
year,  DWS-SDI  currently  pays firms for sales of Class C shares a distribution
fee, payable quarterly, at an annual rate of 0.75% of net assets attributable to
Class C shares  maintained and serviced by the firm. For sales of Class C shares
to employer  sponsored  employee  benefit  plans using the  OmniPlus  subaccount
record keeping  system made  available  through ADP, Inc. under an alliance with
DWS-SDI and its affiliates, DWS-SDI does not advance the first year distribution
fee and for  periods  after the date of sale,  DWS-SDI  currently  pays  firms a

                                       93
<PAGE>

distribution  fee,  payable  quarterly,  at an annual rate of 0.75% based on net
assets as of the last business day of the month  attributable  to Class C shares
maintained  and  serviced by the firm.  DWS-SDI is  compensated  by the Fund for
services as distributor and principal underwriter for Class C shares.

Revenue Sharing

In light of recent  regulatory  developments,  the Advisor,  the Distributor and
their affiliates have undertaken to furnish certain additional information below
regarding  the  level  of  payments  made  by them to  selected  affiliated  and
unaffiliated  brokers,  dealers,  participating  insurance  companies  or  other
financial  intermediaries  ("financial  advisors") in  connection  with the sale
and/or  distribution  of  Fund  shares  or the  retention  and/or  servicing  of
investors and Fund shares ("revenue sharing").

The  Advisor,  the  Distributor  and/or  their  affiliates  may  pay  additional
compensation,  out of their own assets and not as an  additional  charge to each
Fund, to financial  advisors in connection with the sale and/or  distribution of
Fund shares or the retention and/or servicing of Fund investors and Fund shares.
Such revenue  sharing  payments are in addition to any  distribution  or service
fees  payable  under any Rule  12b-1 or  service  plan of any fund,  any  record
keeping/sub-transfer  agency/networking  fees  payable  by each Fund  (generally
through the  Distributor  or an  affiliate)  and/or the  Distributor  to certain
financial   advisors  for  performing  such  services  and  any  sales  charges,
commissions,   non-cash  compensation  arrangements  expressly  permitted  under
applicable  rules of FINRA or other  concessions  described  in the fee table or
elsewhere in the  Prospectuses or the SAI as payable to all financial  advisors.
For example, the Advisor, the Distributor and/or their affiliates may compensate
financial  advisors for  providing  each Fund with "shelf  space" or access to a
third  party  platform  or fund  offering  list,  or  other  marketing  programs
including,   without  limitation,   inclusion  of  each  Fund  on  preferred  or
recommended sales lists,  mutual fund  "supermarket"  platforms and other formal
sales programs; granting the Distributor access to the financial advisor's sales
force;  granting the Distributor access to the financial  advisor's  conferences
and meetings;  assistance  in training and  educating  the  financial  advisor's
personnel; and, obtaining other forms of marketing support. The level of revenue
sharing payments made to financial advisors may be a fixed fee or based upon one
or more of the following factors:  gross sales,  current assets and/or number of
accounts of each Fund attributable to the financial advisor, the particular fund
or fund type or other  measures  as agreed to by the  Advisor,  the  Distributor
and/or their affiliates and the financial  advisors or any combination  thereof.
The amount of these payments is determined at the discretion of the Advisor, the
Distributor  and/or their affiliates from time to time, may be substantial,  and
may be different for different  financial  advisors  based on, for example,  the
nature of the services provided by the financial advisor.

The Advisor,  the  Distributor  and/or their  affiliates  currently make revenue
sharing  payments  from  their own  assets in  connection  with the sale  and/or
distribution of DWS Fund shares, or the retention and/or servicing of investors,
to financial  advisors in amounts that  generally  range from .01% up to .50% of
assets of the Fund serviced and  maintained by the  financial  advisor,  .10% to
..25% of sales of the Fund attributable to the financial  advisor,  a flat fee of
$12,500 up to $500,000, or any combination thereof. These amounts are 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:

                                       94
<PAGE>

Channel: Broker-Dealers and Financial Advisors
A G Edwards & Sons Inc.
AIG Advisors Group
Ameriprise
Cadaret, Grant & Co. Inc.
Capital Analyst, Incorporated
Citigroup Global Markets, Inc. (dba Smith Barney)
Commonwealth Equity Services, LLP (dba Commonwealth Financial Network)
First Clearing/Wachovia Securities
HD Vest Investment Securities, Inc.
ING Group
LaSalle Financial Services, Inc. (dba ABN Amro)
Linsco/Private Ledger Corp.
Marsh Insurance and Investment Company
Merrill Lynch, Pierce, Fenner & Smith Inc.
Morgan Stanley
Oppenheimer & Co., Inc.
Pacific Select Distributors Group
Raymond James & Associates
Raymond James Financial Services
RBC Dain Rauscher, Inc
Securities America, Inc.
UBS Financial Services
Wells Fargo Investments, LLC

Channel: Cash Product Platform
ADP Clearing & Outsourcing
Allegheny Investments LTD
Bank of New York (Hare & Co.)
Bear, Stearns Securities Corp.
Brown Brothers Harriman
Brown Investment Advisory & Trust Company
Cadaret Grant & Co.
Chicago Mercantile Exchange
Citibank NA
D.A. Davidson & Company
Deutsche Bank Securities Inc.
Deutsche Bank Trust Company Americas
Emmett A. Larkin Company
Fiduciary Trust Co. - International
H.C. Denison Co.
Huntleigh Securities
Investors Bank & Trust
JPMorgan Chase
Lincoln Investment Planning
Linsco Private Ledger Financial Services
Mellon Financial Markets LLC
Penson Financial Services
Pershing Choice Platform
ProFunds Distributors, Inc.
Romano Brothers and Company
SAMCO Capital Markets (Fund Services, Inc.)
Smith Moore & Company
State Street Bank & Trust Co.
Sungard Institutional Brokerage Inc.

                                       95
<PAGE>

US Bancorp
UBS Financial Services Inc.
William Blair & Company

Channel: Third Party Insurance Platforms
Acacia National Life Insurance
Allmerica Financial Life Insurance Company
Allstate Life Insurance Company of New York
Ameritas Life Insurance Group
American General Life Insurance Company
Annuity Investors Life Insurance Company
Columbus Life Insurance Company
Commonwealth Annuity and Life Insurance Company
Companion Life Insurance Company
Connecticut General Life Insurance Company
Farmers New World Life Insurance Company
Fidelity Security Life Insurance Company
First Allmerica Financial Life Insurance Company
Genworth Life Insurance Company of New York
Genworth Life and Annuity Insurance Company
Great West Life and Annuity Insurance Company
Hartford Life Insurance Company
ICMG Registered Variable Life
Integrity Life Insurance Company
John Hancock Life Insurance companies
Kemper Investors Life Insurance Company
Lincoln Benefit Life Insurance Company
Lincoln Life & Annuity Company of New York
Lincoln National Life Insurance Company
Massachusetts Mutual Life Insurance Group
MetLife Group
Minnesota Life Insurance Company
Mutual of America Life Insurance Company
National Life Insurance Company
National Integrity Life Insurance Company
Nationwide Group
New York Life Insurance and Annuity Corporation
Phoenix Life Insurance Company
Protective Life Insurance
Provident Mutual Life Insurance
Prudential Insurance Company of America
Sun Life GroupSymetra Life Insurance Company
Transamerica Life Insurance Company
Union Central Life Insurance Company
United of Omaha Life Insurance Company
United Investors Life Insurance Company
Western Southern Life Assurance Company

Any additions,  modifications or deletions to the financial advisors  identified
above that have occurred since the date hereof are not reflected.

The Advisor,  the  Distributor  or their  affiliates  may enter into  additional
revenue sharing arrangements or change or discontinue existing arrangements with
financial advisors at any time without notice.

                                       96
<PAGE>

The  prospect  of  receiving,  or the  receipt  of  additional  compensation  or
promotional  incentives  described above by financial  advisors may provide such
financial advisors and/or their salespersons with an incentive to favor sales of
shares of the DWS Funds or a particular  DWS Fund over sales of shares of mutual
funds (or  non-mutual  fund  investments)  with  respect to which the  financial
advisor does not receive additional compensation or promotional  incentives,  or
receives  lower levels of additional  compensation  or  promotional  incentives.
Similarly,  financial advisors may receive different  compensation or incentives
that may influence  their  recommendation  of any particular  share class of the
Fund or of other funds. These payment arrangements, however, will not change the
price that an investor pays for Fund shares or the amount that the Fund receives
to invest on behalf of an investor and will not increase Fund expenses.  You may
wish to take  such  payment  arrangements  into  account  when  considering  and
evaluating  any  recommendations  relating to Fund shares and you should discuss
this matter with your  financial  advisor  and review your  financial  advisor's
disclosures.

Class A Purchases.  The public  offering  price of Class A shares for purchasers
choosing  the initial  sales  charge  alternative  is the net asset value plus a
sales charge, as set forth below.

<TABLE>
<CAPTION>
                                                          Sales Charge
                                                          ------------
                                                                                         Allowed to Dealers
                                           As a Percentage of    As a Percentage of     as a Percentage of
Amount of Purchase                           Offering Price       Net Asset Value*         Offering Price
------------------                           --------------       ---------------          --------------
<S>                                                  <C>                    <C>                   <C>
Less than $50,000                                  5.75%                  6.10%                 5.20%
$50,000 but less than $100,000                     4.50                   4.71                  4.00
$100,000 but less than $250,000                    3.50                   3.63                  3.00
$250,000 but less than $500,000                    2.60                   2.67                  2.25
$500,000 but less than $1 million                  2.00                   2.04                  1.75
$1 million and over                               0.00**                  0.00**                ***
</TABLE>

*        Rounded to the nearest one-hundredth percent.

**       Redemption  of shares  may be subject to a  contingent  deferred  sales
         charge as discussed below.

***      Commission is payable by DWS-SDI as discussed below.

Class A  Quantity  Discounts.  An  investor  or the  investor's  dealer or other
financial  services  firm must notify the  Shareholder  Service Agent or DWS-SDI
whenever  a  quantity  discount  or  reduced  sales  charge is  applicable  to a
purchase.  In order to qualify  for a lower  sales  charge,  all orders  from an
organized  group will have to be placed  through a single  investment  dealer or
other firm and identified as originating from a qualifying purchaser.

Letter of Intent.  The reduced sales charges for Class A shares, as shown in the
applicable prospectus,  also apply to the aggregate amount of purchases of Class
A shares of DWS Funds that bear a sales  charge made by any  purchaser  within a
24-month period under a written Letter of Intent ("Letter") provided by DWS-SDI.
The Letter,  which imposes no obligation to purchase or sell additional  Class A
shares,  provides  for a price  adjustment  depending  upon  the  actual  amount
purchased  within  such  period.  The Letter  provides  that the first  purchase
following  execution  of the  Letter  must be at least 5% of the  amount  of the
intended  purchase,  and that 5% of the amount of the intended purchase normally
will be held in escrow in the form of shares pending  completion of the intended
purchase.  If the total  investments under the Letter are less than the intended
amount and thereby  qualify only for a higher sales charge than  actually  paid,
the  appropriate  number of escrowed  shares are redeemed and the proceeds  used
toward  satisfaction  of the obligation to pay the increased  sales charge.  The
Letter  for  an  employer-sponsored  employee  benefit  plan  maintained  on the
subaccount  record keeping system available  through ADP, Inc. under an alliance
with DWS-SDI and its affiliates may have special provisions regarding payment of
any  increased  sales charge  resulting  from a failure to complete the intended
purchase under the Letter.  A shareholder  may include the value (at the maximum
offering price,  which is determined by adding the maximum applicable sales load
charged to the net asset  value) of all Class A shares of such DWS Funds held of
record as of the  initial  purchase  date under the  Letter as an  "accumulation
credit" toward the  completion of the Letter,  but no price  adjustment  will be
made on such shares.

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<PAGE>

Class A Cumulative  Discount.  Class A shares of a Fund may also be purchased at
the rate  applicable to the discount  bracket  attained by adding to the cost of
shares being purchased, the value of all Class A shares of DWS Funds that bear a
sales charge (computed at the maximum offering price at the time of the purchase
for which the discount is  applicable)  already  owned by the investor or his or
her immediate family member (including the investor's spouse or life partner and
children or stepchildren age 21 or younger).

Combined  Purchases.  Each 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.

For purposes of the Combined Purchases, Letter of Intent and Cumulative Discount
features  described above,  employer  sponsored employee benefit plans using the
Flex  subaccount  record  keeping  system  available  through ADP, Inc. under an
alliance with DWS-SDI and its affiliates may include:  (a) Money Market Funds as
"DWS  Funds," (b) all classes of shares of any DWS Fund and (c) the value of any
other plan  investments,  such as guaranteed  investment  contracts and employer
stock,  maintained on such subaccount record keeping system.  Once eligible plan
assets under this provision reach the $1,000,000  threshold,  a later decline in
assets  below the  $1,000,000  threshold  will not affect the plan's  ability to
continue to purchase Class A shares at net asset value.

Class A NAV Sales. Class A shares may be sold at net asset value to:

(a)      a current  or former  director  or trustee  of  Deutsche  or DWS mutual
         funds;

(b)      an  employee  (including  the  employee's  spouse or life  partner  and
         children or  stepchildren  age 21 or  younger) of Deutsche  Bank or its
         affiliates or of a subadvisor to any fund in the DWS family of funds or
         of a  broker-dealer  authorized  to sell  shares of the Fund or service
         agents of the Funds;

(c)      certain  professionals  who assist in the promotion of DWS mutual funds
         pursuant to personal services contracts with DWS-SDI, for themselves or
         members of their  families.  DWS-SDI in its  discretion  may compensate
         financial  services  firms  for  sales  of Class A  shares  under  this
         privilege at a commission rate of 0.50% of the amount of Class A shares
         purchased;

(d)      any trust, pension,  profit-sharing or other benefit plan for only such
         persons listed under the preceding paragraphs (a) and (b);

(e)      persons who purchase such shares  through bank trust  departments  that
         process  such  trades  through an  automated,  integrated  mutual  fund
         clearing program provided by a third party clearing firm;

(f)      selected  employees  (including  their  spouses  or life  partners  and
         children  or  stepchildren  age  21 or  younger)  of  banks  and  other
         financial services firms that provide  administrative  services related
         to order placement and payment to facilitate  transactions in shares of
         the Fund for their clients pursuant to an agreement with DWS-SDI or one
         of its  affiliates.  Only those employees of such banks and other firms
         who  as  part  of  their  usual  duties  provide  services  related  to
         transactions in Fund shares qualify;

(g)      unit  investment  trusts  sponsored  by Ranson &  Associates,  Inc. and
         unitholders of unit investment trusts sponsored by Ranson & Associates,
         Inc. or its predecessors through reinvestment programs described in the
         prospectuses of such trusts that have such programs;

(h)      through certain  investment  advisors  registered  under the Investment
         Advisers Act of 1940 and other  financial  services firms acting solely
         as  agent  for  their  clients,   that  adhere  to  certain   standards
         established  by DWS-SDI,  including a  requirement  that such shares be
         sold for the benefit of their  clients  participating  in an investment
         advisory program or agency commission  program under which such clients
         pay a fee to  the  investment  advisor  or  other  firm  for  portfolio
         management  or agency  brokerage  services.  Such  shares  are sold for
         investment  purposes and on the condition  that they will not be resold
         except through redemption or repurchase by the Fund;

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(i)      employer  sponsored  employee  benefit plans using the Flex  subaccount
         recordkeeping system ("Flex Plans") made available through ADP under an
         alliance with DWS-SDI and its affiliates,  established prior to October
         1, 2003,  provided  that the Flex Plan is a  participant-directed  plan
         that has not less than 200 eligible employees;

(j)      investors investing $1 million or more, either as a lump sum or through
         the "Combined  Purchases," "Letter of Intent" and "Cumulative Discount"
         features referred to above (collectively, the "Large Order NAV Purchase
         Privilege"). The Large Order NAV Purchase Privilege is not available if
         another net asset value purchase privilege is available;

(k)      defined contribution investment only plans with a minimum of $1,000,000
         in plan assets regardless of the amount allocated to the DWS funds;

In addition, Class A shares may be sold at net asset value in connection with:

(l)      the  acquisition  of the  assets  of or merger  or  consolidation  with
         another investment  company,  or to shareholders in connection with the
         investment or reinvestment  of income and capital gain  dividends,  and
         under other circumstances  deemed appropriate by DWS-SDI and consistent
         with regulatory requirements; and

(m)      a  direct  "roll  over"  of a  distribution  from a Flex  Plan  or from
         participants in employer sponsored employee benefit plans maintained on
         the OmniPlus  subaccount  record keeping system made available  through
         ADP, Inc. under an alliance with DWS-SDI and its affiliates  into a DWS
         Scudder IRA;

(n)      reinvestment of fund dividends and distributions;

(o)      exchanging  an  investment in Class A shares of another fund in the DWS
         family of funds for an investment in the fund.

Class A shares also may be purchased at net asset value in any amount by members
of the plaintiff class in the proceeding known as Howard and Audrey Tabankin, et
al. v. Kemper  Short-Term  Global  Income Fund, et al., Case No. 93 C 5231 (N.D.
IL). This privilege is generally non-transferable and continues for the lifetime
of individual class members and for a ten-year period for  non-individual  class
members.  To make a  purchase  at net asset  value  under  this  privilege,  the
investor  must,  at the time of  purchase,  submit a  written  request  that the
purchase be processed at net asset value pursuant to this privilege specifically
identifying the purchaser as a member of the "Tabankin  Class." Shares purchased
under this privilege will be maintained in a separate account that includes only
shares  purchased  under  this  privilege.  For  more  details  concerning  this
privilege,  class members should refer to the Notice of (i) Proposed  Settlement
with Defendants;  and (ii) Hearing to Determine Fairness of Proposed Settlement,
dated  August 31,  1995,  issued in  connection  with the  aforementioned  court
proceeding.  For  sales of Fund  shares  at net  asset  value  pursuant  to this
privilege,  DWS-SDI  may in its  discretion  pay  investment  dealers  and other
financial services firms a concession,  payable quarterly,  at an annual rate of
up to 0.25% of net assets attributable to such shares maintained and serviced by
the firm.  A firm  becomes  eligible  for the  concession  based upon  assets in
accounts  attributable  to shares  purchased  under this  privilege in the month
after the month of purchase and the  concession  continues  until  terminated by
DWS-SDI.  The  privilege of  purchasing  Class A shares of the Fund at net asset
value under this  privilege is not available if another net asset value purchase
privilege also applies.

Class B  Purchases.  Class B shares of each 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  Funds'
Prospectuses  and SAI.  Class B shares  automatically  convert to Class A shares
after six years.

Class C  Purchases.  Class C shares of each Fund are offered at net asset value.
No  initial  sales  charge  is  imposed  which  allows  the full  amount  of the
investor's  purchase  payment  to be  invested  in Class C shares for his or her

                                       99
<PAGE>

account.  Class C shares are subject to a  contingent  deferred  sales charge of
1.00% (for  shares  sold within one year of  purchase)  and Rule 12b-1 fees,  as
described in the Funds' Prospectuses and SAI.

Minimum Subsequent Investment Policies.  For current shareholders there is a $50
minimum investment requirement for subsequent investments in a Fund. There is no
minimum subsequent  investment  requirement for investments of Class A shares on
behalf of  participants in certain  fee-based and wrap programs  offered through
financial intermediaries approved by the Advisor.

Multi-Class Suitability

DWS-SDI has established the following procedures regarding the purchase of Class
A, Class B and Class C Shares.  Orders to purchase Class B shares of $100,000 or
more and orders to purchase  Class C shares of $500,000 or more will be declined
with the exception of orders received from financial  representatives acting for
clients  whose  shares are held in an  omnibus  account  and  employer-sponsored
employee  benefit Plans using the subaccount  record  keeping system  ("System")
maintained  for DWS  -branded  plans  under an  alliance  with  DWS-SDI  and its
affiliates ("DWS Scudder Flex Plans" and "DWS Scudder Choice Plans").

The following  provisions apply to DWS Scudder Flex Plans and DWS Scudder Choice
Plans.

a.       Class B Share DWS Scudder Flex Plans. Class B shares have not been sold
         to DWS Scudder  Flex Plans that were  established  on the System  after
         October 1, 2003.  Orders to  purchase  Class B shares for a DWS Scudder
         Flex Plan  established  on the System prior to October 1, 2003 that has
         regularly been  purchasing  Class B shares will be invested  instead in
         Class A shares at net asset value when the combined subaccount value in
         DWS Funds or other  eligible  assets  held by the plan is  $100,000  or
         more.  This  provision  will be imposed  for the first  purchase  after
         eligible plan assets reach the $100,000  threshold.  A later decline in
         assets below the $100,000  threshold will not affect the plan's ability
         to continue to purchase Class A shares at net asset value.

b.       Class C Share DWS Scudder Flex Plans. Orders to purchase Class C shares
         for a  DWS  Scudder  Flex  Plan,  regardless  of  when  such  plan  was
         established on the System,  will be invested  instead in Class A shares
         at net asset value when the combined  subaccount  value in DWS Funds or
         other  eligible  assets held by the plan is  $1,000,000  or more.  This
         provision  will be imposed for the first  purchase  after eligible plan
         assets reach the $1,000,000 threshold.  A later decline in assets below
         the $1,000,000 threshold will not affect the plan's ability to continue
         to purchase Class A shares at net asset value.

c.       Class C Share DWS Scudder  Choice  Plans.  Orders to  purchase  Class C
         shares for a DWS Scudder Choice Plan that has been regularly purchasing
         Class C shares will be invested  instead in Class A shares at net asset
         value when the combined subaccount value in DWS Funds or other eligible
         assets held by the plan is $1,000,000 or more.  This  provision will be
         imposed for purchases  made  beginning in the month after eligible plan
         assets reach the $1,000,000  threshold.  In addition, as a condition to
         being permitted to use the Choice Plan platform, plans must agree that,
         within  one month  after  eligible  plan  assets  reach the  $1,000,000
         threshold,  all  existing  Class  C  shares  held in the  plan  will be
         automatically converted to Class A shares.

The procedures  described  above do not reflect in any way the  suitability of a
particular  class of shares for a  particular  investor and should not be relied
upon as such. A  suitability  determination  must be made by investors  with the
assistance of their financial representative.

Automatic Investment Plan. A shareholder may purchase additional shares of a DWS
through an automatic  investment program.  With the Direct Deposit Purchase Plan
("Direct Deposit"), investments are made automatically (minimum $500 and maximum
$250,000 for initial  investments and a minimum of $50 and maximum  $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.  A Fund may  immediately  terminate a
shareholder's  Direct  Deposit  in the  event  that  any item is  unpaid  by the
shareholder's financial institution.

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<PAGE>

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  Funds  are  not
responsible  for the efficiency of the employer or government  agency making the
payment or any financial institutions transmitting payments.

Expedited Purchase Procedures for Existing  Shareholders.  Shareholders of other
DWS funds who have  submitted an account  application  and have  certified a tax
identification  number, clients having a regular investment counsel account with
the Advisor or its affiliates and members of their immediate families,  officers
and  employees  of the  Advisor  or of any  affiliated  organization  and  their
immediate  families,  members of FINRA, and banks may open an account by wire by
calling 1-800-728-3337 for instructions. The investor must send a duly completed
and signed  application  to the Fund promptly.  A subsequent  purchase order for
$10,000 or more that is not  greater  than four  times an  account  value may be
placed by telephone,  etc. by  established  shareholders  (except by DWS Scudder
Individual  Retirement  Account  (IRA),  DWS Scudder  Horizon Plan,  DWS Scudder
Profit  Sharing and Money  Purchase  Pension  Plans,  DWS Scudder 401(k) and DWS
Scudder 403(b) Plan holders), members of FINRA, and banks.

It is our policy to offer purchase  privileges to current or former directors or
trustees of the Deutsche or DWS mutual funds,  employees,  their spouses or life
partners and children or step-children age 21 or younger of Deutsche Bank or its
affiliates  or a  sub-advisor  to any  fund  in the DWS  family  of  funds  or a
broker-dealer authorized to sell shares of the funds. Qualified individuals will
generally  be allowed to  purchase  shares in the class with the lowest  expense
ratio,  usually  the  Institutional  Class  shares.  If 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.

Redemptions

A Fund may suspend or postpone  redemptions as permitted by section 22(e) of the
Investment Company Act.

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

Redemption  requests  must be  unconditional.  Redemption  requests (and a stock
power for certificated  shares) must be duly endorsed by the account holder.  As
specified  in  the  prospectus,  signatures  may  need  to  be  guaranteed  by a
commercial bank, trust company,  savings and loan  association,  federal savings
bank,  member  firm  of  a  national  securities  exchange  or  other  financial
institution  permitted by SEC rule.  Additional  documentation  may be required,
particularly  from   institutional  and  fiduciary  account  holders,   such  as
corporations,  custodians  (e.g.,  under the Uniform  Transfers  to Minors Act),
executors, administrators, trustees or guardians.

If the proceeds of the  redemption  (prior to the  imposition of any  contingent
deferred  sales charge) are $100,000 or less and the proceeds are payable to the
shareholder of record at the address of record,  normally a telephone request or
a written  request by any one account  holder  without a signature  guarantee is
sufficient for  redemptions by individual or joint account  holders,  and trust,
executor  and  guardian  account  holders,  provided  the  trustee,  executor or
guardian  is named in the  account  registration.  Other  institutional  account
holders may  exercise  this special  privilege of redeeming  shares by telephone
request or  written  request  without  signature  guarantee  subject to the same
conditions as individual account holders,  provided that this privilege has been
pre-authorized by the institutional account holder by written instruction to the
Shareholder Service Agent with signatures guaranteed.  This privilege may not be
used to  redeem  shares  held in  certificated  form  and may not be used if the
shareholder's account has had an address change within 15 days of the redemption
request.

Wires.  Delivery of the proceeds of a wire redemption of $250,000 or more may be
delayed  by a 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 Funds are not


                                      101
<PAGE>

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's Shareholder Service Agent with signatures  guaranteed as described
above or contact the firm through which the Fund shares were purchased.

Automatic  Withdrawal  Plan.  The owner of $5,000 or more of a class of a 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  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.  Requests for increases in
withdrawal  amounts or to change the payee must be submitted in writing,  signed
exactly as the account is registered,  and contain signature  guarantee(s).  Any
such requests must be received by a 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 a 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.

An  Automatic   Withdrawal   Plan  request  form  can  be  obtained  by  calling
1-800-621-1048.

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.
DWS-SDI  receives  any  CDSC  directly.  The  charge  will not be  imposed  upon
redemption of reinvested dividends or share appreciation.

The Class A CDSC will be waived in the event of:

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<PAGE>

(a)      redemptions  by  a   participant-directed   qualified  retirement  plan
         described in Code Section 401(a), a participant-directed  non-qualified
         deferred   compensation  plan  described  in  Code  Section  457  or  a
         participant-directed   qualified  retirement  plan  described  in  Code
         Section 403(b)(7) which is not sponsored by a K-12 school district;

(b)      redemptions  by  employer-sponsored  employee  benefit  plans using the
         subaccount record keeping system made available through ADP, Inc. under
         an alliance with DWS-SDI and its affiliates;


(c)      redemption  of shares of a  shareholder  (including a registered  joint
         owner) who has died or is disabled (under certain conditions);


(d)      redemption  of shares of a  shareholder  (including a registered  joint
         owner) who after purchase of the shares being redeemed  becomes totally
         disabled  (as  evidenced  by a  determination  by  the  federal  Social
         Security Administration);


(e)      redemptions under the Fund's Automatic  Withdrawal Plan at a maximum of
         12% per year of the net asset value of the account;

(f)      redemptions  of  shares  whose  dealer  of  record  at the  time of the
         investment  notifies  DWS-SDI that the dealer waives the  discretionary
         commission applicable to such Large Order NAV Purchase; and

(g)      redemptions for certain loan advances,  hardship  provisions or returns
         of excess contributions from retirement plans.

The Class B CDSC will be waived  for the  circumstances  set forth in items (c),
(d), (e) and (g) for Class A shares. In addition, this CDSC will be waived:

(h)      for redemptions made pursuant to any IRA systematic withdrawal based on
         the  shareholder's  life  expectancy  including,  but not  limited  to,
         substantially  equal periodic  payments  described in Internal  Revenue
         Code Section 72(t)(2)(A)(iv) prior to age 59 1/2;

(i)      for redemptions to satisfy required minimum  distributions after age 70
         1/2 from an IRA account (with the maximum amount subject to this waiver
         being based only upon the shareholder's DWS Scudder IRA accounts); and

(j)      in connection with the following redemptions of shares held by employer
         sponsored  employee benefit plans  maintained on the subaccount  record
         keeping  system  made  available  through  ADP under an  alliance  with
         DWS-SDI and its affiliates:  (1) to satisfy  participant  loan advances
         (note that loan repayments constitute new purchases for purposes of the
         CDSC and the conversion  privilege),  (2) in connection with retirement
         distributions  (limited  at any one time to 12% of the  total  value of
         plan assets invested in the Fund), (3) in connection with distributions
         qualifying under the hardship  provisions of the Internal Revenue Code,
         (4) representing  returns of excess contributions to such plans and (5)
         in connection  with direct "roll over"  distributions  from a Flex Plan
         into a DWS  Scudder  IRA under the  Class A net  asset  value  purchase
         privilege.

The Class C CDSC will be waived  for the  circumstances  set forth in items (b),
(c), (d), (e) and (g) for Class A shares and for the  circumstances set forth in
items (h) and (i) for Class B shares. In addition, this CDSC will be waived for:

(k)      redemption  of shares by an employer  sponsored  employee  benefit plan
         that offers  funds in addition to DWS Funds and whose  dealer of record
         has waived the  advance of the first year  administrative  service  and
         distribution  fees applicable to such shares and agrees to receive such
         fees quarterly, and

                                      103
<PAGE>

(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.  A Fund  reserves  the  right to  honor  any  request  for
redemption  or  repurchase  by  making  payment  in whole or in part in  readily
marketable securities. These securities will be chosen by the Fund and valued as
they are for purposes of computing the Fund's net asset value. A shareholder may
incur transaction expenses in converting these securities to cash.

Exchanges

Shareholders  may request a taxable  exchange of their  shares for shares of the
corresponding  class of other DWS Funds  without  imposition  of a sales charge,
subject to the provisions  below. For purposes of calculating any CDSC,  amounts
exchanged retain their original cost and purchase date.

Shares of money  market  funds that were  acquired  by purchase  (not  including
shares acquired by dividend  reinvestment)  are subject to the applicable  sales
charge on exchange.  Series of DWS Target Fund are  available  on exchange  only
during  the  offering  period for such  series as  described  in the  applicable
prospectus.  Cash Management Fund Investment, Tax Free Money Fund Investment, NY
Tax-Free Money Fund Investment,  Treasury Money Fund -- Class Investment,  Money
Market Fund Investment,  Cash Management Fund Institutional,  Cash Reserves Fund
Institutional,  Treasury Money Fund --  Institutional,  Cash Reserve Fund,  Inc.
Prime Series,  Cash Reserve Fund, Inc.  Treasury Series,  Tax-Exempt  California
Money Market Fund,  Cash Account Trust and Investors Cash Trust are available on
exchange but only through a financial  services firm having a services agreement
with DWS-SDI.  All  exchanges  among money funds must meet  applicable  investor
eligibility  and investment  requirements.  Exchanges may only be made for funds
that are available for sale in the shareholder's state of residence.  Currently,
Tax-Exempt   California  Money  Market  Fund  is  available  for  sale  only  in
California.

Shareholders must obtain prospectuses of the Funds they are exchanging into from
dealers, other firms or DWS-SDI.

Automatic Exchange Plan. The owner of $1,000 or more of any class of shares of a
DWS Fund may  authorize  the  automatic  exchange  of a  specified  amount  ($50
minimum) of such  shares for shares of the same class of another  such DWS Fund.
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 DWS  LifeCompass  Retirement  Fund and the DWS  LifeCompass  2015  Fund both
intend  to  distribute  investment  company  taxable  income,  exclusive  of net
short-term  capital  gains in  excess  of net  long-term  capital  losses,  on a
quarterly  basis,  and  distributions  of net capital gains realized  during the
fiscal year will be made in November  or December to avoid  federal  excise tax,
although  an  additional  distribution  may be made within  three  months of its
fiscal year end, if necessary.  The DWS  LifeCompass  2020 Fund, DWS LifeCompass
2030 Fund and DWS LifeCompass  2040 Fund intend to distribute  their  investment
company  taxable  income  and any net  realized  capital  gains in  November  or
December to avoid federal excise tax,  although any additional  distribution may
be made within three months of a Fund's fiscal year end, if necessary.

The level of income  dividends  per share (as a  percentage  of net asset value)
will be lower for Class B and Class C Shares  than for Class A Shares  primarily
as a result of the  distribution  services fee applicable to Class B and Class C
Shares.  Distributions of capital gains, if any, will be paid in the same amount
for each class.

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<PAGE>

If  a  shareholder   has  elected  to  reinvest  any   dividends   and/or  other
distributions,  such  distributions  will be made in  shares  of that  Fund  and
confirmations will be mailed to each shareholder. If a shareholder has chosen to
receive cash, a check will be sent.  Distributions of 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 each Fund issues to each  shareholder  a  statement  of the
federal income tax status of all distributions in the prior calendar year.

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.  The
Fund will reinvest  dividend checks (and future dividends) in shares of the 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.

Each 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, a Fund
may make additional  distributions of net investment  income or capital gain net
income in order to satisfy the minimum  distribution  requirements  contained in
the Code.

                                      TAXES

The following is intended to be a general  summary of certain federal income tax
consequences  of  investing  in the  Funds.  It is not  intended  as a  complete
discussion  of all such  consequences,  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 a Fund.

Federal Taxation.  Each 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.  Each 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,  each Fund
must among other things:

(a)      derive at least 90% of its gross  income for each taxable year from (i)
         dividends, interest, payments with respect to certain securities loans,
         and gains from the sale or other  disposition  of stock,  securities or
         foreign currencies, or other income (including but not limited to gains
         from options,  futures,  or forward  contracts) derived with respect to
         its business of investing in such stock, securities,  or currencies and
         (ii) net income  derived from interests in "qualified  publicly  traded
         partnerships" (as defined below);

(b)      diversify  its  holdings  so that,  at the end of each  quarter  of the
         Fund's taxable year, (i) at least 50% of the market value of the Fund's
         total  assets is  represented  by cash and cash  items,  US  Government
         securities,  securities of other regulated  investment  companies,  and
         other  securities  limited  in respect of any one issuer to a value not
         greater  than 5% of the value of the Fund's  total  assets and not more
         than 10% of the outstanding  voting securities of such issuer, and (ii)
         not more than 25% of the value of the Fund's  total  assets is invested
         (x) in the  securities  (other than those of the US Government or other
         regulated  investment  companies)  of any one  issuer or of two or more
         issuers  which the Fund  controls  and which are  engaged  in the same,
         similar,  or related trades or businesses,  or (y) in the securities of
         one or more qualified publicly traded  partnerships (as defined below);
         and

(c)      distribute with respect to each taxable year at least 90% of the sum of
         its investment  company  taxable income (as that term is defined in the
         Code without  regard to the deduction for dividends  paid -- generally,
         taxable  ordinary  income and the  excess,  if any,  of net  short-term
         capital gains over net  long-term  capital  losses) and net  tax-exempt
         interest income, for such year.

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<PAGE>

In  general,  for  purposes of the 90% gross  income  requirement  described  in
paragraph  (a)  above,  income  derived  from a  partnership  will be treated as
qualifying  income only to the extent such  income is  attributable  to items of
income of the  partnership  which would be qualifying  income if realized by the
regulated investment company.  However, recent legislation provides that 100% of
the net  income  derived  from  an  interest  in a  "qualified  publicly  traded
partnership"  (defined as a partnership  (i) interests in which are traded on an
established  securities  market or readily tradable on a secondary market or the
substantial equivalent thereof and (ii) that derives less than 90% of its income
from the qualifying  income described in paragraph (a)(i) above) will be treated
as qualifying income. In addition, although in general the passive loss rules of
the Code do not apply to regulated investment companies,  such rules do apply to
a regulated investment company with respect to items attributable to an interest
in a qualified publicly traded partnership.  Finally,  for purposes of paragraph
(b) above, the term "outstanding  voting securities of such issuer" will include
the equity securities of a qualified publicly traded partnership.

If a Fund qualifies as a regulated  investment  company that is accorded special
tax  treatment,  the Fund will not be subject  to  federal  income tax on income
distributed  in a timely  manner to its  shareholders  in the form of  dividends
(including Capital Gain Dividends, as defined below).

If for any taxable year a Fund does not qualify for the special  federal  income
tax treatment afforded regulated investment companies, all of its taxable income
will be subject to federal  income tax at regular  corporate  rates (without any
deduction for distributions to its  shareholders),  and all  distributions  from
earnings and profits,  including any  distributions of net tax-exempt income and
net long-term capital gains, will be taxable to shareholders as ordinary income.
Such  distributions  could be eligible (i) to be treated as "qualified  dividend
income," in the case of individual and certain other noncorporate  shareholders,
subject to reduced rates of federal income  taxation for taxable years beginning
before January 1, 2011 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.

Each Fund is subject to a 4% nondeductible  excise tax on amounts required to be
but 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 each Fund's distribution  policies should enable it to avoid excise tax
liability,  a Fund may  retain  (and be  subject  to income or excise  tax on) a
portion of its capital  gain or other income if it appears to be in the interest
of such Fund.

Taxation  of  Distributions  from the Funds.  For federal  income tax  purposes,
distributions  of investment  income are generally  taxable as ordinary  income.
Taxes on  distributions  of capital  gains are  determined by how long the Funds
owned the investments  that generated  them,  rather than how long a shareholder
has owned his or her shares. Distributions of net capital gains from the sale of
investments  that a Fund  owned  for more  than  one year and that are  properly
designated by the Fund as capital gain dividends ("Capital Gain Dividends") will
be taxable as long-term  capital gains.  Distributions of gains from the sale of
investments  that a Fund owned for one year or less will be taxable as  ordinary
income.  For taxable years beginning  before January 1, 2011,  distributions  of
investment  income  designated  by a Fund as derived  from  "qualified  dividend
income" will be taxed in the hands of  individuals  at the rates  applicable  to
long-term capital gain,  provided holding period and other  requirements are met
at both the shareholder and Fund level.

Distributions  are taxable to shareholders  even if they are paid from income or
gains  earned  by the Fund  before a  shareholder's  investment  (and  thus were
included in the price the shareholder  paid).  Distributions are taxable whether
shareholders  receive them in cash or reinvest them in additional shares through
the reinvestment  privilege. A shareholder whose distributions are reinvested in
shares  will be treated as having  received a dividend  equal to the fair market
value of the new shares issued to the  shareholder.  Any gain resulting from the
sale or exchange of Fund shares generally will be taxable as capital gains.

                                      106
<PAGE>

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

In order for some portion of the dividends  received by a 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 each Fund's shares.  A dividend will not be treated as qualified
dividend income (at either the Fund or shareholder level) (1) if the dividend is
received  with  respect to any share of stock held for fewer than 61 days during
the  121-day  period  beginning  on the date which is 60 days before the date on
which such share becomes  ex-dividend  with respect to such dividend (or, in the
case of certain  preferred stock, 91 days during the 181-day period beginning 90
days  before  such  date),  (2) to the  extent  that the  recipient  is under an
obligation  (whether  pursuant  to a short sale or  otherwise)  to make  related
payments with respect to positions in substantially similar or related property,
(3) if the recipient  elects to have the dividend  income  treated as investment
interest,  or (4) if the dividend is received from a foreign corporation that is
(a) not eligible for the benefits of a comprehensive  income tax treaty with the
United States (with the  exception of dividends  paid on stock of such a foreign
corporation  readily tradable on an established  securities market in the United
States) or (b) treated as a passive foreign investment  company. As discussed in
the  Prospectus,  if a Fund receives  dividends from an Underlying DWS Fund that
qualifies  as a  regulated  investment  company  and  the  Underlying  DWS  Fund
designates  such dividends as qualified  dividend  income,  then the Fund may in
turn designate that portion of its distributions derived from those dividends as
qualified  dividend  income as well,  provided the Fund meets holding period and
other requirements with respect to shares of the Underlying DWS Fund.

In  general,  distributions  of  investment  income  designated  by each Fund 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,  then 100% of the Fund's
dividends (other than dividends  properly  designated as Capital Gain Dividends)
will be eligible to be treated as qualified  dividend income.  For this purpose,
the  only  gain  included  in the  term  "gross  income"  is the  excess  of net
short-term capital gain over net long-term capital loss.

If a fund receives  dividends  from an Underlying  DWS Fund that  qualifies as a
regulated  investment  company  and the  Underlying  DWS  Fund  designates  such
dividends as qualified dividend income, then the fund may in turn designate that
portion of its distributions  derived from those dividends as qualified dividend
income  as  well,   provided  the  fund  meets  the  holding  period  and  other
requirements with respect to shares of the Underlying DWS Fund.

Capital gains  distributions  may be reduced if Fund capital loss  carryforwards
are available.  Any capital loss  carryforwards  to which a Fund is entitled are
disclosed in a Fund's annual and semi-annual reports to shareholders.

Dividends  from  domestic  corporations  constitute a  substantial  part of each
Fund's gross income,  a portion of the income  distributions of such Fund may be
eligible  for  the  70%  deduction  for  dividends   received  by  corporations.
Shareholders will be informed of the portion of dividends which so qualify.  The
dividends-received  deduction is reduced to the extent the shares of a 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
a fund are deemed to have been held by the Fund or the shareholder,  as the case
may be, for less than 46 days during the 91-day period  beginning 45 days before
the shares become ex-dividend.

Fund-of-Funds  Structure.  The use of a fund-of-funds structure could affect the
amount, timing, and character of distributions from a Fund, and, therefore,  may
increase the amount of taxes payable by shareholders. Because a Fund will invest
all of its  assets in shares of the  Underlying  DWS  Funds,  its  distributable
income  and gains will  normally  consist  entirely  of  distributions  from the
Underlying  DWS  Funds and gains  and  losses  on the  disposition  of shares of
Underlying  DWS Funds.  To the extent that an  Underlying  DWS Fund realizes net
losses on its  investments  for a given taxable year, a Fund will not be able to
recognize  its  shares of those  losses  (so as to offset  distributions  of net
income or capital gains from other the  Underlying  DWS Funds) until it disposes
of shares of the Underlying DWS Fund. Moreover,  even when a Fund does make such
a  disposition,  a portion of its loss may be recognized as a


                                      107
<PAGE>

long-term  capital  loss,  which will not be treated as  favorably  for  federal
income tax purposes as a short-term  capital loss or an ordinary  deduction.  In
particular,  a Fund  will not be able to  offset  any  capital  losses  from its
dispositions   of  Underlying  DWS  Fund  shares  against  its  ordinary  income
(including  distributions  of any net  short-term  capital gains  realized by an
Underlying DWS Fund).  In addition,  in certain  circumstances,  the "wash sale"
rules under Section 1091 of the Code may apply to a Fund's sales of shares of an
Underlying DWS Fund that have generated  losses. A wash sale occurs if shares of
an  Underlying  DWS Fund  are  sold by a Fund at a loss  and the  Fund  acquires
additional  shares of that same  Underlying DWS Fund 30 days before or after the
date of the sale. The wash-sale  rules could defer losses in the Fund's hands on
sales of the  Underlying  DWS Fund  shares  (to the  extent  such sales are wash
sales) for extended (and, in certain cases,  potentially  indefinite) periods of
time. As a result of the foregoing rules, and certain other special rules, it is
possible that the amounts of net investment  income and net capital gains that a
Fund will be required to  distribute to  shareholders  will be greater than such
amounts would have been had the Fund invested directly in the securities held by
the Underlying DWS Funds,  rather than investing in shares of the Underlying DWS
Funds.  For similar reasons,  the character of distributions  from a Fund (e.g.,
long-term  capital gain,  exempt  interest,  eligibility for  dividends-received
deduction,  etc.) will not necessarily be the same as it would have been had the
Fund invested directly in the securities held by the Underlying DWS Funds.

Transactions  in Fund Shares.  The sale,  exchange or  redemption of shares of a
Fund may give rise to a gain or loss. In general, any gain or loss realized upon
a taxable  disposition  of shares will be treated as  long-term  capital gain or
loss if the shares have been held for more than 12 months.  Otherwise,  the gain
or loss on the  taxable  disposition  of  shares of a Fund  will be  treated  as
short-term gain or loss.  However,  any loss realized upon a taxable disposition
of shares held for six months or less will be treated as long-term,  rather than
short-term,  to the extent of any long-term capital gain distributions  received
(or deemed  received) by the  shareholder  with respect to the shares.  All or a
portion of any loss  realized upon a taxable  disposition  of shares of the Fund
will be  disallowed  if  other  substantially  identical  shares  of a Fund  are
purchased  within 30 days before or after the  disposition.  In such a case, the
basis of the newly  purchased  shares will be adjusted to reflect the disallowed
loss.

Depending on a Fund's percentage ownership in an Underlying DWS Fund both before
and after a redemption of Underlying DWS Fund shares,  the Fund's  redemption of
shares of such Underlying DWS Fund may cause the Fund to be treated as receiving
a dividend  taxable as ordinary  income on the full  amount of the  distribution
instead of  receiving  capital gain income on the shares of the  Underlying  DWS
Fund.  This would be the case where the Fund holds a significant  interest in an
Underlying DWS Fund and redeems only a small portion of such interest.

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. Under current law, a fund of funds cannot
pass  through to  shareholders  foreign tax credits  borne in respect of foreign
securities  income earned by an underlying fund. A fund is permitted to elect to
pass  through  to its  shareholders  foreign  income  taxes  it pays  only if it
directly  holds more than 50% of its assets in foreign  stock and  securities at
the close of its taxable year.  Foreign  securities held  indirectly  through an
Underlying DWS Fund do not contribute to this 50%  threshold.  As a result,  the
Funds will not be eligible to pass  through to  shareholders  its  proportionate
share of any foreign taxes paid, with the result that  shareholders  will not be
able to include  in  income,  and will not be  entitled  to take any  credits or
deductions for such foreign taxes.

Passive Foreign Investment Companies. Direct equity investments by an Underlying
DWS Fund of a Fund in certain "passive foreign investment  companies"  ("PFICs")
could  potentially  subject  the  Fund to a US  federal  income  tax  (including
interest  charges)  on  distributions  received  from the company or on proceeds
received  from the  disposition  of shares in the  company,  which tax cannot be
eliminated by making distributions to Fund shareholders.  However, such Fund may
elect to avoid the  imposition  of that tax. For example,  the Fund may elect to
treat a PFIC as a "qualified  electing fund" (a "QEF  election"),  in which case
the Fund would be required to include its share of the company's  income and net
capital gains annually,  regardless of whether it receives any distribution from
the  company.  Such Fund also may make an  election  to mark the gains (and to a
limited  extent  losses) in 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. Such gains and losses are treated as ordinary income and loss. The
QEF and  mark-to-market  elections  may  accelerate  the  recognition  of income
(without the receipt of cash) and increase the amount required to be distributed
by the Fund to avoid taxation.  Making either of these  elections  therefore may
require  such Fund to  liquidate  other  investments  (including  when it is not
advantageous  to do so) to meet its  distribution  requirement,


                                      108
<PAGE>

which also may  accelerate  the  recognition of gain and affect the Fund's total
return.  The Funds will not be entitled to make such  elections  with respect to
indirect  investments;  rather, an Underlying DWS Fund investing in a PFIC would
decide  whether  to make such  elections.  Dividends  paid by PFICs  will not be
eligible to be treated as "qualified dividend income."

Other Tax  Considerations.  All distributions by a Fund result in a reduction in
the net asset value of that Fund's shares.  Should a distribution reduce the net
asset  value  below  a  shareholder's   cost  basis,  such  distribution   would
nevertheless be taxable to the shareholder as ordinary income or capital gain as
described above, even though, from an investment standpoint, it may constitute a
partial  return of  capital.  In  particular,  investors  should be  careful  to
consider the tax implications of buying shares just prior to a distribution. The
price of shares  purchased at that time  includes the amount of the  forthcoming
distribution.  Those  purchasing  just prior to a  distribution  will  receive a
partial  return of capital upon the  distribution,  which will  nevertheless  be
taxable to them.

Under Treasury regulations,  if a shareholder  recognizes a loss with respect to
the Fund's  shares of $2 million or more for an  individual  shareholder  or $10
million or more for a corporate shareholder,  the shareholder must file with the
IRS a disclosure  statement on Form 8886. Direct shareholders of Fund securities
are in many cases  excepted from this reporting  requirement,  but under current
guidance,  shareholders  of a regulated  investment  company  are not  excepted.
Future guidance may extend the current exception from this reporting requirement
to shareholders of most or all regulated investment  companies.  The fact that a
loss  is  reportable   under  these   regulations  does  not  affect  the  legal
determination  of  whether  the  taxpayer's  treatment  of the  loss is  proper.
Shareholders should consult their tax advisors to determine the applicability of
these regulations in light of their individual circumstances.

Special tax rules apply to  investments  though defined  contribution  plans and
other  tax-qualified  plans.  Shareholders  should  consult their tax advisor to
determine  the  suitability  of shares of a fund as an  investment  through such
plans  and  the  precise  effect  of and  investment  on  their  particular  tax
situation.  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 a Fund
with their taxpayer  identification  numbers and  certifications as to their tax
status.

Non-US  Shareholders.  Capital Gain Dividends will not be subject to withholding
of federal income tax. In general,  dividends  other than Capital Gain Dividends
paid by a Fund to a shareholder  that is not a "US person" within the meaning of
the Code (such shareholder, a "foreign person") are subject to withholding of US
federal  income tax at a rate of 30% (or lower  applicable  treaty rate) even if
they are  funded by  income or gains  (such as  portfolio  interest,  short-term
capital gains, or foreign-source  dividend and interest income) that, if paid to
a  foreign  person  directly,  would not be  subject  to  withholding.  However,
effective for taxable years of a Fund beginning before January 1, 2008, the Fund
will not be required to withhold any amounts (i) with  respect to  distributions
(other  than  distributions  to a foreign  person  (w) that has not  provided  a
satisfactory  statement that the beneficial owner is not a US person, (x) to the
extent that the dividend is attributable to certain interest on an obligation if
the foreign person is the issuer or is a 10% shareholder of the issuer, (y) that
is within certain foreign  countries that have inadequate  information  exchange
with the United  States,  or (z) to the extent the dividend is  attributable  to
interest paid by a person that is a related person of the foreign person and the
foreign person is a controlled  foreign  corporation)  from  US-source  interest
income that, in general, would not be subject to US federal income tax if earned
directly by an individual  foreign person, to the extent such  distributions are
properly  designated by the Fund, and (ii) with respect to distributions  (other
than  distributions to an individual foreign person who is present in the United
States for a period or periods  aggregating  183 days or more during the year of
the  distribution)  of net  short-term  capital gains in excess of net long-term
capital losses, to the extent such distributions are properly  designated by the
Fund.  Depending on the  circumstances,  a Fund may make such  designations with
respect to all, some or none of its potentially  eligible dividends and/or treat
such  dividends,  in whole or in part, as  ineligible  for this  exemption  from
withholding.  In order to qualify for this exemption from withholding, a foreign
person will need to comply with applicable  certification  requirements relating
to its non-US status  (including,  in general,  furnishing an IRS Form W-8BEN or
substitute  Form).  In the case of shares  held  through  an  intermediary,  the
intermediary  may withhold even if a Fund makes a designation  with respect to a
payment. Foreign persons should contact their intermediaries with respect to the
application of these rules to their accounts.

                                      109
<PAGE>

If a  beneficial  holder who is a foreign  person has a trade or business in the
United States,  and the dividends are effectively  connected with the conduct by
the beneficial holder of a trade or business in the United States,  the dividend
will be subject to US federal net income taxation at regular income tax rates.

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

                                 NET ASSET VALUE

The net  asset  value of  shares  of each  Fund is  computed  as of the close of
regular trading on the New York Stock Exchange (the  "Exchange") on each day the
Exchange is open for trading (the "Value Time"). The Exchange is scheduled to be
closed on the following  holidays:  New Year's Day, Dr. Martin Luther King,  Jr.
Day,  Presidents' Day, Good Friday,  Memorial Day,  Independence Day, Labor Day,
Thanksgiving  and Christmas,  and on the preceding  Friday or subsequent  Monday
when one of these  holidays  falls on a Saturday  or Sunday,  respectively.  Net
asset  value  per share is  determined  separately  for each  class of shares by
dividing  the  value  of the  total  assets  of a  Fund,  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 a
Fund because of higher expenses borne by these classes.

The net asset value of each  Underlying  DWS Fund is  determined  based upon the
nature  of the  securities  as set  forth in the  prospectus  and  statement  of
additional  information of such  Underlying DWS Fund.  Shares of each Underlying
DWS Fund in which a Fund may invest are valued at the net asset  value per share
of each  Underlying DWS Fund as of the close of regular  trading on the Exchange
on each day the Exchange is open for  trading.  The net asset value per share of
the  Underlying  DWS Funds will be  calculated  and  reported  to a Fund by each
Underlying DWS Fund's accounting agent.  Short-term  securities with a remaining
maturity of sixty days or less are valued by the amortized cost method.

If market  quotations  for a portfolio  asset are not readily  available  or the
value of a portfolio  asset as  determined  in  accordance  with Board  approved
procedures does not represent the fair market value of the portfolio  asset, the
value of the portfolio  asset is taken to be an amount which,  in the opinion of
the  Fund's  Pricing  Committee  (or,  in  some  cases,  the  Board's  Valuation
Committee),  represents fair market value. The value of other portfolio holdings
owned by the Fund is determined in a manner which is intended to fairly  reflect
the fair market  value of the asset on the  valuation  date,  based on valuation
procedures  adopted by the Fund's  Board and  overseen  primarily  by the Fund's
Pricing Committee.

                              TRUSTEES AND OFFICERS

The following table presents certain information  regarding the Board Members of
the Trust.  Each Board Member's year of birth is set forth in parentheses  after
his or her name.  Unless  otherwise  noted, (i) each Board Member has engaged in
the principal occupation(s) noted in the table for at least the most recent five
years,  although not  necessarily in the same capacity,  and (ii) the address of
each Board  Member  that is not an  "interested  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.

                                      110
<PAGE>

Independent Board Members

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth,
 Position with the Trust                                                                         Number of Funds
 and Length of Time        Business Experience and                                               in DWS Fund
 Served                    Directorships During the Past 5 Years                                 Complex Overseen
--------------------------------------------------------------------------------------------------------------------

<S>                                 <C>                                                                    <C>
Dawn-Marie Driscoll (1946) President, Driscoll Associates (consulting firm); Executive Fellow,           76
Chairperson since 2004     Center for Business Ethics, Bentley College; formerly, Partner,
Board Member since         Palmer & Dodge (1988-1990); Vice President of Corporate Affairs and
1987                       General Counsel, Filene's (1978-1988). Directorships: Trustee of 8
                           open-end mutual funds managed by Sun Capital Advisers, Inc. (since
                           2007); Director of ICI Mutual Insurance Company (since 2007);
                           Advisory Board, Center for Business Ethics, Bentley College;
                           Trustee, Southwest Florida Community Foundation (charitable
                           organization); Former Directorships: Investment Company Institute
                           (audit, executive, nominating committees) and Independent Directors
                           Council (governance, executive committees)
--------------------------------------------------------------------------------------------------------------------
 Henry P. Becton, Jr.      Vice Chair, WGBH Educational Foundation. Directorships: Association           76
 (1943)                    of Public Television Stations; Becton Dickinson and Company(1)
 Board Member since        (medical technology company); Belo Corporation(1) (media company);
 1990                      Boston Museum of Science; Public Radio International. Former
                           Directorships: American Public Television; Concord Academy; New
                           England Aquarium; Mass. Corporation for Educational
                           Telecommunications; Committee for Economic Development; Public
                           Broadcasting Service
--------------------------------------------------------------------------------------------------------------------
Keith R. Fox (1954)        Managing General Partner, Exeter Capital Partners (a series of                76
Board Member since         private equity funds). Directorships: Progressive Holding
1996                       Corporation (kitchen goods importer and distributor); Natural
                           History, Inc. (magazine publisher); Box Top Media Inc.
                           (advertising); The Kennel Shop (retailer)
--------------------------------------------------------------------------------------------------------------------
Kenneth C. Froewiss        Clinical Professor of Finance, NYU Stern School of Business                   76
(1945)                     (1997-present); Member, Finance Committee, Association for Asian
Board Member since         Studies (2002-present); Director, Mitsui Sumitomo Insurance Group
2005                       (US) (2004-present); prior thereto, Managing Director, J.P. Morgan
                           (investment banking firm) (until 1996)
--------------------------------------------------------------------------------------------------------------------
Martin J. Gruber           Nomura Professor of Finance, Leonard N. Stern School of Business,             76
(1937)                     New York University (since September 1965); Director, Japan Equity
Board Member since         Fund, Inc. (since January 1992), Thai Capital Fund, Inc. (since
2006                       January 2000), Singapore Fund, Inc. (since January 2000), National
                           Bureau of Economic Research (since January 2006). Formerly, Trustee,
                           TIAA (pension funds) (January 1996-January 2000); Trustee, CREF and
                           CREF Mutual Funds (January 2000-March 2005); Chairman, CREF and CREF
                           Mutual Funds (February 2004-March 2005); and Director, S.G. Cowen
                           Mutual Funds (January 1985-January 2001)
--------------------------------------------------------------------------------------------------------------------
Richard J. Herring         Jacob Safra Professor of International Banking and Professor,                 76
(1946)                     Finance Department, The Wharton School, University of Pennsylvania
Board Member since         (since July 1972); Co-Director, Wharton Financial Institutions
2006                       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)
--------------------------------------------------------------------------------------------------------------------



                                      111
<PAGE>

--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth,
 Position with the Trust                                                                         Number of Funds
 and Length of Time        Business Experience and                                               in DWS Fund
 Served                    Directorships During the Past 5 Years                                 Complex Overseen
--------------------------------------------------------------------------------------------------------------------
Graham E. Jones            Senior Vice President, BGK Realty, Inc. (commercial real estate)              76
(1933)                     (since 1995). Formerly, Trustee of various investment companies
Board Member since         managed by Sun Capital Advisors, Inc. (1998-2005), Morgan Stanley
2006                       Asset Management (1985-2001) and Weiss, Peck and Greer (1985-2005)
--------------------------------------------------------------------------------------------------------------------
Rebecca W. Rimel           President and Chief Executive Officer, The Pew Charitable Trusts              76
(1951)                     (charitable foundation) (1994 to present); Trustee, Thomas Jefferson
Board Member since         Foundation (charitable organization) (1994 to present); Trustee,
2006                       Executive Committee, Philadelphia Chamber of Commerce (2001 to
                           present). Formerly, Executive Vice President, The Glenmede Trust
                           Company (investment trust and wealth management) (1983 to 2004);
                           Board Member, Investor Education (charitable organization)
                           (2004-2005); Director, Viasys Health Care(1) (January 2007-June 2007)
--------------------------------------------------------------------------------------------------------------------
Philip Saunders, Jr.       Principal, Philip Saunders Associates (economic and financial                 74
(1935)                     consulting) (since November 1988).  Formerly, Director, Financial
Board Member since         Industry Consulting, Wolf & Company (consulting) (1987-1988);
2006                       President, John Hancock Home Mortgage Corporation (1984-1986);
                           Senior Vice President of Treasury and Financial Services, John
                           Hancock Mutual Life Insurance Company, Inc. (1982-1986)
--------------------------------------------------------------------------------------------------------------------
William N. Searcy, Jr.     Private investor since October 2003; Trustee of 8 open-end mutual             76
(1946)                     funds managed by Sun Capital Advisers, Inc. (since October 1998).
Board Member since         Formerly, Pension & Savings Trust Officer, Sprint Corporation(1)
2006                       (telecommunications) (November 1989-September 2003)
--------------------------------------------------------------------------------------------------------------------
Jean Gleason Stromberg     Retired. Formerly, Consultant (1997-2001); Director, US Government            76
(1943)                     Accountability Office (1996-1997); Partner, Fulbright & Jaworski,
Board Member since         L.L.P. (law firm) (1978-1996). Directorships: The William and Flora
1999                       Hewlett Foundation; Service Source, Inc. Former Directorships:
                           Mutual Fund Directors Forum (2002-2004), American Bar Retirement
                           Association (funding vehicle for retirement plans) (1987-1990 and
                           1994-1996)
--------------------------------------------------------------------------------------------------------------------
Carl W. Vogt               Retired Senior Partner, Fulbright & Jaworski, L.L.P. (law firm);              74
(1936)                     formerly, President (interim) of Williams College (1999-2000);
Board Member since         formerly, President of certain funds in the Deutsche Asset
2002                       Management family of funds (formerly, Flag Investors family of
                           funds) (registered investment companies) (1999-2000). Directorships:
                           Yellow Corporation (trucking); American Science & Engineering (x-ray
                           detection equipment). Former Directorships: ISI Family of Funds
                           (registered investment companies, 4 funds overseen); National
                           Railroad Passenger Corporation (Amtrak) Waste Management, Inc.
                           (solid waste disposal); formerly, Chairman and Member, National
                           Transportation Safety Board
--------------------------------------------------------------------------------------------------------------------


                                      112
<PAGE>

Interested Board Member

--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth,
 Position with the Trust                                                                         Number of Funds
 and Length of Time        Business Experience and                                               in DWS Fund
 Served                    Directorships During the Past 5 Years                                 Complex Overseen
--------------------------------------------------------------------------------------------------------------------
 Axel Schwarzer(2)         Managing Director(4), Deutsche Asset Management; Head of Deutsche            82
 (1958)                    Asset Management Americas; CEO of DWS Scudder; formerly board
 Board Member since        member of DWS Investments, Germany (1999-2005); formerly, Head of
 2006                      Sales and Product Management for the Retail and Private Banking
                           Division of Deutsche Bank in Germany (1997-1999); formerly, various
                           strategic and operational positions for Deutsche Bank Germany
                           Retail and Private Banking Division in the field of investment
                           funds, tax driven instruments and asset management for corporates
                           (1989-1996)
-------------------------------------------------------------------------------------------------------------------

Officers(3)

-------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth,
 Position with the Trust    Business Experience and
 and Length of Time Served  Directorships During the Past 5 Years
-------------------------------------------------------------------------------------------------------------------
 Michael G. Clark(5)        Managing Director(4), Deutsche Asset Management (2006-present); President of DWS
 (1965)                     family of funds; Director, ICI Mutual Insurance Company (since October 2007);
 President, 2006-present    formerly, Director of Fund Board Relations (2004-2006) and Director of Product
                            Development (2000-2004), Merrill Lynch Investment Managers; Senior Vice President
                            Operations, Merrill Lynch Asset Management (1999-2000)
-------------------------------------------------------------------------------------------------------------------
 John Millette(6) (1962)    Director(4), Deutsche Asset Management
 Vice President and
 Secretary, 1999-present
-------------------------------------------------------------------------------------------------------------------
 Paul H. Schubert(5)        Managing Director(4), Deutsche Asset Management (since July 2004); formerly,
 (1963)                     Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family of
 Chief Financial Officer,   Funds (1998-2004); Vice President and Director of Mutual Fund Finance at UBS Global
 2004-present               Asset Management (1994-1998)
 Treasurer, 2005-present
-------------------------------------------------------------------------------------------------------------------
 Patricia DeFilippis(5)     Vice President, Deutsche Asset Management (since June 2005); Counsel, New York Life
 (1963)                     Investment Management LLC (2003-2005); legal associate, Lord, Abbett & Co. LLC
 Assistant Secretary,       (1998-2003)
 2005-present
-------------------------------------------------------------------------------------------------------------------
 Elisa D. Metzger(5)        Director(4), Deutsche Asset Management (since September 2005); Counsel, Morrison and
 (1962)                     Foerster LLP (1999-2005)
 Assistant Secretary,
 2005-present
-------------------------------------------------------------------------------------------------------------------
 Caroline Pearson(6)        Managing Director(4), Deutsche Asset Management
 (1962)
 Assistant Secretary,
 1997-present
-------------------------------------------------------------------------------------------------------------------
 Paul Antosca(6)            Director(4), Deutsche Asset Management (since 2006); Vice President, The
 (1957)                     Manufacturers Life Insurance Company (U.S.A.) (1990-2006)
 Assistant Treasurer,
 2007-present
-------------------------------------------------------------------------------------------------------------------



                                      113
<PAGE>

-------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth,
 Position with the Trust    Business Experience and
 and Length of Time Served  Directorships During the Past 5 Years
-------------------------------------------------------------------------------------------------------------------
 Kathleen Sullivan          Director(4), Deutsche Asset Management
 D'Eramo(6)
 (1957)
 Assistant Treasurer,
 2003-present
-------------------------------------------------------------------------------------------------------------------
 Jason Vazquez(5) (1972)    Vice President, Deutsche Asset Management (since 2006); formerly, AML Operations
 Anti-Money Laundering      Manager for Bear Stearns (2004-2006), Supervising Compliance Principal and
 Compliance Officer,        Operations Manager for AXA Financial (1999-2004)
 2007-present
-------------------------------------------------------------------------------------------------------------------
 Robert Kloby(5) (1962)     Managing Director(4), Deutsche Asset Management (2004-present); formerly, Chief
 Chief Compliance           Compliance Officer/Chief Risk Officer, Robeco USA (2000-2004); Vice President, The
 Officer, 2006-present      Prudential Insurance Company of America (1988-2000); E.F. Hutton and Company
                            (1984-1988)
-------------------------------------------------------------------------------------------------------------------
 J. Christopher Jackson(5)  Director(4), Deutsche Asset Management (2006-present); formerly, Director, Senior
 (1951)                     Vice President, General Counsel, and Assistant Secretary, Hansberger Global
 Chief Legal Officer,       Investors, Inc. (1996-2006); Director, National Society of Compliance Professionals
 2006-present               (2002-2005)(2006-2009)
-------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)      A publicly held company with securities  registered pursuant to Section
         12 of the Securities Exchange Act of 1934.

(2)      The  mailing  address  of Axel  Schwarzer  is c/o  Deutsche  Investment
         Management  Americas Inc.,  345 Park Avenue,  New York, New York 10154.
         Mr.  Schwarzer is an interested Board Member by virtue of his positions
         with Deutsche Asset Management.  As an interested person, Mr. Schwarzer
         receives no compensation from the Funds.

(3)      As a result of their respective positions held with the Advisor,  these
         individuals are considered  "interested  persons" of the Advisor within
         the meaning of the 1940 Act. Interested persons receive no compensation
         from the Funds.

(4)      Executive title, not a board directorship.

(5)      Address:  345 Park Avenue, New York, New York 10154.

(6)      Address: Two International Place, Boston, Massachusetts 02110.

Each Officer also holds  similar  positions for other  investment  companies for
which DIMA or an affiliate serves as the advisor.

Officer's Role with Principal Underwriter:  DWS Scudder Distributors, Inc.

 Paul H. Schubert:                         Vice President
 Caroline Pearson:                         Secretary

Information Concerning Committees and Meetings of Board Members

The  Board of the  Trust met ten (10)  times  during  the  calendar  year  ended
December 31, 2006 and each Board Member attended at least 80% of the meetings of
the Board and meetings of the committees of the Board on which such Board Member
served.

                                      114
<PAGE>

Board  Committees.  Ms.  Driscoll  has served as Chair of the Board of the Funds
since June 2004.

The Board has established the following  standing  committees:  Audit Committee,
Nominating/Corporate Governance Committee, Valuation Committee, Equity Oversight
Committee, Fixed Income Oversight Committee,  Marketing/Distribution/Shareholder
Service Committee,  Legal/Regulatory/Compliance Committee and Expense/Operations
Committee.

The Audit  Committee  assists the Board in  fulfilling  its  responsibility  for
oversight of the quality and integrity of the accounting, auditing and financial
reporting  practices  of the  applicable  Fund.  It also  makes  recommendations
regarding the selection of an independent  registered public accounting firm for
a Fund,  reviews the  independence of such firm,  reviews the scope of audit and
internal  controls,  considers and reports to the Board on matters relating to a
Fund's  accounting and financial  reporting  practices,  and performs such other
tasks as the full Board deems  necessary  or  appropriate.  The Audit  Committee
receives  annual   representations   from  the  independent   registered  public
accounting firm as to its  independence.  The members of the Audit Committee are
Keith R. Fox (Chair and Audit Committee Financial Expert),  Kenneth C. Froewiss,
Richard J. Herring,  Graham E. Jones,  Philip Saunders,  Jr., William N. Searcy,
Jr. and Jean  Gleason  Stromberg.  The Audit  Committee  held eight (8) meetings
during the calendar year 2006.

The  Nominating/Corporate  Governance  Committee  (i)  recommends  to the  Board
candidates  to serve as Board  Members and (ii)  oversees  and, as  appropriate,
makes  recommendations  to the Board  regarding  other  fund  governance-related
matters,  including but not limited to Board compensation practices,  retirement
policies,  self-evaluations  of effectiveness,  review of possible  conflicts of
interest  and  independence  issues  involving  Board  Members,  allocations  of
assignments  and  functions  of  committees  of the Board,  and share  ownership
policies. The members of the Nominating/Corporate Governance Committee are Henry
P.  Becton,  Jr.  (Chair),  Graham E. Jones,  Rebecca W. Rimel and Jean  Gleason
Stromberg.  The  Nominating/Corporate  Governance Committee (previously known as
the  Committee on  Independent  Directors)  held three (3)  meetings  during the
calendar year 2006.

The Valuation  Committee  oversees Fund  valuation  matters,  reviews  valuation
procedures  adopted  by the  Board,  determines  the fair  value  of the  Fund's
securities as needed in accordance  with the valuation  procedures  and performs
such other tasks as the full Board deems necessary or  appropriate.  The members
of the Valuation  Committee  are Keith R. Fox,  Kenneth C.  Froewiss,  Martin J.
Gruber,  Richard J. Herring and Philip  Saunders,  Jr.  (Chair).  The  Valuation
Committee held six (6) meetings during the calendar year 2006.

The Board has established two Investment Oversight  Committees,  one focusing on
Funds  primarily   investing  in  equity   securities  (the  "Equity   Oversight
Committee")  and one  focusing  on Funds  primarily  investing  in fixed  income
securities  (the "Fixed Income  Oversight  Committee").  These  Committees  meet
regularly with Fund portfolio managers and other investment  personnel to review
the relevant  Funds'  investment  strategies  and  investment  performance.  The
members of the Equity  Oversight  Committee are Henry P. Becton,  Jr., Martin J.
Gruber (Chair),  Richard J. Herring,  Rebecca W. Rimel, Philip Saunders, Jr. and
Carl W. Vogt. The members of the Fixed Income Oversight Committee are Dawn-Marie
Driscoll, Keith R. Fox, Kenneth C. Froewiss, Graham E. Jones, William N. Searcy,
Jr. (Chair) and Jean Gleason Stromberg. Each Investment Oversight Committee held
six (6) meetings during the calendar year 2006.

The  Marketing/Distribution/Shareholder   Service  Committee  oversees  (i)  the
quality, costs and types of shareholder services provided to the Funds and their
shareholders,  and (ii) the distribution-related  services provided to the Funds
and their  shareholders.  The members of the  Marketing/Distribution/Shareholder
Service Committee are Martin J. Gruber,  Richard J. Herring (Chair),  Rebecca W.
Rimel,     Jean     Gleason     Stromberg     and    Carl    W.    Vogt.     The
Marketing/Distribution/Shareholder  Service  Committee  held  six  (6)  meetings
during the calendar year 2006.

The  Legal/Regulatory/Compliance  Committee  oversees (i) the significant  legal
affairs of the Funds, including the handling of pending or threatened litigation
or  regulatory  action  involving  the Funds,  (ii) general  compliance  matters
relating   to  the  Funds  and  (iii)   proxy   voting.   The   members  of  the
Legal/Regulatory/Compliance  Committee  are  Henry P.  Becton,  Jr.,  Dawn-Marie
Driscoll,  Rebecca W. Rimel,  William N. Searcy, Jr., Jean Gleason Stromberg and
Carl W. Vogt (Chair).  The  Legal/Regulatory/Compliance  Committee  held six (6)
meetings during the calendar year 2006.


                                      115
<PAGE>

The Expense/Operations Committee (i) monitors the Fund's total operating expense
levels,  (ii)  oversees the  provision of  administrative  services to the Fund,
including the Fund's custody,  fund accounting and insurance  arrangements,  and
(iii) reviews the Fund's investment advisers' brokerage practices, including the
implementation  of  related  policies.  The  members  of the  Expense/Operations
Committee are Henry P. Becton, Jr., Dawn-Marie  Driscoll,  Keith R. Fox, Kenneth
C.  Froewiss,  Graham E. Jones  (Chair),  Philip  Saunders,  Jr. and  William N.
Searcy,  Jr. This  committee  held seven (7) meetings  during the calendar  year
2006.

Ad Hoc Committees.  In addition to the standing committees described above, from
time to time the Board also forms ad hoc committees to consider specific issues.
In 2006,  various ad hoc  committees of the Board held an  additional  seven (7)
meetings.

Remuneration.  Each Independent Board Member receives compensation from the Fund
for his or her services, which includes an annual retainer and an attendance fee
for each meeting attended. No additional compensation is paid to any Independent
Board Member for travel time to meetings,  attendance at directors'  educational
seminars  or  conferences,   service  on  industry  or  association  committees,
participation  as speakers at directors'  conferences or service on special fund
industry director task forces or subcommittees. Independent Board Members do not
receive any employee  benefits such as pension or retirement  benefits or health
insurance from the Fund or any fund in the DWS fund complex.

Members of the Board who are officers,  directors,  employees or stockholders of
Deutsche Asset Management or its affiliates receive no direct  compensation from
a Fund, although they are compensated as employees of Deutsche Asset Management,
or its affiliates,  and as a result may be deemed to participate in fees paid by
the Funds.  The following tables show  compensation  from the Fund and aggregate
compensation  from all of the  funds in the DWS fund  complex  received  by each
Board Member during the calendar year 2006. Mr. Schwarzer became a member of the
Board on May 5,  2006,  is an  interested  person of the Funds and  received  no
compensation  from the  Funds or any fund in the DWS  fund  complex  during  the
relevant periods.

<TABLE>
<CAPTION>
                                 Aggregate        Aggregate       Aggregate        Aggregate       Aggregate         Total
                                Compensation    Compensation     Compensation     Compensation    Compensation    Compensation
                                  from DWS        from DWS         from DWS         from DWS        from DWS     from Fund and
                                LifeCompass      LifeCompass     LifeCompass      LifeCompass     LifeCompass         DWS
Name of Board Member          Retirement Fund     2015 Fund       2020 Fund        2030 Fund       2040 Fund    Fund Complex(1)
--------------------          ---------------     ---------       ---------        ---------       ---------    ---------------

<S>                 <C>                <C>          <C>               <C>                 <C>         <C>          <C>
Henry P. Becton, Jr.(3)                $488         $1,084            $1,011              $72         $0           $189,000
Dawn-Marie Driscoll(2)(3)(4)           $645         $1,435            $1,338              $94         $0           $251,000
Keith R. Fox(3)(4)                     $499         $1,108            $1,033              $73         $0           $195,000
Kenneth C. Froewiss(3)(4)              $514         $1,142            $1,067              $75         $0           $234,988
Martin J. Gruber(3)                    $189           $416              $400              $30         $0           $188,000
Richard J. Herring(3)(4)               $182           $400              $384              $29         $0           $184,000
Graham E. Jones(3)(4)                  $210           $462              $444              $33         $0           $206,000
Rebecca W. Rimel(3)                    $185           $406              $390              $29         $0           $185,000
Philip Saunders, Jr.(3)(4)             $210           $462              $444              $33         $0           $207,000
William N. Searcy, Jr.(3)(4)           $210           $462              $444              $33         $0           $206,000
Jean Gleason Stromberg(3)(4)           $513         $1,139            $1,064              $76         $0           $202,000
Carl W. Vogt(3)                        $488         $1,084            $1,011              $72         $0           $189,000
</TABLE>

(1)      The DWS Fund Complex is composed of 155 funds as of December 31, 2006.

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

(3)      For each Board Member,  except Mr. Becton,  Mr.  Froewiss and Mr. Vogt,
         total  compensation  for calendar year 2006 includes  compensation  for
         service  on  the  boards  of  34  trusts/corporations  comprised  of 87
         funds/portfolios.  For Messrs.  Becton and Vogt total  compensation for
         calendar year 2006 includes  compensation  for service on the boards of
         32  trusts/corporations  comprised  of  85  funds/portfolios.  For  Mr.

                                      116
<PAGE>

         Froewiss   total   compensation   for  calendar   year  2006   includes
         compensation  for  services  on the  boards  of 37  trusts/corporations
         comprised of 90 funds/portfolios.

(4)      Aggregate  compensation  includes amounts paid to the Board Members for
         special  meetings of ad hoc committees of the board in connection  with
         the  possible  consolidation  of the various DWS Fund boards and funds,
         meetings for considering fund expense simplification  initiatives,  and
         consideration  of issues  specific  to the Funds'  direct  shareholders
         (i.e., those shareholders who did not purchase shares through financial
         intermediaries).  Such amounts totaled $16,000 for Ms. Driscoll, $1,000
         for Mr. Fox, $17,000 for Mr. Froewiss,  $1,000 for Dr. Herring, $16,000
         for Mr.  Jones,  $17,000 for Dr.  Saunders,  $16,000 for Mr. Searcy and
         $16,000  for Ms.  Stromberg.  These  meeting  fees  were  borne  by the
         applicable DWS Funds.

Board Member Ownership in the Funds(1)

The  following  table shows the dollar range of equity  securities  beneficially
owned by each Board  Member in the Funds and DWS Fund Complex as of December 31,
2006.

<TABLE>
<CAPTION>
                                            Dollar Range                                      Dollar Range    Aggregate Dollar
                          Dollar Range of   of Beneficial  Dollar Range of  Dollar Range of   of Beneficial  Range of Ownership
                             Beneficial     Ownership in      Beneficial       Beneficial     Ownership in      in all Funds
                            Ownership in         DWS         Ownership in     Ownership in         DWS        Overseen by Board
                          DWS LifeCompass    LifeCompass   DWS LifeCompass  DWS LifeCompass    LifeCompass    Member in the DWS
Board Member              Retirement Fund     2015 Fund       2020 Fund        2030 Fund        2040 Fund      Fund Complex(2)
------------              ---------------     ---------       ---------        ---------        ---------      ---------------

Independent Board Member:
-------------------------

<S>                          <C>             <C>              <C>                <C>              <C>                 <C>
Henry P. Becton, Jr.         $1-$10,000      $1-$10,000       $1-$10,000          None            None          Over $100,000
Dawn-Marie Driscoll       $10,001-$50,000  $10,001-$50,000 $10,001-$50,000     $1-$10,000         None          Over $100,000
Keith R. Fox                    None            None             None             None            None          Over $100,000
Kenneth C. Froewiss             None            None             None             None            None          Over $100,000
Martin J. Gruber                None            None             None             None            None          Over $100,000
Richard J. Herring              None            None             None             None            None          Over $100,000
Graham E. Jones                 None            None             None             None            None          Over $100,000
Rebecca W. Rimel                None            None             None             None            None          Over $100,000
Philip Saunders, Jr.            None            None             None             None            None          Over $100,000
William N. Searcy, Jr.          None            None             None             None            None          Over $100,000
Jean Gleason Stromberg          None       $10,001-$50,000       None             None            None          Over $100,000
Carl W. Vogt                    None            None             None             None            None          Over $100,000

Interested Board Member:
------------------------

Axel Schwarzer                  None            None             None             None                          Over $100,000
</TABLE>

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

(2)      Securities  beneficially  owned as defined  under the 1934 Act  include
         direct and/or indirect ownership of securities where the Board Member's
         economic interest is tied to the securities,  employment  ownership and
         securities  when the Board  Member can exert  voting power and when the
         Board Member has  authority to sell the  securities.  The dollar ranges
         are:  None,   $1-$10,000,   $10,001-$50,000,   $50,001-$100,000,   over
         $100,000.

                                      117
<PAGE>

Ownership in Securities of the Advisor and Related Companies

As  reported to the Funds,  the  information  in the  following  table  reflects
ownership by the Independent Board Members and their immediate family members of
certain  securities as of December 31, 2006. An immediate family member can be a
spouse,  children  residing in the same  household  including  step and adoptive
children and any dependents.  The securities  represent ownership in the Advisor
or principal  underwriter  of the Fund and any persons  (other than a registered
investment company) directly or indirectly controlling,  controlled by, or under
common control with the Advisor or principal underwriter of the Funds (including
Deutsche Bank AG).

<TABLE>
<CAPTION>
                                                                                   Value of        Percent of
                                   Owner and                                     Securities on     Class on an
Independent                     Relationship to                     Title of     an Aggregate       Aggregate
Board Member                      Board Member         Company        Class          Basis            Basis
------------                      ------------         -------        -----          -----            -----
<S>                                   <C>                 <C>            <C>             <C>          <C>
Henry P. Becton, Jr.                                    None
Dawn-Marie Driscoll                                     None
Keith R. Fox                                            None
Kenneth C. Froewiss                                     None
Martin J. Gruber                                        None
Richard J. Herring                                      None
Graham E. Jones                                         None
Rebecca W. Rimel                                        None
Philip Saunders, Jr.                                    None
William N. Searcy, Jr.                                  None
Jean Gleason Stromberg                                  None
Carl W. Vogt                                            None
</TABLE>

Securities Beneficially Owned

As of October 26, 2007, the Board Members and officers of the Trust owned,  as a
group, less than 1% of the outstanding shares of the Funds.

To the best of each Fund's knowledge, as of October 26, 2007, no person owned of
record  or  beneficially  5% or more of any  class  of each  Fund's  outstanding
shares, except as noted below.

DWS Life Compass Retirement Fund

<TABLE>
<CAPTION>
Name and Address of Investor Ownership                          Shares                      % of Total Shares
--------------------------------------                          ------                      -----------------

<S>                                                             <C>                         <C>
DWS TRUST COMPANY TTEE                                          475,597.152                 12.61% of Class A
FBO COMMUNITY HEALTH SYSTEMS
INC 401K PLAN #XXXXXX
ATTN: ASSET RECON
SALEM NH  03079-1143

CITIGROUP GLOBAL MARKETS INC                                  62,563.724                    9.72% of Class B
XXXXXXXXXXX
ATTN PETER BOOTH 7TH FL
NEW YORK NY  10001-2402

MLPF&S FOR THE SOLE BENEFIT OF                                37,093.960                    5.76% of Class B
ITS CUSTOMERS
ATTN FUND ADMINISTRATION 97D93
JACKSONVILLE FL  32246-6484


                                      118
<PAGE>
Name and Address of Investor Ownership                          Shares                      % of Total Shares
--------------------------------------                          ------                      -----------------

MORGAN STANLEY & CO.                                            247,152.484                 22.05% of Class C
HARBORSIDE FINANCIAL CENTER
JERSEY CITY NJ  07311

MLPF&S FOR THE SOLE BENEFIT OF                                  152,386.984                 5.93% of Class C
ITS CUSTOMERS
ATTN FUND ADMINISTRATION 97D93
JACKSONVILLE FL  32246-6484

DWS LifeCompass 2015 Fund

Name and Address of Investor Ownership                          Shares                      % of Total Shares
--------------------------------------                          ------                      -----------------

DWS TRUST COMPANY TTEE                                       1,106,345.708                  10.48% of Class A
FBO COMMUNITY HEALTH SYSTEMS
INC 401K PLAN #XXXXXX
ATTN: ASSET RECON
SALEM NH  03079-1143

MORGAN STANLEY & CO.                                            263,984.399                 41.02% of Class B
HARBORSIDE FINANCIAL CENTER
JERSEY CITY NJ  07311

CITIGROUP GLOBAL MARKETS INC                                    153,763.539                 23.89% of Class B
XXXXXXXXXXX
ATTN PETER BOOTH 7TH FL
NEW YORK NY  10001-2402

MORGAN STANLEY & CO.                                            244,947.514                 9.54% of Class C
HARBORSIDE FINANCIAL CENTER
JERSEY CITY NJ  07311

MLPF&S FOR THE SOLE BENEFIT OF                                  335,549.283                 13.07% of Class C
ITS CUSTOMERS
ATTN FUND ADMINISTRATION 97D93
JACKSONVILLE FL  32246-6484

DWS TRUST COMPANY                                            1,068,687.786                  10.05% of Class S
DURHAM SCHOOL SERVICES 401(K) & PRO
ATTN ASSET RECON DEPT #
XXXXXX
SALEM NH  03079-1143

DWS TRUST COMPANY TTEE OF THE                                1,071,484.820                  10.07% of Class S
TIFFANY & CO EE P/S AND
RETIREMENT SAVINGS PLAN
ATTN: ASSET RECON
SALEM NH  03079-1143


                                      119
<PAGE>
Name and Address of Investor Ownership                          Shares                      % of Total Shares
--------------------------------------                          ------                      -----------------

DWS TRUST COMPANY TTEE                                       1,347,823.385                  12.67% of Class S
FBO ARCHDIOSESAN PENSION PLAN
FOR LAY EMPLOYEES
ATTN: ASSET RECON
SALEM NH  03079-1143

DWS Life Compass 2020 Fund

Name and Address of Investor Ownership                          Shares                      % of Total Shares
--------------------------------------                          ------                      -----------------

DWS TRUST COMPANY TTEE                                          537,960.306                 8.31% of Class A
FBO COMMUNITY HEALTH SYSTEMS
INC 401K PLAN #XXXXXX
ATTN: ASSET RECON
SALEM NH  03079-1143

CITIGROUP GLOBAL MARKETS INC                                    217,442.937                 11.97% of Class B
XXXXXXXXXXX
ATTN PETER BOOTH 7TH FL
NEW YORK NY  10001-2402

MORGAN STANLEY & CO.                                            254,705.250                 14.02% of Class B
HARBORSIDE FINANCIAL CENTER
JERSEY CITY NJ  07311

MORGAN STANLEY & CO.                                            141,571.899                 5.51% of Class C
HARBORSIDE FINANCIAL CENTER
JERSEY CITY NJ  07311

CITIGROUP GLOBAL MARKETS INC                                    201,071.762                 7.83% of Class C
XXXXXXXXXXX
ATTN PETER BOOTH 7TH FL
NEW YORK NY  10001-2402

MLPF&S FOR THE SOLE BENEFIT OF                                  300,610.405                 11.71% of Class C
ITS CUSTOMERS
ATTN FUND ADMINISTRATION 97D93
JACKSONVILLE FL  32246-6484

DWS TRUST COMPANY TTEE OF THE                                   798,436.703                 8.17% of Class S
TIFFANY & CO EE P/S AND
RETIREMENT SAVINGS PLAN
ATTN: ASSET RECON
SALEM NH  03079-1143

DWS Life Compass 2030 Fund

Name and Address of Investor Ownership                          Shares                      % of Total Shares
--------------------------------------                          ------                      -----------------

MLPF&S FOR THE SOLE BENEFIT OF                                   22,401.925                 7.06% of Class B
ITS CUSTOMERS
ATTN FUND ADMINISTRATION 97D93
JACKSONVILLE FL  32246-6484

                                      120
<PAGE>
Name and Address of Investor Ownership                          Shares                      % of Total Shares
--------------------------------------                          ------                      -----------------

MORGAN STANLEY & CO.                                             27,454.499                 8.65% of Class B
HARBORSIDE FINANCIAL CENTER
JERSEY CITY NJ  07311

RICHARD DIXON &                                               47,533.999                    14.98%of Class C
EUNICE E DIXON JTWROS TOD
TUCSON AZ  85739-9413

MORGAN STANLEY & CO.                                          84,479.497                    26.63% of Class C
HARBORSIDE FINANCIAL CENTER
JERSEY CITY NJ  07311

CHIA MEI CHEN TOD                                             42,536.481                    13.98% Of Class S
MOUNTAIN VIEW CA  94039-1290
</TABLE>

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 the Funds,  each Fund's  investment  advisor has agreed,
subject to  applicable  law and  regulation,  to indemnify and hold harmless the
applicable  Funds  against  any and all loss,  damage,  liability  and  expense,
arising  from  market  timing or  marketing  and sales  matters  alleged  in any
enforcement actions brought by governmental authorities involving or potentially
affecting the Funds or the investment  advisor  ("Enforcement  Actions") or that
are the basis for private  actions  brought by shareholders of the Funds against
the Funds,  their directors and officers,  the Funds' investment  advisor and/or
certain other parties ("Private Litigation"), or any proceedings or actions that
may  be  threatened  or  commenced  in  the  future  by  any  person  (including
governmental authorities), arising from or similar to the matters alleged in the
Enforcement Actions or Private Litigation.  In recognition of its undertaking to
indemnify  the  applicable  Funds  and in  light of the  rebuttable  presumption
generally  afforded to independent  directors/trustees  of investment  companies
that they have not engaged in disabling conduct,  each Fund's investment advisor
has also agreed,  subject to  applicable  law and  regulation,  to indemnify the
applicable  Funds'   Independent   Trustees  against  certain   liabilities  the
Independent  Trustees  may incur from the  matters  alleged  in any  Enforcement
Actions or Private  Litigation or arising from or similar to the matters alleged
in the Enforcement Actions or Private Litigation,  and advance expenses that may
be  incurred by the  Independent  Trustees in  connection  with any  Enforcement
Actions  or  Private  Litigation.  The  applicable  investment  advisor  is not,
however,  required to provide  indemnification and advancement of expenses:  (1)
with respect to any  proceeding  or action with respect to which the  applicable
Fund's Board  determines that the Independent  Trustee  ultimately  would not be
entitled to indemnification or (2) for any liability of the Independent  Trustee
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 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 each Fund's  investment
advisor will survive the  termination  of the investment  management  agreements
between the applicable investment advisor and the Funds.

                               TRUST ORGANIZATION

Organizational Description

The Funds are  portfolios  of DWS Target Date Series  (formerly  DWS  Allocation
Series) (the  "Trust"),  a  Massachusetts  business  trust  established  under a
Declaration of Trust dated June 27, 2006.  Prior to February 6, 2006, DWS Target
Date Series was known as Scudder Pathway Series.  The Trust's authorized capital
consists of an unlimited  number of shares of  beneficial  interest of $0.01 par
value,  all of which  are of one  class  and have  equal


                                      121
<PAGE>

rights as to voting,  dividends and liquidation.  The Trust is comprised of five
separate funds: DWS LifeCompass  Retirement Fund, DWS LifeCompass 2015 Fund, and
DWS  LifeCompass  2020 Fund,  all of which were  organized on July 1, 1994;  DWS
LifeCompass  2030  Fund  which  was  organized  on  November  1,  2004  and  DWS
LifeCompass  2040 Fund which was  organized  on  November  15,  2007.  Each Fund
consists of an unlimited  number of shares.  Each Fund,  except DWS  LifeCompass
2040 Fund,  is further  divided into four  classes of shares,  Class S, Class A,
Class B and Class C. DWS LifeCompass  2040 Fund is divided into three classes of
shares,  Class S, Class A and Class C. The Trustees  have the authority to issue
additional  funds to the Trust.  To the extent that the Funds  offer  additional
share classes,  these classes will be offered in a separate  prospectus and have
different fees, requirements and services.

The Trustees have the authority to create  additional funds and to designate the
relative  rights and  preferences as between the different  funds.  The Trustees
also may  authorize  the  division of shares of a Fund into  different  classes,
which may bear different  expenses.  All shares issued and outstanding are fully
paid and non-assessable,  transferable, have no pre-emptive or conversion rights
and are  redeemable as described in the SAI and in the 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.  The Trustees may also  terminate  any Fund or class by
notice to the shareholders without shareholder approval.

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

A Fund generally is not required to hold meetings of its shareholders. Under the
Declaration of Trust,  however,  shareholder meetings will be held in connection
with the following  matters to the extent and as provided in the  Declaration of
Trust and as required by applicable law: (a) the election or removal of trustees
if a meeting is called for such purpose;  (b) the  termination of the Trust or a
Fund; (c) an amendment of the  Declaration  of Trust;  (d) to the same extent as
stockholders of Massachusetts  business corporation as to whether or not a court
action,  proceeding  or claims  should or should not be  brought  or  maintained
derivatively  or as a class  action on behalf of the Trust or the  Shareholders;
(e) a merger, consolidation or sale of assets; (f) the adoption of an investment
advisory  or  management  contract;  (g) the  incorporation  of the Trust or any
series;  (h) any plan  adopted  pursuant to Rule 12b-1 (or any  successor  rule)
under the 1940 Act; and (i) 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 as the  Trustees may  determine  to be necessary or  desirable.
Shareholders also vote upon changes in fundamental policies or restrictions.

The Declaration of Trust provides that shareholder  meeting quorum  requirements
shall be established  in the Trust's  By-laws.  The By-laws  currently in effect
provide that the presence in person or by proxy of the holders of thirty percent
of the shares entitled to vote at a meeting (or of an individual series or class
if required to vote separately) shall constitute a quorum for the transaction of
business at meetings of shareholders of the Trust.

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


                                      122
<PAGE>

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.

Upon the  termination  of the Trust or any series,  after  paying or  adequately
providing for the payment of all liabilities which may include the establishment
of a liquidating  trust or similar  vehicle,  and upon receipt of such releases,
indemnities   and  refunding   agreements  as  they  deem  necessary  for  their
protection, the Trustees may distribute the remaining Trust property or property
of the series,  in cash or in kind or partly each,  to the  shareholders  of the
Trust or the series involved,  ratably  according to the number of shares of the
Trust or such  series  held by the  several  shareholders  of the  Trust or such
series on the date of termination,  except to the extent  otherwise  required or
permitted by the  preferences  and special or relative  rights and privileges of
any classes of shares of a series  involved,  provided that any  distribution to
the  shareholders  of a  particular  class  of  shares  shall  be  made  to such
shareholders  pro rata in  proportion to the number of shares of such class held
by  each  of  them.  The  composition  of any  such  distribution  (e.g.,  cash,
securities  or  other  assets)  shall  be  determined  by the  Trust in its sole
discretion, and may be different among shareholders (including differences among
shareholders in the same series or class).

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

Each Fund has delegated proxy voting responsibilities to its investment advisor,
subject to each Board's general oversight.  Each Fund has delegated proxy voting
to the Advisor with the direction that proxies should be voted  consistent  with
each  Fund's  best  economic  interests.  The  Advisor has adopted its own Proxy
Voting  Policies  and  Procedures  ("Policies"),  and  Proxy  Voting  Guidelines
("Guidelines")  for this  purpose.  The Policies  address,  among other  things,
conflicts of interest that may arise between the interests of each Fund, and the
interests of the Advisor and its  affiliates,  including  each Fund's  principal
underwriter.  The Guidelines set forth the Advisor's general position on various
proposals, such as:

o        Shareholder  Rights -- The Advisor  generally  votes against  proposals
         that restrict shareholder rights.

o        Corporate  Governance -- The Advisor  generally votes for  confidential
         and cumulative voting and against supermajority voting requirements for
         charter and bylaw amendments. The Advisor generally votes for proposals
         to restrict a chief  executive  officer from serving on more than three
         outside  boards of  directors.  The  Advisor  generally  votes  against
         proposals  that  require a company  to  appoint  a  Chairman  who is an
         independent director.

                                      123
<PAGE>

o        Anti-Takeover Matters -- The Advisor generally votes for proposals that
         require shareholder ratification of poison pills or that request boards
         to redeem poison pills,  and votes against the adoption of poison pills
         if  they  are  submitted  for  shareholder  ratification.  The  Advisor
         generally votes for fair price proposals.

o        Compensation  Matters -- The Advisor generally votes for executive cash
         compensation  proposals,  unless they are unreasonably  excessive.  The
         Advisor generally votes against stock option plans that do not meet the
         Advisor's criteria.

o        Routine Matters -- The Advisor  generally votes for the ratification of
         auditors,  procedural matters related to the annual meeting and changes
         in company name, and against bundled proposals and adjournment.

The general provisions described above do not apply to investment companies. The
Advisor generally votes proxies solicited by investment  companies in accordance
with the  recommendations  of an  independent  third  party,  except for proxies
solicited by or with respect to investment companies for which the Advisor or an
affiliate  serves as investment  advisor or principal  underwriter  ("affiliated
investment companies").  The Advisor votes affiliated investment company proxies
in  the  same  proportion  as  the  vote  of  the  investment   company's  other
shareholders  (sometimes called "mirror" or "echo" voting).  Master fund proxies
solicited from feeder funds are voted in accordance with applicable requirements
of the Investment Company Act of 1940.

Although the  Guidelines  set forth the Advisor's  general  voting  positions on
various proposals,  the Advisor may, consistent with each Fund's best interests,
determine under some circumstances to vote contrary to those positions.

The  Guidelines  on a  particular  issue  may or may  not  reflect  the  view of
individual  members of each Board or of a majority of each Board.  In  addition,
the  Guidelines  may  reflect a voting  position  that  differs  from the actual
practices of the public  companies  within the Deutsche Bank  organization or of
the  investment  companies  for  which the  Advisor  or an  affiliate  serves as
investment advisor or sponsor.

The  Advisor  may  consider  the views of a portfolio  company's  management  in
deciding how to vote a proxy or in establishing general voting positions for the
Guidelines, but management's views are not determinative.

As mentioned above, the Policies  describe the way in which the Advisor resolves
conflicts  of  interest.  To  resolve  conflicts,   the  advisor,  under  normal
circumstances,  votes proxies in accordance with its Guidelines.  If the Advisor
departs  from  the  Guidelines  with  respect  to a  particular  proxy or if the
Guidelines do not specifically  address a certain proxy proposal, a proxy voting
committee established by the advisor will vote the proxy. Before voting any such
proxy,  however,  the  Advisor's  conflicts  review  committee  will  conduct an
investigation to determine whether any potential  conflicts of interest exist in
connection with the particular proxy proposal. If the conflicts review committee
determines  that the Advisor has a material  conflict  of  interest,  or certain
individuals on the proxy voting committee  should be recused from  participating
in a  particular  proxy vote,  it will  inform the proxy  voting  committee.  If
notified  that the Advisor has a material  conflict,  or fewer than three voting
members are eligible to  participate  in the proxy vote,  typically  the Advisor
will  engage an  independent  third  party to vote the proxy or follow the proxy
voting recommendations of an independent third party.

Under certain circumstances,  the Advisor may not be able to vote proxies or the
Advisor  may find that the  expected  economic  costs from voting  outweigh  the
benefits  associated with voting. For example,  the Advisor may not vote proxies
on certain foreign securities due to local restrictions or customs.  The Advisor
generally  does  not vote  proxies  on  securities  subject  to  share  blocking
restrictions.

You may  obtain  information  about  how 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-scudder.com  (click on "proxy voting" at the bottom of the
page).

                                      124
<PAGE>

                              FINANCIAL STATEMENTS

The financial statements,  including the portfolio of investments, of each Fund,
together with the Report of the Independent  Registered  Public Accounting Firm,
Financial  Highlights and notes to financial  statements in the Annual Report to
the  Shareholders  of the Fund  dated  August  31,  2007,  are  incorporated  by
reference  herein  and are  deemed to be a part of this  combined  Statement  of
Additional Information.

                             ADDITIONAL INFORMATION

The CUSIP numbers of the classes are:

DWS LifeCompass Retirement Fund

Class A:  23337A608

Class B:  23337A707

Class C:   23337A806

DWS LifeCompass 2015 Fund

Class A:  23337A103

Class B:  23337A202

Class C: 23337A301

DWS LifeCompass 2020 Fund

Class A:  23337A863

Class B:  23337A855

Class C:  23337A848

DWS LifeCompass 2030 Fund

Class A:  23337A814

Class B:  23337A798

Class C:  23337A780

DWS LifeCompass 2040 Fund

Class A:  23337A764

Class C:  23337A756

Each Fund has a fiscal year end of August 31.

This Statement of Additional  Information contains the information of DWS Target
Date Series.  Each Fund,  through its combined  prospectus,  offers only its own
share  classes,  yet it is  possible  that one Fund  might  become  liable for a

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misstatement  regarding  another Fund. The Trustees of each Fund have considered
this, and have approved the use of this Statement of Additional Information.

The Funds' prospectus and this Statement of Additional  Information omit certain
information  contained in the Registration  Statement which the Funds have 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 each Fund and
the securities  offered hereby.  This Registration  Statement and its amendments
are available for inspection by the public at the SEC in Washington, D.C.

                             RATINGS OF INVESTMENTS

Standard & Poor's Corporation Bond Ratings

AAA.  Debt  rated AAA had the  highest  rating  assigned  by  Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA. Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.

A. Debt  rated A has a strong  capacity  to pay  interest  and  repay  principal
although it is somewhat more  susceptible  to the adverse  effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB.  Debt rated BBB is regarded as having an adequate  capacity to pay interest
and  repay  principal.   Whereas  it  normally  exhibits   adequate   protection
parameters,  adverse  economic  conditions  or changing  circumstances  are more
likely to lead to a weakened  capacity to pay interest and repay  principal  for
debt in this category than in higher rated categories.

BB, B, CCC, CC and C. Debt rated BB, B, CCC, CC and C is  regarded,  on balance,
as predominantly  speculative with respect to capacity to pay interest and repay
principal in  accordance  with the terms of the  obligation.  BB  indicates  the
lowest degree of speculation and C the highest degree of speculation. While such
debt will likely have some  quality and  protective  characteristics,  these are
outweighed by large uncertainties or major risk exposures to adverse conditions.

CI. The rating CI is  reserved  for income  bonds on which no  interest is being
paid.

D. Debt rated D is in  default,  and  payment of interest  and/or  repayment  of
principal is in arrears.

Moody's Investors Service, Inc. Bond Ratings

AAA. Bonds which are rated Aaa are judged to be of the best quality.  They carry
the  smallest  degree  of  investment  risk  and are  generally  referred  to as
"gilt-edge."  Interest  payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change,  such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Aa. Bonds which are rated Aa are judged to be of high quality by all  standards.
Together with the Aaa group they comprise what are generally known as high-grade
bonds.  They are rated lower than the best bonds  because  margins of protection
may not be as large as in Aaa securities or  fluctuation of protective  elements
may be of greater  amplitude or there may be other  elements  present which make
the long term risks appear somewhat larger than in Aaa securities.

A. Bonds which are rated A possess many favorable investment  attributes and are
to be considered as upper medium grade  obligations.  Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

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<PAGE>

Baa. Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither  highly  protected nor poorly  secured.  Interest  payments and
principal  security  appear  adequate  for the present  but  certain  protective
elements may be lacking or may be  characteristically  unreliable over any great
length of time. Such bonds lack outstanding  investment  characteristics  and in
fact have speculative characteristics as well.

Ba.  Bonds  which are rated Ba are judged to have  speculative  elements;  their
future cannot be considered  as well assured.  Often the  protection of interest
and  principal  payments may be very  moderate and thereby not well  safeguarded
during  both  good  and bad  times  over the  future.  Uncertainty  of  position
characterizes bonds in this class.

B. Bonds  which are rated B  generally  lack  characteristics  of the  desirable
investment.  Assurance of interest and principal  payments or of  maintenance of
other terms of the contract over any long period of time may be small.

Caa.  Bonds  which are rated Caa are of poor  standing.  Such  issues  may be in
default or there may be present  elements of danger with respect to principal or
interest.

Ca. Bonds which are rated Ca represent  obligations  which are  speculative in a
high degree. Such issues are often in default or have other marked shortcomings.

C.  Bonds  which are rated C are the lowest  rated  class of bonds and issues so
rated can be regarded as having  extremely  poor prospects of ever attaining any
real investment standing.

Fitch Long-Term Debt Ratings

AAA.  Highest credit  quality.  "AAA" ratings  denote the lowest  expectation of
credit risk. They are assigned only in case of exceptionally strong capacity for
timely payment of financial commitments.  This capacity is highly unlikely to be
adversely affected by foreseeable events.

AA. Very high credit  quality.  "AA"` ratings  denote a very low  expectation of
credit risk.  They indicate very strong capacity for timely payment of financial
commitments.  This  capacity  is not  significantly  vulnerable  to  foreseeable
events.

A. High credit quality. "A" ratings denote a low expectation of credit risk. The
capacity for timely payment of financial  commitments is considered strong. This
capacity may, nevertheless, be more vulnerable to changes in circumstances or in
economic conditions than is the case for higher ratings.

BBB. Good credit quality.  "BBB" ratings  indicate that there is currently a low
expectation  of credit  risk.  The  capacity  for timely  payment  of  financial
commitments is considered adequate,  but adverse changes in circumstances and in
economic conditions are more likely to impair this capacity.  This is the lowest
investment-grade category.

BB.  Speculative.  "BB" ratings  indicate that there is a possibility  of credit
risk  developing,  particularly  as the result of adverse  economic  change over
time;  however,  business or  financial  alternatives  may be available to allow
financial  commitments  to be met.  Securities  rated in this  category  are not
investment grade.

B. Highly  speculative.  "B" ratings  indicate that  significant  credit risk is
present,  but a limited  margin of safety  remains.  Financial  commitments  are
currently being met; however,  capacity for continued payment is contingent upon
a sustained, favorable business and economic environment.

CCC,  CC, C. High  default  risk.  Default is a real  possibility.  Capacity for
meeting  financial  commitments  is solely  reliant  upon  sustained,  favorable
business or economic developments.  A "CC" rating indicates that default of some
kind appears probable. "C" ratings signal imminent default.

DDD, DD, D. Default.  The ratings of  obligations  in this category are based on
their prospects for achieving  partial or full recovery in a  reorganization  or
liquidation  of  the  obligor.   While  expected   recovery  values  are  highly

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<PAGE>

speculative  and cannot be estimated with any precision,  the following serve as
general  guidelines.  "DDD" obligations have the highest potential for recovery,
around  90%-100% of  outstanding  amounts and accrued  interest.  "DD" indicates
potential  recoveries  in the  range of  50%-90%,  and "D" the  lowest  recovery
potential, i.e., below 50%.

Entities  rated  in  this  category  have  defaulted  on  some  or all of  their
obligations.  Entities  rated "DDD" have the highest  prospect for resumption of
performance  or  continued  operation  with or  without a formal  reorganization
process.  Entities  rated  "DD"  and  "D"  are  generally  undergoing  a  formal
reorganization or liquidation process;  those rated "DD" are likely to satisfy a
higher portion of their outstanding obligations, while entities rated "D" have a
poor prospect for repaying all obligations.

Fitch Short-Term Debt Ratings

F1.  Highest credit  quality.  Indicates the Best capacity for timely payment of
financial commitments;  may have an added "+" to denote any exceptionally strong
credit feature.

F2. Good credit quality. A satisfactory capacity for timely payment of financial
commitments,  but the  margin  of  safety  is not as great as in the case of the
higher ratings.

F3.  Fair  credit  quality.   The  capacity  for  timely  payment  of  financial
commitments is adequate;  however,  near-term  adverse changes could result in a
reduction to non-investment grade.

B.  Speculative.  Minimal capacity for timely payment of financial  commitments,
plus  vulnerability  to  near-term  adverse  changes in  financial  and economic
conditions.

C. High  default  risk.  Default is a real  possibility.  Capacity  for  meeting
financial commitments is solely reliant upon a sustained, favorable business and
economic environment.

D. Default. Denotes actual or imminent payment default.

Commercial Paper Ratings

Commercial  paper rated by Standard & Poor's  Ratings  Services  ("S&P") has the
following   characteristics:   Liquidity   ratios  are  adequate  to  meet  cash
requirements.  Long-term  senior  debt is rated "A" or  better.  The  issuer has
access to at least two additional channels of borrowing. Basic earnings and cash
flow  have an  upward  trend  with  allowance  made for  unusual  circumstances.
Typically, the issuer's industry is well established and the issuer has a strong
position  within the industry.  The  reliability  and quality of management  are
unquestioned.  Relative  strength  or weakness  of the above  factors  determine
whether the issuer's commercial paper is rated A-1 or A-2.

The ratings  Prime-1 and Prime-2 are the two highest  commercial  paper  ratings
assigned  by Moody's  Investors  Service,  Inc.  ("Moody's").  Among the factors
considered by it in assigning  ratings are the following:  (1) evaluation of the
management of the issuer;  (2) economic  evaluation of the issuer's  industry or
industries and an appraisal of  speculative-type  risks which may be inherent in
certain  areas;  (3)  evaluation  of  the  issuer's   products  in  relation  to
competition and customer  acceptance;  (4) liquidity;  (5) amount and quality of
long-term debt; (6) trend of earnings over a period of ten years;  (7) financial
strength of a parent company and the relationships  which exist with the issuer;
and (8) recognition by the management of obligations which may be present or may
arise as a result of public  interest  questions and  preparations  to meet such
obligations.  Relative  strength  or weakness  of the above  factors  determines
whether the issuer's commercial paper is rated Prime-1 or 2.

Municipal Notes

Moody's: The highest ratings for state and municipal short-term  obligations are
"MIG 1," "MIG 2," and "MIG 3" (or "VMIG 1," "VMIG 2" and "VMIG 3" in the case of
an issue having a variable rate demand feature). Notes rated "MIG 1" or "VMIG 1"
are judged to be of the "best  quality".  Notes rated "MIG 2" or "VMIG 2" are of
"high


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quality,"  with  margins or  protection  "ample  although not as large as in the
preceding  group".  Notes rated "MIG 3" or "VMIG 3" are of "favorable  quality,"
with all  security  elements  accounted  for but  lacking  the  strength  of the
preceding grades.

S&P:  The  "SP-1"  rating  reflects  a "very  strong or strong  capacity  to pay
principal and interest". Notes issued with "overwhelming safety characteristics"
will be rated "SP-1+".  The "SP-2" rating reflects a "satisfactory  capacity" to
pay principal and interest.

Fitch:  The highest ratings for state and municipal  short-term  obligations are
"F-1+," "F-1," and "F-2."




                                      129
<PAGE>

                             DWS TARGET DATE SERIES
                        (formerly DWS ALLOCATION SERIES)


                         DWS LifeCompass Retirement Fund
                   (formerly DWS Conservative Allocation Fund)

                                     Class S

                            DWS LifeCompass 2015 Fund
                     (formerly DWS Moderate Allocation Fund)
                                     Class S

                            DWS LifeCompass 2020 Fund
                      (formerly DWS Growth Allocation Fund)
                                     Class S

                            DWS LifeCompass 2030 Fund
                   (formerly DWS Growth Plus Allocation Fund)
                                     Class S

                            DWS LifeCompass 2040 Fund
                                     Class S









                       STATEMENT OF ADDITIONAL INFORMATION

                                November 15, 2007

This combined Statement of Additional Information is not a prospectus and should
be read in conjunction with the combined  prospectus dated November 15, 2007, as
amended from time to time, for DWS LifeCompass  Retirement Fund, DWS LifeCompass
2015  Fund,  DWS  LifeCompass  2020  Fund,  DWS  LifeCompass  2030  Fund and DWS
LifeCompass  2040 Fund  (each a "Fund" and  collectively  the  "Funds"),  each a
series of DWS Target Date Series (the "Trust").  Copies of the prospectus may be
obtained without charge by contacting DWS Scudder Distributors,  Inc., 222 South
Riverside Plaza, Chicago, Illinois 60606, 1-800-621-1148,  or from the firm from
which this Statement of Additional  Information was obtained,  and are available
along with other materials on the Securities and Exchange  Commission's Internet
Web site (http://www.sec.gov).

The financial  statements  that are part of the Annual Report to Shareholders of
each Fund,  dated August 31, 2007, are  incorporated by reference herein and are
deemed to be part of this Statement of Additional Information.

This Statement of Additional  Information is  incorporated by reference into the
combined prospectus.



<PAGE>



                                TABLE OF CONTENTS
                                                                            Page
                                                                            ----

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

INVESTMENT POLICIES AND TECHNIQUES FOR THE FUNDS...............................2

INVESTMENT POLICIES AND TECHNIQUES OF THE UNDERLYING DWS FUNDS................13
   Strategic Transactions and Derivatives.....................................51
   Portfolio Holdings Information.............................................60

MANAGEMENT OF THE FUNDS.......................................................61
   Investment Advisor.........................................................61
   Compensation of Portfolio Managers.........................................64
   Administrative Agreements..................................................68

FUND SERVICE PROVIDERS........................................................77
   Underwriter................................................................77
   Independent Registered Public Accounting Firm and Reports to Shareholders..78
   Legal Counsel..............................................................78
   Custodian, Transfer Agent and Shareholder Service Agent....................78

PORTFOLIO TRANSACTIONS........................................................81

PURCHASE OR REDEMPTION OF SHARES..............................................86

DIVIDENDS.....................................................................96

TAXES.........................................................................96

NET ASSET VALUE..............................................................101

TRUSTEES AND OFFICERS........................................................102

TRUST ORGANIZATION...........................................................113

PROXY VOTING GUIDELINES......................................................115

FINANCIAL STATEMENTS.........................................................116

ADDITIONAL INFORMATION.......................................................116

RATINGS OF INVESTMENTS.......................................................117

                                       i

<PAGE>

                             INVESTMENT RESTRICTIONS

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

Each Fund has elected to be classified  as a  diversified  series of an open-end
investment management company.

As a matter of fundamental policy, each Fund may not:

(1)       borrow money,  except as permitted under the Investment Company Act of
          1940 (the "1940 Act"),  as amended,  and as interpreted or modified by
          regulatory authority having jurisdiction, from time to time;

(2)       issue senior  securities,  except as permitted  under the 1940 Act, as
          amended, and as interpreted or modified by regulatory authority having
          jurisdiction, from time to time;

(3)       engage in the business of  underwriting  securities  issued by others,
          except to the extent that a Fund may be deemed to be an underwriter in
          connection with the disposition of portfolio securities;

(4)       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; except
          that each Fund may  concentrate  in an Underlying  DWS Fund.  However,
          each   Underlying  DWS  Fund  in  which  each  Fund  will  invest  may
          concentrate its investments in a particular industry;

(5)       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;

(6)       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; or

(7)       make loans except as permitted under the 1940 Act, as amended,  and as
          interpreted or modified by regulatory  authority having  jurisdiction,
          from time to time.

A  fundamental  policy may not be changed  without the approval of a majority of
the  outstanding  voting  securities  of a Fund  which,  under the 1940 Act,  as
amended,  and the rules  thereunder  and as used in this Statement of Additional
Information,  means  the  lesser  of (1) 67% or more  of the  voting  securities
present at such  meeting,  if the  holders  of more than 50% of the  outstanding
voting  securities of a Fund are present or  represented  by proxy,  or (2) more
than 50% of the outstanding voting securities of a Fund.

The  Trustees  of the  Trust  have  voluntarily  adopted  certain  policies  and
restrictions,  which are observed in the conduct of each Fund's  affairs.  These
represent  intentions  of the Trustees  based upon current  circumstances.  Such
non-fundamental  policies may be changed or amended by the Trustees of the Trust
without prior notice to or approval of shareholders.

As a matter of non-fundamental policy, each Fund currently does not intend to:

(a)      invest  in  companies  for the  purpose  of  exercising  management  or
         control;

                                       1
<PAGE>

(b)      borrow money in an amount  greater  than 5% of its total assets  except
         (i) for temporary or emergency purposes and (ii) by engaging in reverse
         repurchase   agreements,   dollar  rolls,   or  other   investments  or
         transactions  described in a Fund's registration statement which may be
         deemed to be borrowings;

The Funds will not purchase  illiquid  securities,  including  time deposits and
repurchase  agreements maturing in more than seven days if, as a result thereof,
more than 10% of a Fund's net assets valued at the time of the transaction would
be invested in such securities.

To meet federal tax  requirements for  qualification  as a regulated  investment
company,  each Fund  must  limit  its  investments  so that at the close of each
quarter  of its  taxable  year (1) no more  than  25% of its  total  assets  are
invested in the securities (other than US Government securities or securities of
a regulated  investment  company) of (a) 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 (b) in the securities of one or more qualified publicly
traded  partnerships (as discussed in "Taxes,"  below),  and (2) at least 50% of
its total assets is represented by cash,  government  securities,  securities of
other regulated  investment  companies,  and other securities of any issuer that
does not  represent  more than 5% of the  Fund's  assets or more than 10% of the
issuer's outstanding voting securities.

                INVESTMENT POLICIES AND TECHNIQUES FOR THE FUNDS

General Investment Objectives and Policies

Except as otherwise  indicated,  each Fund's investment  objectives and policies
are not fundamental and may be changed without a vote of shareholders.  If there
is a change  in a Fund's  investment  objective,  shareholders  should  consider
whether  the Fund  remains  an  appropriate  investment  in light of their  then
current financial position and needs. There can be no assurance that each Fund's
objectives will be met.

The Funds are professionally managed portfolios which allocate their investments
among select funds in the DWS Family of Funds (the  "Underlying  DWS Funds") and
securities of non-affiliated investment companies (e.g., Exchange Traded Funds).
Descriptions  in  this  Statement  of  Additional  Information  of a  particular
investment  practice or technique in which the  Underlying  DWS Funds may engage
(such as short  selling,  hedging,  etc.) or a  financial  instrument  which the
Underlying DWS Funds may purchase (such as options,  etc.) are meant to describe
the spectrum of investments  that the Advisor in its discretion,  might,  but is
not  required  to, use in  managing a fund's  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 a fund,  but,  to the  extent
employed,  could  from  time  to  time  have  a  material  impact  on  a  fund's
performance.  It is possible that certain  investment  practices and  techniques
described  below  may not be  permissible  for a Fund  based  on its  investment
restrictions, as described herein, and in the Fund's applicable prospectus.

The Funds may each borrow  money for  temporary,  emergency  or other  purposes,
including investment leverage purposes, as determined by the Trustees.  The 1940
Act requires  borrowings  to have 300% asset  coverage.  The Funds may each also
enter into reverse repurchase agreements.

Exchange  Traded  Funds.  In addition to investing  in DWS Funds,  the Funds may
invest in Exchange  Traded  Funds  ("ETFs") up to the maximum  amount  allowable
under the 1940 Act, when the desired economic exposure to a particular market or
sector  is not  available  through  a DWS  Fund.  ETFs  are  typically  open-end
investment companies, unit investment trusts or depositary receipts, listed on a
stock  exchange.  The  Funds  might do so as a way of  gaining  exposure  to the
segment  of  the  equity  or  fixed-income  markets  represented  by  the  ETFs'
portfolio.  Each  Fund  will  indirectly  bear  its  proportionate  share of any
management or other fees by an ETF in which it invests.

For  example,  a Fund may  invest in a variety  of ETFs  which seek to track the
composition  and  performance  of specific  indexes or a specific  portion of an
index.  These index-based  investments hold substantially all of their assets in
securities  representing  their specific  index.  Accordingly,  the main risk of
investing in index-based  investments is the same as investing in a portfolio of
equity  securities  comprising  the  index.  The  market  prices of  index-based

                                       2
<PAGE>

investments  will fluctuate in accordance  with both changes in the market value
of their  underlying  portfolio  securities and due to supply and demand for the
instruments on the exchanges on which they are traded (which may result in their
trading at a discount or premium to their NAVs). Index-based investments may not
replicate   exactly  the   performance  of  their  specified  index  because  of
transaction  costs  and  because  of the  temporary  unavailability  of  certain
component  securities  of the index.  In  addition,  an  index-based  investment
tracking a specific sector may be adversely  affected by the performance of that
specific sector or group of industries on which it is based.

Examples of index-based ETFs include:

SPDRs(R):  SPDRs,  an acronym for "Standard & Poor's  Depositary  Receipts," are
based on the S&P 500  Composite  Stock Price Index.  They are issued by the SPDR
Trust,  a unit  investment  trust that  holds  shares of  substantially  all the
companies in the S&P 500 Index in substantially  the same weighting and seeks to
closely track the price performance and dividend yield of the Index.

MidCap  SPDRs(R):  MidCap SPDRs are based on the S&P MidCap 400 Index.  They are
issued by the MidCap SPDR Trust, a unit investment  trust that holds a portfolio
of securities  consisting of  substantially  all of the common stocks in the S&P
MidCap 400 Index in substantially  the same weighting and seeks to closely track
the price performance and dividend yield of the Index.

Select Sector SPDRs(R):  Select Sector SPDRs are based on a particular sector or
group of  industries  that are  represented  by a specified  Select Sector Index
within the Standard & Poor's Composite Stock Price Index. They are issued by The
Select Sector SPDR Trust, an open-end  management  investment  company with nine
portfolios  that each seeks to closely track the price  performance and dividend
yield of a particular Select Sector Index.

DIAMONDS(SM):  DIAMONDS are based on the Dow Jones Industrial Average(SM).  They
are issued by the DIAMONDS Trust, a unit investment trust that holds a portfolio
of all the component common stocks of the Dow Jones Industrial Average and seeks
to closely track the price performance and dividend yield of the Dow.

Nasdaq-100 Shares: Nasdaq-100 Shares are based on the Nasdaq 100 Index. They are
issued by the Nasdaq-100  Trust, a unit investment  trust that holds a portfolio
consisting of substantially  all of the securities,  in  substantially  the same
weighting,  as the component stocks of the Nasdaq-100 Index and seeks to closely
track the price performance and dividend yield of the Index.

In addition,  each Fund may allocate cash balances for cash management  purposes
or as part of its investment  strategy among  affiliated  funds  including money
market funds,  short-term bond funds and Cash Management QP Trust or one or more
affiliated entities as described below.

Investment of Uninvested  Cash  Balances.  The Funds may each have cash balances
that have not been invested in portfolio securities,  as appropriate,  or in the
underlying  portfolios  ("Uninvested  Cash").  Uninvested Cash may result from a
variety of sources,  including  dividends or interest received from investments,
unsettled  securities  transactions,   reserves  held  for  investment  strategy
purposes,   scheduled   maturity  of  investments,   liquidation  of  investment
securities to meet anticipated  redemptions and dividend payments,  and new cash
received from  investors.  In addition,  the Funds may invest a portion of their
assets in money market  securities  or other short term  obligations  as part of
their  investment  strategy.  Pursuant to an Exemptive  Order issued by the SEC,
each  Fund may use  Uninvested  Cash to  purchase  shares  of  affiliated  funds
including money market funds, short-term bond funds and Cash Management QP Trust
or one or more  future  entities  for which DIMA acts as  trustee or  investment
advisor  that  operate  as cash  management  investment  vehicles  and  that are
excluded from the definition of investment  company  pursuant to Section 3(c)(1)
or 3(c)(7) of the 1940 Act (collectively,  the "Central Funds") in excess of the
limitations  of Section  12(d)(1)  of the 1940 Act.  Investment  by each Fund in
shares  of the  Central  Funds  will be in  accordance  with  Fund's  investment
policies and restrictions as set forth in its registration statement.

Certain of the  Central  Funds  comply  with Rule 2a-7 under the Act.  The other
Central Funds are or will be short-term  bond funds that invest in  fixed-income
securities  and maintain a  dollar-weighted  average  maturity of three years or
less.  Each of the  Central  Funds will be managed  specifically  to  maintain a
highly liquid portfolio,  and access to them will enhance each Fund's ability to
manage Uninvested Cash.

                                       3
<PAGE>

Each Fund will invest  Uninvested  Cash in Central Funds only to the extent that
each Fund's aggregate direct investment in the Central Funds does not exceed 25%
of its total  assets in shares of the  Central  Funds,  which  would not include
investments  in the Central Funds that may be made by  underlying  portfolios in
which the Funds  invest.  Purchase and sales of shares of Central Funds are made
at net asset value.

Master/feeder Fund Structure. The Board of Trustees has the discretion to retain
the current  distribution  arrangement for the Funds while investing in a master
fund in a master/feeder fund structure as described below.

A master/feeder fund structure is one in which a fund (a "feeder fund"), instead
of investing  directly in a portfolio of securities,  invests most or all of its
investment  assets in a separate  registered  investment  company  (the  "master
fund") with  substantially  the same  investment  objective  and policies as the
feeder  fund.  Such a  structure  permits  the  pooling of assets of two or more
feeder funds,  preserving  separate  identities or distribution  channels at the
feeder  fund  level.  Based on the  premise  that  certain  of the  expenses  of
operating an investment  portfolio are  relatively  fixed,  a larger  investment
portfolio may eventually  achieve a lower ratio of operating expenses to average
net assets  through a  master/feeder  fund  structure.  An  existing  investment
company is able to convert to a feeder fund by selling  all of its  investments,
which  involves  brokerage  and other  transaction  costs and  realization  of a
taxable  gain or loss,  or by  contributing  its assets to the  master  fund and
avoiding  transaction  costs  and,  if  proper  procedures  are  followed,   the
realization of taxable gain or loss.

The Underlying DWS Funds

Each Fund will  purchase  or sell  shares in the  Underlying  DWS Funds to:  (a)
accommodate purchases and sales of the Fund's shares, (b) change the percentages
of the Fund's assets invested in each of the Underlying DWS Funds in response to
changing  market  conditions,  and (c) maintain or modify the  allocation of the
Fund's assets in accordance with the Fund's target date.

The managers will allocate Fund assets among  Underlying  DWS Funds based on the
Fund's target  investment  horizon,  current or expected market conditions or to
manage risk.  The  Underlying  DWS Funds have been selected to represent a broad
spectrum of investment options for the Funds.

Risk Factors of Underlying DWS Funds

In pursuing  their  investment  objectives,  each of the Underlying DWS Funds is
permitted investment  strategies in a wide range of investment  techniques.  The
Underlying DWS Funds' risks are determined by the nature of the securities  held
and the portfolio management strategies used by the Advisor. Further information
about the Underlying DWS Funds is contained in the  prospectuses  of such funds.
Because each Fund invests in certain of the Underlying  DWS Funds,  shareholders
of each  Fund  will be  affected  by the  portfolio  management  strategies  and
investment  policies of the  Underlying  DWS Funds in direct  proportion  to the
amount of assets the Fund allocates to each Underlying DWS Fund.

The following are the Underlying DWS Funds in which the Funds may invest.

DWS Blue Chip Fund. The fund seeks growth of capital and of income. Under normal
circumstances,  the fund invests at least 80% of net assets,  plus the amount of
any borrowings for investment  purposes,  in common stocks of large US companies
that are similar in size to the  companies  in the S&P 500 Index (as of December
31,  2006,  the S&P 500  Index  had a median  market  capitalization  of  $12.48
billion) and that the portfolio  managers  consider to be "blue chip" companies.
Blue chip  companies are large,  well-known  companies  that  typically  have an
established  earnings  and  dividends  history,  easy  access to  credit,  solid
positions in their industry and strong management. While the fund invests mainly
in US  common  stocks,  it  could  invest  up to 20% of net  assets  in  foreign
securities. The fund may also invest in other types of equity securities such as
preferred stocks or convertible securities.

DWS Capital Growth Fund. The fund seeks to provide  long-term growth of capital.
The fund  normally  invests  at least 65% of total  assets in  equities,  mainly
common stocks of US companies.  Although the fund can invest in companies of any
size, it generally focuses on established  companies that are similar in size to
the companies in the


                                       4
<PAGE>

Standard & Poor's 500  Composite  Stock Price Index (the "S&P 500 Index") or the
Russell 1000(R) Growth Index (as of December 31, 2006, the S&P 500 Index and the
Russell 1000(R) Growth Index had median market capitalizations of $12.48 billion
and $5.56 billion,  respectively).  Although the fund may invest in companies of
any size,  the fund  intends  to invest  primarily  in  companies  whose  market
capitalizations fall within the normal range of these indexes.

DWS  Commodity  Securities  Fund.  The fund's  investment  objective  is capital
appreciation.  The fund seeks to achieve its investment objective by focusing on
commodities-related   securities  and   equity-related   securities,   including
commodities-related   structured   notes  and  similar   instruments,   Deutsche
Investment Management Americas Inc., the funds investment advisor,  believes are
undervalued but have favorable prospects for appreciation.

DWS  Disciplined  Market  Neutral  Fund.  The fund  seeks  capital  appreciation
independent  of stock market  direction.  It pursues its objective by investing,
under normal circumstances, in long and short positions of common stock of large
US companies. The managers buy, or take, long positions in common stock that the
managers  believe are undervalued  and sell, or take,  short positions in common
stock that the managers believe are overvalued.  The fund's investment  strategy
is designed to maintain  approximately equal dollar amounts invested in long and
short positions under normal circumstances.

DWS Disciplined Long/Short Growth Fund. The fund seeks capital appreciation. The
fund intends to hold approximately  80%-130% of its net assets in long positions
in stocks that the managers believe will outperform the market and approximately
0%-30% of its net assets in short positions in stocks that the managers  believe
will underperform the market. In addition,  the fund intends to borrow up to 30%
of its net assets for investment  purposes.  The fund's equity  investments  are
mainly  common  stocks,  but may also  include  other types of equities  such as
preferred stocks or convertible securities.

DWS Disciplined Long/Short Value Fund. The fund seeks capital appreciation.  The
fund intends to hold approximately  80%-130% of its net assets in long positions
in stocks that the managers believe will outperform the market and approximately
0%-30% of its net assets in short positions in stocks that the managers  believe
will underperform the market. In addition,  the fund intends to borrow up to 30%
of net assets for investment purposes.  The fund's equity investments are mainly
common  stocks,  but may also include  other types of equities such as preferred
stocks or convertible securities.

DWS Emerging  Markets Equity Fund. The fund seeks  long-term  growth of capital.
Under normal  circumstances,  the fund invests at least 80% of net assets,  plus
the  amount of any  borrowings  for  investment  purposes,  in  emerging  market
equities (equities traded mainly in emerging markets or issued by companies that
are  organized  in  emerging  markets  or have more than half of their  business
there).  The fund  invests  primarily  in  common  stocks.  The  fund  considers
"emerging  markets"  to include  any  country  that is defined as an emerging or
developing  economy  by any one of the  following:  The  International  Bank for
Reconstruction and Development (i.e., the World Bank), the International Finance
Corporation or the United Nations or its authorities.  The fund may invest up to
20% of net assets in equities from the US or other developed  markets.  The fund
may also invest up to 20% of net assets in US or emerging market debt securities
when portfolio management believes these securities may perform at least as well
as equities.  The fund's equity  investments  are mainly common stocks,  but may
also include  other types of equities  such as preferred  stocks or  convertible
securities.

DWS Emerging  Markets Fixed Income Fund.  The fund seeks to provide high current
income  and,   secondarily,   long-term  capital   appreciation.   Under  normal
circumstances,  the fund invests at least 80% of net assets,  plus the amount of
any borrowings for investment purposes, in high yield bonds (also known as "junk
bonds") and other debt  securities  issued by governments  and  corporations  in
emerging  market  countries  (i.e.,  the issuer is traded  mainly in an emerging
market,  is  organized  under the laws of an  emerging  market  country  or is a
company with more than half of its  business in emerging  markets) or the return
on which  is  derived  primarily  from  emerging  markets.  The  fund  considers
"emerging  markets"  to include  any  country  that is defined as an emerging or
developing  economy  by any one of the  following:  The  International  Bank for
Reconstruction and Development (i.e., the World Bank), the International Finance
Corporation or the United Nations or its authorities. Historically, the managers
have tended to emphasize Latin America, but may also invest in Asia, Africa, the
Middle East and Eastern  Europe.  To help manage risk, the fund invests at least
65% of total assets in US dollar-denominated  securities. The fund also does not
invest more than 40% of total assets in any one country.  The fund may invest up
to 20% of net assets in debt securities


                                       5
<PAGE>

from  developed  markets  and  up to 20% of net  assets  in US  debt  securities
including those that are rated below investment-grade.

DWS Equity 500 Index Fund. The fund seeks to replicate,  as closely as possible,
before the deduction of expenses,  the  performance of the Standard & Poor's 500
Composite Stock Price Index (the "S&P 500 Index"),  which  emphasizes  stocks of
large US companies.  The fund invests for capital appreciation,  not income; any
dividend and interest income is incidental to the pursuit of its objective.  The
fund is a feeder fund in a master/feeder fund arrangement.  The fund pursues its
investment  objective by investing all of its assets in a master portfolio,  DWS
Equity 500 Index  Portfolio,  with the same  investment  objective  as the fund.
Under  normal  circumstances,  the fund  through DWS Equity 500 Index  Portfolio
intends  to  invest  at  least  80% of its  assets,  determined  at the  time of
purchase, in stocks of companies included in the S&P 500 Index and in derivative
instruments, such as futures contracts and options, that provide exposure to the
stocks of companies in the S&P 500 Index.

DWS Equity Partners Fund. The fund seeks to achieve  long-term growth of capital
and,  secondarily,  current income.  The fund seeks to achieve its objectives by
investing  primarily in a diversified  portfolio of common stocks.  Under normal
circumstances,  the fund will invest at least 80% of its  assets,  valued at the
time the security is purchased, in a diversified portfolio of common stocks.

DWS Value  Builder  Fund.  The fund seeks to  maximize  total  return  through a
combination of long-term growth of capital and current income. The fund seeks to
achieve its objective by investing primarily in a portfolio of common stocks and
fixed-income securities. Under normal market conditions,  between 40% and 75% of
the fund's  assets  will be  invested  in common  stocks and at least 25% of the
fund's  assets  will  be  invested  in  fixed-income  securities.  In  selecting
investments for the fund, the fund's investment advisor and subadvisor determine
the  relative  percentages  of  assets  to be  invested  in  common  stocks  and
fixed-income  securities  based on  their  judgment  as to  general  market  and
economic conditions,  trends in yields and interest rates, and changes in fiscal
and monetary  policy.  In  addition,  the fund may invest up to 10% of its total
assets  in  equity  and  debt  securities  issued  by  foreign   governments  or
corporations.

DWS Communications  Fund. The fund seeks to maximize total return.  Under normal
circumstances,  the fund will  invest at least 80% of its net  assets,  plus the
amount  of any  borrowings  for  investment  purposes  (measured  at the time of
investment),  in securities of companies in the  communications  field. The fund
normally  focuses  on the  securities  of  companies  that  are  engaged  in the
research,   development,   manufacture  or  sale  of  communications   services,
technology,  equipment  or  products.  The fund may also  invest in  convertible
securities and in bonds and short-term cash equivalents.  Convertible securities
are bonds or  preferred  stocks that give  purchasers  the right to exchange the
convertible  security  for a specified  number of shares of a  company's  common
stock at specified  prices within a certain period of time.  Purchasers  receive
regular interest payments until they exercise their exchange right. The fund may
also invest up to 10% of its assets in stocks and other  securities of companies
not  publicly  traded in the United  States,  including  securities  of emerging
markets.

DWS Core Fixed Income Fund. The fund seeks to maximize  total return  consistent
with preservation of capital and prudent investment management, by investing for
both current income and capital appreciation.  Under normal  circumstances,  the
fund invests at least 80% of its assets,  determined at the time of purchase, in
fixed  income  securities.  Fixed  income  securities  include  those  of the US
Treasury,  as well as US government agencies and  instrumentalities,  corporate,
mortgage-backed  and asset-backed  securities,  taxable municipal and tax-exempt
municipal bonds and liquid Rule 144A securities.  The fund invests  primarily in
investment-grade  fixed income securities rated with the top three credit rating
categories.   The  fund  may   invest  up  to  20%  of  its   total   assets  in
investment-grade  fixed income  securities  rated with the fourth highest credit
rating  category.  The fund  may  invest  up to 25% of its  total  assets  in US
dollar-dominated  securities of foreign  issuers and  governments.  The fund may
hold up to 20% of its total assets in cash or money market  instruments in order
to maintain  liquidity,  or in the event the portfolio  managers  determine that
securities meeting the fund's investment objective are not readily available for
purchase.   The  fund's  investments  in  foreign  issuers  are  limited  to  US
dollar-denominated securities to avoid currency risk.

DWS Floating Rate Plus Fund. The fund seeks to provide high current income.  The
fund invests,  under normal  circumstances,  at least 80% of its total assets in
adjustable rate loans that have a senior right to payment  ("Senior


                                       6
<PAGE>

Loans") and other  floating rate debt  securities.  The fund may acquire  senior
loans of borrowers engaged in any industry,  but will invest no more than 25% of
its total assets in senior loans of borrowers and securities of other issuers in
any one industry. Under normal market conditions,  up to 20% of the fund's total
assets may be held in cash and other investments, including, but not limited to,
fixed-rate debt obligations, short- to medium-term notes, high-yield securities,
equity securities,  hybrid and synthetic loans, collateralized loan obligations,
and asset backed securities.

DWS Global Thematic Fund. The fund seeks long-term  growth of capital.  The fund
invests at least 65% of its total  assets in US and foreign  equities  (equities
issued by US and  foreign-based  companies).  Most of the  fund's  equities  are
common  stocks.  Although  the fund can invest in companies of any size and from
any country,  it generally  focuses on  established  companies in countries with
developed economies.

DWS Global Bond Fund.  The fund seeks total return,  with an emphasis on current
income;  capital  appreciation is a secondary goal. Under normal  circumstances,
the fund invests at least 80% of net assets,  plus the amount of any  borrowings
for investment  purposes,  in bonds of issuers from around the world,  including
the United  States.  The fund  normally  invests at least 65% of total assets in
investment-grade  bonds.  The  fund  can  buy  many  types  of  income-producing
securities,  among them US and foreign  government  bonds,  corporate  bonds and
mortgage- and asset-backed securities.

DWS Global Opportunities Fund. The fund seeks above-average capital appreciation
over the long  term.  The fund  invests  at least 65% of total  assets in common
stocks and other equities of small  companies  throughout  the world  (companies
with market  values  similar to the smallest 20% of the  Citigroup  Broad Market
Index).  While the fund may invest in  securities  in any country,  it generally
focuses on countries with developed economies (including the US). As of December
31,  2006,  companies  in  which  the  fund  invests  typically  have  a  market
capitalization  of between  $500 million and $5 billion at the time of purchase.
As part of the investment  process (and low turnover  strategy) the fund may own
stocks even though they  exceed the market  capitalization  level.  The fund may
invest up to 35% of total  assets in common  stocks and other  equities of large
companies  or in debt  securities  (of which 5% of net assets may be junk bonds,
i.e., grade BB/Ba and below).

DWS GNMA Fund. The fund seeks to produce a high level of income. It does this by
investing,  under  normal  circumstances,  at least 80% of net assets,  plus the
amount of any borrowings for  investment  purposes,  in "Ginnie Maes," which are
mortgage-backed  securities  that are  issued or  guaranteed  by the  Government
National Mortgage  Association  (GNMA).  The balance of the fund's assets may be
invested  in  securities   issued  by  the  US   government,   its  agencies  or
instrumentalities.  These securities may not be guaranteed by the US Treasury or
backed by the full faith and credit of the US government. The fund may also hold
up to 10% of its total net assets in uninvested  cash, cash  equivalents such as
money market securities,  repurchase  agreements or shares of money market funds
or short-term bond funds,  which  investments may not be issued or guaranteed by
the US government, its agencies or instrumentalities.

DWS Gold & Precious Metals Fund. The fund seeks maximum return (principal change
and income). The fund invests at least 80% of net assets, plus the amount of any
borrowings  for investment  purposes,  in common stocks and other equities of US
and foreign companies engaged in activities related to gold, silver, platinum or
other precious metals,  and in gold coin and bullion  directly.  These companies
may  be  involved  in  activities  such  as  exploration,  mining,  fabrication,
processing and  distribution.  While the fund invest mainly in common stocks, it
may invest up to 20% of net assets in high-quality  debt securities of companies
in precious metals and minerals operations,  and debt securities whose return is
linked to precious  metals  prices.  The fund's  equity  investments  are mainly
common stocks, but may also include other types of equities such as preferred or
convertible stocks.

DWS Europe Equity Fund. The fund seeks long-term growth of capital. Under normal
circumstances  the fund  invests  at least 80% of its total  assets in  European
common stocks and other  equities  (equities  that are traded mainly on European
markets or are issued by companies organized under the laws of Europe or do more
than half of their business there).  Although the fund may invest in equities of
any  size  or  European  country,   it  tends  to  focus  on  common  stocks  of
multinational   companies  in  industrialized   Western  and  Southern  European
countries  such as  France,  Italy,  Germany,  the  Netherlands  and the  United
Kingdom.  While most of the fund's equities are common


                                       7
<PAGE>

stock,  some may be other  types of  equities,  such as  convertible  stocks  or
preferred stocks.  The fund may invest up to 20% of its total assets in European
debt securities, including junk bonds (i.e., grade BB and below).

DWS Growth & Income Fund. The fund seeks  long-term  growth of capital,  current
income and growth of income.  The fund  invests at least 65% of total  assets in
equities, mainly common stocks. Although the fund can invest in companies of any
size and from any country, it invests primarily in large US companies.

DWS Health Care Fund. The fund seeks  long-term  growth of capital by investing,
under normal circumstances, at least 80% of total assets, plus the amount of any
borrowings for investment purposes,  in common stocks of companies in the health
care sector.  For purposes of the fund's 80% investment policy, to be considered
part of the health  care  sector,  companies  must commit at least half of their
assets to, or derive at least half of their  revenues or net income  from,  that
sector.  The  industries  in the health  care  sector  include  pharmaceuticals,
biotechnology,  medical  products and supplies,  and health care  services.  The
companies may be of any size. The fund will invest primarily in securities of US
companies, but may invest in foreign companies as well.

DWS High  Income  Fund.  The fund  seeks the  highest  level of  current  income
obtainable  from a diversified  portfolio of fixed income  securities  which the
fund's  investment  manager  considers  consistent  with  reasonable  risk. As a
secondary  objective,  the fund will seek capital gain where consistent with its
primary objective.  Under normal  circumstances,  this fund generally invests at
least 65% of net  assets,  plus the  amount  of any  borrowings  for  investment
purposes,  in junk bonds,  which are those rated below the fourth highest credit
rating  category  (i.e.,  grade BB/Ba and below).  Compared to  investment-grade
bonds, junk bonds may pay higher yields,  have higher volatility and higher risk
of default on payments of interest or  principal.  The fund may invest up to 50%
of total assets in bonds  denominated in US dollars or foreign  currencies  from
foreign issuers.

DWS High  Income  Plus Fund.  The fund  seeks  high  current  income  and,  as a
secondary objective,  capital  appreciation.  Under normal conditions,  the fund
invests at least 65% of its total assets in US dollar-denominated,  domestic and
foreign below investment grade fixed income  securities (junk bonds),  including
those whose  issuers are located in  countries  with new or emerging  securities
markets.  The fund considers an emerging  securities  market to be one where the
sovereign  debt issued by the  government in local currency terms is rated below
investment  grade. The fund's  investments in fixed income  securities may be of
any credit quality and may include  securities not paying interest currently and
securities  in  default.  The fund may  invest up to 25% of its total  assets in
non-US dollar denominated,  below investment-grade fixed income securities.  The
fund  may  invest  up to 35%  of its  total  assets  in  cash  or  money  market
instruments in order to maintain  liquidity,  or in the event that the portfolio
manager determines that securities meeting the fund's investment  objectives are
not readily available for purchase.  The fund may also purchase  securities on a
when-issued basis and engage in short sales.

DWS Dreman High  Return  Equity  Fund.  The fund seeks to achieve a high rate of
total return. Under normal  circumstances,  the fund invests at least 80% of net
assets,  plus the amount of any borrowings for  investment  purposes,  in equity
securities  (mainly  common  stocks).  The fund  focuses  on  stocks of large US
companies  that are similar in size to the companies in the S&P 500 Index (as of
January 31, 2007, the S&P 500 Index had a median market capitalization of $12.92
billion)  and that the  portfolio  managers  believe are  undervalued.  The fund
intends to invest  primarily in  companies  whose  market  capitalizations  fall
within the normal range of the Index.  Although the fund can invest in stocks of
any economic sector, at times it may emphasize the financial  services sector or
other sectors.  In fact, it may invest more than 25% of total assets in a single
sector. The fund may invest up to 20% of total assets in foreign securities. The
fund's equity  investments are mainly common stocks,  but may also include other
types of equities such as preferred or convertible stocks.

DWS Core Plus Income Fund.  The fund seeks to maximize  total return  consistent
with preservation of capital and prudent investment management, by investing for
both current income and capital  appreciation.  The fund primarily invests in US
dollar-denominated investment grade fixed income securities, including corporate
bonds, US government and agency bonds and mortgage- and asset-backed securities.
A significant  portion of the fund's assets may also be allocated  among foreign
investment  grade fixed  income  securities,  high yield bonds of US and foreign
issuers (including high yield bonds of issuers in countries with new or emerging
securities  markets),  or,  to  maintain  liquidity,  in  cash or  money  market
instruments.  The fund  normally  invests  at least 65% of total  assets in high
grade US  bonds  (those  considered  to be in the top  three  grades  of  credit
quality).  The  fund  may  invest  up to 25%  of its


                                       8
<PAGE>

total assets in foreign  investment  grade bonds (those  considered to be in the
top four grades of credit quality). In addition,  the fund may also invest up to
20% of total  assets in  securities  of US and  foreign  issuers  that are below
investment  grade  (rated  as low as the  sixth  credit  grade,  i.e.,  grade B,
otherwise  known as junk bonds),  including  investment  in US dollar or foreign
currency  denominated bonds of issuers located in countries with new or emerging
securities markets.

DWS  Inflation   Protected  Plus  Fund.  The  fund  seeks  to  provide   maximum
inflation-adjusted return, consistent with preservation of capital. Under normal
circumstances,  the fund will  invest at least 80% of its net  assets,  plus any
borrowings  for  investment  purposes,  in  inflation-indexed  bonds of  varying
maturities issued by the US government,  non-US  governments,  their agencies or
instrumentalities, and corporations and derivatives related to these securities.
The fund may  invest  the  remaining  portion  of its  assets in other  types of
fixed-income  securities,  cash or cash  equivalents.  In an  attempt to enhance
return, the fund also employs a global asset allocation strategy,  which invests
in  instruments  across  domestic and  international  fixed-income  and currency
markets.

DWS International  Fund. The fund seeks long-term growth of capital by investing
at least  65% of its  total  assets  in  foreign  equities  (equities  issued by
foreign-based companies and listed on foreign exchanges).  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).

DWS International Select Equity Fund. 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.  The fund  primarily  invests in the countries that make up the
Morgan Stanley Capital International Europe,  Australia and Ear East Index (MSCI
EAFE(R)  Index).  The MSCI EAFE(R) 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.  At least 50% of the fund's assets
will be invested in securities  that are  represented in the MSCI EAFE(R) Index.
However,  the  fund  may  invest  up to 50% of its  total  assets  in  non-Index
securities  of companies  located in the countries  that make up the Index.  The
fund's equity  investments are mainly common stocks,  but may also include other
types of equities  such as preferred or  convertible  stocks.  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.  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 15% of its
net assets in emerging markets.

DWS  International  Value  Opportunities  Fund. The fund seeks long-term capital
appreciation,  with  current  income  as a  secondary  objective.  Under  normal
circumstances,  the fund invests at least 80% of its assets,  determined  at the
time of purchase, in the stocks and other securities with equity characteristics
of companies in developed  countries  outside the United States.  Almost all the
companies in which the fund invests are based in the developed foreign countries
that make up the Morgan Stanley Capital International Europe,  Australia and Ear
East Index.  The fund may also invest a portion of its assets in companies based
in emerging markets of Latin America,  the Middle East, Europe,  Asia and Africa
if the  portfolio  managers  believe  that  their  return  potential  more  than
compensates for the extra risks associated with these markets. 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.

DWS Japan Equity Fund.  The fund seeks high capital  appreciation.  Under normal
circumstances, the fund seeks to achieve its objective by investing at least 80%
of its  assets,  measured  at the time a  security  is  purchased,  in  Japanese
securities  (securities issued by companies organized under the laws of Japan or
their  affiliates,  or by a company  that derives more than half of its revenues
from  Japan).  The fund invests  primarily in common  stocks of companies of any
size,  including  up to 30% of net assets in smaller  companies  that are traded
over-the-counter.

DWS Large Cap Value Fund. The fund seeks long-term  capital  appreciation,  with
current income as a secondary objective.  Under normal  circumstances,  the fund
invests  at least  80% of net  assets,  plus the  amount of any  borrowings  for
investment  purposes,  in common stocks and other equity  securities of large US
companies that are similar in size to the companies in the Russell 1000(R) Value
Index (as of January  31,  2007,  the Russell  1000(R)  Value Index had a median
market  capitalization of $5.46 billion) and that the portfolio managers believe
are undervalued.


                                       9
<PAGE>

These  are  typically  companies  that  have  been  sound  historically  but are
temporarily  out of favor.  The fund  intends to invest  primarily  in companies
whose market capitalizations fall within the normal range of the Index. Although
the fund can invest in stocks of any economic  sector (which is comprised of two
or more industries),  at times it may emphasize the financial services sector or
other sectors.  In fact, it may invest more than 25% of total assets in a single
sector. The fund may invest up to 20% of total assets in foreign securities. The
fund's equity  investments are mainly common stocks,  but may also include other
types of equities such as preferred or convertible stocks.

DWS Large Company  Growth Fund.  The fund seeks  long-term  growth of capital by
investing, under normal circumstances,  at least 80% of its net assets, plus the
amount of any borrowings for investment purposes, in large US companies that are
similar in size to the  companies  in the Russell  1000(R)  Growth  Index (as of
October  31,  2006,  the  Russell  1000(R)  Growth  Index  had a  median  market
capitalization of $5 billion). The fund intends to invest primarily in companies
whose market  capitalizations  fall within the normal range of the Index.  These
investments are in equities, mainly common stocks.

DWS Latin America Equity Fund. The fund seeks  long-term  capital  appreciation.
Under normal  circumstances,  the fund invests at least 80% of net assets,  plus
the amount of any borrowings for investment  purposes,  in Latin American common
stocks and other  equities  (equities  that are traded mainly on Latin  American
markets,  issued or  guaranteed  by a Latin  American  government or issued by a
company organized under the laws of a Latin American country or any company with
more than half of its business in Latin  America).  Latin  America is defined as
Mexico, Central America,  South America and the Spanish-speaking  islands of the
Caribbean.  Although  the fund may  invest in any  Latin  American  country,  it
expects  to invest  primarily  in  common  stocks of  established  companies  in
Argentina,  Brazil, Chile, Colombia,  Mexico, Panama and Peru. While most of the
fund's equities are common stocks, some may be other types of equities,  such as
convertible  stocks or  preferred  stocks.  The fund may invest up to 20% of net
assets in debt securities  including junk bonds (i.e.,  grade BB and below), 10%
of which may include securities rated B or lower.

DWS  Micro  Cap  Fund.  The  fund  seeks  capital  appreciation.   Under  normal
circumstances,  the fund invests at least 80% of its assets,  determined  at the
time of purchase, in stocks and other securities with equity  characteristics of
US micro capitalization companies. For the purposes of this 80% limitation,  the
micro  capitalization  equity  universe is defined as the bottom 5% of the total
domestic equity market  capitalization (at the time of initial investment) using
a minimum market capitalization of $10 million. The fund may invest up to 20% of
its total assets in the securities of foreign companies that would be considered
to be in the bottom 5% in terms of market capitalization in the US equity market
(subject to a $10 million  market  capitalization  minimum).  The fund's  equity
investment are mainly common stocks,  but may also include other types of equity
securities,  such as preferred  stocks or convertible  securities.  The fund may
invest up to 20% of its assets in high quality debt instruments and money market
instruments with remaining  maturities of one year or less, including repurchase
agreements.  The fund may invest up to 5% of its net  assets in  non-convertible
bonds and preferred stocks that the managers believe to be of high quality.

DWS Mid Cap Growth Fund. The fund seeks long-term  capital growth.  Under normal
circumstances,  the fund invests at least 80% of its assets,  determined  at the
time of purchase, in companies with market caps within the market capitalization
range  of  the  Russell  Mid  Cap  Growth  Index  or   securities   with  equity
characteristics  that provide  exposure to those  companies.  The fund's  equity
investments are mainly common stocks, but may also include other types of equity
securities  such as preferred  stocks or  convertible  securities.  The fund may
invest up to 20% of its assets in stocks and other securities of companies based
outside the US.

DWS Money  Market  Prime  Series -- DWS Cash  Investment  Trust.  The fund seeks
maximum current income to the extent consistent with stability of principal. The
fund seeks to achieve its goal of current  income by  investing  in high quality
money market securities and maintains a  dollar-weighted  average maturity of 90
days or less.  The fund may  invest  more than 25% of its  total  assets in bank
obligations.  The fund may invest up to 10% of its total  assets in other  money
market mutual funds in accordance with applicable regulations.

DWS Money Market Series -- Institutional  Shares. The fund is a feeder fund that
invests all of its assets in a master portfolio,  the Cash Management Portfolio,
which will invest directly in securities and other instruments.  The fund's goal
is to seek a high level of current  income  consistent  with  liquidity  and the
preservation of capital.  The


                                       10
<PAGE>

fund,  through the  Portfolio,  seeks to achieve its goal by  investing  in high
quality short-term money market instruments.

DWS RREEF Global Real Estate Securities Fund. The fund's investment objective is
to seek total  return  through a  combination  of current  income and  long-term
capital  appreciation.  The fund seeks to achieve  this  objective  by investing
primarily  in publicly  listed real estate  investment  trusts  (REITs) and real
estate operating  companies on a global basis. Under normal  circumstances,  the
fund  will  invest  at  least  80% of its net  assets,  plus the  amount  of any
borrowing for investment purposes (calculated at the time of any investment), in
the equity  securities of REITs and real estate  operating  companies  listed on
recognized stock exchanges around the world. Currently, the fund does not intend
to borrow for  investment  purposes.  A security will be considered  part of the
fund's  investment  universe  if  the  issuer  of  such  security  has a  market
capitalization  of at least $50 million  and,  in the  opinion of the  portfolio
managers,  at least 50% of its revenues or 50% of the market value of its assets
at the time its  securities  are  purchased  by the fund are  attributed  to the
ownership, construction, management or sale of real estate and it is listed on a
recognized public foreign or domestic stock exchange or traded over the counter.
The fund may also invest in unlisted  securities  provided such  securities  are
expected to be listed on a recognized  public stock  exchange or traded over the
counter  within six months from the time of investment.  In addition,  while the
fund does not currently plan to hedge international  currency risk, the fund may
engage in foreign  currency  transactions,  including  foreign  currency forward
contracts,  options,  swaps and other similar  transactions  in connection  with
investments in securities of non-US companies. The fund's equity investments are
mainly  common  stocks,  but may also  include  other types of equities  such as
preferred or convertible stocks.

DWS RREEF Real  Estate  Securities  Fund.  The fund's  investment  objective  is
long-term capital appreciation and current income. The fund invests primarily in
real estate  securities.  Under  normal  circumstances,  the fund will invest at
least 80% of its net assets,  plus the amount of any  borrowing  for  investment
purposes  (calculated at the time of any  investment),  in equity  securities of
real estate investment  trusts ("REITs") and real estate  companies.  The fund's
equity investments are mainly common stocks, but may also include other types of
equities such as preferred or convertible stocks.

DWS S&P 500 Index  Fund.  The fund seeks to  provide  investment  results  that,
before expenses, correspond to the total return of common stocks publicly traded
in the United  States,  as  represented  by the Standard & Poor's 500  Composite
Stock Price Index (S&P 500 Index).  The fund  invests for capital  appreciation,
not income; any dividend and interest income is incidental to the pursuit of its
objective.  The fund is a feeder fund in a master/feeder  fund arrangement.  The
fund pursues its  investment  objective by  investing  substantially  all of its
assets in a master portfolio, DWS Equity 500 Index Portfolio, which has the same
investment  objective and is subject to the same  investment  risks as the fund.
Under  normal  circumstances,  the fund  through DWS Equity 500 Index  Portfolio
intends  to  invest  at  least  80% of its  assets,  determined  at the  time of
purchase, in stocks of companies included in the S&P 500 Index and in derivative
instruments, such as futures contracts and options, that provide exposure to the
stocks of companies in the S&P 500 Index.

DWS Enhanced S&P 500 Index Fund. The fund seeks  long-term  growth and income by
investing  at least 80% of total assets in common  stocks of companies  that are
included  in the  Standard & Poor's 500  Composite  Stock  Price  Index (S&P 500
Index)  (as  of  March  31,  2007,  the  S&P  500  Index  had  a  median  market
capitalization  of $13  billion).  The  fund  intends  to  invest  primarily  in
companies whose market  capitalizations  fall within the normal range of the S&P
500  Index.  This Index is one of the most  widely  used  measures  of US equity
performance.  While most of the fund's  investments are common stocks,  the fund
may also invest up to 20% of total assets in  investment-grade  debt  securities
(i.e., grade BBB/Baa and higher).

DWS Short Duration Fund. The fund seeks to maximize total return consistent with
preservation of capital and prudent investment management, by investing for both
current income and capital appreciation.  Under normal  circumstances,  the fund
invests at least 80% of its assets, determined at the time of purchase, in fixed
income securities. The fund invests in US Treasury,  corporate,  mortgage-backed
and asset-backed  securities,  taxable municipal and tax-exempt municipal bonds.
The  fund  invests  primarily  in   investment-grade   short-term  fixed  income
securities  rated within the top three credit  rating  categories.  The fund may
invest up to 15% of its total assets in investment-grade fixed income securities
rated within the fourth highest credit rating  category.  The fund may invest up
to 25% of its  total  assets  in US  dollar-denominated  securities  of  foreign
issuers and governments.  The fund's


                                       11
<PAGE>

investments in foreign issuers are limited to US  dollar-denominated  securities
to avoid  currency risk. The fund may hold up to 20% of its total assets in cash
or money market instruments in order to maintain liquidity,  or in the event the
portfolio  managers  determine  that  securities  meeting the fund's  investment
objective are not otherwise readily available for purchase.  The fund may invest
up to 40% of its total assets in asset-backed securities.

DWS Short Duration Plus Fund. The fund's investment objective is to provide high
income   while  also   seeking  to  maintain  a  high  degree  of  stability  of
shareholders'  capital. The fund invests in securities of varying maturities and
normally seeks to maintain an average portfolio duration of no longer than three
years.  The fund invests,  under normal market  conditions,  at least 65% of its
total assets in fixed income securities  rated, at the time of purchase,  within
the top four long-term rating categories by a nationally recognized  statistical
rating  organization  (a "NRSRO")  (or, if  unrated,  determined  by us to be of
similar   quality)  The  fund  may  invest  up  to  10%  of  its  assets  in  US
dollar-denominated,  domestic and foreign  below  investment-grade  fixed income
securities (junk bonds) rated in the fifth and sixth long-term rating categories
by a  NRSRO  (or,  if  unrated,  determined  by us to  be of  similar  quality),
including  those whose  issuers are  located in  countries  with new or emerging
securities  markets.  The fund considers an emerging securities market to be one
where the sovereign  debt issued by the  government in local  currency  terms is
rated below  investment-grade.  A portion of high yield securities purchased for
the fund may consist of non-US dollar denominated,  below investment-grade fixed
income  securities.  The fund can invest up to 15% of its net assets in illiquid
securities.  In an  attempt to enhance  return,  the fund also  employs a global
allocation   strategy,   which  invests  in  instruments   across  domestic  and
international fixed income and currency markets.

DWS Small Cap Growth Fund. The fund seeks long-term capital growth. Under normal
circumstances,  the fund invests at least 80% of its assets,  determined  at the
time of purchase, in stocks and other securities with equity  characteristics of
US  smaller  capitalization  companies.  For  purposes  of this  80%  investment
limitation,  the small  capitalization  equity universe is defined as the bottom
20% of the total domestic equity market  capitalization  (at the time of initial
investment),  using a minimum market capitalization of $10 million. The fund may
invest up to 20% of its  assets in the  stocks  of  non-US  companies  and large
capitalization  stocks.  The fund  may also  invest  in  other  types of  equity
securities such as preferred stocks or convertible securities.

DWS Small Cap Core Fund.  The fund seeks to provide  long-term  capital  growth.
Under normal  circumstances,  the fund invests at least 80% of net assets,  plus
the amount of any borrowings for investment purposes,  in common stocks of small
US companies with potential for above-average  long-term  capital growth.  These
companies  are similar in size to the companies in the Russell 2000 Index (as of
December 31, 2006, the Russell 2000 Index had a median market  capitalization of
$657   million).   The  fund  intends  to  invest  in  companies   whose  market
capitalizations  fall within the normal range of the Russell  2000 Index.  While
the fund invests  primarily in common  stocks,  it may invest up to 20% of total
assets in US government  securities.  The fund may also invest in other types of
equity securities such as preferred stocks or convertible securities.

DWS Small  Cap Value  Fund.  The fund  seeks  long-term  growth  of  capital  by
investing,  under normal circumstances,  at least 90% of total assets, including
the amount of any  borrowings  for investment  purposes,  in undervalued  common
stocks of small US companies.  These are  companies  that are similar in size to
those in the Russell 2000 Value Index (as of October 31, 2006,  the Russell 2000
Value Index had a median market  capitalization of approximately  $643 million).
The fund intends to invest  primarily in companies whose market  capitalizations
fall within the normal range of the Russell 2000 Value Index.

DWS Dreman Concentrated Value Fund. The fund's investment objective is long-term
growth  of  capital.  The fund  seeks to  achieve  its  objective  by  investing
primarily in the common stocks of large  companies  that the portfolio  managers
believe are undervalued, but have favorable prospects for appreciation. The fund
is classified  as a  non-diversified  portfolio  and normally  invests in a core
position  of  common  stocks  (normally  20 to 25  stocks)  that  represent  the
portfolio managers' best ideas. The fund may hold a limited number of additional
positions  under unusual  market  conditions,  to  accommodate  large inflows or
outflows of cash, or to accumulate or reduce  existing  positions.  The fund may
invest up to 20% of total  assets in foreign  securities  and up to 10% of total
assets in high yield bonds ("Junk"  bonds).  The fund's equity  investments  are
mainly  common  stocks,  but may also  include  other types of equities  such as
preferred or convertible stocks.

                                       12
<PAGE>

DWS Dreman Mid Cap Value Fund. The fund seeks  long-term  capital  appreciation.
Under normal  circumstances,  the fund invests at least 80% of net assets,  plus
the  amount of any  borrowings  for  investment  purposes,  in common  stocks of
mid-cap companies that the portfolio managers believe are undervalued,  but have
favorable  prospects for  appreciation.  The fund defines  mid-cap  companies as
companies  that  have a market  capitalization  similar  to that of the  Russell
Midcap Value Index with a market  capitalization  which  usually  ranges from $1
billion to $20 billion. The fund may invest up to 20% of total assets in foreign
securities. The fund's equity investments are mainly common stocks, but may also
include other types of equities such as preferred or convertible stocks.

DWS Dreman Small Cap Value Fund. The fund seeks long-term capital  appreciation.
Under normal  circumstances,  the fund invests at least 80% of net assets,  plus
the amount of any  borrowings  for investment  purposes,  in undervalued  common
stocks of small US  companies,  which the fund  defines  as  companies  that are
similar in market  value to those in the  Russell  2000 Index (as of January 31,
2007,  the  Russell  2000  Index  had a  median  market  capitalization  of $664
million).  The fund  intends  to invest  primarily  in  companies  whose  market
capitalizations  fall  within  the  normal  range of the  Index.  While the fund
invests  mainly  in US  stocks,  it could  invest  up to 20% of total  assets in
foreign securities.  The fund's equity investments are mainly common stocks, but
may also  include  other  types of equities  such as  preferred  or  convertible
stocks.

DWS  Technology   Fund.   The  fund  seeks  growth  of  capital.   Under  normal
circumstances,  the fund invests at least 80% of net assets,  plus the amount of
any  borrowings for  investment  purposes,  in common stocks of companies in the
technology sector.  For purposes of the fund's 80% investment policy,  companies
in the  technology  sector  must  commit  at least  half of their  assets to the
technology  sector or derive at least half of their  revenues or net income from
that  sector.   Examples  of  industries   within  the  technology   sector  are
semiconductors, software, telecom equipment, computer/hardware, IT services, the
Internet  and health  technology.  The fund may invest in companies of any size.
While the fund  invests  mainly in US stocks,  it could  invest up to 35% of net
assets in foreign  securities.  The fund's equity  investments are mainly common
stocks,  but may also  include  other types of  equities  such as  preferred  or
convertible stocks.

         INVESTMENT POLICIES AND TECHNIQUES OF THE UNDERLYING DWS FUNDS

The Underlying Funds may engage in certain practices not described herein.

Adjustable  Rate  Securities.  The interest  rates paid on the  adjustable  rate
securities in which a fund invests  generally are readjusted at intervals of one
year or less to an increment over some predetermined  interest rate index. There
are three main  categories  of indices:  those based on US Treasury  securities,
those derived from a calculated  measure such as a cost of funds index and those
based on a moving average of mortgage  rates.  Commonly used indices include the
one-year,  three-year  and  five-year  constant  maturity  Treasury  rates,  the
three-month  Treasury  bill rate,  the  180-day  Treasury  bill  rate,  rates on
longer-term Treasury  securities,  the 11th District Federal Home Loan Bank Cost
of Funds,  the  National  Median  Cost of  Funds,  the  one-month,  three-month,
six-month or one-year London Interbank Offered Rate ("LIBOR"), the prime rate of
a specific bank or commercial  paper rates.  Some indices,  such as the one-year
constant maturity Treasury rate,  closely mirror changes in market interest rate
levels.  Others,  such as the 11th  District Home Loan Bank Cost of Funds index,
tend to lag behind  changes in market rate  levels and tend to be somewhat  less
volatile.

The  Mortgage-Backed  Securities  either issued or guaranteed by GNMA,  FHLMC or
FNMA  ("Certificates")  are called pass-through  Certificates because a pro rata
share of both regular interest and principal  payments (less GNMA's,  FHLMC's or
FNMA's fees and any  applicable  loan  servicing  fees),  as well as unscheduled
early prepayments on the underlying mortgage pool, are passed through monthly to
the holder of the Certificate (i.e., a fund). The principal and interest on GNMA
securities are guaranteed by GNMA and backed by the full faith and credit of the
US  Government.  FNMA  guarantees  full and timely  payment of all  interest and
principal,  while  FHLMC  guarantees  timely  payment of interest  and  ultimate
collection of principal.  Mortgage-Backed Securities from FNMA and FHLMC are not
backed by the full  faith and  credit of the United  States;  however,  they are
generally considered to offer minimal credit risks. The yields provided by these
Mortgage-Backed  Securities have historically exceeded the yields on other types
of US Government  Securities with comparable  maturities in large measure due to
the prepayment risk discussed below.

                                       13
<PAGE>

If prepayments of principal are made on the underlying  mortgages during periods
of rising interest rates, a fund generally will be able to reinvest such amounts
in securities  with a higher  current rate of return.  However,  a fund will not
benefit from  increases in interest rates to the extent that interest rates rise
to the point where they cause the current  coupon of adjustable  rate  mortgages
held as investments by a fund to exceed the maximum allowable annual or lifetime
reset  limits (or "cap  rates") for a  particular  mortgage.  Also, a fund's net
asset  value  could vary to the extent that  current  yields on  Mortgage-Backed
Securities  are  different  than market yields during  interim  periods  between
coupon reset dates.

During  periods of declining  interest  rates,  of course,  the coupon rates may
readjust downward, resulting in lower yields to a fund. Further, because of this
feature,  the value of  adjustable  rate  mortgages  is  unlikely to rise during
periods  of  declining   interest   rates  to  the  same  extent  as  fixed-rate
instruments.  As with other Mortgage-Backed  Securities,  interest rate declines
may result in  accelerated  prepayment of mortgages,  and the proceeds from such
prepayments must be reinvested at lower prevailing interest rates.

One  additional  difference  between  adjustable  rate  mortgages and fixed rate
mortgages is that for certain types of adjustable rate mortgage securities,  the
rate of amortization of principal,  as well as interest  payments,  can and does
change in  accordance  with  movements in a specified,  published  interest rate
index. The amount of interest due to an adjustable rate mortgage security holder
is  calculated  by adding a specified  additional  amount,  the "margin," to the
index, subject to limitations or "caps" on the maximum and minimum interest that
is charged to the  mortgagor  during the life of the  mortgage or to maximum and
minimum changes to that interest rate during a given period.

Advance  Refunded  Bonds.  DWS Floating  Rate Plus Fund may  purchase  Municipal
Securities that are subsequently  refunded by the issuance and delivery of a new
issue of bonds prior to the date on which the outstanding  issue of bonds can be
redeemed or paid. The proceeds from the new issue of bonds are typically  placed
in an escrow fund consisting of US Government  obligations  that are used to pay
the interest,  principal and call premium on the issue being refunded.  The Fund
may also purchase Municipal Securities that have been refunded prior to purchase
by a fund.

Asset-Backed Securities.  Asset backed securities may include pools of mortgages
("mortgage-backed  securities"),  loans, receivables or other assets. Payment of
principal and interest may be largely dependent upon the cash flows generated by
the assets backing the securities. For purposes of determining the percentage of
a fund's total assets  invested in securities of issuers having their  principal
business  activities in a particular  industry,  asset backed securities will be
classified separately,  based on the nature of the underlying assets,  according
to the  following  categories:  captive auto,  diversified,  retail and consumer
loans, captive equipment and business, business trade receivables,  nuclear fuel
and capital and mortgage lending.  Asset-backed securities present certain risks
that  are  not  presented  by  mortgage-backed   securities.   Primarily,  these
securities  may not have the  benefit of any  security  interest  in the related
assets.  Credit card  receivables  are  generally  unsecured and the debtors are
entitled  to the  protection  of a number of state and federal  consumer  credit
laws,  many of which give such debtors the right to set off certain amounts owed
on the credit cards,  thereby reducing the balance due. There is the possibility
that  recoveries on repossessed  collateral may not, in some cases, be available
to support  payments  on these  securities.  Asset-backed  securities  are often
backed by a pool of assets representing the obligations of a number of different
parties.  To lessen the effect of failures by obligors on  underlying  assets to
make payments,  the securities may contain elements of credit support which fall
into two  categories:  (i) liquidity  protection,  and (ii)  protection  against
losses resulting from ultimate  default by an obligor on the underlying  assets.
Liquidity  protection  refers to the  provision  of  advances,  generally by the
entity  administering the pool of assets, to ensure that the receipt of payments
on the underlying  pool occurs in a timely  fashion.  Protection  against losses
results from payment of the insurance  obligations  on at least a portion of the
assets in the pool. This protection may be provided through guarantees, policies
or letters of credit  obtained  by the  issuer or  sponsor  from third  parties,
through various means of structuring the transaction or through a combination of
such  approaches.  The funds will not pay any  additional  or separate  fees for
credit  support.  The  degree  of  credit  support  provided  for each  issue is
generally  based on historical  information  respecting the level of credit risk
associated  with the  underlying  assets.  Delinquency or loss in excess of that
anticipated or failure of the credit support could  adversely  affect the return
on an investment in such a security. The availability of asset-backed securities
may be affected by legislative or regulatory  developments.  It is possible that
such developments may require the funds to dispose of any then existing holdings
of such securities.

                                       14
<PAGE>

Asset-Indexed Securities. A fund may purchase asset-indexed securities which are
debt  securities   usually  issued  by  companies  in  precious  metals  related
businesses such as mining,  the principal amount,  redemption terms, or interest
rates of which are related to the market price of a specified  precious metal. A
fund  will  only  enter  into  transactions  in  publicly  traded  asset-indexed
securities.  Market prices of asset-indexed  securities will relate primarily to
changes in the market prices of the precious  metals to which the securities are
indexed rather than to changes in market rates of interest.  However,  there may
not be a perfect  correlation  between the price movements of the  asset-indexed
securities  and  the  underlying  precious  metals.   Asset-indexed   securities
typically  bear  interest or pay dividends at below market rates (and in certain
cases at nominal  rates).  A fund may purchase  asset-indexed  securities to the
extent permitted by law.

Auction  Rate  Securities.  Auction rate  securities  in which a fund may invest
consist  of  auction  rate  municipal  securities  and  auction  rate  preferred
securities  issued by closed-end  investment  companies that invest primarily in
municipal securities. Provided that the auction mechanism is successful, auction
rate  securities  usually permit the holder to sell the securities in an auction
at par value at specified intervals. The dividend is reset by "Dutch" auction in
which  bids are made by  broker-dealers  and  other  institutions  for a certain
amount of securities at a specified  minimum yield. The dividend rate set by the
auction is the lowest  interest  or  dividend  rate that  covers all  securities
offered  for sale.  While  this  process  is  designed  to permit  auction  rate
securities  to be traded at par value,  there is the risk that an  auction  will
fail due to insufficient  demand for the  securities.  Dividends on auction rate
preferred  securities  issued by a closed-end  fund may be  designated as exempt
from  federal  income  tax to the extent  they are  attributable  to  tax-exempt
interest  income  earned  by a fund  on the  securities  in  its  portfolio  and
distributed to holders of the preferred securities,  provided that the preferred
securities are treated as equity  securities for federal income tax purposes and
the  closed-end  fund  complies  with  certain  requirements  under the Internal
Revenue Code of 1986, as amended (the "Code").  A fund's  investments in auction
rate  preferred  securities of closed-end  funds are subject to  limitations  on
investments in other US registered investment  companies,  which limitations are
prescribed  by the 1940 Act.  These  limitations  include  prohibitions  against
acquiring  more than 3% of the voting  securities  of any other such  investment
company,  and investing more than 5% of a fund's assets in securities of any one
such investment company or more than 10% of its assets in securities of all such
investment companies.

Bank and Savings and Loan  Obligations.  These  obligations  include  negotiable
certificates  of  deposit,  bankers'  acceptances,  deposit  notes,  fixed  time
deposits  or other  short-term  bank  obligations.  Certificates  of deposit are
negotiable  certificates  evidencing  the  obligations  of a bank to repay funds
deposited  with  it for a  specified  period  of  time.  A fund  may  invest  in
certificates  of deposit of large  domestic  banks and their  foreign  branches,
large US regulated subsidiaries of large foreign banks (i.e., banks which at the
time of their most  recent  annual  financial  statements  show total  assets in
excess of $1 billion),  and of smaller banks as described below. Although a fund
recognizes  that  the  size of a bank  is  important,  this  fact  alone  is not
necessarily  indicative of its  creditworthiness.  Investment in certificates of
deposit issued by foreign  branches of domestic banks involves  investment risks
that are  different in some respects from those  associated  with  investment in
certificates of deposit issued by domestic branches of domestic banks, including
the possible  imposition of withholding  taxes on interest income,  the possible
adoption of foreign  governmental  restrictions which might adversely affect the
payment of principal  and  interest on such  certificates  of deposit,  or other
adverse  political  or  economic  developments.  In  addition,  it might be more
difficult  to obtain  and  enforce  a  judgment  against  a foreign  branch of a
domestic bank.

A fund may also invest in  certificates  of deposit  issued by banks and savings
and  loan  institutions  which  had,  at the time of their  most  recent  annual
financial  statements,  total assets of less than $1 billion,  provided that (i)
the principal  amounts of such  certificates of deposit are insured by an agency
of the US  Government,  (ii) at no time  will a fund  hold  more  than  $100,000
principal  amount of  certificates of deposit of any one such bank, and (iii) at
the time of  acquisition,  no more than 10% of a fund's assets (taken at current
value) are invested in certificates of deposit of such banks having total assets
not in excess of $1 billion.

Banker's acceptances are credit instruments evidencing the obligations of a bank
to  pay a  draft  drawn  on it by a  customer.  These  instruments  reflect  the
obligation  both of the bank and of the  drawer  to pay the face  amount  of the
instrument upon maturity.

Time deposits are non-negotiable  deposits  maintained in a banking  institution
for a specified  period of time at a stated  interest rate.  Time deposits which
may be held by a fund will not benefit from  insurance  from the Bank


                                       15
<PAGE>

Insurance Fund or the Savings  Association  Insurance Fund  administered  by the
Federal Deposit Insurance  Corporation.  Fixed time deposits may be withdrawn on
demand by the investor,  but may be subject to early  withdrawal  penalties that
vary with market conditions and the remaining maturity of the obligation.  Fixed
time  deposits  subject  to  withdrawal  penalties  maturing  in more than seven
calendar  days are subject to a fund's  limitation  on  investments  in illiquid
securities.

Bank Loans.  Bank loans are  typically  senior  debt  obligations  of  borrowers
(issuers) and as such, are  considered to hold a senior  position in the capital
structure of the  borrower.  These may include  loans which hold the most senior
position,  that hold an equal ranking with other senior debt, or loans that are,
in the judgment of the Advisor,  in the category of senior debt of the borrower.
This capital  structure  position  generally  gives the holders of these loans a
priority  claim  on some  or all of the  borrower's  assets  in the  event  of a
default. In most cases, these loans are either partially or fully collateralized
by the assets of a corporation,  partnership, limited liability company or other
business entity, or by cash flow that the Advisor believes has a market value at
the time of acquisition that equals or exceeds the principal amount of the loan.
These loans are often issued in connection with recapitalizations, acquisitions,
leveraged  buy-outs and  refinancings.  It is important to note that Moody's and
S&P may rate bank  loans  higher  than high  yield  bonds of the same  issuer to
reflect  their more  senior  position.  The fund may  invest in both  fixed- and
floating-rate loans. In addition, bank loans can trade either as an "assignment"
or "participation." When the Fund buys an assignment, it is essentially becoming
a party to the bank  agreement.  The vast majority of all trades are assignments
and would therefore  generally represent the preponderance of bank loans held by
the Fund.  In  certain  cases,  the Fund may buy bank  loans on a  participation
basis,  if for  example,  the  Fund  did not  want to  become  party to the bank
agreement.  However,  in all cases,  the Fund will not purchase bank loans where
Deutsche Bank, or an affiliate, serves as an agent bank.

Participations  and  assignments   involve  credit  risk,  interest  rate  risk,
liquidity  risk,  and the  risk of  being a  lender.  If the  Fund  purchases  a
participation, it may only be able to enforce its rights through the lender, and
may assume the credit risk of both the lender and the borrower.

Investments  in loans through  direct  assignment  of a financial  institution's
interests with respect to a loan may involve additional risks. For example, if a
loan is foreclosed, the purchaser could become part owner of any collateral, and
would bear the costs and liabilities associated with owning and disposing of the
collateral.  In addition,  it is at least  conceivable that under emerging legal
theories of lender liability, a purchaser could be held liable as a co-lender.

In the case of loans administered by a bank or other financial  institution that
acts as agent for all holders,  if assets held by the agent for the benefit of a
purchaser  are  determined  to be subject to the claims of the  agent's  general
creditors,  the  purchaser  might incur  certain  costs and delays in  realizing
payment on the loan or loan  participation  and could suffer a loss of principal
or interest.

In the case of loan  participations  where a bank or other  lending  institution
serves  as  financial  intermediary  between  a fund  and the  borrower,  if the
participation does not shift to the fund the direct debtor-creditor relationship
with the borrower, SEC interpretations  require the fund, in some circumstances,
to treat both the lending bank or other lending  institution and the borrower as
issuers for  purposes of the fund's  investment  policies.  Treating a financial
intermediary  as an issuer of  indebtedness  may  restrict  a fund's  ability to
invest in indebtedness related to a single financial intermediary, or a group of
intermediaries  engaged in the same industry,  even if the underlying  borrowers
represent many different companies and industries.

Borrowing.  As a matter of  fundamental  policy,  certain  funds will not borrow
money, except as permitted under the 1940 Act, and as interpreted or modified by
regulatory authority having  jurisdiction,  from time to time. While such funds'
Board of  Directors/Trustees  does not currently intend to borrow for investment
leveraging purposes,  if such a strategy were implemented in the future it would
increase  the  funds'  volatility  and the risk of loss in a  declining  market.
Borrowing  by a fund will  involve  special  risk  considerations.  Although the
principal of a fund's  borrowings  will be fixed,  a fund's assets may change in
value during the time a borrowing is outstanding,  thus  increasing  exposure to
capital risk.

                                       16
<PAGE>

DWS Disciplined  Long/Short  Growth Fund, DWS Disciplined  Long/Short Value Fund
and DWS Floating Rate Plus Fund may each borrow money from banks for  investment
purposes  to the extent  permitted  by the 1940 Act.  This  practice is known as
leverage. Currently, under the 1940 Act, the funds may borrow up to one-third of
their total assets  (including the amount  borrowed)  provided that it maintains
continuous  asset  coverage of 300% with  respect to such  borrowings  and sells
(within three days) sufficient portfolio holdings to restore such coverage if it
should decline to less than 300% due to market  fluctuations or otherwise,  even
if disadvantageous from an investment  standpoint.  The funds may borrow through
other means to the extent  permitted  by the 1940 Act. In addition to  borrowing
for leverage  purposes,  the funds also may borrow money to meet  redemptions in
order to avoid  forced,  unplanned  sales of portfolio  securities  or for other
temporary or emergency  purposes.  This allows the funds greater  flexibility to
buy and sell portfolio  securities for investment or tax considerations,  rather
than for cash flow considerations.

The use of borrowing by the funds involves special risk  considerations that may
not  be  associated   with  other  funds  having   similar   policies.   Because
substantially all of the funds' assets fluctuate in value,  whereas the interest
obligation  resulting  from a borrowing  may be fixed by the terms of the fund's
agreement with its lender,  the net asset value per share of the funds will tend
to increase  more when its portfolio  securities  increase in value and decrease
more when its portfolio securities decrease in value than would otherwise be the
case if the  funds  did  not  borrow  funds.  In  addition,  interest  costs  on
borrowings  may  fluctuate  with  changing  market  rates  of  interest  and may
partially  offset or exceed the return earned on borrowed  funds.  Under adverse
market  conditions,  the funds might have to sell  portfolio  securities to meet
interest  or  principal   payments  at  a  time  when   fundamental   investment
considerations  would not favor such sales. The interest that the funds must pay
on borrowed money, together with any additional fees to establish and maintain a
borrowing  facility,  are additional costs that will reduce or eliminate any net
investment  income  and may also  offset any  potential  capital  gains.  Unless
appreciation  and income,  if any, on assets acquired with borrowed funds exceed
the  costs of  borrowing,  the use of  leverage  will  diminish  the  investment
performance of the funds compared with what it would have been without leverage.

Brady Bonds. Brady Bonds are securities created through the exchange of existing
commercial bank loans to public and private entities in certain emerging markets
for  new   bonds  in   connection   with  debt   restructurings   under  a  debt
restructuring-plan  introduced by former US Secretary of the Treasury,  Nicholas
F.  Brady  (the  "Brady  Plan").   Brady  Plan  debt  restructurings  have  been
implemented in Argentina,  Brazil, Bulgaria, Costa Rica, the Dominican Republic,
Ecuador,  Jordan,  Mexico,  Nigeria, the Philippines,  Poland and Uruguay. Brady
Bonds have been issued fairly  recently,  and for that reason do not have a long
payment history.  Brady Bonds may be  collateralized  or  uncollateralized,  are
issued in various  currencies (but primarily the dollar) and are actively traded
in over-the-counter secondary markets. Dollar-denominated,  collateralized Brady
Bonds,  which may be  fixed-rate  bonds or  floating-rate  bonds,  are generally
collateralized  in full as to principal by US Treasury  zero coupon bonds having
the same maturity as the bonds. Interest payments on these Brady Bonds generally
are collateralized by cash or 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 that time and
is adjusted at regular  intervals  thereafter.  Brady Bonds are often  viewed as
having  three or four  valuation  components:  the  collateralized  repayment of
principal  at  final  maturity;   the  collateralized   interest  payments;  the
uncollateralized  interest  payments;  and  any  uncollateralized  repayment  of
principal at maturity (these  uncollateralized  amounts constitute the "residual
risk"). In light of the residual risk of Brady Bonds and the history of defaults
of countries  issuing  Brady Bonds,  with  respect to  commercial  bank loans by
public  and  private  entities,  investments  in Brady  Bonds  may be  viewed as
speculative.  Approximately  $152  billion in Brady  Bonds  have been  issued in
Africa,  Asia, Eastern Europe,  Latin America and the Middle East, with over 90%
of these Brady Bonds being denominated in US dollars.

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 funds 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

                                       17
<PAGE>

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.

Collateralized   Mortgage  Obligations   ("CMOs").   CMOs  are  hybrids  between
mortgage-backed bonds and mortgage pass-through  securities.  Similar to a bond,
interest and prepaid principal are paid, in most cases,  semiannually.  CMOs may
be collateralized by whole mortgage loans but are more typically  collateralized
by portfolios of mortgage pass-through  securities guaranteed by GNMA, FHLMC, or
Fannie Mae, and their income streams.

CMOs are  structured  into  multiple  classes,  each bearing a different  stated
maturity.  Actual  maturity  and average  life will  depend upon the  prepayment
experience  of  the  collateral.  CMOs  provide  for a  modified  form  of  call
protection  through a de facto  breakdown  of the  underlying  pool of mortgages
according  to how  quickly the loans are repaid.  Monthly  payment of  principal
received from the pool of underlying mortgages,  including prepayments, is first
returned to investors holding the shortest maturity class. Investors holding the
longer maturity  classes  receive  principal only after the first class has been
retired.  An investor is partially  guarded against a sooner than desired return
of principal  because of the  sequential  payments.  The prices of certain CMOs,
depending on their structure and the rate of prepayments,  can be volatile. Some
CMOs may also not be as liquid as other securities.

In a typical CMO transaction,  a corporation issues multiple series (e.g., A, B,
C, Z) of CMO bonds ("Bonds"). Proceeds of the Bond offering are used to purchase
mortgages or mortgage pass-through certificates  ("Collateral").  The Collateral
is pledged to a third party  trustee as security  for the Bonds.  Principal  and
interest  payments from the Collateral are used to pay principal on the Bonds in
the order A, B, C, Z. The  Series A, B, and C Bonds all bear  current  interest.
Interest  on the  Series Z Bond is  accrued  and added to  principal  and a like
amount is paid as principal on the Series A, B, or C Bond  currently  being paid
off. When the Series A, B, and C Bonds are paid in full,  interest and principal
on the Series Z Bond  begins to be paid  currently.  With some CMOs,  the issuer
serves as a conduit to allow loan originators (primarily builders or savings and
loan associations) to borrow against their loan portfolios.

The principal  risk of CMOs results from the rate of  prepayments  on underlying
mortgages  serving as collateral and from the structure of the deal. An increase
or decrease in prepayment rates will affect the yield, average life and price of
CMOs.

Commercial Paper. Subject to its investment  objectives and policies, a fund may
invest in commercial  paper issued by major  corporations  under the 1933 Act in
reliance on the exemption from registration afforded by Section 3(a)(3) thereof.
Such  commercial  paper may be issued only to finance current  transactions  and
must  mature  in nine  months  or  less.  Trading  of such  commercial  paper is
conducted primarily by institutional  investors through investment dealers,  and
individual  investor  participation  in the  commercial  paper  market  is  very
limited.  A fund also may invest in  commercial  paper issued in reliance on the
so-called "private  placement"  exemption from registration  afforded by Section
4(2) of the 1933 Act ("Section 4(2) paper"). Section 4(2) paper is restricted as
to  disposition  under the federal  securities  laws,  and  generally is sold to
institutional  investors  such as a fund who agree that they are  purchasing the
paper for investment and not with a view to public  distribution.  Any resale by
the purchaser must be in an exempt  transaction.  Section 4(2) paper normally is
resold  to  other  institutional  investors  like a fund  through  or  with  the
assistance of the issuer or investment  dealers who make a market in the Section
4(2)  paper,  thus  providing  liquidity.  The  Advisor  considers  the  legally
restricted  but  readily  saleable  Section  4(2) paper to be  liquid;  however,
pursuant to procedures approved by a fund's Board, if a particular investment in
Section  4(2) paper is not  determined  to be liquid,  that  investment  will be
included  within the  limitation of a fund on illiquid  securities.  The Advisor
monitors the liquidity of its  investments in Section 4(2) paper on a continuing
basis.

Common  Stocks.  Common  stock is issued by companies to raise cash for business
purposes  and  represents  a  proportionate  interest in the issuing  companies.
Therefore, a fund participates in the success or failure of any company in which
it holds stock.  The market values of common stock can fluctuate  significantly,
reflecting the business performance of the issuing company,  investor perception
and general economic and financial market  movements.  Despite the risk of price
volatility, however, common stocks have historically offered a greater potential
for long-term gain on investment,  compared to other classes of financial assets
such as bonds or cash equivalents,  although there can be no assurance that this
will be true in the future.

                                       18
<PAGE>

Convertible Securities.  A fund may invest in convertible  securities,  that is,
bonds,  notes,  debentures,  preferred  stocks  and other  securities  which are
convertible into common stock. Investments in convertible securities can provide
an  opportunity  for capital  appreciation  and/or income  through  interest and
dividend payments by virtue of their conversion or exchange features.

The convertible securities in which a fund may invest are either fixed income or
zero coupon debt  securities  which may be converted or exchanged at a stated or
determinable exchange ratio into underlying shares of common stock. The exchange
ratio for any particular  convertible security may be adjusted from time to time
due to stock splits,  dividends,  spin-offs,  other corporate  distributions  or
scheduled  changes  in the  exchange  ratio.  Convertible  debt  securities  and
convertible  preferred  stocks,  until converted,  have general  characteristics
similar to both debt and equity  securities.  Although  to a lesser  extent than
with debt securities generally, the market value of convertible securities tends
to decline as interest  rates  increase  and,  conversely,  tends to increase as
interest  rates  decline.  In addition,  because of the  conversion  or exchange
feature,  the market value of convertible  securities  typically  changes as the
market value of the underlying common stocks changes, and, therefore, also tends
to follow  movements  in the  general  market  for equity  securities.  A unique
feature of convertible  securities is that as the market price of the underlying
common stock declines,  convertible  securities tend to trade  increasingly on a
yield basis, and so may not experience  market value declines to the same extent
as the underlying  common stock.  When the market price of the underlying common
stock  increases,  the prices of the  convertible  securities  tend to rise as a
reflection of the value of the underlying common stock,  although  typically not
as much as the  underlying  common stock.  While no securities  investments  are
without risk,  investments in convertible  securities generally entail less risk
than investments in common stock of the same issuer.

As debt securities,  convertible  securities are investments which provide for a
stream of income (or in the case of zero coupon securities, accretion of income)
with  generally  higher  yields  than  common  stocks.   Convertible  securities
generally offer lower yields than non-convertible  securities of similar quality
because of their conversion or exchange features.

Of course,  like all debt  securities,  there can be no  assurance  of income or
principal payments because the issuers of the convertible securities may default
on their obligations.

Convertible   securities   generally  are  subordinated  to  other  similar  but
non-convertible  securities of the same issuer,  although  convertible bonds, as
corporate debt  obligations,  enjoy  seniority in right of payment to all equity
securities,  and  convertible  preferred stock is senior to common stock, of the
same issuer.  However,  because of the subordination feature,  convertible bonds
and  convertible  preferred  stock  typically  have lower  ratings  than similar
non-convertible securities. Convertible securities may be issued as fixed income
obligations that pay current income or as zero coupon notes and bonds, including
Liquid Yield Option Notes ("LYONs"(TM)).

Correlation of Gold and Gold Securities.  The underlying fund's advisor believes
that the value of the  securities  of firms  that  deal in gold will  correspond
generally,  over time,  with the prices of the  underlying  metal.  At any given
time,  however,  changes in the price of gold may not  strongly  correlate  with
changes  in the value of  securities  related  to gold,  which are  expected  to
constitute the principal part of a fund's assets.  In fact, there may be periods
in which the price of gold  stocks and gold will move in  different  directions.
The reason for this potential  disparity is that political and economic factors,
including  behavior  of the stock  market,  may have  differing  impacts on gold
versus gold stocks.

Corporate Obligations.  Investment in corporate debt obligations involves credit
and interest rate risk.  The value of  fixed-income  investments  will fluctuate
with changes in interest  rates and bond market  conditions,  tending to rise as
interest  rates decline and to decline as interest  rates rise.  Corporate  debt
obligations generally offer less current yield than securities of lower quality,
but lower-quality  securities generally have less liquidity,  greater credit and
market risk,  and as a result,  more price  volatility.  Longer-term  bonds are,
however, generally more volatile than bonds with shorter maturities.

Custodial  Receipts.  Custodial  receipts  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


                                       19
<PAGE>

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 (see "US Government Securities" above)
are  interests in accounts  sponsored  by the US Treasury.  Receipts are sold as
zero coupon securities; for more information, see "Zero Coupon Securities."

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.

Depositary  Receipts.  A fund may invest in  sponsored or  unsponsored  American
Depositary  Receipts ("ADRs"),  European  Depositary  Receipts ("EDRs"),  Global
Depositary  Receipts ("GDRs"),  International  Depositary  Receipts ("IDRs") and
other types of Depositary Receipts (which, together with ADRs, GDRs and IDRs are
hereinafter referred to as "Depositary  Receipts").  Depositary receipts provide
indirect  investment  in securities of foreign  issuers.  Prices of  unsponsored
Depositary  Receipts  may be more  volatile  than if they were  sponsored by the
issuer of the underlying securities.  Depositary Receipts may not necessarily be
denominated  in the same currency as the underlying  securities  into which they
may be  converted.  In  addition,  the  issuers  of  the  stock  of  unsponsored
Depositary  Receipts are not obligated to disclose  material  information in the
United  States  and,  therefore,  there may not be a  correlation  between  such
information and the market value of the Depositary Receipts. ADRs are Depositary
Receipts which are bought and sold in the United States and are typically issued
by a US bank or trust company which evidence ownership of underlying  securities
by a foreign corporation.  GDRs, IDRs and other types of Depositary Receipts are
typically issued by foreign banks or trust companies,  although they may also be
issued by United  States banks or trust  companies,  and  evidence  ownership of
underlying securities issued by either a foreign or a United States corporation.
Generally,  Depositary  Receipts in registered  form are designed for use in the
United  States  securities  markets and  Depositary  Receipts in bearer form are
designed for use in securities  markets outside the United States.  For purposes
of a fund's investment  policies,  a fund's  investments in ADRs, GDRs and other
types of Depositary  Receipts will be deemed to be investments in the underlying
securities.  Depositary Receipts, including those denominated in US dollars will
be subject to foreign currency exchange rate risk.  However,  by investing in US
dollar-denominated  ADRs rather than directly in foreign  issuers' stock, a fund
avoids  currency  risks during the  settlement  period.  In general,  there is a
large,  liquid  market in the  United  States for most  ADRs.  However,  certain
Depositary  Receipts  may not be  listed on an  exchange  and  therefore  may be
illiquid securities.

Direct Debt  Instruments.  DWS Floating Rate Plus Fund may invest in direct debt
instruments.  Direct  debt  instruments  are  interests  in  amounts  owed  by a
corporate,  governmental  or  other  borrower  to  lenders  (direct  loans),  to
suppliers of goods or services  (trade claims or other  receivables) or to other
parties.

When the fund participates in a direct loan it will be lending money directly to
an issuer.  Direct loans generally do not have an underwriter or agent bank, but
instead,  are  negotiated  between a company's  management  team and a lender or
group of lenders.  Direct loans  typically  offer better security and structural
terms than other types of high yield  securities.  Direct debt  obligations  are
often  the most  senior-obligations  in an  issuer's  capital  structure  or are
well-collateralized so that overall risk is lessened.

                                       20
<PAGE>

Trade claims are unsecured rights of payment arising from obligations other than
borrowed funds.  Trade claims include vendor claims and other  receivables  that
are   adequately   documented   and  available  for  purchase  from  high  yield
broker-dealers.  Trade claims  typically may sell at a discount.  In addition to
the risks otherwise associated with low-quality  obligations,  trade claims have
other  risks,  including  the  possibility  that the  amount of the claim may be
disputed by the obligor.  Trade claims normally would be considered illiquid and
pricing can be volatile.

Direct debt instruments  involve a risk of loss in case of default or insolvency
of the borrower.  The fund will rely primarily upon the  creditworthiness of the
borrower  and/or  the  collateral  for  payment of  interest  and  repayment  of
principal.  The value of the fund's  investments  may be  adversely  affected if
scheduled interest or principal payments are not made. Because most direct loans
will be secured,  there will be a smaller  risk of loss with  direct  loans than
with an investment in unsecured  high yield bonds or trade claims.  Indebtedness
of borrowers whose creditworthiness is poor involves substantially greater risks
and may be highly speculative. Borrowers that are in bankruptcy or restructuring
may never pay off their  indebtedness  or may pay only a small  fraction  of the
amount owed.  Investments in direct debt  instruments also involve interest rate
risk  and  liquidity  risk.  However,  interest  rate  risk is  lessened  by the
generally  short-term  nature of direct debt instruments and their interest rate
structure,  which typically floats. To the extent the direct debt instruments in
which the fund invests are considered  illiquid,  the lack of a liquid secondary
market (1) will have an  adverse  impact on the value of such  instruments,  (2)
will have an  adverse  impact on the  fund's  ability  to  dispose  of them when
necessary  to meet the  fund's  liquidity  needs or in  response  to a  specific
economic event, such as a decline in creditworthiness of the issuer, and (3) may
make it more difficult for the fund to assign a value of these  instruments  for
purposes of valuing the fund's portfolio and calculating its net asset value. In
order to lessen  liquidity  risk, the fund  anticipates  investing  primarily in
direct debt  instruments that are quoted and traded in the high yield market and
will not  invest in these  instruments  if it would  cause  more than 15% of the
fund's net assets to be  illiquid.  Trade  claims may also present a tax risk to
the fund.

The fund will not invest in trade claims if it effects the fund's  qualification
as a regulated  investment  company under  Subchapter M of the Internal  Revenue
Code.

Dollar Roll Transactions. Dollar roll transactions consist of the sale by a fund
to a bank or broker/dealer  (the  "counterparty")  of GNMA certificates or other
mortgage-backed  securities  together  with a  commitment  to purchase  from the
counterparty  similar,  but not  identical,  securities at a future date, at the
same price.  The  counterparty  receives all  principal  and interest  payments,
including  prepayments,  made on the  security  while it is the  holder.  A fund
receives a fee from the  counterparty  as  consideration  for entering  into the
commitment  to  purchase.  Dollar  rolls may be renewed over a period of several
months  with  a  different  purchase  and  repurchase  price  fixed  and a  cash
settlement  made  at each  renewal  without  physical  delivery  of  securities.
Moreover,  the  transaction  may  be  preceded  by a firm  commitment  agreement
pursuant to which a fund agrees to buy a security on a future date.

A fund will segregate  cash, US Government  securities or other liquid assets in
an amount sufficient to meet their purchase obligations under the transactions.

Dollar  rolls may be treated for  purposes of the 1940 Act, as  borrowings  of a
fund because  they  involve the sale of a security  coupled with an agreement to
repurchase.  A dollar roll involves costs to a fund.  For example,  while a fund
receives a fee as consideration for agreeing to repurchase the security,  a fund
forgoes the right to receive  all  principal  and  interest  payments  while the
counterparty  holds the security.  These payments to the counterparty may exceed
the fee received by a fund, thereby effectively  charging a fund interest on its
borrowing.  Further,  although  a fund  can  estimate  the  amount  of  expected
principal prepayment over the term of the dollar roll, a variation in the actual
amount of prepayment could increase or decrease the cost of a fund's borrowing.

The entry into dollar rolls involves  potential risks of loss that are different
from those related to the securities  underlying the transactions.  For example,
if the  counterparty  becomes  insolvent,  a fund's  right to purchase  from the
counterparty might be restricted. Additionally, the value of such securities may
change adversely before a fund is able to purchase them.  Similarly,  a fund may
be required to purchase  securities in connection with a dollar roll at a higher
price than may otherwise be available on the open market. Since, as noted above,
the counterparty is required to deliver a similar, but not identical security to
a fund, the security that a fund is required to buy under the dollar roll may be
worth less than an identical security. Finally, there can be no assurance that a
fund's use of the cash that it receives from a dollar roll will provide a return
that exceeds borrowing costs.

                                       21
<PAGE>

Equities as a result of workouts.  A fund may hold equity securities received in
an exchange or workout of distressed  lower-rated debt securities.  A distressed
security is a security that is in default or in risk of being in default.

Eurodollar  Instruments.  A fund may make investments in Eurodollar instruments.
Eurodollar  instruments are US  dollar-denominated  futures contracts or options
thereon  which are  linked  to the  London  Interbank  Offered  Rate  ("LIBOR"),
although  foreign  currency-denominated  instruments  are available from time to
time.  Eurodollar futures contracts enable purchasers to obtain a fixed rate for
the lending of funds and sellers to obtain a fixed rate for  borrowings.  A Fund
might use  Eurodollar  futures  contracts  and options  thereon to hedge against
changes in LIBOR, to which many interest rate swaps and fixed income instruments
are linked or for any other purpose.

Eurodollar  Obligations.  Eurodollar bank obligations are US  dollar-denominated
certificates  of deposit and time deposits issued outside the US capital markets
by foreign  branches of US banks and US branches  of foreign  banks.  Eurodollar
obligations  are  subject  to the same risks that  pertain to  domestic  issues,
notably credit risk,  market risk and liquidity risk.  Additionally,  Eurodollar
obligations are subject to certain sovereign risks.

Foreign  Currencies.  Because  investments  in foreign  securities  will usually
involve  currencies  of foreign  countries,  and because a fund may hold foreign
currencies  and  forward   foreign   currency   exchange   contracts   ("forward
contracts"),   futures  contracts,  options  on  futures  contracts  on  foreign
currencies and other currency-related  instruments, the value of the assets of a
fund as  measured  in US dollars may be affected  favorably  or  unfavorably  by
changes in foreign currency exchange rates and exchange control regulations, and
a  fund  may  incur  costs  in  connection  with  conversions   between  various
currencies.

The  strength  or  weakness  of  the  US  dollar  against  these  currencies  is
responsible for part of a fund's investment performance.  If the dollar falls in
value relative to the Japanese yen, for example,  the dollar value of a Japanese
stock held in the portfolio  will rise even though the price of the stock in yen
remains unchanged. Conversely, if the dollar rises in value relative to the yen,
the dollar value of the Japanese stock will fall.  Many foreign  currencies have
experienced significant devaluation relative to the dollar.

Although  a fund  values its assets  daily in terms of US  dollars,  it does not
intend to convert its holdings of foreign  currencies into US dollars on a daily
basis.  It will do so from time to time,  and  investors  should be aware of the
costs of currency conversion.  Although foreign exchange dealers do not charge a
fee for  conversion,  they do  realize  a profit  based on the  difference  (the
"spread")  between  the  prices at which they are  buying  and  selling  various
currencies. Thus, a dealer may offer to sell a foreign currency to a fund at one
rate,  while  offering a lesser rate of exchange  should a fund desire to resell
that currency to the dealer. A fund will conduct its foreign  currency  exchange
transactions  either on a spot (i.e., cash) basis at the spot rate prevailing in
the foreign currency exchange market, or through entering into forward contracts
(or options thereon) to purchase or sell foreign currencies.
(See "Strategic Transactions and Derivatives" below.)

Foreign Fixed Income Securities.  Since most foreign fixed income securities are
not rated,  a fund will invest in foreign fixed income  securities  based on the
underlying funds' advisor's analysis without relying on published ratings. Since
such  investments will be based upon the underlying  funds'  advisor's  analysis
rather than upon  published  ratings,  achievement  of a fund's goals may depend
more upon the abilities of the underlying funds' advisor than would otherwise be
the case.

The value of the foreign fixed income  securities  held by a fund,  and thus the
net asset value of a fund's shares, generally will fluctuate with (a) changes in
the perceived creditworthiness of the issuers of those securities, (b) movements
in interest  rates,  and (c) changes in the relative values of the currencies in
which a fund's  investments  in fixed income  securities  are  denominated  with
respect to the US Dollar.  The extent of the fluctuation  will depend on various
factors,  such as the average maturity of a fund's  investments in foreign fixed
income  securities,  and the extent to which a fund  hedges its  interest  rate,
credit and currency exchange rate risks. A longer average maturity  generally is
associated  with a  higher  level  of  volatility  in the  market  value of such
securities in response to changes in market conditions.

                                       22
<PAGE>

Investments in sovereign  debt,  including  Brady Bonds,  involve special risks.
Brady Bonds are debt securities  issued under a plan implemented to allow debtor
nations to restructure their outstanding  commercial bank indebtedness.  Foreign
governmental  issuers of debt or the  governmental  authorities that control the
repayment  of the debt may be  unable or  unwilling  to repay  principal  or pay
interest  when due.  In the event of  default,  there may be limited or no legal
recourse in that, generally, remedies for defaults must be pursued in the courts
of the defaulting party.  Political conditions,  especially a sovereign entity's
willingness  to  meet  the  terms  of  its  fixed  income  securities,   are  of
considerable  significance.  Also, there can be no assurance that the holders of
commercial bank loans to the same sovereign  entity may not contest  payments to
the holders of sovereign debt in the event of default under commercial bank loan
agreements.  In  addition,  there is no  bankruptcy  proceeding  with respect to
sovereign debt on which a sovereign has  defaulted,  and a fund may be unable to
collect  all or any  part  of its  investment  in a  particular  issue.  Foreign
investment  in certain  sovereign  debt is  restricted  or controlled to varying
degrees,  including  requiring  governmental  approval for the  repatriation  of
income, capital or proceed of sales by foreign investors.  These restrictions or
controls may at times limit or preclude foreign  investment in certain sovereign
debt or increase the costs and expenses of a fund.  Sovereign debt may be issued
as part of debt  restructuring  and such debt is to be  considered  speculative.
There is a history of defaults with respect to  commercial  bank loans by public
and private  entities  issuing  Brady  Bonds.  All or a portion of the  interest
payments  and/or  principal  repayment  with  respect  to  Brady  Bonds  may  be
uncollateralized.

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

In addition, foreign securities may be subject to the risk of nationalization or
expropriation   of  assets,   imposition  of  currency   exchange   controls  or
restrictions on the  repatriation of foreign  currency,  confiscatory  taxation,
political or  financial  instability  and  diplomatic  developments  which could
affect  the  value of the  fund's  investments  in  certain  foreign  countries.
Governments   of  many   countries  have  exercised  and  continue  to  exercise
substantial  influence  over many  aspects of the  private  sector  through  the
ownership or control of many  companies,  including some of the largest in these
countries.  As  a  result,  government  actions  in  the  future  could  have  a
significant  effect on economic  conditions which may adversely affect prices of
certain   portfolio   securities.   There  is  also  generally  less  government
supervision and regulation of stock  exchanges,  brokers,  and listed  companies
than in the US.  Dividends or interest on, or proceeds from the sale of, foreign
securities  may be subject  to foreign  withholding  taxes,  and  special US tax
considerations  may apply.  Moreover,  foreign economies may differ favorably or
unfavorably  from the US economy in such  respects  as growth of gross  national
product, rate of inflation, capital reinvestment,  resource self-sufficiency and
balance of payments position.

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

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

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

                                       23
<PAGE>

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

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

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

The risk  also  exists  that an  emergency  situation  may  arise in one or more
emerging  markets as a result of which trading of securities may cease or may be
substantially  curtailed and prices for a fund's  securities in such markets may
not be readily  available.  A fund may suspend  redemption of its shares for any
period during which an emergency exists,  as determined by the SEC.  Accordingly
if a fund believes that appropriate  circumstances exist, it will promptly apply
to the SEC for a determination  that an emergency is present.  During the period
commencing from a fund's  identification of such condition until the date of the
SEC action,  a fund's  securities in the affected markets will be valued at fair
value determined in good faith by or under the direction of a fund's Board.

Foreign  Securities.  Investments in foreign securities involves certain special
considerations,  including  those  set  forth  below,  which  are not  typically
associated   with  investing  in  US  securities  and  which  may  favorably  or
unfavorably affect a fund's performance.  As foreign companies are not generally
subject to uniform  accounting,  auditing  and  financial  reporting  standards,
practices and requirements comparable to those applicable to domestic companies,
there may be less publicly  available  information  about a foreign company than
about a domestic company. Many foreign stock markets, while growing in volume of
trading  activity,  have  substantially  less  volume  than the New  York  Stock
Exchange,  Inc. (the  "Exchange"),  and securities of some foreign companies are
less liquid and more volatile than securities of domestic companies.  Similarly,
volume and  liquidity in most foreign bond markets is less than in the US and at
times,  volatility  of price can be  greater  than in the US.  Further,  foreign
markets  have  different  clearance  and  settlement  procedures  and in certain
markets  there have been times when  settlements  have been  unable to keep pace
with the volume of securities transactions,  making it difficult to conduct such
transactions. Delays in settlement could result in temporary periods when assets
of a fund are  uninvested  and no return is earned  thereon.  The inability of a
fund to make intended security purchases due to settlement  problems could cause
a fund to miss  attractive  investment  opportunities.  Inability  to dispose of
portfolio securities due to settlement problems either could result in losses to
a fund due to subsequent  declines in value of the  portfolio  security or, if a
fund has  entered  into a  contract  to sell the  security,  could  result  in a
possible liability to the purchaser. Payment for securities without delivery may
be required in certain foreign markets.  Fixed commissions on some foreign stock
exchanges  are generally  higher than  negotiated  commissions  on US exchanges,
although a fund will  endeavor to achieve the most  favorable net results on its
portfolio transactions.  Further, a fund may encounter difficulties or be unable
to pursue  legal  remedies  and obtain  judgments  in foreign  courts.  There is
generally less  government  supervision  and regulation of business and industry
practices, stock exchanges,  brokers and listed companies than in the US. It may
be more difficult for a fund's agents to keep currently informed about corporate
actions such as stock  dividends or other matters which may affect the prices of
portfolio securities. Communications between the US and foreign countries may be
less  reliable  than  within  the  US,  thus  increasing  the


                                       24
<PAGE>

risk of delayed  settlements of portfolio  transactions  or loss of certificates
for  portfolio  securities.   In  addition,  with  respect  to  certain  foreign
countries,  there is the possibility of expropriation or confiscatory  taxation,
political or social instability,  or diplomatic  developments which could affect
US investments in those countries.  Moreover,  individual  foreign economies may
differ  favorably or unfavorably  from the US economy in such respects as growth
of gross national product,  rate of inflation,  capital  reinvestment,  resource
self-sufficiency  and balance of payments  position.  The  management  of a fund
seeks to mitigate the risks associated with the foregoing considerations through
diversification and continuous professional management.

Gold or Precious  Metals  Custody.  Gold and other precious metals held by or on
behalf of a fund may be held on  either an  allocated  or an  unallocated  basis
inside or  outside  the US.  Placing  gold or  precious  metals in an  allocated
custody  account  gives the fund a direct  interest  in  specified  gold bars or
precious metals,  whereas an unallocated  deposit does not and instead gives the
Fund a right only to compel  the  counterparty  to deliver a specific  amount of
gold or precious metals, as applicable.  Consequently, a fund could experience a
loss if the counterparty to an unallocated  deposit arrangement becomes bankrupt
or fails to deliver the gold or precious metals as requested.  An allocated gold
or precious  metals  custody  account  also  involves  the risk that the gold or
precious  metals will be stolen or damaged while in transit.  Both allocated and
unallocated  arrangements  require a fund as seller to  deliver,  either by book
entry or physically,  the gold or precious metals sold in advance of the receipt
of payment.

High Yield/High  Risk Bonds. A fund may also purchase debt securities  which are
rated below  investment-grade  (commonly referred to as "junk bonds"),  that is,
rated below Baa by Moody's or below BBB by S&P and unrated  securities judged to
be of equivalent  quality as determined by the underlying fund's advisor.  These
securities  usually entail greater risk (including the possibility of default or
bankruptcy  of the  issuers  of  such  securities),  generally  involve  greater
volatility  of price and risk to principal  and income,  and may be less liquid,
than securities in the higher rating  categories.  The lower the ratings of such
debt  securities,  the more their  risks  render  them like  equity  securities.
Securities  rated D may be in default  with  respect to payment of  principal or
interest.

Issuers of such high yield  securities  often are highly  leveraged  and may not
have available to them more  traditional  methods of financing.  Therefore,  the
risk  associated  with  acquiring the  securities  of such issuers  generally is
greater than is the case with higher rated  securities.  For example,  during an
economic  downturn  or a  sustained  period of  rising  interest  rates,  highly
leveraged  issuers of high yield  securities  may experience  financial  stress.
During such periods, such issuers may not have sufficient revenues to meet their
interest  payment  obligations.   The  issuer's  ability  to  service  its  debt
obligations may also be adversely affected by specific  corporate  developments,
or the issuer's inability to meet specific projected business forecasts,  or the
unavailability  of  additional  financing.  The risk of loss from default by the
issuer is significantly greater for the holders of high yield securities because
such  securities  are generally  unsecured and are often  subordinated  to other
creditors  of the  issuer.  Prices  and  yields of high  yield  securities  will
fluctuate over time and, during periods of economic  uncertainty,  volatility of
high  yield  securities  may  adversely  affect a fund's  net  asset  value.  In
addition,  investments  in high yield zero coupon or pay-in-kind  bonds,  rather
than  income-bearing  high yield securities,  may be more speculative and may be
subject to greater fluctuations in value due to changes in interest rates.

A fund may have difficulty  disposing of certain high yield  securities  because
they may have a thin trading market. Because not all dealers maintain markets in
all high yield securities, a fund anticipates that such securities could be sold
only to a limited number of dealers or  institutional  investors.  The lack of a
liquid  secondary  market may have an adverse  effect on the market  price and a
fund's  ability  to  dispose  of  particular  issues  and may also  make it more
difficult  for a fund to obtain  accurate  market  quotations  for  purposes  of
valuing a fund's assets.  Market quotations generally are available on many high
yield  issues  only from a limited  number of  dealers  and may not  necessarily
represent  firm  bids of such  dealers  or  prices  for  actual  sales.  Adverse
publicity and investor perceptions may decrease the values and liquidity of high
yield  securities.  These  securities  may  also  involve  special  registration
responsibilities,   liabilities   and  costs,   and   liquidity   and  valuation
difficulties.

Credit  quality in the  high-yield  securities  market can change  suddenly  and
unexpectedly,  and even recently issued credit ratings may not fully reflect the
actual risks posed by a particular high-yield security. For these reasons, it is
generally the policy of the underlying fund's advisor not to rely exclusively on
ratings issued by established  credit rating  agencies,  but to supplement  such
ratings with its own  independent  and on-going  review of credit  quality.  The
achievement of a fund's  investment  objective by investment in such  securities
may be more dependent on the


                                       25
<PAGE>

underlying  fund's advisor's credit analysis than is the case for higher quality
bonds.  Should the rating of a portfolio security be downgraded,  the underlying
funds' advisor will  determine  whether it is in the best interests of a fund to
retain or dispose of such security.

Prices  for   high-yield   may  be  affected  by   legislative   and  regulatory
developments.  Also, Congress has from time to time considered legislation which
would restrict or eliminate the corporate tax deduction for interest payments in
these  securities and regulate  corporate  restructurings.  Such legislation may
significantly depress the prices of outstanding securities of this type.

A portion of the high-yield  acquired by a fund will be purchased upon issuance,
which may involve  special  risks  because the  securities  so acquired  are new
issues. In such instances a fund may be a substantial purchaser of the issue and
therefore have the  opportunity  to participate in structuring  the terms of the
offering.  Although  this may  enable a fund to seek to protect  itself  against
certain of such risks, the  considerations  discussed herein would  nevertheless
remain applicable.

Illiquid  Securities and Restricted  Securities.  A fund may purchase securities
that are subject to legal or  contractual  restrictions  on resale  ("restricted
securities").  Generally  speaking,  restricted  securities  may be sold  (i) to
qualified  institutional buyers; (ii) in a privately negotiated transaction to a
limited number of purchasers;  (iii) in limited  quantities after they have been
held for a specified  period of time and other conditions are met pursuant to an
exemption  from  registration;  or  (iv)  in  a  public  offering  for  which  a
registration statement is in effect under the Securities Act of 1933, as amended
(the "1933 Act").  Issuers of  restricted  securities  may not be subject to the
disclosure and other investor  protection  requirements that would be applicable
if their securities were publicly traded.

Restricted  securities  are often  illiquid,  but they may also be  liquid.  For
example,  restricted securities that are eligible for resale under Rule 144A are
often deemed to be liquid.

Each fund's Board has approved  guidelines for use by its advisor in determining
whether a security  is liquid or  illiquid.  Among the  factors  an advisor  may
consider in reaching  liquidity  decisions relating to Rule 144A securities are:
(1) the  frequency  of trades  and quotes  for the  security;  (2) the number of
dealers  wishing  to  purchase  or sell the  security  and the  number  of other
potential purchasers;  (3) dealer undertakings to make a market in the security;
and (4) the nature of the security and the nature of the market for the security
(i.e.,  the time  needed to dispose of the  security,  the method of  soliciting
offers, and the mechanics of the transfer.  Issuers of restricted securities may
not be subject to the disclosure and other investor protection  requirement that
would  be  applicable  if  their  securities  were  publicly  traded.   Where  a
registration  statement is required for the resale of restricted  securities,  a
fund may be required to bear all or part of the  registration  expenses.  A fund
may be deemed to be an "underwriter"  for purposes of the 1933 Act, when selling
restricted  securities to the public and, in such event, a fund may be liable to
purchasers of such  securities  if the  registration  statement  prepared by the
issuer is materially inaccurate or misleading.

A fund may also purchase securities that are not subject to legal or contractual
restrictions  on resale,  but that are deemed  illiquid.  Such securities may be
illiquid, for example, because there is a limited trading market for them.

A fund may be unable to sell a restricted or illiquid security.  In addition, it
may be more  difficult to determine a market  value for  restricted  or illiquid
securities.  Moreover,  if adverse market  conditions were to develop during the
period between a fund's  decision to sell a restricted or illiquid  security and
the point at which a fund is  permitted  or able to sell such  security,  a fund
might  obtain a price  less  favorable  than the price  that  prevailed  when it
decided to sell.

Impact of Large  Redemptions  and  Purchases of Fund Shares.  From time to time,
shareholders  of a Fund or an Underlying DWS Fund (which may include  affiliated
and/or  non-affiliated  registered investment companies that invest in a Fund or
an Underlying DWS Fund) may make  relatively  large  redemptions or purchases of
fund shares.  These  transactions may cause a 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 a fund's  performance  to the extent  that a fund may be  required to
sell securities or invest cash at times when it would not


                                       26
<PAGE>

otherwise do so. These  transactions  could also  accelerate the  realization of
taxable  income if sales of securities  resulted in capital gains and could also
increase transaction costs, which may impact a fund's expense ratio.

Indexed Securities. A fund may invest in indexed securities,  the value of which
is linked to currencies, interest rates, commodities, indices or other financial
indicators ("reference instruments"). Most indexed securities have maturities of
three years or less.

Indexed  securities  differ from other types of debt  securities in which a fund
may invest in several  respects.  First, the interest rate or, unlike other debt
securities,  the principal amount payable at maturity of an indexed security may
vary based on changes in one or more specified reference instruments, such as an
interest rate compared with a fixed interest rate or the currency exchange rates
between  two  currencies  (neither  of which need be the  currency  in which the
instrument is denominated).  The reference instrument need not be related to the
terms of the indexed security.  For example, the principal amount of a US dollar
denominated  indexed security may vary based on the exchange rate of two foreign
currencies.  An indexed security may be positively or negatively  indexed;  that
is, its value may increase or decrease if the value of the reference  instrument
increases.  Further,  the change in the principal amount payable or the interest
rate of an indexed security may be a multiple of the percentage change (positive
or negative) in the value of the underlying reference instrument(s).

Investment in indexed  securities  involves  certain  risks.  In addition to the
credit risk of the  security's  issuer and the normal risks of price  changes in
response  to  changes  in  interest  rates,  the  principal  amount  of  indexed
securities  may  decrease  as a result  of  changes  in the  value of  reference
instruments.  Further,  in the case of certain  indexed  securities in which the
interest  rate is linked to a reference  instrument,  the  interest  rate may be
reduced to zero, and any further  declines in the value of the security may then
reduce the principal amount payable on maturity. Finally, indexed securities may
be  more  volatile  than  the  reference  instruments   underlying  the  indexed
securities.

Inflation-Indexed  Instruments. A fund may purchase inflation-indexed securities
issued by the US Treasury,  US government agencies and  instrumentalities  other
than the US Treasury,  and entities  other than the US Treasury or US government
agencies and instrumentalities.

Inflation-indexed  bonds are fixed income  securities or other instruments whose
principal value is periodically adjusted according to the rate of inflation. Two
structures  are common.  The US Treasury and some other  issuers use a structure
that accrues  inflation  on either a current or lagged basis into the  principal
value of the bond.  Most other issuers pay out the price index  accruals as part
of a semiannual coupon.

Inflation-indexed  securities issued by the US Treasury have maturities of five,
ten or  thirty  years,  although  it is  possible  that  securities  with  other
maturities will be issued in the future. The US Treasury securities pay interest
on a semiannual  basis,  equal to a fixed  percentage of the  inflation-adjusted
principal amount.  For example,  if a Fund purchased an  inflation-indexed  bond
with a par value of $1,000  and a 3% real rate of return  coupon  (payable  1.5%
semiannually),  and  calculated  inflation over the first six months was 1%, the
mid-year  value of the bond  would be $1,010 and the first  semiannual  interest
payment would be $15.15 ($1,010 times 1.5%). If calculated  inflation during the
second half of the year resulted in the whole year's inflation  equaling 3%, the
end of year value of the bond would be $1,030 and the second semiannual interest
payment would be $15.45 ($1,030 times 1.5%).

If the periodic  adjustment rate measuring  inflation falls, the principal value
of inflation-indexed  bonds will be adjusted downward,  and,  consequently,  the
interest  payable  on these  securities  (calculated  with  respect to a smaller
principal  amount) will be reduced.  Repayment of the original bond principal on
maturity (as adjusted for  inflation)  is  guaranteed in the case of US Treasury
inflation-indexed bonds, even during a period of deflation. However, the current
market value of the bonds is not guaranteed and will fluctuate.  A fund may also
invest in other  inflation  related  bonds that may or may not provide a similar
guarantee.  If a guarantee of principal is not provided,  the adjusted principal
value of the bond repaid at maturity may be less than the original principal. In
addition,  if a  fund  purchases  inflation-indexed  bonds  offered  by  foreign
issuers,  the rate of inflation  measured by the foreign inflation index may not
be correlated to the rate of inflation in the US.

The value of  inflation-indexed  bonds is  expected  to change  in  response  to
changes in real interest  rates.  Real interest  rates, in turn, are tied to the
relationship   between  nominal  interest  rates  and  the  rate  of  inflation.
Therefore,


                                       27
<PAGE>

if inflation  were to rise at a faster rate than nominal  interest  rates,  real
interest   rates   might   decline,   leading  to  an   increase   in  value  of
inflation-indexed  bonds. In contrast,  if nominal interest rates increased at a
faster  rate than  inflation,  real  interest  rates  might  rise,  leading to a
decrease  in  value  of  inflation-indexed  bonds.  There  can be no  assurance,
however,  that the value of inflation-indexed  bonds will be directly correlated
to changes in interest rates.

While these securities are expected to be protected from long-term  inflationary
trends,  short-term  increases in inflation  may lead to a decline in value.  If
interest  rates rise due to reasons other than  inflation  (for example,  due to
changes in currency  exchange  rates),  investors in these securities may not be
protected  to the  extent  that the  increase  is not  reflected  in the  bond's
inflation measure.

In  general,  the  measure  used to  determine  the  periodic  adjustment  of US
inflation-indexed  bonds  is  the  Consumer  Price  Index  for  Urban  Consumers
("CPI-U"), which is calculated monthly by the US Bureau of Labor Statistics. The
CPI-U is a measurement  of changes in the cost of living,  made up of components
such as housing,  food,  transportation and energy. The inflation  adjustment to
the securities  references this index with a three month lag.  Inflation-indexed
bonds  issued  by a foreign  government  are  generally  adjusted  to  reflect a
comparable inflation index calculate by the applicable government.  There can be
no  assurance  that the CPI-U or any  foreign  inflation  index will  accurately
measure  the  real  rate of  inflation  in the  prices  of goods  and  services.
Moreover,  there can be no  assurance  that the rate of  inflation  in a foreign
country will be correlated to the rate of inflation in the US.  Finally,  income
distributions  of  a  fund  are  likely  to  fluctuate  more  than  those  of  a
conventional bond fund.

The  taxation  of  inflation-indexed  US Treasury  securities  is similar to the
taxation of  conventional  bonds.  Both  interest  payments  and the  difference
between original principal and the inflation-adjusted  principal will be treated
as interest  income  subject to  taxation.  Interest  payments  are taxable when
received or accrued. The inflation adjustment to the principal is subject to tax
in the year the  adjustment  is made,  not at maturity of the security  when the
cash from the repayment of principal is received.  If an upward  adjustment  has
been  made  (which  typically  should  happen),  investors  in  non-tax-deferred
accounts  will pay taxes on this  amount  currently.  Decreases  in the  indexed
principal  can be  deducted  only from  current or  previous  interest  payments
reported as income.

Inflation-indexed  US Treasury  securities  therefore have a potential cash flow
mismatch   to  an   investor,   because   investors   must  pay   taxes  on  the
inflation-adjusted  principal before the repayment of principal is received.  It
is  possible  that,   particularly  for  high  income  tax  bracket   investors,
inflation-indexed  US Treasury  securities would not generate enough income in a
given year to cover the tax liability they could create.  This is similar to the
current tax treatment for zero-coupon  bonds and other discount  securities.  If
inflation-indexed  US Treasury  securities  are sold prior to maturity,  capital
losses or gains are realized in the same manner as traditional bonds.

Inflation-indexed securities are designed to offer a return linked to inflation,
thereby  protecting  future  purchasing  power of the  money  invested  in them.
However, inflation-indexed securities provide this protected return only if held
to maturity.  In  addition,  inflation-indexed  securities  may not trade at par
value.  Real interest  rates (the market rate of interest  less the  anticipated
rate of inflation)  change over time as a result of many  factors,  such as what
investors  are  demanding as a true value for money.  When real rates do change,
inflation-indexed securities prices will be more sensitive to these changes than
conventional  bonds,  because these securities were sold originally based upon a
real interest rate that is no longer prevailing.  Should market expectations for
real interest  rates rise,  the price of  inflation-indexed  securities  and the
share  price of a Fund may fall.  Investors  in the fund  should be  prepared to
accept not only this share price  volatility  but also the possible  adverse tax
consequences it may cause.

An  investment  in  securities  featuring  inflation-adjusted  principal  and/or
interest  involves factors not associated with more traditional  fixed-principal
securities. Such factors include the possibility that the inflation index may be
subject  to  significant  changes,  that  changes  in the  index  may or may not
correlate to changes in interest rates generally or changes in other indices, or
that the  resulting  interest  may be greater or less than that payable on other
securities of similar  maturities.  In the event of sustained  deflation,  it is
possible that the amount of semiannual interest payments, the inflation-adjusted
principal  of the  security  and the  value  of the  stripped  components,  will
decrease.  If any of these possibilities are realized,  a Fund's net asset value
could be negatively affected.

Interfund Borrowing and Lending Program. Each fund has received exemptive relief
from the Securities and Exchange Commission (the "SEC"), which permits the funds
to  participate  in  an  interfund-lending   program  among


                                       28
<PAGE>

certain  investment  companies  advised by the  Advisor.  The  interfund-lending
program  allows the  participating  funds to borrow money from and loan money to
each other for  temporary  or  emergency  purposes.  The program is subject to a
number of  conditions  designed to ensure fair and  equitable  treatment  of all
participating  funds,  including  the  following:  (1) no fund may borrow  money
through the program  unless it receives a more  favorable  interest  rate than a
rate  approximating  the  lowest  interest  rate at which  bank  loans  would be
available to any of the participating  funds under a loan agreement;  and (2) no
fund may lend money  through  the program  unless it  receives a more  favorable
return than that available from an investment in repurchase  agreements  and, to
the extent applicable, money market cash sweep arrangements. In addition, a fund
may participate in the program only if and to the extent that such participation
is consistent  with a fund's  investment  objectives and policies (for instance,
money market  funds would  normally  participate  only as lenders and tax exempt
funds only as borrowers).  Interfund loans and borrowings may extend  overnight,
but could  have a maximum  duration  of seven  days.  Loans may be called on one
day's notice. A fund may have to borrow from a bank at a higher interest rate if
an interfund loan is called or not renewed.  Any delay in repayment to a lending
fund could result in a lost  investment  opportunity  or additional  costs.  The
program is subject to the  oversight  and  periodic  review of the Boards of the
participating  funds. To the extent the funds are actually  engaged in borrowing
through the interfund  lending  program,  such  borrowings will comply with each
fund's non-fundamental policies.

Inverse Floaters.  A fund may invest in inverse  floaters.  Inverse floaters are
debt  instruments  with a  floating  rate of  interest  that  bears  an  inverse
relationship to changes in short-term market interest rates. Investments in this
type of  security  involve  special  risks as compared  to  investments  in, for
example,  a fixed rate municipal  security.  A fund could lose money and its NAV
could  decline if  movements  in  interest  rates are  incorrectly  anticipated.
Moreover,  the markets for securities of this type may be less developed and may
have less liquidity than the markets for more traditional municipal securities.

Investing in Emerging Markets. A fund's investments in foreign securities may be
in developed  countries or in countries  considered by a fund's  advisor to have
developing or "emerging" markets, which involves exposure to economic structures
that are  generally  less diverse and mature than in the United  States,  and to
political  systems that may be less  stable.  A  developing  or emerging  market
country can be considered  to be a country that is in the initial  stages of its
industrialization  cycle.  Currently,  emerging markets  generally include every
country in the world other than the United States, Canada, Japan, Australia, New
Zealand,  Hong Kong,  Singapore and most Western European countries.  Currently,
investing in many emerging  markets may not be desirable or feasible  because of
the lack of adequate custody arrangements for a fund's assets, overly burdensome
repatriation  and  similar  restrictions,  the  lack  of  organized  and  liquid
securities   markets,   unacceptable   political  risks  or  other  reasons.  As
opportunities to invest in securities in emerging  markets  develop,  a fund may
expand and further broaden the group of emerging markets in which it invests. In
the past,  markets of developing  or emerging  market  countries  have been more
volatile than the markets of developed  countries;  however,  such markets often
have  provided  higher rates of return to investors.  The advisor  believes that
these characteristics may be expected to continue in the future.

Most emerging  securities markets have substantially less volume and are subject
to less governmental supervision than US securities markets.  Securities of many
issuers in emerging markets may be less liquid and more volatile than securities
of  comparable  domestic  issuers.  In  addition,  there is less  regulation  of
securities  exchanges,  securities dealers, and listed and unlisted companies in
emerging markets than in the US.

Emerging markets also have different clearance and settlement procedures, and in
certain markets there have been times when  settlements  have not kept pace with
the volume of  securities  transactions.  Delays in  settlement  could result in
temporary  periods when a portion of the assets of a fund is  uninvested  and no
return is earned  thereon.  The  inability of a fund to make  intended  security
purchases  due to  settlement  problems  could  cause a fund to miss  attractive
investment  opportunities.  Inability to dispose of portfolio  securities due to
settlement  problems  could result  either in losses to a fund due to subsequent
declines in value of the  portfolio  security  or, if a fund has entered  into a
contract  to sell the  security,  could  result  in  possible  liability  to the
purchaser.   Costs  associated  with  transactions  in  foreign  securities  are
generally higher than costs associated with transactions in US securities.  Such
transactions  also involve  additional costs for the purchase or sale of foreign
currency.

Certain emerging markets require prior  governmental  approval of investments by
foreign  persons,  limit the  amount  of  investment  by  foreign  persons  in a
particular  company,  limit the investment by foreign persons only to a specific

                                       29
<PAGE>

class of securities of a company that may have less advantageous rights than the
classes  available for purchase by  domiciliaries of the countries and/or impose
additional  taxes  on  foreign  investors.  Certain  emerging  markets  may also
restrict  investment  opportunities in issuers in industries deemed important to
national interest.

Certain emerging markets may require governmental  approval for the repatriation
of investment income,  capital or the proceeds of sales of securities by foreign
investors.  In  addition,  if a  deterioration  occurs in an  emerging  market's
balance of payments  or for other  reasons,  a country  could  impose  temporary
restrictions on foreign capital remittances.  A fund could be adversely affected
by delays in, or a refusal to grant,  any  required  governmental  approval  for
repatriation  of  capital,  as  well  as by the  application  to a  fund  of any
restrictions on investments.

In the course of investment in emerging  markets,  a fund will be exposed to the
direct or indirect consequences of political, social and economic changes in one
or more emerging  markets.  While a fund will manage its assets in a manner that
will seek to minimize the exposure to such risks, there can be no assurance that
adverse political,  social or economic changes will not cause a fund to suffer a
loss of value in respect of the securities in a fund's portfolio.

The risk  also  exists  that an  emergency  situation  may  arise in one or more
emerging  markets as a result of which trading of securities may cease or may be
substantially  curtailed and prices for a fund's  securities in such markets may
not be readily  available.  A fund may suspend  redemption of its shares for any
period during which an emergency exists,  as determined by the SEC.  Accordingly
if a fund believes that appropriate circumstances exist, it may apply to the SEC
for a determination  that an emergency is present.  During the period commencing
from a fund's identification of such condition until the date of the SEC action,
a fund's  securities  in the  affected  markets  will be  valued  at fair  value
determined in good faith by or under the direction of a fund's Board.

Volume  and  liquidity  in most  foreign  markets  are less than in the US,  and
securities  of many foreign  companies  are less liquid and more  volatile  than
securities of comparable US companies.  Fixed commissions on foreign  securities
exchanges  are generally  higher than  negotiated  commissions  on US exchanges,
although a fund  endeavors  to achieve  the most  favorable  net  results on its
portfolio  transactions.  There is generally  less  government  supervision  and
regulation of business and industry practices,  securities  exchanges,  brokers,
dealers  and listed  companies  than in the US Mail  service  between the US and
foreign  countries  may be slower or less  reliable  than  within  the US,  thus
increasing the risk of delayed settlements of portfolio  transactions or loss of
certificates for certificated portfolio securities. In addition, with respect to
certain  emerging  markets,   there  is  the  possibility  of  expropriation  or
confiscatory   taxation,   political  or  social   instability,   or  diplomatic
developments  which  could  affect a  fund's  investments  in  those  countries.
Moreover,   individual   emerging  market  economies  may  differ  favorably  or
unfavorably  from the US economy in such  respects  as growth of gross  national
product, rate of inflation, capital reinvestment,  resource self-sufficiency and
balance of payments position.

A fund may have limited legal recourse in the event of a default with respect to
certain debt  obligations  it holds.  If the issuer of a  fixed-income  security
owned by a fund defaults, a fund may incur additional expenses to seek recovery.
Debt obligations issued by emerging market country  governments differ from debt
obligations  of private  entities;  remedies from  defaults on debt  obligations
issued by emerging  market  governments,  unlike those on private debt,  must be
pursued  in the  courts of the  defaulting  party  itself.  A fund's  ability to
enforce its rights against private issuers may be limited. The ability to attach
assets to  enforce a  judgment  may be  limited.  Legal  recourse  is  therefore
somewhat diminished. Bankruptcy, moratorium and other similar laws applicable to
private issuers of debt obligations may be substantially different from those of
other  countries.  The  political  context,  expressed  as  an  emerging  market
governmental issuer's willingness to meet the terms of the debt obligation,  for
example, is of considerable  importance.  In addition, no assurance can be given
that the holders of commercial bank debt may not contest payments to the holders
of  debt  obligations  in the  event  of  default  under  commercial  bank  loan
agreements.

Income from  securities  held by a fund could be reduced by a withholding tax at
the source or other taxes  imposed by the emerging  market  countries in which a
fund makes its  investments.  A fund's net asset  value may also be  affected by
changes in the rates or methods of taxation  applicable to a fund or to entities
in which a fund has invested. The Advisor will consider the cost of any taxes in
determining  whether to acquire any particular  investments,  but can provide no
assurance that the taxes will not be subject to change.

                                       30
<PAGE>

Many  emerging  markets  have  experienced  substantial,  and, in some  periods,
extremely  high  rates  of  inflation  for  many  years.   Inflation  and  rapid
fluctuations  in  inflation  rates  have had and may  continue  to have  adverse
effects on the  economies  and  securities  markets of certain  emerging  market
countries. In an attempt to control inflation, wage and price controls have been
imposed in certain  countries.  Of these countries,  some, in recent years, have
begun to control inflation through prudent economic policies.

Emerging market governmental issuers are among the largest debtors to commercial
banks,  foreign  governments,  international  financial  organizations and other
financial  institutions.  Certain emerging market governmental  issuers have not
been able to make  payments of interest on or principal of debt  obligations  as
those  payments  have  come due.  Obligations  arising  from past  restructuring
agreements  may  affect  the  economic  performance  and  political  and  social
stability of those issuers.

Governments  of many emerging  market  countries  have exercised and continue to
exercise  substantial  influence over many aspects of the private sector through
the ownership or control of many companies, including some of the largest in any
given  country.  As a result,  government  actions  in the  future  could have a
significant  effect on economic  conditions in emerging markets,  which in turn,
may adversely affect companies in the private sector,  general market conditions
and  prices  and yields of  certain  of the  securities  in a fund's  portfolio.
Expropriation,  confiscatory taxation,  nationalization,  political, economic or
social instability or other similar  developments have occurred  frequently over
the  history of certain  emerging  markets and could  adversely  affect a fund's
assets should these conditions recur.

The  ability of  emerging  market  country  governmental  issuers to make timely
payments  on their  obligations  is  likely  to be  influenced  strongly  by the
issuer's balance of payments,  including export  performance,  and its access to
international  credits and  investments.  An emerging  market whose  exports are
concentrated  in a few  commodities  could be  vulnerable  to a  decline  in the
international   prices   of  one  or  more  of  those   commodities.   Increased
protectionism  on the part of an emerging  market's  trading partners could also
adversely  affect the country's  exports and diminish its trade account surplus,
if any. To the extent that emerging  markets  receive payment for its exports in
currencies other than dollars or non-emerging market currencies,  its ability to
make debt payments  denominated  in dollars or  non-emerging  market  currencies
could be affected.

Another factor bearing on the ability of emerging market countries to repay debt
obligations is the level of international reserves of the country.  Fluctuations
in the level of these  reserves  affect the amount of foreign  exchange  readily
available  for  external  debt  payments  and thus  could  have a bearing on the
capacity  of  emerging   market   countries  to  make  payments  on  these  debt
obligations.

To the extent that an emerging  market country cannot  generate a trade surplus,
it must  depend on  continuing  loans  from  foreign  governments,  multilateral
organizations or private commercial banks, aid payments from foreign governments
and inflows of foreign investment. The access of emerging markets to these forms
of external  funding may not be certain,  and a withdrawal  of external  funding
could  adversely  affect the capacity of emerging  market  country  governmental
issuers  to make  payments  on  their  obligations.  In  addition,  the  cost of
servicing  emerging  market  debt  obligations  can be  affected  by a change in
international  interest  rates  since the  majority of these  obligations  carry
interest rates that are adjusted periodically based upon international rates.

Investment Company Securities. A fund may acquire securities of other investment
companies  to the  extent  consistent  with  its  investment  objective  and the
limitations of the 1940 Act. A fund will indirectly bear its proportionate share
of any  management  fees  and  other  expenses  paid  by such  other  investment
companies.

For example,  a fund may invest in a variety of investment  companies which seek
to track the  composition  and  performance  of  specific  indexes or a specific
portion of an index.  These  index-based  investments hold  substantially all of
their assets in securities representing their specific index.  Accordingly,  the
main risk of investing in index-based  investments is the same as investing in a
portfolio  of equity  securities  comprising  the index.  The  market  prices of
index-based  investments  will fluctuate in accordance  with both changes in the
market  value of their  underlying  portfolio  securities  and due to supply and
demand for the  instruments on the exchanges on which they are traded (which may
result in their  trading at a discount  or premium to their  NAVs).  Index-based
investments  may not replicate  exactly the performance of their specified index
because of  transaction  costs and because of the  temporary


                                       31
<PAGE>

unavailability  of certain  component  securities of the index. In addition,  an
index-based  investment  tracking a specific sector may be adversely affected by
the  performance  of that specific  sector or group of industries on which it is
based.

Investment-Grade  Bonds.  When the Advisor believes that it is appropriate to do
so  in   order  to   achieve   a  fund's   objectives,   a  fund  may   purchase
"investment-grade"  bonds, which are those rated Aaa, Aa, A or Baa by Moody's or
AAA, AA, A or BBB by S&P or, if unrated,  judged to be of equivalent  quality as
determined  by the  Advisor.  Moody's  considers  bonds  it  rates  Baa to  have
speculative elements as well as investment-grade characteristics.  To the extent
that a fund invests in higher-grade securities, a fund will not be able to avail
itself of  opportunities  for  higher  income  which may be  available  at lower
grades.

The principal  risks involved with  investments  in bonds include  interest rate
risk, credit risk and pre-payment risk.  Interest rate risk refers to the likely
decline in the value of bonds as  interest  rates rise.  Generally,  longer-term
securities are more susceptible to changes in value as a result of interest-rate
changes than are shorter-term securities. Credit risk refers to the risk that an
issuer of a bond may  default  with  respect  to the  payment of  principal  and
interest.  The  lower  a bond  is  rated,  the  more  it is  considered  to be a
speculative or risky  investment.  Pre-payment risk is commonly  associated with
pooled debt  securities,  such as  mortgage-backed  securities  and asset backed
securities,  but may affect other debt  securities as well.  When the underlying
debt obligations are prepaid ahead of schedule,  the return on the security will
be lower than expected.  Pre-payment  rates usually increase when interest rates
are falling.

IPO Risk.  Securities  issued  through  an  initial  public  offering  (IPO) can
experience an immediate drop in value if the demand for the securities  does not
continue to support the  offering  price.  Information  about the issuers of IPO
securities is also difficult to acquire since they are new to the market and may
not have lengthy operating histories.  The fund may engage in short-term trading
in connection with its IPO investments, which could produce higher trading costs
and  adverse  tax  consequences.  The number of  securities  issued in an IPO is
limited,  so it is likely that IPO securities will represent a smaller component
of a fund's  portfolio  as the  fund's  assets  increase  (and  thus have a more
limited effect on the fund's performance).

Lending of Portfolio  Securities.  A fund may lend its investment  securities to
approved institutional borrowers,  including those 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,  a  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 a fund. A 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 a 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 a fund at any time,  and (d) a fund
receives reasonable interest on the loan (which may include a 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 a fund's  delegate  after a
commercially  reasonable review of relevant facts and  circumstances,  including
the creditworthiness of the borrower.

At the  present  time,  the staff of the SEC does not  object  if an  investment
company pays reasonable negotiated fees in connection with loaned securities, so
long as such  fees are set  forth in a  written  contract  and  approved  by the
investment company's Board of Directors/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 a fund may
be invested in a money  market fund  managed by a fund's  advisor (or one of its
affiliates).

Letters  of   Credit.   Municipal   obligations,   including   certificates   of
participation,  commercial paper and other short-term obligations, may be backed
by an  irrevocable  letter of credit of a bank which assumes the  obligation for

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<PAGE>

payment of principal  and  interest in the event of default by the issuer.  Only
banks which, in the opinion of the Advisor, are of investment quality comparable
to other permitted investments of a fund may be used for letter of credit backed
investments.

Loan   Participations  and  Assignments.   A  fund  may  invest  in  fixed-  and
floating-rate loans ("Loans") arranged through private  negotiations  between an
issuer  of  emerging   market  debt   instruments  and  one  or  more  financial
institutions  ("Lenders").  A fund's  investments  in Loans are expected in most
instances to be in the form of  participations in Loans  ("Participations")  and
assignments   of  portions  of  Loans   ("Assignments")   from  third   parties.
Participations typically will result in a fund having a contractual relationship
only with the  Lender and not with the  borrower.  A fund will have the right to
receive  payments of  principal,  interest  and any fees to which it is entitled
only from the Lender  selling  the  Participation  and only upon  receipt by the
Lender  of the  payments  from  the  borrower.  In  connection  with  purchasing
Participations, a fund generally will have no right to enforce compliance by the
borrower  with the terms of the loan  agreement  relating  to the Loan,  nor any
rights of set-off against the borrower, and a fund may not directly benefit from
any collateral  supporting the Loan in which it has purchased the Participation.
As a result,  a fund will  assume the credit risk of both the  borrower  and the
Lender that is selling the Participation.  In the event of the insolvency of the
Lender selling a  Participation,  a fund may be treated as a general creditor of
the Lender  and may not  benefit  from any  set-off  between  the Lender and the
borrower. A fund will acquire  Participations only if the Lender interpositioned
between a fund and the borrower is determined by the Advisor to be creditworthy.

When a fund purchases  Assignments  from Lenders,  it will acquire direct rights
against the  borrower on the Loan.  Because  Assignments  are  arranged  through
private  negotiations  between  potential  assignees  and  potential  assignors,
however,  the rights and  obligations  acquired by a fund as the purchaser of an
Assignment  may differ  from,  and may be more limited  than,  those held by the
assigning Lender.

A fund may have difficulty disposing of Assignments and Participations.  Because
no liquid market for these obligations typically exists, a fund anticipates that
these  obligations  could be sold  only to a  limited  number  of  institutional
investors.  The lack of a liquid secondary market will have an adverse effect on
a fund's  ability to dispose of particular  Assignments or  Participations  when
necessary to meet a fund's liquidity needs or in response to a specific economic
event, such as a deterioration in the creditworthiness of the borrower. The lack
of a liquid secondary market for Assignments and Participations may also make it
more difficult for a fund to assign a value to those  securities for purposes of
valuing a fund's portfolio and calculating its net asset value.

Maintenance  of $1.00 Net Asset Value,  Credit  Quality and Portfolio  Maturity.
Pursuant  to Rule  2a-7 of the  1940  Act,  money  market  funds  effect  sales,
redemptions and repurchases at the net asset value per share, normally $1.00. In
fulfillment  of their  responsibilities  under  that  Rule,  a fund's  Board has
approved  policies  established  by a fund's  Advisor  reasonably  calculated to
prevent a fund's net asset  value per share  from  deviating  from $1.00  except
under  unusual  or   extraordinary   circumstances   and  a  fund's  Board  will
periodically  review the Advisor's  operations  under such policies at regularly
scheduled  Board  meetings.  Those policies  include a weekly  monitoring by the
Advisor  of  unrealized  gains  and  losses  in a  fund's  portfolio,  and  when
necessary,  in an effort to avoid deviation,  taking corrective action,  such as
adjusting the maturity of the  portfolio,  or, if possible,  realizing  gains or
losses to  offset  in part  unrealized  losses  or  gains.  The  result of those
policies  may be that the yield on shares of a fund will be lower  than would be
the case if the  policies  were not in effect.  Such  policies  also provide for
certain action to be taken with respect to portfolio securities which experience
a downgrade in rating or suffer a default.

Securities  eligible for  investment  by a fund are those  securities  which are
generally rated (or issued by an issuer with comparable securities rated) in the
highest  short-term  rating  category by at least two rating services (or by one
rating  service,  if no other rating  agency has issued a rating with respect to
that  security).   These  securities  are  known  as  "first  tier  securities."
Securities  generally rated (or issued by an issuer with  comparable  securities
rated) in the top two  categories  by at least two rating  agencies  (or one, if
only one rating  agency has rated the  security)  which do not  qualify as first
tier securities are known as "second tier  securities." To ensure diversity of a
fund's  investments,  a fund will not invest more than 5% of its total assets in
the  securities of a single issuer,  other than the US  Government.  A fund may,
however, invest more than 5% of its total assets in the first tier securities of
a single  issuer  for a period  of up to three  business  days  after  purchase,
although a fund may not make more than one such  investment  at any time  during
such  period.  A fund  may not  invest  more  than  5% of its  total  assets  in
securities which


                                       33
<PAGE>

were second tier  securities  when acquired by a fund.  Further,  a fund may not
invest more than the greater of (1) 1% of its total  assets,  or (2) one million
dollars,  in the securities of a single issuer which were second tier securities
when acquired by a fund.

The assets of a fund  consist  entirely of cash items and  investments  having a
stated  maturity  date of 397  calendar  days or less from the date of  purchase
(including  investment  in  repurchase  agreements,  in which case  maturity  is
measured  by  the  repurchase  date,  without  respect  to the  maturity  of the
obligation).  The term "Government securities," as used herein, means securities
issued or  guaranteed  as to  principal  or interest by the US  Government,  its
agencies or  instrumentalities.  The portfolio of a fund will be managed so that
the average maturity of all instruments (on a dollar-weighted  basis) will be 90
days or  less.  The  average  maturity  of a fund  will  vary  according  to the
management's  appraisal of money market  conditions.  A fund will invest only in
securities  determined  by or under  the  direction  of the  Board to be of high
quality with minimal credit risks.

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

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

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

Mining and  Exploration.  The  business  of gold  mining by its nature  involves
significant  risks and  hazards,  including  environmental  hazards,  industrial
accidents, labor disputes, discharge of toxic chemicals, fire, drought, flooding
and natural acts. The  occurrence of any of these hazards can delay  production,
increase  production costs and result in liability to the operator of the mines.
A mining  operation  may become  subject to  liability  for  pollution  or other
hazards  against which it has not insured or cannot insure,  including  those in
respect of past mining activities for which it was not responsible.

Exploration  for gold and  other  precious  metals  is  speculative  in  nature,
involves many risks and  frequently is  unsuccessful.  There can be no assurance
that any mineralisation  discovered will result in an increase in the proven and
probable reserves of a mining operation.  If reserves are developed, it can take
a number of years from the initial  phases of  drilling  and  identification  of
mineralisation  until  production  is  possible,  during which time the economic
feasibility of production may change.  Substantial  expenditures are required to
establish  ore  reserves  properties  and to  construct  mining  and  processing
facilities.  As a result of these uncertainties,  no assurance can be given that
the  exploration  programs  undertaken  by a particular  mining  operation  will
actually result in any new commercial mining.

Mortgage-Backed Securities and Mortgage Pass-Through Securities. Mortgage-backed
securities are interests in pools of mortgage  loans,  including  mortgage loans
made by savings and loan  institutions,  mortgage bankers,  commercial banks and
others.  Pools  of  mortgage  loans  are  assembled  as  securities  for sale to
investors by various governmental,  government-related and private organizations
as further described below.  Underlying  mortgages may be of a variety of types,
including adjustable rate, conventional 30-year, graduated payment and 15-year.

A decline  in  interest  rates  may lead to a faster  rate of  repayment  of the
underlying  mortgages,  and may  expose a fund to a lower  rate of  return  upon
reinvestment.  To the extent that such mortgage-backed  securities are held by a

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<PAGE>

fund, the prepayment right will tend to limit to some degree the increase in net
asset value of a fund because the value of the  mortgage-backed  securities held
by a fund may not  appreciate  as  rapidly  as the  price of  non-callable  debt
securities. Mortgage-backed securities are subject to the risk of prepayment and
the risk that the underlying loans will not be repaid.  Because principal may be
prepaid  at any  time,  mortgage-backed  securities  may  involve  significantly
greater price and yield volatility than traditional debt securities.

When  interest  rates rise,  mortgage  prepayment  rates tend to  decline,  thus
lengthening  the life of a  mortgage-related  security and  increasing the price
volatility of that security, affecting the price volatility of a fund's shares.

Interests in pools of mortgage-backed securities differ from other forms of debt
securities,  which  normally  provide for periodic  payment of interest in fixed
amounts with principal  payments at maturity or specified  call dates.  Instead,
these  securities  provide a monthly payment which consists of both interest and
principal  payments.  In effect,  these  payments  are a  "pass-through"  of the
monthly  payments made by the individual  borrowers on their mortgage loans, net
of any fees  paid to the  issuer or  guarantor  of such  securities.  Additional
payments are caused by  repayments of principal  resulting  from the sale of the
underlying property,  refinancing or foreclosure, net of fees or costs which may
be incurred. Some mortgage-related  securities (such as securities issued by the
Government  National Mortgage  Association  ("GNMA")) are described as "modified
pass-through."  These securities  entitle the holder to receive all interest and
principal  payments  owed on the  mortgage  pool,  net of certain  fees,  at the
scheduled  payment dates  regardless  of whether or not the  mortgagor  actually
makes the payment.

The principal  governmental  guarantor of  mortgage-related  securities is GNMA.
GNMA is a wholly  owned US  Government  corporation  within  the  Department  of
Housing and Urban  Development.  GNMA is authorized to guarantee,  with the full
faith and credit of the US  Government,  the timely  payment  of  principal  and
interest on securities issued by institutions  approved by GNMA (such as savings
and loan  institutions,  commercial  banks and  mortgage  bankers) and backed by
pools of FHA-insured or VA-guaranteed mortgages.  These guarantees,  however, do
not apply to the market value or yield of  mortgage-backed  securities or to the
value of fund shares.  Also,  GNMA  securities  often are purchased at a premium
over the  maturity  value  of the  underlying  mortgages.  This  premium  is not
guaranteed and will be lost if prepayment occurs.

Government-related  guarantors (i.e., not backed by the full faith and credit of
the US  Government)  include  Fannie  Mae and the  Federal  Home  Loan  Mortgage
Corporation ("FHLMC").  Fannie Mae is a  government-sponsored  corporation owned
entirely by private  stockholders.  It is subject to general  regulation  by the
Secretary of Housing and Urban  Development.  Fannie Mae purchases  conventional
(i.e., not insured or guaranteed by any government agency) mortgages from a list
of approved seller/servicers which include state and federally chartered savings
and loan associations,  mutual savings banks, commercial banks and credit unions
and  mortgage  bankers.   Pass-through  securities  issued  by  Fannie  Mae  are
guaranteed as to timely  payment of principal and interest by Fannie Mae but are
not backed by the full faith and credit of the US Government.

FHLMC is a corporate  instrumentality  of the US  Government  and was created by
Congress  in 1970 for the purpose of  increasing  the  availability  of mortgage
credit for  residential  housing.  Its stock is owned by the twelve Federal Home
Loan Banks.  FHLMC issues  Participation  Certificates  ("PCs") which  represent
interests in  conventional  mortgages  from FHLMC's  national  portfolio.  FHLMC
guarantees the timely payment of interest and ultimate  collection of principal,
but PCs are not backed by the full faith and credit of the US Government.

Commercial  banks,  savings and loan  institutions,  private mortgage  insurance
companies,  mortgage  bankers and other  secondary  market  issuers  also create
pass-through  pools  of  conventional  mortgage  loans.  Such  issuers  may,  in
addition,  be the originators and/or servicers of the underlying  mortgage loans
as well as the guarantors of the mortgage-related  securities.  Pools created by
such  non-governmental  issuers  generally  offer a higher rate of interest than
government and government-related  pools because there are no direct or indirect
government or agency guarantees of payments. However, timely payment of interest
and  principal of these pools may be supported by various  forms of insurance or
guarantees,  including  individual  loan,  title,  pool and hazard insurance and
letters of credit.  The  insurance  and  guarantees  are issued by  governmental
entities,  private  insurers  and  the  mortgage  poolers.  Such  insurance  and
guarantees and the creditworthiness of the issuers thereof will be considered in
determining  whether  a  mortgage-related  security  meets a  fund's  investment
quality  standards.  There can be no  assurance  that the  private  insurers  or
guarantors can meet their obligations under the insurance  policies or guarantee
arrangements.  A


                                       35
<PAGE>

fund may buy  mortgage-related  securities  without insurance or guarantees,  if
through  an   examination   of  the  loan   experience   and  practices  of  the
originators/servicers and poolers, the underlying fund's advisor determines that
the  securities  meet a fund's quality  standards.  Although the market for such
securities is becoming increasingly liquid, securities issued by certain private
organizations may not be readily marketable.

Mortgage Dollar Rolls. A fund may enter into mortgage  "dollar rolls" in which a
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, a fund forgoes principal and interest paid on the securities.  A 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. A fund may
enter into both covered and  uncovered  rolls.  At the time a fund enters into a
dollar roll  transaction,  it will segregate with an approved  custodian 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 its value is maintained.

Municipal  Securities.  A fund may  invest  to a  limited  extent  in  municipal
securities.  Municipal  securities consist of bonds, notes and other instruments
issued  by or on  behalf  of  states,  territories  and  possessions  of  the US
(including the District of Columbia) and their political subdivisions,  agencies
or  instrumentalities,  the  interest  on which is exempt from  regular  federal
income tax (i.e., excluded from gross income for federal income tax purposes but
not necessarily  exempt from the federal  alternative  minimum tax or from state
and local  taxes).  Municipal  securities  may also be issued on a taxable basis
(i.e., the interest on such securities is not exempt from regular federal income
tax).

Municipal  securities  are  often  issued to obtain  funds  for  various  public
purposes,  including the construction of a wide range of public  facilities such
as bridges, highways, housing, hospitals, mass transportation,  schools, streets
and water and sewer works. Other public purposes for which municipal  securities
may be issued include  refunding  outstanding  obligations,  obtaining funds for
general  operating  expenses,  and  obtaining  funds  to  lend to  other  public
institutions  and  facilities.   Municipal   securities  also  include  "private
activity" or industrial  development  bonds, which are issued by or on behalf of
public  authorities  to provide  financing  aid to acquire sites or construct or
equip  facilities   within  a  municipality  for  privately  or  publicly  owned
corporations.

The  two  principal   classifications  of  municipal   securities  are  "general
obligations" and "revenue  obligations".  General obligations are secured by the
issuer's  pledge of its full faith and credit for the payment of  principal  and
interest although the characteristics and enforcement of general obligations may
vary  according  to  the  law  applicable  to  the  particular  issuer.  Revenue
obligations,  which  include,  but are not limited to, private  activity  bonds,
resource  recovery bonds,  certificates of participation  and certain  municipal
notes,  are not backed by the credit and taxing  authority of the issuer and are
payable solely from the revenues derived from a particular  facility or class of
facilities  or, in some cases,  from the  proceeds of a special  excise or other
specific revenue source. Nevertheless, the obligations of the issuer may also be
backed by a letter of credit,  guarantee or insurance.  General  obligations and
revenue  obligations may be issued in a variety of forms,  including  commercial
paper,  fixed,  variable and floating  rate  securities,  tender  option  bonds,
auction rate bonds and capital appreciation bonds.

In addition to general obligations and revenue obligations,  there are a variety
of hybrid and special  types of municipal  securities.  There are also  numerous
differences  in the  credit  backing of  municipal  securities  both  within and
between these two principal classifications.

For the purpose of applying a fund's investment restrictions, the identification
of the issuer of a municipal  security which is not a general obligation is made
by the Advisor based on the characteristics of the municipal security,  the most
important  of which is the  source of funds for the  payment  of  principal  and
interest on such securities.

One or a small number of institutional  investors such as a fund may purchase an
entire  issue of  municipal  securities.  Thus,  the issue may not be said to be
publicly  offered.  Unlike some  securities  that are not  publicly  offered,  a

                                       36
<PAGE>

secondary  market exists for many  municipal  securities  that were not publicly
offered initially and such securities can be readily marketable.

The obligations of an issuer to pay the principal of and interest on a municipal
security are subject to the provisions of bankruptcy,  insolvency and other laws
affecting the rights and remedies of creditors,  such as the Federal  Bankruptcy
Act,  and laws,  if any,  that may be enacted by Congress or state  legislatures
extending  the time for payment of  principal  or  interest  or  imposing  other
constraints  upon  the  enforcement  of such  obligations.  There  is  also  the
possibility  that,  because  of  litigation  or other  conditions,  the power or
ability of the issuer to pay when due  principal  of or  interest on a municipal
security may be materially affected.

Municipal  Leases,   Certificates  of  Participation  and  other   Participation
Interests.  A  municipal  lease  is an  obligation  in the  form of a  lease  or
installment  purchase  contract that is issued by a state or local government to
acquire  equipment and  facilities.  Income from such  obligations  is generally
exempt from state and local  taxes in the state of issuance  (as well as regular
federal  income tax).  Municipal  leases  frequently  involve  special risks not
normally  associated  with  general  obligation  or  revenue  bonds.  Leases and
installment  purchase or conditional  sale contracts (which normally provide for
title to the leased asset to pass  eventually to the  governmental  issuer) have
evolved as a means for  governmental  issuers to acquire  property and equipment
without meeting the constitutional  and statutory  requirements for the issuance
of debt. The debt issuance  limitations are deemed to be inapplicable because of
the  inclusion in many leases or contracts of  `non-appropriation'  clauses that
relieve the governmental  issuer of any obligation to make future payments under
the lease or  contract  unless  money is  appropriated  for such  purpose by the
appropriate legislative body on a yearly or other periodic basis. Thus, a fund's
investment  in  municipal  leases will be subject to the  special  risk that the
governmental issuer may not appropriate funds for lease payments.

In addition,  such leases or contracts may be subject to the temporary abatement
of payments in the event the issuer is prevented from  maintaining  occupancy of
the leased premises or utilizing the leased equipment.  Although the obligations
may be secured by the leased  equipment or  facilities,  the  disposition of the
property in the event of  nonappropriation or foreclosure might prove difficult,
time consuming and costly, and result in an unsatisfactory or delayed recoupment
of a fund's original investment.

Certificates of participation represent undivided interests in municipal leases,
installment  purchase  contracts  or other  instruments.  The  certificates  are
typically  issued by a trust or other entity that has received an  assignment of
the payments to be made by the state or political  subdivision under such leases
or installment purchase contracts.

Certain  municipal lease  obligations and certificates of  participation  may be
deemed  illiquid  for the  purpose of a fund's  limitations  on  investments  in
illiquid  securities.  Other  municipal lease  obligations  and  certificates of
participation  acquired by a fund may be determined by the Advisor,  pursuant to
guidelines adopted by the Trustees of the Trust, to be liquid securities for the
purpose  of a fund's  limitation  on  investments  in  illiquid  securities.  In
determining  the liquidity of municipal lease  obligations  and  certificates of
participation, the Advisor will consider a variety of factors including: (1) the
willingness  of  dealers  to bid for the  security;  (2) the  number of  dealers
willing to purchase  or sell the  obligation  and the number of other  potential
buyers;  (3) the frequency of trades or quotes for the  obligation;  and (4) the
nature of the marketplace trades. In addition, the Advisor will consider factors
unique  to  particular  lease  obligations  and  certificates  of  participation
affecting the marketability thereof. These include the general  creditworthiness
of the issuer, the importance to the issuer of the property covered by the lease
and the likelihood that the  marketability  of the obligation will be maintained
throughout the time the obligation is held by a fund. A fund may not invest more
than 5% of its net assets in municipal leases.

A fund may purchase  participations in municipal securities held by a commercial
bank or other financial institution. Such participations provide a fund with the
right to a pro rata undivided interest in the underlying  municipal  securities.
In  addition,  such  participations  generally  provide a fund with the right to
demand  payment,  on not more than  seven days  notice,  of all or any part of a
fund's participation interest in the underlying municipal security, plus accrued
interest.

Municipal Notes. Municipal securities in the form of notes generally are used to
provide for short-term  capital needs, in anticipation of an issuer's receipt of
other revenues or financing, and typically have maturities of up to


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three  years.  Such  instruments  may include Tax  Anticipation  Notes,  Revenue
Anticipation Notes, Bond Anticipation Notes, Tax and Revenue  Anticipation Notes
and Construction  Loan Notes.  Tax Anticipation  Notes are issued to finance the
working capital needs of governments. Generally, they are issued in anticipation
of various tax  revenues,  such as income,  sales,  property,  use and  business
taxes,  and are payable from these specific future taxes.  Revenue  Anticipation
Notes are issued in  expectation  of receipt of other kinds of revenue,  such as
federal  revenues  available  under  federal  revenue  sharing  programs.   Bond
Anticipation  Notes are issued to provide interim financing until long-term bond
financing can be arranged.  In most cases,  the long-term bonds then provide the
funds needed for  repayment  of the notes.  Tax and Revenue  Anticipation  Notes
combine  the  funding  sources  of  both  Tax  Anticipation  Notes  and  Revenue
Anticipation  Notes.  Construction  Loan Notes are sold to provide  construction
financing.  These  notes are secured by  mortgage  notes  insured by the Federal
Housing Authority; however, the proceeds from the insurance may be less than the
economic  equivalent  of the payment of  principal  and interest on the mortgage
note if there has been a  default.  The  obligations  of an issuer of  municipal
notes are generally  secured by the anticipated  revenues from taxes,  grants or
bond financing. An investment in such instruments, however, presents a risk that
the  anticipated  revenues  will not be received or that such  revenues  will be
insufficient to satisfy the issuer's payment obligations under the notes or that
refinancing will be otherwise unavailable.

Other Asset-Backed  Securities.  The  securitization  techniques used to develop
mortgage-backed  securities  are now being  applied to a broad  range of assets.
Through the use of trusts and special  purpose  corporations,  various  types of
assets, including automobile loans, computer leases and credit card receivables,
are  being   securitized  in   pass-through   structures   similar  to  mortgage
pass-through  structures  or in a  structure  similar to the CMO  structure.  In
general, the collateral  supporting these securities is of shorter maturity than
mortgage  loans and is less likely to experience  substantial  prepayments  with
interest rate fluctuations.

Several types of asset-backed securities have already been offered to investors,
including Certificates of Automobile ReceivablesSM ("CARSSM").  CARSSM represent
undivided  fractional  interests  in a trust whose  assets  consist of a pool of
motor vehicle retail  installment sales contracts and security  interests in the
vehicles  securing the  contracts.  Payments of principal and interest on CARSSM
are passed  through  monthly to  certificate  holders,  and are guaranteed up to
certain  amounts and for a certain time period by a letter of credit issued by a
financial institution  unaffiliated with the trustee or originator of the trust.
An investor's  return on CARSSM may be affected by early prepayment of principal
on the underlying vehicle sales contracts. If the letter of credit is exhausted,
the  trust  may be  prevented  from  realizing  the full  amount  due on a sales
contract  because  of  state  law  requirements  and  restrictions  relating  to
foreclosure  sales  of  vehicles  and  the  obtaining  of  deficiency  judgments
following  such sales or because of  depreciation,  damage or loss of a vehicle,
the  application of federal and state  bankruptcy and insolvency  laws, or other
factors.  As a result,  certificate holders may experience delays in payments or
losses if the letter of credit is exhausted.

Asset-backed  securities  present  certain  risks  that  are  not  presented  by
mortgage-backed securities. Primarily, these securities may not have the benefit
of any security  interest in the related  assets.  Credit card  receivables  are
generally  unsecured and the debtors are entitled to the  protection of a number
of state and federal  consumer  credit laws, many of which give such debtors the
right to set off certain amounts owed on the credit cards,  thereby reducing the
balance due. There is the possibility that recoveries on repossessed  collateral
may not, in some cases, be available to support payments on these securities.

Asset-backed  securities are often backed by a pool of assets  representing  the
obligations of a number of different  parties.  To lessen the effect of failures
by obligors on underlying  assets to make  payments,  the securities may contain
elements  of credit  support  which  fall  into two  categories:  (i)  liquidity
protection,  and (ii) protection  against losses resulting from ultimate default
by an obligor  on the  underlying  assets.  Liquidity  protection  refers to the
provision of advances, generally by the entity administering the pool of assets,
to ensure that the receipt of payments on the underlying pool occurs in a timely
fashion.  Protection  against  losses  results  from  payment  of the  insurance
obligations on at least a portion of the assets in the pool. This protection may
be provided  through  guarantees,  policies or letters of credit obtained by the
issuer or sponsor from third parties,  through  various means of structuring the
transaction or through a combination of such approaches. A fund will not pay any
additional or separate  fees for credit  support.  The degree of credit  support
provided for each issue is generally based on historical  information respecting
the level of credit risk associated with the underlying  assets.  Delinquency or
loss in excess of that  anticipated  or  failure  of the  credit  support  could
adversely affect the return on an investment in such a security.

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<PAGE>

A fund may also invest in residual interests in asset-backed securities.  In the
case of asset-backed  securities  issued in a pass-through  structure,  the cash
flow generated by the underlying  assets is applied to make required payments on
the securities and to pay related  administrative  expenses.  The residual in an
asset-backed  security  pass-through  structure  represents  the interest in any
excess cash flow remaining  after making the foregoing  payments.  The amount of
residual cash flow resulting from a particular issue of asset-backed  securities
will depend on,  among  other  things,  the  characteristics  of the  underlying
assets,  the coupon rates on the  securities,  prevailing  interest  rates,  the
amount of administrative  expenses and the actual  prepayment  experience on the
underlying assets. Asset-backed security residuals not registered under the 1933
Act may be subject to certain  restrictions  on  transferability.  In  addition,
there may be no liquid market for such securities.

The  availability of  asset-backed  securities may be affected by legislative or
regulatory  developments.  It is possible that such  developments  may require a
fund to dispose of any then-existing holdings of such securities.

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

Pre-Refunded  Municipal  Securities.  The principal of and interest on municipal
securities  that have been  pre-refunded  are no longer  paid from the  original
revenue source for the securities.  Instead,  after  pre-refunding the source of
such payments of the principal of and interest on these securities are typically
paid from an escrow fund  consisting of obligations  issued or guaranteed by the
US  Government.  The assets in the escrow fund are derived  from the proceeds of
refunding  bonds  issued  by  the  same  issuer  as the  pre-refunded  municipal
securities. Issuers of municipal securities use this advance refunding technique
to obtain  more  favorable  terms with  respect to  securities  that are not yet
subject to call or  redemption  by the issuer.  For example,  advance  refunding
enables an issuer to refinance debt at lower market interest rates,  restructure
debt to improve cash flow or eliminate restrictive covenants in the indenture or
other governing instrument for the pre-refunded  municipal securities.  However,
except for a change in the revenue  source  from which  principal  and  interest
payments are made, the pre-refunded  municipal  securities remain outstanding on
their  original  terms  until  they  mature  or  are  redeemed  by  the  issuer.
Pre-refunded  municipal  securities  are  usually  purchased  at a  price  which
represents a premium over their face value.

Private  Activity  Bonds.  Certain  types  of  municipal  securities,  generally
referred to as industrial  development  bonds (and referred to under current tax
law as private activity bonds), are issued by or on behalf of public authorities
to obtain funds for privately-operated housing facilities, airport, mass transit
or port  facilities,  sewage  disposal,  solid waste disposal or hazardous waste
treatment or disposal  facilities and certain local facilities for water supply,
gas or electricity. Other types of industrial development bonds, the proceeds of
which  are  used for the  construction,  equipment,  repair  or  improvement  of
privately operated industrial or commercial facilities, may constitute municipal
securities,  although the current federal tax laws place substantial limitations
on the size of such issues.  The interest from certain  private  activity  bonds
owned by a fund (including a fund's distributions attributable to such interest)
may be a preference item for purposes of the alternative minimum tax.

Privatized Enterprises. Investments in foreign securities may include securities
issued  by  enterprises   that  have  undergone  or  are  currently   undergoing
privatization.  The  governments of certain  foreign  countries have, to varying
degrees,  embarked on privatization  programs  contemplating  the sale of all or
part of their  interests  in state  enterprises.  A  fund's  investments  in the
securities  of  privatized   enterprises   may  include   privately   negotiated
investments in a government or  state-owned or controlled  company or enterprise
that has not yet  conducted  an  initial  equity  offering,  investments  in the
initial  offering of equity  securities  of a state  enterprise  or former state
enterprise and investments in the securities of a state enterprise following its
initial equity offering.

                                       39
<PAGE>

In certain  jurisdictions,  the ability of foreign entities,  such as a fund, to
participate in privatizations may be limited by local law, or the price or terms
on which a fund may be able to  participate  may be less  advantageous  than for
local investors.  Moreover, there can be no assurance that governments that have
embarked on  privatization  programs will continue to divest their  ownership of
state  enterprises,  that  proposed  privatizations  will be  successful or that
governments will not re-nationalize enterprises that have been privatized.

In the case of the  enterprises in which a fund may invest,  large blocks of the
stock of those  enterprises may be held by a small group of  stockholders,  even
after  the  initial  equity  offerings  by those  enterprises.  The sale of some
portion or all of those blocks could have an adverse  effect on the price of the
stock of any such enterprise.

Prior to making an initial  equity  offering,  most state  enterprises or former
state  enterprises go through an internal  reorganization  or  management.  Such
reorganizations  are made in an attempt to better  enable these  enterprises  to
compete in the private sector. However,  certain reorganizations could result in
a  management  team  that does not  function  as well as an  enterprise's  prior
management and may have a negative effect on such enterprise.  In addition,  the
privatization  of an  enterprise  by its  government  may occur over a number of
years,  with the  government  continuing to hold a  controlling  position in the
enterprise even after the initial equity offering for the enterprise.

Prior to privatization, most of the state enterprises in which a fund may invest
enjoy the protection of and receive  preferential  treatment from the respective
sovereigns  that own or control them.  After making an initial equity  offering,
these   enterprises   may  no  longer  have  such  protection  or  receive  such
preferential  treatment and may become subject to market  competition from which
they were  previously  protected.  Some of these  enterprises may not be able to
operate  effectively in a competitive market and may suffer losses or experience
bankruptcy due to such competition.

Precious  Metals.  DWS  Gold &  Precious  Metals  Fund  "concentrates"  (for the
purposes  of the 1940 Act) its  assets in  securities  related  to gold and gold
bullion and coins,  which means that as a matter of fundamental  policy,  at all
times,  the fund invests at least 25% of total assets in  securities  related to
gold and in gold  directly.  As a result,  the fund may be  subject  to  greater
market fluctuation than a fund which has securities representing a broader range
of investment  alternatives.  In addition,  when market conditions warrant,  the
fund reserves the freedom to  concentrate  its assets in  securities  related to
other precious  metals and in those metals  directly.  The fund may invest up to
25% of its assets in wholly owned  subsidiaries of the corporation  which invest
in gold,  silver,  platinum and palladium  bullion and in gold and silver coins.
The  subsidiaries  will incur expenses for the storage and insurance of precious
metals purchased.  However,  the subsidiaries may realize capital gains from the
sale of metals and may pay distributions to the fund from such gains. Currently,
Scudder Precious Metals, Inc. is the Corporation's only subsidiary.  Investments
in  precious  metals and in precious  metals-related  securities  and  companies
involve a  relatively  high  degree of risk.  Prices of gold and other  precious
metals  can be  influenced  by a  variety  of  global  economic,  financial  and
political  factors and may fluctuate  markedly over short periods of time. Among
other  things,  precious  metals values can be affected by changes in inflation,
investment speculation,  metal sales by governments or central banks, changes in
industrial and commercial demand,  and any governmental  restrictions on private
ownership of gold or other precious metals.

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

Certain REITs have relatively  small market  capitalizations,  which may tend to
increase the  volatility of the market price of their  securities.  Furthermore,
REITs  are  dependent  upon   specialized   management   skills,   have  limited

                                       40
<PAGE>

diversification and are,  therefore,  subject to risks inherent in operating and
financing a limited  number of  projects.  REITs are also  subject to heavy cash
flow dependency, defaults by borrowers and the possibility of failing to qualify
for tax-free pass-through of income under the Internal Revenue Code of 1986 (the
"Code"),   as  amended,   and  to  maintain   exemption  from  the  registration
requirements of the 1940 Act. By investing in REITs indirectly through the fund,
a shareholder will bear not only his or her proportionate  share of the expenses
of a fund, but also,  indirectly,  similar  expenses of the REITs.  In addition,
REITs  depend  generally  on  their  ability  to  generate  cash  flow  to  make
distributions to shareholders.

Repurchase  Agreements.  A fund may invest in repurchase  agreements pursuant to
its investment guidelines.  In a repurchase agreement, a fund acquires ownership
of a security and simultaneously  commits to resell that security to the seller,
typically a bank or broker/dealer.

A repurchase  agreement  provides a means for a fund to earn income on funds for
periods as short as overnight.  It is an  arrangement  under which the purchaser
(i.e., a fund) acquires a security  ("Obligation") and the seller agrees, at the
time of sale,  to  repurchase  the  Obligation  at a  specified  time and price.
Securities  subject to a repurchase  agreement are held in a segregated  account
and the value of such securities is kept at least equal to the repurchase  price
on a daily basis.  The repurchase  price may be higher than the purchase  price,
the difference being income to a fund, or the purchase and repurchase prices may
be the same,  with  interest  at a stated rate due to a fund  together  with the
repurchase  price  upon  repurchase.  In either  case,  the  income to a fund is
unrelated to the interest rate on the  Obligation  itself.  Obligations  will be
held by the custodian or in the Federal Reserve Book Entry System.

It is not clear  whether a court would  consider the  Obligation  purchased by a
fund  subject to a  repurchase  agreement  as being  owned by a fund or as being
collateral for a loan by a fund to the seller.  In the event of the commencement
of  bankruptcy  or  insolvency  proceedings  with  respect  to the seller of the
Obligation before repurchase of the Obligation under a repurchase  agreement,  a
fund may encounter delay and incur costs before being able to sell the security.
Delays may involve  loss of interest or decline in price of the  Obligation.  If
the court characterizes the transaction as a loan and a fund has not perfected a
security  interest  in the  Obligation,  a fund may be  required  to return  the
Obligation to the seller's estate and be treated as an unsecured creditor of the
seller. As an unsecured creditor,  a fund would be at risk of losing some or all
of the principal and income involved in the  transaction.  As with any unsecured
debt  Obligation  purchased for a fund,  the Advisor seeks to reduce the risk of
loss through  repurchase  agreements  by analyzing the  creditworthiness  of the
obligor,  in this case the  seller  of the  Obligation.  Apart  from the risk of
bankruptcy or insolvency proceedings, there is also the risk that the seller may
fail to repurchase the Obligation,  in which case a fund may incur a loss if the
proceeds  to a fund of the sale to a third  party are less  than the  repurchase
price.  However,  if the market value  (including  interest)  of the  Obligation
subject to the  repurchase  agreement  becomes  less than the  repurchase  price
(including interest), a fund will direct the seller of the Obligation to deliver
additional  securities  so that the market  value  (including  interest)  of all
securities  subject  to the  repurchase  agreement  will  equal  or  exceed  the
repurchase price.

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

Reverse  Repurchase  Agreements.  A fund  may  enter  into  "reverse  repurchase
agreements,"  which are repurchase  agreements in which a fund, as the seller of
the  securities,  agrees to  repurchase  such  securities  at an agreed time and
price.  A fund  maintains a segregated  account in connection  with  outstanding
reverse  repurchase  agreements.  A fund  will  enter  into  reverse  repurchase
agreements only when the advisor  believes that the interest income to be earned
from the investment of the proceeds of the transaction  will be greater than the
interest expense of the transaction. Such transactions may increase fluctuations
in the market  value of fund assets and its yield and may be viewed as a form of
leverage.

Securities  Backed by Guarantees.  The funds may invest in securities  backed by
guarantees from banks, insurance companies and other financial  institutions.  A
money  market  fund's  ability to maintain a stable  share price may depend upon
such  guarantees,   which  are  not  supported  by  federal  deposit  insurance.
Consequently,  changes in the


                                       41
<PAGE>

credit quality of these  institutions could have an adverse impact on securities
they have  guaranteed  or backed,  which could cause losses to a fund and affect
its share price.

Securities with Put Rights. A fund may enter into put transactions  with respect
to  obligations  held in its portfolio  with  broker/dealers  pursuant to a rule
under the 1940 Act, and with commercial banks.

The right of a fund to exercise a put is unconditional and unqualified. A put is
not transferable by a fund,  although a fund may sell the underlying  securities
to a third party at any time.  If necessary  and  advisable,  a fund may pay for
certain puts either separately in cash or by paying a higher price for portfolio
securities  that are acquired  subject to such a put (thus reducing the yield to
maturity otherwise available for the same securities).  A fund expects, however,
that puts  generally  will be  available  without  the  payment of any direct or
indirect consideration.

A fund may  enter  into  puts only with  banks or  broker/dealers  that,  in the
opinion of the advisor,  present minimal credit risks.  The ability of a fund to
exercise a put will  depend on the ability of the bank or  broker/dealer  to pay
for the  underlying  securities at the time the put is  exercised.  In the event
that a bank or  broker/dealer  should default on its obligation to repurchase an
underlying  security,  a fund might be unable to recover all or a portion of any
loss sustained from having to sell the security elsewhere.

A fund  intends to enter into puts  solely to  maintain  liquidity  and does not
intend to exercise its rights  thereunder  for trading  purposes.  The puts will
only be for  periods  of  substantially  less  than the  life of the  underlying
security.  The  acquisition  of a put will not affect the valuation by a fund of
the  underlying  security.  The actual put will be valued at zero in determining
net asset value of a fund.  Where a fund pays directly or indirectly  for a put,
its cost will be reflected in realized gain or loss when the put is exercised or
expires. If the value of the underlying  security  increases,  the potential for
unrealized  or realized  gain is reduced by the cost of the put. The maturity of
an obligation purchased by a fund will not be considered shortened by any put to
which such obligation is subject.

Senior Loans.  DWS Floating  Rate Plus Fund may invest in Senior  Loans.  Senior
Loans are direct  obligations of corporations or other business entities and are
generally  arranged by banks or other commercial  lending  institutions and made
generally to finance internal growth, mergers,  acquisitions,  stock repurchases
and leveraged buyouts. Senior Loans may include restrictive covenants which must
be maintained by the borrower. Such covenants, in addition to the timely payment
of interest and principal,  may include mandatory prepayment  provisions arising
from free cash flow,  restrictions on dividend payments and usually state that a
borrower must maintain specific minimum financial ratios as well as establishing
limits on total debt. A breach of covenant, which is not waived by the agent, is
normally  an event of  acceleration,  i.e.,  the agent has the right to call the
outstanding  Senior Loan.  In addition,  loan  covenants  may include  mandatory
prepayment  provisions stemming from free cash flow. Free cash flow is cash that
is in excess of capital expenditures plus debt service requirements of principal
and  interest.  The free cash flow shall be applied to prepay the Senior Loan in
an order of maturity described in the loan documents. Under certain interests in
Senior  Loans,  the fund may have an obligation  to make  additional  loans upon
demand by the  borrower.  The fund intends to reserve  against  such  contingent
obligations by segregating  sufficient assets in high quality  short-term liquid
investments or borrowing to cover such obligations.

The  fund's  investment  in  Senior  Loans may take the form of  purchase  of an
assignment  or a portion of a Senior Loan from a third party  ("assignment")  or
acquiring a participation in a Senior Loan ("participation"). The fund may pay a
fee  or  forego  a  portion  of  interest  payments  to  the  lender  selling  a
participation or assignment under the terms of such participation or assignment.
When the fund is a purchaser of an assignment,  it typically succeeds to all the
rights and  obligations  under the loan  agreement of the  assigning  lender and
becomes a lender under the loan agreement  with the same rights and  obligations
as the assigning  lender.  Assignments  are,  however,  arranged through private
negotiations between potential assignees and potential assignors, and the rights
and  obligations  acquired by the purchaser of an assignment may be more limited
than  those  held  by  the  assigning  lender.  The  fund  may  also  invest  in
participations  in Senior  Loans.  With respect to any given  Senior  Loan,  the
rights of the fund when it acquires a participation may be more limited than the
rights of the  original  lenders or of  investors  who  acquire  an  assignment.
Participations may entail certain risks relating to the  creditworthiness of the
parties from which the participations are obtained.

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<PAGE>

In a typical  interest in a Senior Loan, the agent  administers the loan and has
the right to monitor the collateral. The agent is also required to segregate the
principal  and interest  payments  received  from the borrower and to hold these
payments for the benefit of the lenders. The fund normally looks to the agent to
collect and distribute principal of and interest on a Senior Loan.  Furthermore,
the fund looks to the agent to use normal credit remedies,  such as to foreclose
on  collateral;  monitor  credit loan  covenants;  and notify the lenders of any
adverse  changes  in the  borrower's  financial  condition  or  declarations  of
insolvency.  In the event of a default by the borrower,  it is possible,  though
unlikely, that the fund could receive a portion of the borrower's collateral. If
the fund receives collateral other than cash, such collateral will be liquidated
and the cash received from such  liquidation will be available for investment as
part of the  fund's  portfolio.  At times the fund may also  negotiate  with the
agent regarding the agent's exercise of credit remedies under a Senior Loan. The
agent is  compensated  for these services by the borrower as is set forth in the
loan  agreement.  Such  compensation  may take the form of a fee or other amount
paid upon the making of the Senior Loan and/or an ongoing fee or other amount.

The loan  agreement in  connection  with Senior Loans sets forth the standard of
care to be exercised by the agents on behalf of the lenders and usually provides
for the  termination  of the agent's agency status in the event that it fails to
act  properly,  becomes  insolvent,  enters  FDIC  receivership,  or if not FDIC
insured,  enters into bankruptcy or if the agent resigns.  In the event an agent
is unable to perform its  obligations as agent,  another lender would  generally
serve in that capacity.

The fund believes  that the  principal  credit risk  associated  with  acquiring
Senior Loans from another lender is the credit risk associated with the borrower
of the  underlying  Senior  Loan.  The fund may incur  additional  credit  risk,
however,  when the fund acquires a  participation  in a Senior Loan from another
lender  because the fund must assume the risk of insolvency or bankruptcy of the
other  lender from which the Senior Loan was  acquired.  However,  in  acquiring
Senior  Loans,  the fund  conducts an analysis and  evaluation  of the financial
condition of each such lender.  The fund has taken the following  measures in an
effort to reduce such risks. The fund will only acquire participations in Senior
Loans  if  the  lender  selling  the   participation,   and  any  other  persons
interpositioned  between the fund and the lender,  at the time of investment has
outstanding  debt or deposit  obligations  rated investment grade (BBB or A-3 or
higher by Standards & Poor's  Ratings  Group  ("S&P") or Baa or P-3 or higher by
Moody's  Investors  Service  ("Moody's"))  or determined by the Advisor to be of
comparable quality. Long-term debt rated BBB by S&P is regarded by S&P as having
adequate  capacity to pay  interest  and repay  principal  and debt rated Baa by
Moody's is regarded by Moody's as a medium grade obligation, i.e., it is neither
highly protected nor poorly secured. Commercial paper rated A-1 by S&P indicates
that the degree of safety  regarding  timely  payment is considered by S&P to be
either  overwhelming or very strong and issues of commercial paper rated Prime-1
by Moody's are considered by Moody's to have a superior ability for repayment of
senior short-term debt obligations.

Senior Loans,  unlike certain bonds,  usually do not have call protection.  This
means that interests comprising the fund's portfolio,  while having a stated one
to ten-year  term,  may be prepaid,  often without  penalty.  The fund generally
holds  Senior Loans to maturity  unless it has become  necessary to sell them to
adjust the fund's  portfolio in accordance with the Advisor's view of current or
expected economic or specific industry or borrower conditions.

Senior Loans frequently  require full or partial prepayment of a loan when there
are asset sales or a securities  issuance.  Prepayments on Senior Loans may also
be made by the borrower at its  election.  The rate of such  prepayments  may be
affected by, among other things,  general business and economic  conditions,  as
well as the financial status of the borrower.  Prepayment would cause the actual
duration of a Senior Loan to be shorter than its stated maturity. Prepayment may
be deferred by the fund. This should,  however,  allow the fund to reinvest in a
new loan and recognize as income any unamortized loan fees. This may result in a
new facility fee payable to the fund.

Because  interest rates paid on these Senior Loans  periodically  fluctuate with
the market,  it is expected that the prepayment  and a subsequent  purchase of a
new Senior Loan by the fund will not have a material adverse impact on the yield
of the portfolio. See "Portfolio Transactions."

Under a Senior Loan,  the borrower  generally  must pledge as collateral  assets
which may  include  one or more of the  following:  cash;  accounts  receivable;
inventory; property, plant and equipment; both common and preferred stock in its
subsidiaries;  trademarks,  copyrights,  patent rights; and franchise value. The
fund may also receive guarantees as a form of collateral.  In some instances,  a
Senior Loan may be secured  only by stock in a borrower or its  affiliates.


                                       43
<PAGE>

The fund may also  invest in Senior  Loans not  secured by any  collateral.  The
market value of the assets  serving as collateral  (if any) will, at the time of
investment,  in the opinion of the Advisor, equal or exceed the principal amount
of the Senior  Loan.  The  valuations  of these  assets may be  performed  by an
independent  appraisal.  If the  agent  becomes  aware  that  the  value  of the
collateral  has declined,  the agent may take action as it deemed  necessary for
the  protection of its own  interests  and the  interests of the other  lenders,
including, for example, giving the borrower an opportunity to provide additional
collateral or accelerating  the loan. There is no assurance,  however,  that the
borrower  would provide  additional  collateral or that the  liquidation  of the
existing  collateral  would  satisfy the  borrower's  obligation in the event of
nonpayment of scheduled interest or principal,  or that such collateral could be
readily liquidated.

The fund may be required to pay and may receive  various fees and commissions in
the process of purchasing,  selling and holding Senior Loans.  The fee component
may include any, or a combination of, the following elements:  arrangement fees,
non-use fees, facility fees, letter of credit fees and ticking fees. Arrangement
fees are paid at the  commencement of a loan as compensation  for the initiation
of the  transaction.  A non-use fee is paid based upon the amount  committed but
not used  under  the  loan.  Facility  fees are  on-going  annual  fees  paid in
connection  with a loan.  Letter of credit  fees are paid if a loan  involves  a
letter of credit.  Ticking fees are paid from the initial commitment  indication
until loan closing if for an extended  period.  The amount of fees is negotiated
at the time of transaction.

If legislation or state or federal regulators impose additional  requirements or
restrictions  on the ability of  financial  institutions  to make loans that are
considered highly leveraged  transactions,  the availability of Senior Loans for
investment by the fund may be adversely affected. In addition, such requirements
or  restrictions  could  reduce or eliminate  sources of  financing  for certain
borrowers. This would increase the risk of default. If legislation or federal or
state regulators require financial  institutions to dispose of Senior Loans that
are considered  highly  leveraged  transactions  or subject such Senior Loans to
increased regulatory scrutiny, financial institutions may determine to sell such
Senior  Loans.  Such sales could  result in prices  that,  in the opinion of the
Advisor, do not represent fair value. If the fund attempts to sell a Senior Loan
at a time when a financial institution is engaging in such a sale, the price the
fund could get for the Senior Loan may be adversely affected.

Short  Sales.  When  DWS  Disciplined   Market  Neutral  Fund,  DWS  Disciplined
Long/Short  Growth  Fund,  DWS  Disciplined  Long/Short  Value Fund or DWS RREEF
Global Real Estate  Securities Fund takes a long position,  it purchases a stock
outright.  When a fund takes a short  position,  it sells at the current  market
price a stock it does not own but has borrowed in  anticipation  that the market
price of the stock will  decline.  To  complete,  or close  out,  the short sale
transaction,  a fund buys the same  stock in the  market  and  returns it to the
lender.  The  price at such time may be more or less than the price at which the
security was sold by a fund. Until the security is replaced,  a fund is required
to pay the lender  amounts  equal to any  dividends  or  interest,  which accrue
during  the  period of the  loan.  To borrow  the  security,  a fund may also be
required to pay a premium,  which would  increase the cost of the security sold.
The  proceeds of the short sale will be  retained  by the broker,  to the extent
necessary to meet the margin  requirements,  until the short  position is closed
out. A fund makes money when the market  price of the  borrowed  stock goes down
and a fund is able to  replace  it for less than it earned by  selling it short.
Alternatively  if the price of the stock goes up after the short sale and before
the short position is closed, a fund will lose money because it will have to pay
more to  replace  the  borrowed  stock than it  received  when it sold the stock
short.

A fund may not always be able to close out a short position at a particular time
or at an acceptable price. A lender may request that the borrowed  securities be
returned  to it on  short  notice,  and a fund  may  have  to buy  the  borrowed
securities at an  unfavorable  price.  If this occurs at a time that other short
sellers of the same  security also want to close out their  positions,  a "short
squeeze" can occur.  A short  squeeze  occurs when demand is greater than supply
for the stock sold short.  A short squeeze makes it more likely that a fund will
have to cover its short sale at an unfavorable  price.  If that happens,  a fund
will lose some or all of the  potential  profit from,  or even incur a loss as a
result of, the short sale.

Until a fund closes its short position or replaces the borrowed security, a fund
will  designate  liquid assets it owns (other than the short sales  proceeds) as
segregated  assets to the books of the broker  and/or its custodian in an amount
equal to its  obligation to purchase the securities  sold short,  as required by
the 1940  Act.  The  amount  segregated  in this  manner  will be  increased  or
decreased  each  business  day equal to the  change in market  value of a fund's

                                       44
<PAGE>

obligation to purchase the security sold short. If the lending broker requires a
fund to deposit  additional  collateral (in addition to the short sales proceeds
that the broker holds during the period of the short sale), which may be as much
as 50% of the value of the securities  sold short,  the amount of the additional
collateral may be deducted in determining  the amount of cash or liquid assets a
fund is required to segregate to cover the short sale obligation pursuant to the
1940 Act. The amount  segregated must be unencumbered by any other obligation or
claim than the obligation  that is being covered.  Each fund believes that short
sale  obligations  that are  covered,  either  by an  offsetting  asset or right
(acquiring  the security sold short or having an option to purchase the security
sold  short at  exercise  price  that  covers  the  obligation),  or by a fund's
segregated  asset  procedures  (or  a  combination  thereof),   are  not  senior
securities  under  the  1940  Act and  are not  subject  to a  fund's  borrowing
restrictions. This requirement to segregate assets limits a fund's leveraging of
its investments and the related risk of losses from  leveraging.  A fund also is
required  to pay the lender of the  security  any  dividends  or  interest  that
accrues on a borrowed  security during the period of the loan.  Depending on the
arrangements  made with the broker or  custodian,  a fund may or may not receive
any  payments  (including  interest) on  collateral  it has  deposited  with the
broker.

Short  sales  involve  the risk  that a fund will  incur a loss by  subsequently
buying a security  at a higher  price than the price at which a fund  previously
sold  the  security  short.  Any  loss  will  be  increased  by  the  amount  of
compensation,  interest or dividends, and transaction costs a fund must pay to a
lender of the security. In addition, because a fund's loss on a short sale stems
from increases in the value of the security sold short, the extent of such loss,
like the price of the  security  sold  short,  is  theoretically  unlimited.  By
contrast, a fund's loss on a long position arises from decreases in the value of
the  security  held by a fund  and  therefore  is  limited  by the  fact  that a
security's value cannot drop below zero.

The use of short sales,  in effect,  leverages a fund's  portfolio,  which could
increase a fund's  exposure  to the  market,  magnify  losses and  increase  the
volatility of returns.

Although  a fund's  share  price  may  increase  if the  securities  in its long
portfolio  increase  in value  more  than the  securities  underlying  its short
positions,  a fund's share price may decrease if the  securities  underlying its
short  positions  increase  in  value  more  than  the  securities  in its  long
portfolio.

While  the  Advisor  has  extensive   experience   managing   mutual  funds  and
institutional  accounts,  it has not previously  managed a long/short  strategy.
Although  the  Adviser  believes  that  its  stock  selection  strategy  will be
effective in selecting short  positions,  there is no assurance that the Adviser
will be successful in applying this approach to a long/short strategy.

Short Sales Against the Box. A fund may make short sales of common stocks if, at
all times when a short position is open, a fund owns the stock or owns preferred
stocks or debt  securities  convertible  or  exchangeable,  without  payment  of
further  consideration,  into the shares of common stock sold short. Short sales
of this kind are referred to as short sales "against the box." The broker/dealer
that  executes a short sale  generally  invests cash  proceeds of the sale until
they are paid to a fund.  Arrangements  may be made  with the  broker/dealer  to
obtain a portion of the interest earned by the broker on the investment of short
sale  proceeds.  A fund  will  segregate  the  common  stock or  convertible  or
exchangeable  preferred  stock or debt  securities in a special account with the
custodian.  Uncertainty  regarding the tax effects of short sales of appreciated
investments  may limit the  extent to which a fund may enter  into  short  sales
against the box.

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

                                       45
<PAGE>

Sovereign Debt.  Investment in sovereign debt can involve a high degree of risk.
The governmental entity that controls the repayment of sovereign debt may not be
able or willing to repay the  principal  and/or  interest when due in accordance
with the terms of such debt. A governmental  entity's  willingness or ability to
repay  principal  and interest due in a timely  manner may be affected by, among
other factors, its cash flow situation,  the extent of its foreign reserves, the
availability  of sufficient  foreign  exchange on the date a payment is due, the
relative  size of the  debt  service  burden  to the  economy  as a  whole,  the
governmental  entity's  policy toward the  International  Monetary Fund, and the
political   constraints  to  which  a   governmental   entity  may  be  subject.
Governmental  entities  may also be  dependent  on expected  disbursements  from
foreign governments, multilateral agencies and others abroad to reduce principal
and  interest  arrearages  on their debt.  The  commitment  on the part of these
governments,  agencies and others to make such  disbursements may be conditioned
on a governmental  entity's  implementation  of economic reforms and/or economic
performance  and the timely  service of such  debtor's  obligations.  Failure to
implement  such reforms,  achieve such levels of economic  performance  or repay
principal  or  interest  when due may result in the  cancellation  of such third
parties commitments to lend funds to the governmental  entity, which may further
impair such  debtor's  ability or  willingness  to service its debts in a timely
manner. Consequently, governmental entities may default on their sovereign debt.
Holders of sovereign debt may be requested to participate in the rescheduling of
such debt and to extend  further  loans to  governmental  entities.  There is no
bankruptcy  proceeding by which  sovereign debt on which  governmental  entities
have defaulted may be collected in whole or in part.

Stand-by Commitments.  A stand-by commitment is a right acquired by a fund, when
it purchases a municipal  obligation  from a broker,  dealer or other  financial
institution  ("seller"),  to  sell  up to the  same  principal  amount  of  such
securities  back to the  seller,  at a  fund's  option,  at a  specified  price.
Stand-by  commitments  are also known as  "puts."  The  exercise  by a fund of a
stand-by  commitment is subject to the ability of the other party to fulfill its
contractual commitment.

Stand-by  commitments  acquired by a fund will have the following features:  (1)
they will be in writing and will be physically held by a fund's custodian; (2) a
fund's right to exercise them will be unconditional  and  unqualified;  (3) they
will be entered into only with sellers which in the Advisor's  opinion present a
minimal  risk  of  default;  (4)  although  stand-by  commitments  will  not  be
transferable, municipal obligations purchased subject to such commitments may be
sold to a third party at any time,  even though the  commitment is  outstanding;
and (5) their exercise price will be (i) a fund's  acquisition  cost  (excluding
any accrued interest which a fund paid on their acquisition), less any amortized
market premium or plus any amortized original issue discount during the period a
fund owned the  securities,  plus (ii) all  interest  accrued on the  securities
since the last interest payment date.

A fund expects that stand-by commitments generally will be available without the
payment  of any direct or  indirect  consideration.  However,  if  necessary  or
advisable,  a fund will pay for stand-by commitments,  either separately in cash
or by paying a higher price for portfolio  securities which are acquired subject
to the commitments.

It is difficult to evaluate the likelihood of use or the potential  benefit of a
stand-by commitment.  Therefore,  it is expected that the Advisor will determine
that stand-by commitments  ordinarily have a "fair value" of zero, regardless of
whether any direct or indirect  consideration was paid.  However,  if the market
price of the  security  subject  to the  stand-by  commitment  is less  than the
exercise  price of the stand-by  commitment,  such security  will  ordinarily be
valued at such exercise price. Where a fund has paid for a stand-by  commitment,
its cost will be  reflected as  unrealized  depreciation  for the period  during
which the commitment is held.

The Advisor  understands  that the Internal  Revenue Service (the "Service") has
issued  a  favorable   revenue  ruling  to  the  effect  that,  under  specified
circumstances,  a registered  investment company will be the owner of tax-exempt
municipal  obligations  acquired  subject to a put option.  The Service has also
issued  private  letter  rulings  to  certain  taxpayers  (which do not serve as
precedent for other taxpayers) to the effect that tax-exempt  interest  received
by a regulated  investment  company  with  respect to such  obligations  will be
tax-exempt  in  the  hands  of  the  company  and  may  be  distributed  to  its
shareholders  as  exempt-interest   dividends.   The  Service  has  subsequently
announced  that it will not  ordinarily  issue advance  ruling letters as to the
identity of the true owner of property in cases involving the sale of securities
or participation  interests  therein if the purchaser has the right to cause the
security,  or the participation  interest therein, to be purchased by either the
seller or a third party.  A fund  intends to take the position  that it owns any
municipal  obligations  acquired  subject  to a  stand-by  commitment  and  that
tax-exempt  interest


                                       46
<PAGE>

earned with respect to such  municipal  obligations  will be  tax-exempt  in its
hands.  There is no assurance  that the Service will agree with such position in
any particular case.

Supranational Entities.  Supranational entities are international  organizations
designated   or  supported  by   governmental   entities  to  promote   economic
reconstruction or development and international banking institutions and related
government agencies.  Examples include the International Bank for Reconstruction
and Development  (the World Bank),  the European Coal and Steel  Community,  The
Asian  Development Bank and the InterAmerican  Development Bank.  Obligations of
supranational  entities  are  backed  by the  guarantee  of one or more  foreign
governmental parties which sponsor the entity.

Synthetic Investments.  In certain circumstances,  a fund may wish to obtain the
price  performance  of a security  without  actually  purchasing the security in
circumstances  where, for example,  the security is illiquid,  or is unavailable
for direct  investment  or  available  only on less  attractive  terms.  In such
circumstances,  a  fund  may  invest  in  synthetic  or  derivative  alternative
investments ("Synthetic Investments") that are based upon or otherwise relate to
the economic performance of the underlying securities. Synthetic Investments may
include swap transactions,  notes or units with variable redemption amounts, and
other similar instruments and contracts.  Synthetic Investments typically do not
represent  beneficial  ownership  of the  underlying  security,  usually are not
collateralized  or otherwise secured by the counterparty and may or may not have
any credit enhancements  attached to them.  Accordingly,  Synthetic  Investments
involve  exposure  not  only  to  the  creditworthiness  of  the  issuer  of the
underlying  security,  changes in exchange rates and future governmental actions
taken by the jurisdiction in which the underlying  security is issued,  but also
to the  creditworthiness and legal standing of the counterparties  involved.  In
addition, Synthetic Investments typically are illiquid.

Tax-Exempt  Commercial  Paper.  Issues of tax-exempt  commercial paper typically
represent short-term,  unsecured, negotiable promissory notes. These obligations
are issued by state and local  governments and their agencies to finance working
capital needs of municipalities or to provide interim construction financing and
are  paid  from  general  revenues  of  municipalities  or are  refinanced  with
long-term debt. In most cases,  tax-exempt commercial paper is backed by letters
of credit,  lending  agreements,  note  repurchase  agreements  or other  credit
facility agreements offered by banks or other institutions.

TBA  Purchase  Commitments.  A 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 a fund's  other  assets.  Unsettled  TBA purchase  commitments  are
valued at the current market value of the underlying securities.

Tender Option Bonds.  A tender  option bond is a municipal  security  (generally
held pursuant to a custodial  arrangement) having a relatively long maturity and
bearing interest at a fixed rate substantially higher than prevailing short-term
tax-exempt rates. The bond is typically issued in conjunction with the agreement
of a third party, such as a bank,  broker-dealer or other financial institution,
pursuant to which such institution  grants the security  holders the option,  at
periodic  intervals,  to tender their  securities to the institution and receive
the face value thereof.

As consideration for providing the option,  the financial  institution  receives
periodic fees equal to the  difference  between the bond's fixed coupon rate and
the  rate,  as  determined  by a  remarketing  or  similar  agent at or near the
commencement of such period,  that would cause the securities,  coupled with the
tender option,  to trade at par on the date of such  determination.  Thus, after
payment of this fee, the security holder  effectively  holds a demand obligation
that bears interest at the prevailing short-term tax-exempt rate.

However,  an institution  will not be obligated to accept  tendered bonds in the
event of certain  defaults  or a  significant  downgrade  in the  credit  rating
assigned to the issuer of the bond.  The  liquidity of a tender option bond is a
function  of the  credit  quality  of both the  bond  issuer  and the  financial
institution  providing  liquidity.  Tender  option bonds are deemed to be liquid
unless, in the opinion of the Advisor, the credit quality of the bond issuer and
the  financial  institution  is  deemed,  in light of a  fund's  credit  quality
requirements,  to be inadequate.  A fund intends to invest only in tender option
bonds the interest on which will,  in the opinion of bond  counsel,  counsel for
the issuer of interests


                                       47
<PAGE>

therein or counsel  selected  by the  Advisor,  be exempt from  regular  federal
income tax.  However,  because there can be no assurance that the IRS will agree
with such counsel's  opinion in any particular case, there is a risk that a fund
will not be  considered  the owner of such tender option bonds and thus will not
be entitled to treat such  interest as exempt from such tax.  Additionally,  the
federal  income tax  treatment of certain  other  aspects of these  investments,
including  the proper tax  treatment of tender  option bonds and the  associated
fees,  in relation to various  regulated  investment  company tax  provisions is
unclear.  A fund  intends  to  manage  its  portfolio  in a manner  designed  to
eliminate or minimize any adverse impact from the tax rules  applicable to these
investments.

Third Party Puts. A fund may purchase  long-term fixed rate bonds that have been
coupled with an option granted by a third party financial institution allowing a
fund at specified  intervals  to tender (or "put") the bonds to the  institution
and receive the face value thereof (plus  accrued  interest).  These third party
puts are available in several  different  forms, may be represented by custodial
receipts or trust  certificates  and may be combined with other features such as
interest  rate swaps.  A fund receives a short-term  rate of interest  (which is
periodically  reset),  and the interest rate differential  between that rate and
the  fixed  rate on the  bond is  retained  by the  financial  institution.  The
financial  institution  granting the option does not provide credit enhancement,
and in the  event  that  there is a  default  in the  payment  of  principal  or
interest,  or downgrading of a bond or a loss of the bond's  tax-exempt  status,
the put option will terminate automatically,  the risk to a fund will be that of
holding  such a long-term  bond and the  weighted  average  maturity of a fund's
portfolio would be adversely affected.

These bonds coupled with puts may present the same tax issues as are  associated
with Stand-By Commitments.  As with any Stand-By Commitments acquired by a fund,
a fund  intends  to take the  position  that it is the  owner  of any  municipal
obligation  acquired subject to a third-party put, and that tax-exempt  interest
earned with respect to such  municipal  obligations  will be  tax-exempt  in its
hands.  There is no assurance that the Internal  Revenue Service will agree with
such  position in any  particular  case.  Additionally,  the federal  income tax
treatment of certain other aspects of these investments, including the treatment
of tender fees and swap payments,  in relation to various  regulated  investment
company tax provisions is unclear. However, the advisor seeks to manage a fund's
portfolio  in a manner  designed  to  minimize  any  adverse  impact  from these
investments.

Trust Preferred  Securities.  A fund may invest in Trust  Preferred  Securities,
which are hybrid  instruments  issued by a special  purpose  trust (the "Special
Trust"),  the entire equity  interest of which is owned by a single issuer.  The
proceeds of the issuance to the Fund of Trust Preferred Securities are typically
used to purchase a junior  subordinated  debenture,  and distributions  from the
Special  Trust are funded by the  payments  of  principal  and  interest  on the
subordinated debenture.

If payments on the underlying junior subordinated debentures held by the Special
Trust are deferred by the debenture  issuer,  the debentures would be treated as
original issue discount ("OID")  obligations for the remainder of their term. As
a  result,  holders  of Trust  Preferred  Securities,  such as a fund,  would be
required to accrue  daily for  Federal  income tax  purposes  their share of the
stated interest and the de minimis OID on the debentures  (regardless of whether
a fund receives any cash distributions from the Special Trust), and the value of
Trust  Preferred  Securities  would  likely  be  negatively  affected.  Interest
payments on the underlying junior subordinated  debentures typically may only be
deferred if dividends are  suspended on both common and  preferred  stock of the
issuer. The underlying junior  subordinated  debentures  generally rank slightly
higher in terms of payment priority than both common and preferred securities of
the issuer,  but rank below other  subordinated  debentures and debt securities.
Trust Preferred  Securities may be subject to mandatory prepayment under certain
circumstances.  The  market  values of Trust  Preferred  Securities  may be more
volatile than those of conventional debt securities.  Trust Preferred Securities
may be issued in reliance on Rule 144A under the 1933 Act, and, unless and until
registered,  are  restricted  securities;  there can be no  assurance  as to the
liquidity  of Trust  Preferred  Securities  and the  ability of holders of Trust
Preferred Securities, such as a fund, to sell their holdings.

US   Government   Securities.   There   are   two   broad   categories   of   US
Government-related debt instruments:  (a) direct obligations of the US Treasury,
and (b) securities issued or guaranteed by US Government agencies.

Examples of direct  obligations  of the US Treasury are Treasury  Bills,  Notes,
Bonds and other debt securities issued by the US Treasury. These instruments are
backed  by the  "full  faith and  credit"  of the  United  States.  They  differ
primarily in interest rates, the length of maturities and the dates of issuance.
Treasury bills have original maturities


                                       48
<PAGE>

of one year or less. Treasury notes have original maturities of one to ten years
and Treasury bonds generally have original maturities of greater than ten years.

Some  agency  securities  are  backed by the full faith and credit of the United
States (such as Maritime Administration Title XI Ship Financing Bonds and Agency
for  International  Development  Housing Guarantee Program Bonds) and others are
backed only by the rights of the issuer to borrow from the US Treasury  (such as
Federal Home Loan Bank Bonds and Federal National Mortgage  Association  Bonds),
while still others,  such as the securities of the Federal Farm Credit Bank, are
supported only by the credit of the issuer. With respect to securities supported
only by the credit of the issuing agency or by an additional line of credit with
the US  Treasury,  there is no  guarantee  that the US  Government  will provide
support  to such  agencies  and  such  securities  may  involve  risk of loss of
principal and interest.

US Government  Securities  may include "zero coupon"  securities  that have been
stripped  by  the  US  Government  of  their  unmatured   interest  coupons  and
collateralized  obligations  issued or guaranteed  by a US Government  agency or
instrumentality.

Interest rates on US Government  obligations may be fixed or variable.  Interest
rates on variable rate obligations are adjusted at regular  intervals,  at least
annually,  according to a formula  reflecting  then current  specified  standard
rates, such as 91-day US Treasury bill rates.  These adjustments  generally tend
to reduce fluctuations in the market value of the securities.

The government  guarantee of the US Government  Securities in a fund's portfolio
does not guarantee the net asset value of the shares of a fund. There are market
risks  inherent in all  investments in securities and the value of an investment
in a fund will  fluctuate  over time.  Normally,  the value of investments in US
Government  Securities  varies  inversely  with changes in interest  rates.  For
example,  as  interest  rates  rise the value of  investments  in US  Government
Securities  will tend to  decline,  and as  interest  rates  fall the value of a
fund's  investments  will tend to  increase.  In  addition,  the  potential  for
appreciation  in the event of a decline  in  interest  rates may be  limited  or
negated   by   increased   principal   prepayments   with   respect  to  certain
Mortgage-Backed  Securities,  such as  GNMA  Certificates.  Prepayments  of high
interest  rate  Mortgage-Backed  Securities  during times of declining  interest
rates will tend to lower the return of a fund and may even result in losses to a
fund if some securities were acquired at a premium.  Moreover, during periods of
rising interest rates,  prepayments of  Mortgage-Backed  Securities may decline,
resulting in the extension of a fund's average portfolio maturity.  As a result,
a fund's portfolio may experience  greater  volatility  during periods of rising
interest rates than under normal market conditions.

Variable  and  Floating  Rate  Instruments.  A fund may  invest in  variable  or
floating  rate  instruments  and  variable  rate demand  instruments,  including
variable amount master demand notes.  These  instruments  will normally  involve
industrial  development  or revenue bonds that provide that the rate of interest
is set as a specific  percentage  of a  designated  base rate (such as the prime
rate) at a major  commercial  bank.  In  addition,  the  interest  rate on these
securities may be reset daily, weekly or on some other reset period and may have
a floor or ceiling on interest rate changes. When holding such an instrument,  a
fund can demand payment of the obligation at all times or at stipulated dates on
short notice (not to exceed 30 days) at par plus accrued interest.

Debt  instruments  purchased  by a fund may be  structured  to have  variable or
floating  interest rates.  These  instruments may include variable amount master
demand notes that permit the  indebtedness  to vary in addition to providing for
periodic  adjustments  in the  interest  rates.  The Advisor  will  consider the
earning  power,  cash  flows  and other  liquidity  ratios  of the  issuers  and
guarantors  of such  instruments  and, if the  instrument is subject to a demand
feature,  will  continuously  monitor their financial ability to meet payment on
demand. Where necessary to ensure that a variable or floating rate instrument is
equivalent  to  the  quality  standards  applicable  to a  fund's  fixed  income
investments, the issuer's obligation to pay the principal of the instrument will
be backed  by an  unconditional  bank  letter or line of  credit,  guarantee  or
commitment  to lend.  Any bank  providing  such a bank  letter,  line of credit,
guarantee or loan commitment  will meet a fund's  investment  quality  standards
relating to investments in bank obligations.  The Advisor will also continuously
monitor the creditworthiness of issuers of such instruments to determine whether
a fund should continue to hold the investments.

                                       49
<PAGE>

The absence of an active secondary market for certain variable and floating rate
notes could make it  difficult to dispose of the  instruments,  and a fund could
suffer a loss if the issuer  defaults  or during  periods in which a fund is not
entitled to exercise its demand rights.

Variable  and  floating  rate  instruments  held by a fund will be  subject to a
fund's limitation on investments in illiquid  securities when a reliable trading
market for the instruments does not exist and the fund may not demand payment of
the principal amount of such instruments within seven days.

Warrants.  The holder of a warrant has the right, until the warrant expires,  to
purchase a given number of shares of a particular  issuer at a specified  price.
Such  investments  can  provide a greater  potential  for profit or loss than an
equivalent  investment  in the  underlying  security.  Prices of warrants do not
necessarily  move,  however,  in  tandem  with  the  prices  of  the  underlying
securities and are, therefore, considered speculative investments.  Warrants pay
no  dividends  and confer no rights  other than a purchase  option.  Thus,  if a
warrant held by a fund were not exercised by the date of its expiration,  a fund
would lose the entire purchase price of the warrant.

When-Issued  Securities.  A fund may from time to time purchase  equity and debt
securities on a "when-issued,"  "delayed  delivery" or "forward delivery" basis.
The price of such securities, which may be expressed in yield terms, is fixed at
the time the  commitment  to purchase is made,  but delivery and payment for the
securities  takes place at a later date.  During the period between purchase and
settlement,  no payment is made by a fund to the issuer and no interest  accrues
to a fund.  When a fund purchases such  securities,  it immediately  assumes the
risks of ownership, including the risk of price fluctuation.  Failure to deliver
a security purchased on this basis may result in a loss or missed opportunity to
make an alternative investment.

To the extent that assets of a fund are held in cash pending the settlement of a
purchase of securities,  a fund would earn no income.  While such securities may
be sold prior to the  settlement  date, a fund intends to purchase them with the
purpose  of  actually  acquiring  them  unless  a  sale  appears  desirable  for
investment  reasons.  At the time a fund  makes the  commitment  to  purchase  a
security on this basis,  it will record the transaction and reflect the value of
the  security  in  determining  its net asset  value.  The  market  value of the
securities may be more or less than the purchase price.

Zero Coupon Securities.  A fund may invest in zero coupon securities,  which pay
no cash  income  and are  sold at  substantial  discounts  from  their  value at
maturity.  When  held to  maturity,  their  entire  income,  which  consists  of
accretion of  discount,  comes from the  difference  between the issue price and
their value at maturity.  Zero coupon  securities  are subject to greater market
value  fluctuations  from  changing  interest  rates  than debt  obligations  of
comparable  maturities which make current distributions of interest (cash). Zero
coupon  securities which are convertible into common stock offer the opportunity
for capital  appreciation  as increases  (or  decreases) in market value of such
securities  closely  follow the movements in the market value of the  underlying
common stock. Zero coupon  convertible  securities  generally are expected to be
less volatile than the underlying  common stocks as they usually are issued with
maturities  of 15 years or less and are issued with  options  and/or  redemption
features  exercisable  by the holder of the  obligation  entitling the holder to
redeem the obligation and receive a defined cash payment.

Zero coupon securities include municipal securities,  securities issued directly
by the US Treasury,  and US Treasury bonds or notes and their unmatured interest
coupons and receipts for their underlying principal  ("coupons") which have been
separated by their holder,  typically a custodian  bank or investment  brokerage
firm, from the underlying  principal (the "corpus") of the US Treasury security.
A number of securities  firms and banks have  stripped the interest  coupons and
receipts and then resold them in  custodial  receipt  programs  with a number of
different names,  including  Treasury Income Growth Receipts  ("TIGRS(TM)")  and
Certificate  of Accrual on Treasuries  ("CATS(TM)").  The underlying US Treasury
bonds and notes  themselves are held in book-entry  form at the Federal  Reserve
Bank or, in the case of bearer securities (i.e.,  unregistered  securities which
are owned ostensibly by the bearer or holder thereof), in trust on behalf of the
owners  thereof.  Counsel to the  underwriters  of these  certificates  or other
evidences  of  ownership of the US Treasury  securities  have stated  that,  for
federal  tax and  securities  purposes,  in  their  opinion  purchasers  of such
certificates,  such as a fund, most likely will be deemed the beneficial  holder
of the  underlying  US  Government  securities.  A fund intends to adhere to the
current SEC staff position that  privately  stripped  obligations


                                       50
<PAGE>

should not be considered US Government securities for the purpose of determining
if a fund is "diversified" under the 1940 Act.

The US Treasury has facilitated transfers of ownership of zero coupon securities
by accounting  separately  for the beneficial  ownership of particular  interest
coupon and corpus  payments on Treasury  securities  through the Federal Reserve
book-entry record-keeping system. The Federal Reserve program, as established by
the Treasury Department, is known as "STRIPS" or "Separate Trading of Registered
Interest and Principal of Securities."  Under the STRIPS program, a fund will be
able  to have  its  beneficial  ownership  of zero  coupon  securities  recorded
directly  in the  book-entry  record-keeping  system  in lieu of  having to hold
certificates  or other  evidences  of ownership  of the  underlying  US Treasury
securities.

When US Treasury  obligations  have been  stripped of their  unmatured  interest
coupons  by the  holder,  the  principal  or corpus  is 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.  Once  stripped  or  separated,  the  corpus and  coupons  may be sold
separately.  Typically,  the coupons are sold  separately  or grouped with other
coupons with like  maturity  dates and sold bundled in such form.  Purchasers of
stripped  obligations   acquire,  in  effect,   discount  obligations  that  are
economically identical to the zero coupon securities that the Treasury sells.

Strategic Transactions and Derivatives

A fund may, but is not required to, utilize various other investment  strategies
as described  below for a variety of purposes,  such as hedging  various  market
risks,   managing  the  effective  maturity  or  duration  of  the  fixed-income
securities in a fund's  portfolio or enhancing  potential gain. These strategies
may be executed through the use of derivative contracts.

In the course of pursuing these investment  strategies,  a fund may purchase and
sell  exchange-listed and  over-the-counter  put and call options on securities,
equity and fixed-income indices and other instruments, purchase and sell futures
contracts and options thereon,  enter into various  transactions  such as swaps,
caps, floors, collars,  currency forward contracts,  currency futures contracts,
currency swaps or options on currencies,  or currency  futures and various other
currency  transactions  (collectively,  all  the  above  are  called  "Strategic
Transactions").  In addition,  certain  Strategic  Transactions may also include
additional   techniques,   instruments  or  strategies  that  are  permitted  as
regulatory  changes  occur.  Strategic  Transactions  may be used without  limit
(subject  to  certain  limits  imposed  by the 1940 Act) to  attempt  to protect
against  possible  changes in the market  value of  securities  held in or to be
purchased for a fund's portfolio  resulting from securities  markets or currency
exchange rate fluctuations, to protect a fund's unrealized gains in the value of
its  portfolio  securities,  to  facilitate  the  sale  of such  securities  for
investment  purposes,  to manage the effective  maturity or duration of a fund's
portfolio,  to establish a position in the  derivatives  markets as a substitute
for  purchasing  or  selling  particular  securities  or for any  other  purpose
permitted by applicable  law. Some  Strategic  Transactions  may also be used to
enhance potential gain. Any or all of these investment techniques may be used at
any time  and in any  combination,  and  there is no  particular  strategy  that
dictates the use of one technique  rather than another,  as use of any Strategic
Transaction is a function of numerous variables including market conditions. The
ability of a fund to utilize  these  Strategic  Transactions  successfully  will
depend on the Advisor's  ability to predict  pertinent market  movements,  which
cannot be assured.  Strategic Transactions will not be used to alter fundamental
investment purposes and characteristics of a fund.

Strategic  Transactions,  including derivative contracts,  have risks associated
with them  including  possible  default by the other  party to the  transaction,
illiquidity and, to the extent the Advisor's view as to certain market movements
is incorrect,  the risk that the use of such Strategic Transactions could result
in losses  greater  than if they had not been used.  Use of put and call options
may  result  in  losses  to a fund,  force  the sale or  purchase  of  portfolio
securities  at  inopportune  times or for prices higher than (in the case of put
options)  or lower than (in the case of call  options)  current  market  values,
limit the amount of  appreciation a fund can realize on its investments or cause
a fund  to  hold a  security  it  might  otherwise  sell.  The  use of  currency
transactions  can result in a fund  incurring  losses as a result of a number of
factors   including  the   imposition  of  exchange   controls,   suspension  of
settlements,  or the inability to deliver or receive a specified  currency.  The
use of  options  and  futures  transactions  entails  certain  other  risks.  In
particular,  the  variable  degree of  correlation  between  price  movements of
futures  contracts and price  movements in the related  portfolio  position of a
fund  creates  the  possibility  that losses on the  hedging  instrument  may be
greater


                                       51
<PAGE>

than gains in the value of a fund's position.  In addition,  futures and options
markets  may not be liquid in all  circumstances  and  certain  over-the-counter
options may have no markets.  As a result, in certain markets,  a fund might not
be able to close out a transaction  without incurring  substantial losses, if at
all.  Although the use of futures and options  transactions  for hedging  should
tend to  minimize  the risk of loss due to a decline  in the value of the hedged
position,  at the same time they tend to limit any  potential  gain which  might
result from an increase in value of such position. Other Strategic Transactions,
such as forward  contracts and swaps, are also subject to similar risks.  Losses
resulting from the use of Strategic  Transactions  would reduce net asset value,
and  possibly  income,  and such  losses  can be greater  than if the  Strategic
Transactions had not been utilized.

Combined Transactions.  A fund may enter into multiple  transactions,  including
multiple options transactions,  multiple futures transactions, multiple currency
transactions  (including forward currency  contracts) and multiple interest rate
transactions and any combination of futures, options, currency and interest rate
transactions   ("component"   transactions),   instead  of  a  single  Strategic
Transaction,  as part of a single or combined  strategy  when, in the opinion of
the  advisor,  it is in the  best  interests  of a fund  to do  so.  A  combined
transaction  will usually  contain  elements of risk that are present in each of
its component transactions.  Although combined transactions are normally entered
into based on the advisor's  judgment that the combined  strategies  will reduce
risk or otherwise  more  effectively  achieve the desired  portfolio  management
goal, it is possible that the  combination  will instead  increase such risks or
hinder achievement of the portfolio management objective.

Commodities-Linked   Derivative  Instruments.   A  fund  intends  to  invest  in
commodities-linked  derivative  instruments,  in particular in structured notes.
The value of a  commodities-linked  derivative  instrument typically is based on
the price movements of a physical  commodity,  a commodity  futures  contract or
commodity index, or some other readily  measurable  economic variable  dependent
upon changes in the value of  commodities  or the  commodities  markets.  A fund
invests in commodities-linked derivative investments that are hybrid instruments
excluded  from  regulation  under  the  Commodity  Exchange  Act and  the  rules
thereunder, so that a fund will not be considered a "commodity pool." A fund may
invest  up to  40%  of  its  total  assets  in  qualifying  hybrid  instruments.
Additionally,  from time to time the fund may invest in other hybrid instruments
that do not qualify for exemption from regulation  under the Commodity  Exchange
Act.

A fund will invest in derivative debt  instruments  with principal and/or coupon
payments linked to the value of commodities, commodity futures contracts, or the
performance   of   commodity   indices.   These  are   "commodities-linked"   or
"index-linked"  notes.  They are  sometimes  referred to as  "structured  notes"
because the terms of the debt  instrument may be structured by the issuer of the
note and the purchaser of the note, such as a fund. These notes may be issued by
banks, brokerage firms, insurance companies and other corporations.

The  values of these  notes  will rise and fall in  response  to  changes in the
underlying  commodity or related index or investment.  These notes expose a fund
economically  to  movements  in  commodity  prices,  but a  particular  note  is
primarily a debt obligation. These notes also are subject to credit and interest
rate risks that in general affect the value of debt  securities.  Therefore,  at
the  maturity of the note,  a fund may receive  more or less  principal  than it
originally invested. A fund might receive interest payments on the note that are
more or less than the stated  coupon  interest rate  payments.  To try to reduce
this risk, a fund does not expect to invest more than 40% of its total assets in
structured  notes under whose terms the potential loss,  either at redemption or
maturity,  exceeds 50% of the face value of the notes. That amount is calculated
at the time of investment.

The  structured  notes a fund  enters  into are  expected  to involve  leverage,
meaning that the value of the instrument will be calculated as a multiple of the
upward or  downward  price  movement  of the  underlying  index.  The  prices of
commodity-linked  instruments may move in different  directions than investments
in traditional  equity and debt  securities in periods of rising  inflation.  Of
course,  there can be no guarantee  that a fund's  commodity-linked  investments
would not be correlated with  traditional  financial assets under any particular
market conditions.

Commodity-linked  structured  notes  may  be  issued  by US and  foreign  banks,
brokerage firms,  insurance  companies and other  corporations.  These notes are
debt  securities of the issuer and so, in addition to fluctuating in response to
changes  in the  underlying  commodity  index,  will be  subject  to credit  and
interest rate risks that typically affect debt securities.

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<PAGE>

The  commodity-linked  instruments  a fund  invests  in may be wholly  principal
protected,  partially principal protected or offer no principal protection. With
a wholly  principal  protected  instrument,  a fund will receive at maturity the
greater of the par value of the note or the increase in value of the  underlying
index. Partially protected instruments may suffer some loss of principal up to a
specified limit if the underlying index declines in value during the term of the
instrument.  For instruments without principal protection,  there is a risk that
the instrument  could lose all of its value if the index declines  sufficiently.
The Advisor's decision on whether and to what extent to use principal protection
depends in part on the cost of the  protection.  In  addition,  the ability of a
fund to take advantage of any protection feature depends on the creditworthiness
of the issuer of the instrument.

Although  a fund  itself  will not be  leveraged,  some of the  commodity-linked
instruments the fund may hold will involve leverage. The fund will not invest in
an  instrument  if, at the time of  purchase,  (1) that  instrument's  "leverage
ratio" exceeds 300% of the price increase (or decrease) in the underlying  index
or (2) the fund's  "portfolio  leverage  ratio" exceeds 150%. What this means is
that for an instrument with a "leverage  factor" of 300%, a 1% gain (or loss) in
the  underlying  index  would  result in a 3% gain (or loss) in the value of the
instrument. "Portfolio leverage ratio" is defined as the average (mean) leverage
ratio of all instruments in a fund's portfolio, weighted by the market values of
such instruments or, in the case of futures contracts, their notional value.

Derivative  strategies  and the  writing of  uncovered  (or  so-called  "naked")
options are speculative and may hurt a Fund's performance. A fund may attempt to
hedge its  investments  in order to mitigate  risk, but it is not required to do
so. The benefits to be derived from the fund's  derivatives and options strategy
are dependent upon the Advisor's ability to discern pricing  inefficiencies  and
predict trends in the commodities and other markets, which decisions could prove
to be inaccurate.  This requires different skills and techniques than predicting
changes in the price of individual stocks or fixed-income securities,  and there
can be no assurance that the use of this strategy will be successful.

General  Characteristics of Options. Put options and call options typically have
similar structural  characteristics and operational  mechanics regardless of the
underlying  instrument on which they are purchased or sold.  Thus, the following
general  discussion relates to each of the particular types of options discussed
in greater  detail below.  In addition,  many Strategic  Transactions  involving
options  require  segregation of fund assets in special  accounts,  as described
below under "Use of Segregated and Other Special Accounts."

A put option gives the purchaser of the option,  upon payment of a premium,  the
right to sell, and the writer the  obligation to buy, the  underlying  security,
commodity,  index,  currency or other  instrument  at the  exercise  price.  For
instance,  a fund's  purchase of a put option on a security might be designed to
protect its holdings in the underlying  instrument (or, in some cases, a similar
instrument)  against a substantial  decline in the market value by giving a fund
the right to sell such  instrument at the option  exercise price. A call option,
upon payment of a premium,  gives the  purchaser of the option the right to buy,
and the seller the obligation to sell, the underlying instrument at the exercise
price.  A fund's  purchase  of a call option on a  security,  financial  future,
index,  currency or other instrument might be intended to protect a fund against
an  increase  in the  price of the  underlying  instrument  that it  intends  to
purchase  in the  future  by  fixing  the  price at which it may  purchase  such
instrument.  An American  style put or call option may be  exercised at any time
during  the  option  period  while a  European  style put or call  option may be
exercised only upon expiration or during a fixed period prior thereto. A fund is
authorized to purchase and sell  exchange  listed  options and  over-the-counter
options  ("OTC  options").  Exchange  listed  options  are issued by a regulated
intermediary such as the Options Clearing Corporation ("OCC"),  which guarantees
the  performance  of the  obligations  of  the  parties  to  such  options.  The
discussion  below uses the OCC as an example,  but is also  applicable  to other
financial intermediaries.

With certain exceptions, OCC issued and exchange listed options generally settle
by physical  delivery of the  underlying  security or currency,  although in the
future cash  settlement  may become  available.  Index  options  and  Eurodollar
instruments are cash settled for the net amount,  if any, by which the option is
"in-the-money"  (i.e., where the value of the underlying  instrument exceeds, in
the case of a call  option,  or is less than,  in the case of a put option,  the
exercise  price of the option) at the time the option is exercised.  Frequently,
rather than taking or making delivery of the underlying  instrument  through the
process of  exercising  the option,  listed  options are closed by entering into
offsetting  purchase or sale transactions that do not result in ownership of the
new option.

                                       53
<PAGE>

A fund's ability to close out its position as a purchaser or seller of an OCC or
exchange listed put or call option is dependent,  in part, upon the liquidity of
the option market. Among the possible reasons for the absence of a liquid option
market on an exchange are: (i) insufficient trading interest in certain options;
(ii) restrictions on transactions  imposed by an exchange;  (iii) trading halts,
suspensions or other restrictions  imposed with respect to particular classes or
series of  options or  underlying  securities  including  reaching  daily  price
limits;  (iv)  interruption of the normal  operations of the OCC or an exchange;
(v) inadequacy of the facilities of an exchange or OCC to handle current trading
volume;  or (vi) a decision by one or more exchanges to discontinue  the trading
of options  (or a  particular  class or series of  options),  in which event the
relevant market for that option on that exchange would cease to exist,  although
outstanding  options on that exchange would generally continue to be exercisable
in accordance with their terms.

The hours of trading for listed  options may not coincide  with the hours during
which the underlying  financial  instruments are traded.  To the extent that the
option   markets  close  before  the  markets  for  the   underlying   financial
instruments,  significant  price  and  rate  movements  can  take  place  in the
underlying markets that cannot be reflected in the option markets.

OTC  options  are  purchased  from  or  sold to  securities  dealers,  financial
institutions  or  other  parties  ("Counterparties")  through  direct  bilateral
agreement with the Counterparty.  In contrast to exchange listed options,  which
generally have standardized terms and performance mechanics, all the terms of an
OTC option, including such terms as method of settlement,  term, exercise price,
premium,  guarantees and security, are set by negotiation of the parties. A fund
will only sell OTC options (other than OTC currency options) that are subject to
a buy-back  provision  permitting a fund to require the Counterparty to sell the
option  back to a fund at a formula  price  within  seven days.  A fund  expects
generally  to enter  into OTC  options  that  have cash  settlement  provisions,
although it is not required to do so.

Unless the  parties  provide  for it,  there is no central  clearing or guaranty
function in an OTC option.  As a result,  if the  Counterparty  fails to make or
take delivery of the security,  currency or other  instrument  underlying an OTC
option  it has  entered  into  with a fund or  fails  to make a cash  settlement
payment due in  accordance  with the terms of that option,  a fund will lose any
premium  it paid  for the  option  as well  as any  anticipated  benefit  of the
transaction.  Accordingly,  the Advisor must assess the creditworthiness of each
such Counterparty or any guarantor or credit  enhancement of the  Counterparty's
credit to  determine  the  likelihood  that the terms of the OTC option  will be
satisfied. A fund will engage in OTC option transactions only with US government
securities  dealers  recognized  by the  Federal  Reserve  Bank  of New  York as
"primary  dealers"  or  broker/dealers,  domestic  or  foreign  banks  or  other
financial  institutions which have received (or the guarantors of the obligation
of which have  received) a short-term  credit rating of A-1 from S&P or P-1 from
Moody's or an  equivalent  rating  from any  nationally  recognized  statistical
rating organization ("NRSRO") or, in the case of OTC currency transactions,  are
determined to be of equivalent  credit quality by the Advisor.  The staff of the
SEC  currently  takes the position  that OTC options  purchased  by a fund,  and
portfolio securities "covering" the amount of a fund's obligation pursuant to an
OTC option sold by it (the cost of the sell-back plus the  in-the-money  amount,
if any) are  illiquid,  and are subject to a fund's  limitation  on investing no
more than 15% of its net assets in illiquid securities.

If a fund sells a call  option,  the  premium  that it  receives  may serve as a
partial hedge,  to the extent of the option  premium,  against a decrease in the
value of the  underlying  securities  or  instruments  in its  portfolio or will
increase a fund's income. The sale of put options can also provide income.

A fund may purchase and sell call  options on  securities  including US Treasury
and agency  securities,  mortgage-backed  securities,  foreign  sovereign  debt,
corporate debt securities,  equity securities (including convertible securities)
and  Eurodollar  instruments  that  are  traded  on US  and  foreign  securities
exchanges  and in the  over-the-counter  markets,  and  on  securities  indices,
currencies  and futures  contracts.  All calls sold by a fund must be  "covered"
(i.e., a fund must own the securities or futures  contract  subject to the call)
or must meet the asset segregation  requirements  described below as long as the
call is outstanding.  Even though a fund will receive the option premium to help
protect it against loss, a call sold by a fund exposes a fund during the term of
the option to possible loss of opportunity to realize appreciation in the market
price of the underlying  security or instrument and may require a fund to hold a
security or instrument which it might otherwise have sold.

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<PAGE>

A fund may purchase and sell put options on securities including US Treasury and
agency securities, mortgage-backed securities, foreign sovereign debt, corporate
debt  securities,  equity  securities  (including  convertible  securities)  and
Eurodollar  instruments  (whether  or not it holds the above  securities  in its
portfolio),  and on securities  indices,  currencies and futures contracts other
than futures on individual  corporate debt and individual equity  securities.  A
fund will not sell put options if, as a result,  more than 50% of a fund's total
assets would be required to be  segregated  to cover its  potential  obligations
under such put  options  other than those with  respect to futures  and  options
thereon. In selling put options,  there is a risk that a fund may be required to
buy the underlying security at a disadvantageous price above the market price.

General  Characteristics  of Futures. A fund may enter into futures contracts or
purchase  or sell  put and  call  options  on such  futures  as  hedges  against
anticipated  interest rate, currency or equity market changes,  and for duration
management,  risk  management  and  return  enhancement  purposes.  Futures  are
generally  bought and sold on the  commodities  exchanges  where they are listed
with payment of initial and variation  margin as described  below. The sale of a
futures  contract  creates a firm  obligation  by the seller,  to deliver to the
buyer the specific type of financial  instrument called for in the contract at a
specific  future  time for a  specified  price  (or,  with  respect  to  certain
instruments,  such as index  futures and  Eurodollar  instruments,  the net cash
amount)  and a firm  obligation  by the buyer to deliver  the  specified  price.
Options on futures contracts are similar to options on securities except that an
option on a futures  contract  gives the  purchaser  the right in return for the
premium paid to assume a position in a futures contract and obligates the seller
to deliver such position.

A fund's use of futures and options thereon will in all cases be consistent with
applicable  regulatory  requirements and in particular the rules and regulations
of the Commodity  Futures  Trading  Commission and will be entered into for bona
fide hedging, risk management (including duration management) or other portfolio
and return enhancement  management  purposes.  Typically,  maintaining a futures
contract  or  selling  an  option  thereon  requires  a fund to  deposit  with a
financial  intermediary  as security  for its  obligations  an amount of cash or
other specified  assets (initial  margin) which initially is typically 1% to 10%
of the face amount of the  contract  (but may be higher in some  circumstances).
Additional  cash or assets  (variation  margin) may be required to be  deposited
thereafter  on a  daily  basis  as the  mark to  market  value  of the  contract
fluctuates. The purchase of an option on financial futures involves payment of a
premium for the option without any further  obligation on the part of a fund. If
a fund  exercises  an option on a futures  contract it will be obligated to post
initial margin (and  potential  subsequent  variation  margin) for the resulting
futures  position  just as it would  for any  position.  Futures  contracts  and
options thereon are generally settled by entering into an offsetting transaction
but  there  can be no  assurance  that  the  position  can be  offset  prior  to
settlement at an advantageous price, nor that delivery will occur.

A fund will not enter into a futures  contract  or related  option  (except  for
closing transactions) if, immediately  thereafter,  the sum of the amount of its
initial margin and premiums on open futures  contracts and options thereon would
exceed 5% of a fund's total assets  (taken at current  value);  however,  in the
case of an  option  that  is  in-the-money  at the  time  of the  purchase,  the
in-the-money  amount may be  excluded  in  calculating  the 5%  limitation.  The
segregation  requirements  with respect to futures contracts and options thereon
are described below.

Hedging  Strategies.  A 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) US Treasury and Eurodollar
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 a fund's  investment  objective and
policies.  Among  other  purposes,  these  hedging  strategies  may be  used  to
effectively  maintain  desired  portfolio  duration or to protect against market
risk should a fund change its investments  among different types of fixed income
securities.

A 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 or other  economic  factors  in using a hedging
strategy,  a 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 a fund;

                                       55
<PAGE>

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 a fund's  ability to  purchase or sell
         portfolio  investments at advantageous times due to the need for a fund
         to maintain "cover" or to segregate securities; and

o        the  possibility  that a 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  options,  futures  and  currency  exchange
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 far exceed the value of the futures
contracts  sold by a fund,  an increase  in the value of the  futures  contracts
could only  mitigate,  but not  totally  offset,  the  decline in the value of a
fund's assets.

To the extent that a fund engages in the strategies  described above, a 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 a fund may be unable to close out a  position
without incurring  substantial  losses, if at all. A fund is also subject to the
risk of default by a counterparty to an off-exchange transaction.

Options on  Securities  Indices  and Other  Financial  Indices.  A fund also may
purchase and sell call and put options on securities indices and other financial
indices and in so doing can achieve many of the same objectives it would achieve
through  the sale or  purchase  of options  on  individual  securities  or other
instruments.  Options on  securities  indices  and other  financial  indices are
similar to options on a security or other  instrument  except that,  rather than
settling by physical delivery of the underlying instrument,  they settle by cash
settlement,  i.e.,  an option on an index gives the holder the right to receive,
upon exercise of the option, an amount of cash if the closing level of the index
upon which the option is based exceeds,  in the case of a call, or is less than,
in the case of a put, the exercise  price of the option  (except if, in the case
of an OTC option, physical delivery is specified).  This amount of cash is equal
to the excess of the closing  price of the index over the exercise  price of the
option,  which  also may be  multiplied  by a formula  value.  The seller of the
option is  obligated,  in return for the premium  received,  to make delivery of
this  amount.  The  gain or loss on an  option  on an  index  depends  on  price
movements in the instruments making up the market,  market segment,  industry or
other  composite  on which the  underlying  index is based,  rather  than  price
movements in  individual  securities,  as is the case with respect to options on
securities.

Currency  Transactions.   A  fund  may  engage  in  currency  transactions  with
Counterparties  primarily in order to hedge,  or manage the risk of the value of
portfolio holdings denominated in particular  currencies against fluctuations in
relative  value.  Currency  transactions  include  forward  currency  contracts,
exchange listed currency futures, exchange listed and OTC options on currencies,
and currency swaps. A forward currency contract involves a privately  negotiated
obligation  to purchase or sell (with  delivery  generally  required) a specific
currency at a future  date,  which may be any fixed number of days from the date
of the contract  agreed upon by the  parties,  at a price set at the time of the
contract.  A currency  swap is an agreement to exchange  cash flows based on the
notional  difference  among two or more currencies and operates  similarly to an
interest  rate swap,  which is described  below.  A fund may enter into currency
transactions with  Counterparties  which have received (or the guarantors of the
obligations  which  have  received)  a  credit  rating  of  A-1 or P-1 by S&P or
Moody's, respectively, or that have an equivalent rating from a NRSRO or (except
for OTC currency  options) are determined to be of equivalent  credit quality by
the underlying fund's advisor.

A fund's dealings in forward currency contracts and other currency  transactions
such as futures, options, options on futures and swaps generally will be limited
to hedging involving either specific  transactions or portfolio positions except
as described below.  Transaction hedging is entering into a currency transaction
with respect to specific  assets or liabilities of a fund,  which will generally
arise in connection with the purchase or sale of its portfolio securities or the
receipt  of income  therefrom.  Position  hedging  is  entering  into a currency
transaction  with  respect  to  portfolio  security  positions   denominated  or
generally quoted in that currency.

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<PAGE>

A fund generally will not enter into a transaction to hedge currency exposure to
an extent greater,  after netting all transactions  intended wholly or partially
to offset other  transactions,  than the aggregate  market value (at the time of
entering into the  transaction) of the securities held in its portfolio that are
denominated or generally quoted in or currently  convertible into such currency,
other than with respect to proxy hedging or cross hedging as described below, as
applicable.

A fund may also cross-hedge currencies by entering into transactions to purchase
or sell one or more currencies that are expected to decline in value relative to
other  currencies  to  which  a fund  has or in  which  a fund  expects  to have
portfolio exposure.

To reduce  the  effect of  currency  fluctuations  on the value of  existing  or
anticipated  holdings of portfolio  securities,  a fund may also engage in proxy
hedging.  Proxy  hedging  is often  used when the  currency  to which the fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar. Proxy
hedging  entails  entering into a commitment or option to sell a currency  whose
changes in value are  generally  considered  to be  correlated  to a currency or
currencies  in which  some or all of a fund's  portfolio  securities  are or are
expected  to be  denominated,  in  exchange  for US  dollars.  Currency  hedging
involves some of the same risks and  considerations  as other  transactions with
similar instruments. Currency transactions can result in losses to a fund if the
currency being hedged  fluctuates in value to a degree or in a direction that is
not  anticipated.  Further,  there is the risk  that the  perceived  correlation
between  various  currencies may not be present or may not be present during the
particular time that a fund is engaging in proxy hedging.  If a fund enters into
a currency hedging  transaction,  a fund will comply with the asset  segregation
requirements described below.

Risks of  Currency  Transactions.  Currency  transactions  are  subject to risks
different from those of other portfolio  transactions.  Because currency control
is of great  importance  to the  issuing  governments  and  influences  economic
planning and policy, purchases and sales of currency and related instruments can
be  negatively  affected  by  government  exchange  controls,   blockages,   and
manipulations or exchange restrictions imposed by governments.  These can result
in losses to a fund if it is unable to deliver or receive  currency  or funds in
settlement of obligations  and could also cause hedges it has entered into to be
rendered  useless,  resulting  in full  currency  exposure as well as  incurring
transaction  costs.  Buyers and sellers of  currency  futures are subject to the
same risks that apply to the use of futures generally.  Further, settlement of a
currency  futures  contract for the purchase of most  currencies must occur at a
bank  based in the  issuing  nation.  Trading  options  on  currency  futures is
relatively  new,  and the ability to establish  and close out  positions on such
options is subject to the maintenance of a liquid market which may not always be
available.  Currency  exchange rates may fluctuate based on factors extrinsic to
that country's economy.

Eurodollar  Instruments.  A fund may make investments in Eurodollar instruments.
Eurodollar  instruments are US  dollar-denominated  futures contracts or options
thereon  which are  linked  to the  London  Interbank  Offered  Rate  ("LIBOR"),
although  foreign  currency-denominated  instruments  are available from time to
time.  Eurodollar futures contracts enable purchasers to obtain a fixed rate for
the lending of funds and sellers to obtain a fixed rate for  borrowings.  A fund
might use  Eurodollar  futures  contracts  and options  thereon to hedge against
changes in LIBOR, to which many interest rate swaps and fixed income instruments
are linked.

Risks of Strategic  Transactions  Outside the US. When conducted outside the US,
Strategic  Transactions may not be regulated as rigorously as in the US, may not
involve a clearing mechanism and related guarantees, and are subject to the risk
of  governmental  actions  affecting  trading  in,  or the  prices  of,  foreign
securities,  currencies and other instruments.  The value of such positions also
could be adversely affected by: (i) other complex foreign  political,  legal and
economic  factors,  (ii) lesser  availability than in the US of data on which to
make trading  decisions,  (iii) delays in a fund's  ability to act upon economic
events  occurring in foreign markets during  non-business  hours in the US, (iv)
the  imposition of different  exercise and  settlement  terms and procedures and
margin requirements than in the US, and (v) lower trading volume and liquidity.

Swaps, Caps, Floors and Collars.  Among the Strategic  Transactions into which a
fund may enter  are  interest  rate,  currency,  index  and other  swaps and the
purchase or sale of related  caps,  floors and collars.  A fund expects to enter
into these transactions primarily to preserve a return or spread on a particular
investment  or  portion  of  its   portfolio,   to  protect   against   currency
fluctuations,  as a  duration  management  technique,  to  protect  against  any
increase in the price of  securities a fund  anticipates  purchasing  at a later
date or to enhance  returns.  A fund will not sell  interest rate


                                       57
<PAGE>

caps or floors where it does not own securities or other  instruments  providing
the income  stream a fund may be obligated to pay.  Interest  rate swaps involve
the exchange by a fund with another party of their respective commitments to pay
or receive interest,  e.g., an exchange of floating rate payments for fixed rate
payments with respect to a notional  amount of principal.  A currency swap is an
agreement to exchange cash flows on a notional  amount of two or more currencies
based on the  relative  value  differential  among  them and an index swap is an
agreement to swap cash flows on a notional amount based on changes in the values
of the  reference  indices.  The  purchase of a cap  entitles  the  purchaser to
receive payments on a notional  principal amount from the party selling such cap
to the extent that a specified  index exceeds a  predetermined  interest rate or
amount.  The purchase of a floor entitles the purchaser to receive payments on a
notional principal amount from the party selling such floor to the extent that a
specified index falls below a predetermined interest rate or amount. A collar is
a  combination  of a cap and a floor that  preserves a certain  return  within a
predetermined range of interest rates or values.

Swaps will be  entered in 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
instrument, with each fund receiving or paying, as the case may be, only the net
amount of the two payments.  Each fund will not enter into any swap,  cap, floor
or collar transaction unless, at the time of entering into such transaction, the
unsecured  long-term  debt  of  the  Counterparty,   combined  with  any  credit
enhancements,  is rated at least A by S&P or Moody's or has an equivalent rating
from another NRSRO or is determined  to be of equivalent  credit  quality by the
Advisor.  If  there  is a  default  by the  Counterparty,  each  fund  may  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.  Caps,  floors and collars are more recent  innovations  for
which  standardized   documentation  has  not  yet  been  fully  developed  and,
accordingly, they are less liquid than swaps.

A credit  default swap is a contract  between a buyer and a seller of protection
against a pre-defined  credit event.  The buyer of protection  pays the seller a
fixed regular fee provided  that no event of default on an underlying  reference
obligation has occurred.  If an event of default occurs, the seller must pay the
buyer the full notional  value,  or "par value," of the reference  obligation in
exchange for the reference obligation.  Credit default swaps are used as a means
of "buying" credit protection,  i.e., attempting to mitigate the risk of default
or  credit  quality  deterioration  in some  portion  of a fund's  holdings,  or
"selling" credit protection,  i.e., attempting to gain exposure to an underlying
issuer's  credit  quality  characteristics  without  directly  investing in that
issuer.  Where a fund is a seller  of credit  protection,  it  effectively  adds
leverage to its portfolio  because,  in addition to its total net assets, a fund
would be subject to  investment  exposure on the notional  amount of the swap. A
fund will only sell credit  protection  with respect to  securities  in which it
would be  authorized  to invest  directly.  A fund  currently  considers  credit
default  swaps to be  illiquid  and treats the market  value of the  contract as
illiquid for purposes of determining  compliance  with a fund's  restrictions on
investing in illiquid securities.

If the fund is a buyer of a credit default swap and no event of default  occurs,
the fund will lose its investment and recover nothing. However, if the fund is a
buyer and an event of default  occurs,  the fund will receive the full  notional
value of the reference obligation that may have little or no value. As a seller,
the fund  receives  a fixed  rate of  income  through  the term of the  contract
(typically  between  six  months  and three  years),  provided  that there is no
default event. If an event of default occurs,  the seller must pay the buyer the
full notional  value of the reference  obligation.  Credit default swaps involve
greater  risks  than  if the  fund  had  invested  in the  reference  obligation
directly.

The fund may use credit default swaps to gain exposure to particular  issuers or
particular  markets  through  investments in portfolios of credit default swaps,
such  as  Dow  Jones  CDX.NA.HY  certificates.   By  investing  in  certificates
representing  interests in a basket of credit default swaps,  the fund is taking
credit risk with respect to an entity or group of entities and providing  credit
protection  to the swap  counterparties.  For example,  the CDX EM is a tradable
basket of 19 credit  default  swaps on country  credits which seeks to replicate
the returns on the indices of a broad group of emerging markets  countries.  The
credits  are a subset of the  countries  represented  by the  JPMorgan  Emerging
Markets Bond Index Global  Diversified.  By purchasing  interests in CDX EM, the
fund is gaining emerging markets  exposure through a single  investment.  Unlike
other types of credit  default  swaps which are generally  considered  illiquid,
credit default swap certificates generally can be sold within seven days and are
not subject to the fund's restrictions on investing in illiquid securities.

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<PAGE>

Use of Segregated and Other Special Accounts. Most Strategic  Transactions,  and
certain other instruments (such as reverse repurchase  agreements,  dollar rolls
and when-issued securities),  expose the Fund to an obligation to another party.
The Fund will comply with SEC  guidelines  regarding  cover for these  Strategic
Transactions  and instruments and will, if the guidelines so require,  segregate
on its books cash or liquid assets in the prescribed amount as determined daily.
The Fund may also enter into offsetting  transactions or own positions  covering
its  obligations.  Although  this SAI  describes  certain  permitted  methods of
segregating assets or otherwise "covering" such transactions for these purposes,
such  descriptions  are not intended to be  exhaustive.  The Fund may cover such
transactions  using other methods currently or in the future permitted under the
1940 Act,  the rules and  regulations  thereunder,  or orders  issued by the SEC
thereunder. For these purposes, interpretations and guidance provided by the SEC
staff may be taken into  account  when deemed  appropriate  by the Fund.  To the
extent that a Fund covers its commitment  under Strategic  Transactions and such
other  instruments,  including by segregation  of liquid  assets,  entering into
offsetting  transactions  or owning  positions  covering its  obligations,  such
Strategic  Transactions  and  instruments  will  not  be  considered  a  "senior
security"  by the  Fund and  therefore  will not be  subject  to the 300%  asset
coverage requirement otherwise applicable to borrowings by the Fund.

Assets  used as cover  cannot be sold while the  position  in the  corresponding
Strategic Transaction or other such instrument is open, unless they are replaced
with other appropriate assets. As a result, the commitment of a large portion of
the Fund's assets to cover in accounts could impede portfolio  management or the
Fund's ability to meet redemption requests or other current obligations.

Global Asset Allocation  Strategy ("GAA  Strategy").  In connection with the GAA
Strategy and in addition to the securities described above, a fund may invest in
indexed  securities,   futures  contracts  on  securities  indices,   securities
representing  securities of foreign issuers (e.g., ADRs, GDRs and EDRs), options
on stocks, options on futures contracts,  foreign currency exchange transactions
and options on foreign currencies.  These are discussed below, to the extent not
already described above.

Indexed  Securities.  The indexed  securities in which a fund may invest include
debt  securities  whose value at  maturity is  determined  by  reference  to the
relative  prices of various  currencies  or to the price of a stock  index.  The
value of such securities depends on the price of foreign currencies,  securities
indices  or other  financial  values  or  statistics.  These  securities  may be
positively or negatively indexed;  that is, their value may increase or decrease
if the underlying instrument appreciates.

Securities  Representing  Securities of Foreign Issuers. A fund's investments in
the  securities of foreign  issuers may be made directly or in the form of ADRs,
GDRs, also referred to as International  Depositary  Receipts or "IDRs", EDRs or
other  similar  securities  representing  securities of foreign  issuers.  These
securities  may not  necessarily  be  denominated  in the same  currency  as the
securities  they  represent,  and while designed for use as  alternatives to the
purchase of the underlying  securities in their national markets and currencies,
are subject to the same risks as the foreign securities to which they relate.

ADRs  are  receipts,  typically  issued  by a US bank or  trust  company,  which
evidence  ownership of underlying  securities  issued by a foreign  corporation.
EDRs,  which  are  sometimes  referred  to as  Continental  Depository  Receipts
("CDRs"), are receipts issued in Europe, and GDRs or IDRs are issued outside the
United States.  EDRs (CDRs) and GDRs (IDRs) are typically issued by non-US banks
and trust  companies  and  evidence  ownership  of either  foreign  or  domestic
securities.  Generally,  ADRs in  registered  form  are  designed  for use in US
securities markets,  and EDRs (CDRs) and GDRs (IDRs) in bearer form are designed
for use in European and non-US securities markets, respectively. For purposes of
a fund's investment  policies,  depository receipts generally are deemed to have
the same  classification  as the underlying  securities they represent.  Thus, a
depository  receipt  representing  ownership  of common stock will be treated as
common stock.

ADRs are publicly traded on exchanges or  over-the-counter  in the United States
and are issued through "sponsored" or "unsponsored" arrangements. In a sponsored
ADR arrangement, the foreign issuer assumes the obligation to pay some or all of
the depository's transaction fees, whereas under an unsponsored arrangement, the
foreign issuer assumes no obligations and the depository's  transaction fees are
paid directly by the ADR holders. In addition,  less information is available in
the United States about an unsponsored ADR than about a sponsored ADR.

                                       59
<PAGE>

Investments  in foreign  securities  incur higher costs than  investments  in US
securities,  including higher costs in making securities transactions as well as
foreign  government  taxes which may reduce the investment  return of A fund. In
addition,  foreign  investments  may  include  risks  associated  with  currency
exchange rates,  less complete  information  about  additional  companies,  less
market liquidity and political instability.

Portfolio Holdings Information

In addition to the public disclosure of Fund portfolio holdings through required
Securities and Exchange  Commission  ("SEC") quarterly  filings, a Fund may make
its portfolio holdings information publicly available on the DWS Funds' Web site
as  described  in  each  Fund's  prospectus.  Each  Fund  does  not  disseminate
non-public  information  about  portfolio  holdings  except in  accordance  with
policies and procedures adopted by each Fund.

Each 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 and each of their  respective  affiliates  and
advisers who require access to this  information to fulfill their duties to each
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 each Fund's
procedures.  This non-public  information may also be disclosed,  subject to the
requirements described below, to securities lending agents,  financial printers,
proxy voting firms, mutual fund analysts and rating and tracking agencies, or to
shareholders in connection with in-kind redemptions  (collectively,  "Authorized
Third Parties").

Prior to any disclosure of each Fund's non-public portfolio holdings information
to Authorized  Third Parties,  a person  authorized by each Fund's Trustees must
make a good faith determination in light of the facts then known that a Fund has
a legitimate business purpose for providing the information, that the disclosure
is in the  best  interest  of each  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 each Fund or DeAM for disclosing non-public holdings
information.  Periodic  reports  regarding these  procedures will be provided to
each 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 each Fund and
information  derived therefrom,  including,  but not limited to, how each 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 each Fund's
holdings could not be derived from such information.

Registered  investment  companies  that are subadvised by DeAM may be subject to
different portfolio holdings disclosure policies,  and neither DeAM nor a Fund's
Trustees  exercise  control over such policies.  In addition,  separate  account
clients of DeAM have access to their portfolio holdings and are not subject to a
fund's portfolio  holdings  disclosure policy. The portfolio holdings of some of
the funds  subadvised by DeAM and some of the separate  accounts managed by DeAM
may substantially overlap with the portfolio holdings of a Fund.

DeAM also  manages  certain  unregistered  commingled  trusts and creates  model
portfolios,  the portfolio holdings of which may substantially  overlap with the
portfolio  holdings of a Fund. To the extent that investors in these  commingled
trusts  or  recipients  of model  portfolio  holdings  information  may  receive
portfolio  holdings  information  of their  trust or of a model  portfolio  on a
different basis from that on which fund portfolio  holdings  information is made
public,  DeAM has implemented  procedures  reasonably designed to encourage such
investors and recipients to keep such information  confidential,  and to prevent
those investors from trading on the basis of non-public holdings information.

There is no assurance that a Fund's  policies and procedures with respect to the
disclosure  of  portfolio  holdings  information  will  protect  a Fund from the
potential  misuse of portfolio  holdings  information  by those in possession of
that information.

                                       60
<PAGE>

                             MANAGEMENT OF THE FUNDS

Investment Advisor

Deutsche Investment Management Americas Inc. ("DIMA" or the "Advisor"), which is
part of Deutsche Asset Management  ("DeAM"),  is the investment advisor for each
Fund, with headquarters at 345 Park Avenue,  New York, New York 10154. Under the
supervision  of the Board of  Trustees  of the Trust,  DIMA  makes  each  Fund's
investment  decisions,  buys and sells  securities  for the  Funds and  conducts
research that leads to these purchase and sale  decisions.  The Advisor  manages
each Fund's  daily  investment  and  business  affairs  subject to the  policies
established  by the  Trust's  Board of  Trustees.  The  Funds'  Advisor  is also
responsible  for  selecting  brokers and dealers and for  negotiating  brokerage
commissions  and dealer  charges.  The  Advisor's  duties are  described in more
detail below.  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.

DeAM is the  marketing  name in the US for the asset  management  activities  of
Deutsche Bank AG, DIMA, DeAM, Deutsche Bank Trust Company Americas and DWS Trust
Company. DeAM is a global asset management organization that offers a wide range
of investing  expertise and resources,  including hundreds of portfolio managers
and analysts and an office  network  that reaches the world's  major  investment
centers.  This well-resourced  global investment platform brings together a wide
variety of experience and investment insight, across industries,  regions, asset
classes and investing  styles.  DIMA is an indirect,  wholly owned subsidiary of
Deutsche Bank AG. Deutsche Bank AG is a major global banking institution that is
engaged in a wide range of financial services,  including investment management,
mutual fund,  retail,  private and commercial  banking,  investment  banking and
insurance.  The term "DWS Scudder" is the designation  given to the products and
services provided by DIMA and its affiliates to the DWS Mutual Funds.

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.

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

Certain  investments  may be  appropriate  for a Fund and also for other clients
advised by the Advisor.  Investment  decisions  for a Fund and other clients are
made with a view to achieving their respective  investment  objectives and after
consideration  of such factors as their current  holdings,  availability of cash
for  investment  and the  size of their  investments  generally.  Frequently,  a
particular  security  may be bought or sold for only one client or in  different
amounts  and at  different  times for more  than one but less than all  clients.
Likewise,  a particular  security may be bought for one or more clients when one
or more other clients are selling the security. In addition,  purchases or sales
of the same  security  may be made for two or more  clients on the same day.  In
such event,  such  transactions  will be allocated among the clients in a manner
believed by the Advisor to be equitable to each. In some cases,  this  procedure
could have an adverse effect on the price or amount of the securities  purchased
or sold by a Fund.  Purchase  and sale  orders for a Fund may be  combined  with
those of other  clients of the  Advisor in the  interest of  achieving  the most
favorable net results to a Fund.

The Agreement with respect to the DWS  LifeCompass  2040 Fund was first approved
by the Board on October 19, 2007.  The  Agreement  for the  remaining  Funds was
renewed by the Board on September 17, 2007. The current  Agreement for each Fund
will continue in effect until  September 30, 2008, and  thereafter  from year to
year only if its  continuance is approved  annually by the vote of a majority of
those Trustees who are not parties to such  Agreements or interested  persons of
the Advisor or the Fund,  cast in person at a meeting  called for the purpose of
voting on such  approval,  and either by a vote of the Board or of a majority of
the outstanding voting securities of the respective Fund.

                                       61
<PAGE>

Pursuant to the investment  management agreement (the "Agreement"),  the Advisor
provides  continuing  investment  management  of the  assets  of the  Funds.  In
addition to the  investment  management of the assets of the Funds,  the Advisor
determines the  investments to be made for each 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 each  Fund's  policies as
stated in its  Prospectuses  and SAIs, or as adopted by each Fund's  Board.  The
Advisor  will  also  monitor,   to  the  extent  not  monitored  by  the  Funds'
administrator or other agent, each Fund's compliance with its investment and tax
guidelines  and other  compliance  policies.  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 Advisor  provides  assistance to the Funds' Board in valuing the  securities
and other  instruments held by each Fund, to the extent  reasonably  required by
valuation policies and procedures that may be adopted by a Fund.

Pursuant to the  Agreement,  (unless  otherwise  provided in the agreement or as
determined by the Funds' Board and to the extent  permitted by applicable  law),
the  Advisor  pays the  compensation  and  expenses  of all the  Board  members,
officers,  and executive employees of the Funds,  including each Fund's share of
payroll taxes, who are affiliated persons of the Advisor.

The Agreement provides that each 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 Funds, the Funds' custodian, or other agents of the Funds;
taxes and governmental  fees; fees and expenses of the Funds'  accounting agent,
custodian,  sub-custodians,  depositories, transfer agents, dividend reimbursing
agents and registrars;  payment for portfolio  pricing or valuation  services to
pricing agents,  accountants,  bankers and other specialists,  if any; brokerage
commissions or other costs of acquiring or disposing of any portfolio securities
or  other   instruments  of  the  Funds;  and  litigation   expenses  and  other
extraordinary  expenses  not  incurred  in the  ordinary  course  of the  Funds'
business.

The  Agreement  allows the  Advisor  to  delegate  any of its  duties  under the
Agreement to a subadvisor, subject to a majority vote of the Board of the Funds,
including a majority of the Board who are not  interested  persons of the Funds,
and, if required by  applicable  law,  subject to a majority vote of each Fund's
shareholders.

The  Agreement  provides  that the Advisor  shall not be liable for any error of
judgment or mistake of law or for any loss  suffered by the Funds in  connection
with  matters  to which the  agreement  relates,  except a loss  resulting  from
willful malfeasance, bad faith or gross negligence on the part of the Advisor in
the  performance of its duties or from reckless  disregard by the Advisor of its
obligations  and duties under the agreement.  The Agreement may be terminated at
any time,  without payment of penalty,  by either party or by vote of a majority
of the outstanding voting securities of a Fund on 60 days' written notice.

The Funds do not directly bear any management fees,  although the Funds directly
bear  other  Fund fees and  expenses.  In  addition,  shareholders  of the Funds
indirectly bear their pro rata share of the cost of operating the Underlying DWS
Funds in which  the Funds  invest  in their  capacity  as a  shareholder  of the
Underlying DWS Funds.

Through December 31, 2006, the Advisor has contractually  agreed to waive all or
a portion of its management  fee and reimburse or pay operating  expenses of the
DWS LifeCompass  Retirement Fund to the extent  necessary to maintain the fund's
operating expenses at a ratio no higher than 0.30% for Class S shares, excluding
certain  expenses  such as  extraordinary  expenses,  proxy,  taxes,  brokerage,
interest,   organizational  and  offering  expenses  and  indirect  expenses  of
underlying DWS funds.

Effective   January  1,  2007  through   December  14,  2007,  the  Advisor  has
contractually  agreed  to  waive  all or a  portion  of its  management  fee and
reimburse or pay operating  expenses of the DWS  LifeCompass  Retirement Fund to
the extent  necessary  to maintain the fund's  operating  expenses at a ratio no
higher  than  0.39% for  Class S  shares,  excluding  certain  expenses  such as
extraordinary expenses,  proxy, taxes, brokerage,  interest,  organizational and
offering expenses and indirect expenses of underlying DWS funds.

                                       62
<PAGE>

Effective  November  15,  2007  through  November  30,  2008,  the  Advisor  has
contractually  agreed  to  waive  all or a  portion  of its  management  fee and
reimburse or pay operating  expenses of the DWS  LifeCompass  Retirement Fund to
the extent  necessary to maintain the fund's total  operating  expenses at 0.27%
for Class S shares,  excluding certain expenses such as extraordinary  expenses,
taxes, brokerage, interest and indirect expenses of underlying DWS funds.

Through December 31, 2006, the Advisor has contractually  agreed to waive all or
a portion of its management  fee and reimburse or pay operating  expenses of the
DWS  LifeCompass  2015 Fund to the  extent  necessary  to  maintain  the  fund's
operating expenses at a ratio no higher than 0.30% for Class S shares, excluding
certain  expenses  such as  extraordinary  expenses,  proxy,  taxes,  brokerage,
interest,   organizational  and  offering  expenses  and  indirect  expenses  of
underlying DWS funds.

Effective   January  1,  2007  through   December  14,  2007,  the  Advisor  has
contractually  agreed  to  waive  all or a  portion  of its  management  fee and
reimburse  or pay  operating  expenses of the DWS  LifeCompass  2015 Fund to the
extent necessary to maintain the fund's operating  expenses at a ratio no higher
than 0.37% for Class S shares,  excluding certain expenses such as extraordinary
expenses,  proxy,  taxes,  brokerage,  interest,   organizational  and  offering
expenses and indirect expenses of underlying DWS funds.

Effective  November  15,  2007  through  November  30,  2008,  the  Advisor  has
contractually  agreed  to  waive  all or a  portion  of its  management  fee and
reimburse  or pay  operating  expenses of the DWS  LifeCompass  2015 Fund to the
extent  necessary to maintain the fund's total  operating  expenses at 0.23% for
Class S shares,  excluding  certain  expenses  such as  extraordinary  expenses,
taxes, brokerage, interest and indirect expenses of underlying DWS funds.

Through December 31, 2006, the Advisor has contractually  agreed to waive all or
a portion of its management  fee and reimburse or pay operating  expenses of the
DWS  LifeCompass  2020 Fund to the  extent  necessary  to  maintain  the  fund's
operating expenses at a ratio no higher than 0.30% for Class S shares, excluding
certain  expenses  such as  extraordinary  expenses,  proxy,  taxes,  brokerage,
interest,   organizational  and  offering  expenses  and  indirect  expenses  of
underlying DWS funds.

Effective   January  1,  2007  through   December  14,  2007,  the  Advisor  has
contractually  agreed  to  waive  all or a  portion  of its  management  fee and
reimburse  or pay  operating  expenses of the DWS  LifeCompass  2020 Fund to the
extent necessary to maintain the fund's operating  expenses at a ratio no higher
than 0.40% for Class S shares,  excluding certain expenses such as extraordinary
expenses,  proxy,  taxes,  brokerage,  interest,   organizational  and  offering
expenses and indirect expenses of underlying DWS funds.

Effective  November  15,  2007  through  November  30,  2008,  the  Advisor  has
contractually  agreed  to  waive  all or a  portion  of its  management  fee and
reimburse  or pay  operating  expenses of the DWS  LifeCompass  2020 Fund to the
extent  necessary to maintain the fund's total  operating  expenses at 0.24% for
Class S shares,  excluding  certain  expenses  such as  extraordinary  expenses,
taxes, brokerage, interest and indirect expenses of underlying DWS funds.

Through September 30, 2007, the Advisor has contractually agreed to waive all or
a portion of its management  fee and reimburse or pay operating  expenses of the
DWS  LifeCompass  2030 Fund to the  extent  necessary  to  maintain  the  fund's
operating expenses at a ratio no higher than 0.30% for Class S shares, excluding
certain  expenses  such as  extraordinary  expenses,  proxy,  taxes,  brokerage,
interest,   organizational  and  offering  expenses  and  indirect  expenses  of
underlying DWS funds.

Effective   October  1,  2007  through   December  14,  2007,  the  Advisor  has
contractually  agreed  to  waive  all or a  portion  of its  management  fee and
reimburse  or pay  operating  expenses of the DWS  LifeCompass  2030 Fund to the
extent necessary to maintain the fund's operating  expenses at a ratio no higher
than 0.50% for Class S shares,  excluding certain expenses such as extraordinary
expenses,  proxy,  taxes,  brokerage,  interest,   organizational  and  offering
expenses and indirect expenses of underlying DWS funds.

Effective  November  15,  2007  through  November  30,  2008,  the  Advisor  has
contractually  agreed  to  waive  all or a  portion  of its  management  fee and
reimburse  or pay  operating  expenses of the DWS  LifeCompass  2030 Fund to the
extent  necessary to maintain the fund's total  operating  expenses at 0.20% for
Class S shares,  excluding  certain  expenses  such as  extraordinary  expenses,
taxes, brokerage, interest and indirect expenses of underlying DWS funds.

                                       63
<PAGE>

Through November 30, 2008, the Advisor has contractually  agreed to waive all or
a portion of its management  fee and reimburse or pay operating  expenses of the
DWS LifeCompass  2040 Fund to the extent  necessary to maintain the fund's total
operating expenses at 0.24% for Class S shares,  excluding certain expenses such
as  extraordinary  expenses,  taxes,  brokerage,  interest,  and acquired  funds
(underlying funds) fees and expenses (estimated at 0.70%).

In  addition,  in 2006 the  Board and  shareholders  approved  a new  subadvisor
approval policy for the Funds (the "Subadvisor Approval Policy"). The Subadvisor
Approval  Policy  permits  the  Advisor,  subject to the  approval of the Board,
including a majority of its  independent  board members,  to appoint and replace
subadvisors and to amend  sub-advisory  contracts without obtaining  shareholder
approval.  Under the  Subadvisor  Approval  Policy,  the  Board,  including  its
independent  board  members,  will  continue  to  evaluate  and  approve all new
sub-advisory  contracts  between the Advisor and any subadvisor,  as well as all
changes to any existing  subadvisory  contract.  The Funds cannot  implement the
Subadvisor  Approval Policy without the SEC either adopting revisions to current
rules (as it proposed to do in October  2003) or  granting  the Funds  exemptive
relief  from  existing  rules.  The Funds 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  Funds  and its  shareholders  are  adequately  protected
whenever the Advisor acts under the Subadvisor  Approval  Policy,  including any
shareholder notice requirements.

The Advisor may enter into  arrangements with affiliates and third party service
providers to perform  various  administrative,  back-office  and other  services
relating to client accounts.  Such service providers may be located in the US or
in non-US jurisdictions.

Compensation of Portfolio Managers

Each  Fund has been  advised  that the  Advisor  seeks to offer  its  investment
professionals  competitive  short-term  and  long-term  compensation.  Portfolio
managers and research professionals are paid (i) fixed base salaries,  which are
linked to job function,  responsibilities  and financial  services industry peer
comparison  and (ii)  variable  compensation,  which  is  linked  to  investment
performance, individual contributions to the team and DWS Scudder's and Deutsche
Bank's  financial  results.  Variable  compensation  may  include  a cash  bonus
incentive and  participation in a variety of long-term equity programs  (usually
in the form of Deutsche Bank equity).

Bonus  and  long-term   incentives   comprise  a  greater  proportion  of  total
compensation as an investment  professional's  seniority and compensation levels
increase.  Top performing  investment  professionals  earn a total  compensation
package  that is highly  competitive,  including  a bonus that is a multiple  of
their base  salary.  The amount of equity  awarded  under the  long-term  equity
programs is generally based on the individual's total  compensation  package and
may  comprise  from  0%-40%  of  the  total  compensation  award.  As  incentive
compensation increases,  the percentage of compensation awarded in Deutsche Bank
equity also increases. Certain senior investment professionals may be subject to
a mandatory diverting of a portion of their equity compensation into proprietary
mutual funds that they manage.

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

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

                                       64
<PAGE>

o        Qualitative  measures include  adherence to the investment  process and
         individual  contributions  to  the  process,  among  other  things.  In
         addition, the Advisor assesses compliance, risk management and teamwork
         skills.

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

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

Fund Ownership of Portfolio Managers

The following table shows the dollar range of shares owned  beneficially  and of
record by each member of each Fund's  portfolio  management team in each 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 each Fund's most
recent fiscal year end.

<TABLE>
<CAPTION>

                        DWS
                    LifeCompass        DWS              DWS                                DWS        Dollar Range of
Name of Portfolio   Retirement     LifeCompass      LifeCompass      DWS LifeCompass   LifeCompass     All DWS Fund
Manager                Fund         2015 Fund        2020 Fund          2030 Fund       2040 Fund      Shares Owned
-------                ----         ---------        ---------          ---------       ---------      ------------

<S>                     <C>            <C>               <C>        <C>       <C>          <C>      <C>        <C>
Inna Okounkova          $0             $0                $0         $10,001 - $50,000      $0       $100,001 - $500,000
Robert Wang             $0             $0        $10,001 - $50,000         $0              $0       $100,001 - $500,000
</TABLE>

Conflicts of Interest

In addition to managing the assets of each Fund, each Fund's portfolio  managers
may have responsibility for managing other client accounts of the Advisor or its
affiliates.  The tables below show, for each portfolio  manager,  the number and
asset size of (1) SEC registered  investment companies (or series thereof) other
than the Fund, (2) pooled investment vehicles that are not registered investment
companies and (3) other  accounts  (e.g.,  accounts  managed for  individuals or
organizations)  managed by each  portfolio  manager.  The  tables  also show the
number of  performance  based fee  accounts,  as well as the total assets of the
accounts for which the advisory fee is based on the  performance of the account.
This information is provided as of each Fund's most recent fiscal year end.

DWS LifeCompass Retirement Fund
<TABLE>
<CAPTION>

Other SEC Registered Investment Companies Managed:

                                      Number of         Total Assets of    Number of Investment
                                      Registered          Registered         Company Accounts       Total Assets of
                                      Investment          Investment               with           Performance- Based
Name of Portfolio Manager             Companies            Companies       Performance-Based Fee     Fee Accounts
-------------------------             ---------            ---------       ---------------------     ------------

<S>                                       <C>            <C>                         <C>                  <C>
Inna Okounkova                            12             $4,362,540,484              0                    $0
Robert Wang                               39            $14,721,012,193              0                    $0

                                       65
<PAGE>

DWS LifeCompass 2015 Fund

Other SEC Registered Investment Companies Managed:

                                      Number of         Total Assets of    Number of Investment
                                      Registered          Registered         Company Accounts       Total Assets of
                                      Investment          Investment               with           Performance- Based
Name of Portfolio Manager             Companies            Companies       Performance-Based Fee     Fee Accounts
-------------------------             ---------            ---------       ---------------------     ------------

Inna Okounkova                            12             $4,185,098,403              0                    $0
Robert Wang                               39            $14,543,570,111              0                    $0

DWS LifeCompass 2020 Fund

Other SEC Registered Investment Companies Managed:

                                      Number of         Total Assets of    Number of Investment
                                      Registered          Registered         Company Accounts       Total Assets of
                                      Investment          Investment               with           Performance- Based
Name of Portfolio Manager             Companies            Companies       Performance-Based Fee     Fee Accounts
-------------------------             ---------            ---------       ---------------------     ------------

Inna Okounkova                            12             $4,191,521,872              0                    $0
Robert Wang                               39            $14,549,993,580              0                    $0

DWS LifeCompass 2030 Fund

Other SEC Registered Investment Companies Managed:

                                      Number of         Total Assets of    Number of Investment
                                      Registered          Registered         Company Accounts       Total Assets of
                                      Investment          Investment               with           Performance- Based
Name of Portfolio Manager             Companies            Companies       Performance-Based Fee     Fee Accounts
-------------------------             ---------            ---------       ---------------------     ------------

Inna Okounkova                            12             $4,472,947,692              0                    $0
Robert Wang                               39            $14,831,419,401              0                    $0

DWS LifeCompass 2040 Fund

Other SEC Registered Investment Companies Managed:

                                      Number of         Total Assets of    Number of Investment
                                      Registered          Registered         Company Accounts       Total Assets of
                                      Investment          Investment               with           Performance- Based
Name of Portfolio Manager             Companies            Companies       Performance-Based Fee     Fee Accounts
-------------------------             ---------            ---------       ---------------------     ------------

Inna Okounkova                            13             $4,512,758,109              0                    $0
Robert Wang                               40            $14,871,229,818              0                    $0

                                       66
<PAGE>

DWS LifeCompass Retirement Fund, DWS LifeCompass 2015 Fund, DWS LifeCompass
2020 Fund, DWS LifeCompass 2030 Fund, DWS LifeCompass 2040 Fund

Other Pooled Investment Vehicles Managed:

                                                                              Number of Pooled
                                      Number of                              Investment Vehicle
                                       Pooled          Total Assets of         Accounts with        Total Assets of
                                     Investment       Pooled Investment      Performance-Based    Performance- Based
Name of Portfolio Manager             Vehicles             Vehicles                 Fee              Fee Accounts
-------------------------             --------             --------                 ---              ------------

Inna Okounkova                              4             $333,508,513               0                          $0
Robert Wang                                18             $542,869,078               2                $257,589,096

DWS LifeCompass Retirement Fund, DWS LifeCompass 2015 Fund, DWS LifeCompass
2020 Fund, DWS LifeCompass 2030 Fund, DWS LifeCompass 2040 Fund

Other Accounts Managed:

                                                                              Number of Other
                                                                               Accounts with      Total Assets of
                                      Number of     Total Assets of Other   Performance- Based      Performance-
Name of Portfolio Manager          Other Accounts          Accounts                 Fee          Based Fee Accounts
-------------------------          --------------          --------                 ---          ------------------

Inna Okounkova                              0                       $0               0                        $0
Robert Wang                                40           $8,919,864,979               2              $148,708,705
</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 Funds.  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 Funds
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 each Fund and also for other
         clients advised by the Advisor, including other client accounts managed
         by each Fund's portfolio management team. Investment decisions for each
         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 each 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 each  Fund.  Purchase  and sale  orders  for  each  Fund may be
         combined  with those of other clients of the Advisor in the interest of
         achieving  the most  favorable  net  results to each Fund and the other
         clients.

                                       67
<PAGE>

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 each Fund may
         manage other mutual funds and separate  accounts on a long-short basis.
         The  simultaneous  management  of long  and  short  portfolios  creates
         potential  conflicts  of  interest  including  the risk that short sale
         activity could adversely  affect the market value of the long positions
         (and vice versa),  the risk arising from sequential  orders in long and
         short  positions,  and the risks  associated  with  receiving  opposing
         orders at the same time.  The Advisor has  adopted  procedures  that it
         believes are reasonably  designed to mitigate these potential conflicts
         of  interest.  Included in these  procedures  are  specific  guidelines
         developed to ensure fair and equitable  treatment for all clients whose
         accounts  are managed by each Fund's  portfolio  management  team.  The
         Advisor and the portfolio  management team have established  monitoring
         procedures,  a protocol for supervisory  reviews, as well as compliance
         oversight to ensure that  potential  conflicts of interest  relating to
         this type of activity are properly addressed.

The Advisor is owned by Deutsche Bank AG, a  multi-national  financial  services
company.  Therefore,  the Advisor is affiliated  with a variety of entities that
provide, and/or engage in commercial banking, insurance,  brokerage,  investment
banking,  financial  advisory,  broker-dealer  activities  (including  sales and
trading),  hedge funds, real estate and private equity investing, in addition to
the provision of investment  management services to institutional and individual
investors.  Since  Deutsche  Bank AG, its  affiliates,  directors,  officers and
employees (the "Firm") are engaged in businesses  and have interests  other than
managing  asset  management  accounts,   such  other  activities  involve  real,
potential or apparent  conflicts of interest.  These  interests  and  activities
include potential  advisory,  transactional  and financial  activities and other
interests  in  securities  and  companies  that may be  directly  or  indirectly
purchased  or sold by the Firm for its  clients'  advisory  accounts.  These are
considerations  of which  advisory  clients  should be aware and which may cause
conflicts that could be to the disadvantage of the Advisor's  advisory  clients.
The Advisor has  instituted  business and  compliance  policies,  procedures and
disclosures  that are  designed to identify,  monitor and mitigate  conflicts of
interest and, as appropriate, to report them to the Fund's Board.

Administrative Agreements

Each Fund has entered into an administrative services agreement with the Advisor
(the  "Administrative  Services  Agreement"),  pursuant  to  which  the  Advisor
provides administrative services to each Fund including, among others, providing
the Funds with personnel, preparing and making required filings on behalf of the
Funds, maintaining books and records for the Funds, and monitoring the valuation
of Fund securities.  For all services provided under the Administrative Services
Agreement, each Fund pays the Advisor a fee, computed daily and paid monthly, of
the greater of 0.100% of the Funds' average daily net assets or $50,000.

Under the  Administrative  Services  Agreement,  the Advisor is  obligated  on a
continuous  basis to provide  such  administrative  services as the Board of the
Funds reasonably deems necessary for the proper administration of the Funds. The
Advisor  provides the Funds with  personnel;  arranges for the  preparation  and
filing of each Fund's tax  returns;  prepares  and  submits  reports and meeting
materials to the Board and the  shareholders;  prepares and files updates to the
Funds'  prospectuses  and statements of additional  information as well as other
reports required to be filed by the SEC; maintains each Fund's records; provides
the Funds 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 each  Fund;  assists in the
resolution  of


                                       68
<PAGE>

accounting  issues  that may arise with  respect to the Funds;  establishes  and
monitors each Fund's  operating  expense  budgets;  reviews and  processes  each
Fund's bills;  assists in determining the amount of dividends and  distributions
available to be paid by the Funds, 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.

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

For the year ended August 31, 2007, DIMA received $145,630,  $321,480,  $323,731
and $50,000 (of which  $50,000 was waived) as  compensation  for  administrative
services provided to DWS LifeCompass Retirement Fund, DWS LifeCompass 2015 Fund,
DWS LifeCompass 2020 Fund and DWS LifeCompass 2030 Fund, respectively.

Prior to June 1, 2006, DWS Scudder Fund Accounting Corporation ("DWS-SFAC"), Two
International Place, Boston, Massachusetts,  02110, a subsidiary of the Advisor,
was  responsible  for  determining net asset value per share and maintaining the
portfolio  and  general  accounting  records  for the Funds.  From April 1, 2004
through May 31, 2006,  each Fund paid DWS-SFAC an annual fee equal to 0.0250% of
the first $150  million of average  daily net assets,  0.0075% of such assets in
excess of $150 million and 0.0045% of such assets in excess of $1 billion,  plus
holding and transaction charges for this service.  For the period from September
1, 2005  through May 31, 2006,  the amount  charged to the Funds by DWS-SFAC for
accounting   services  aggregated   $26,070,   $41,612,   $40,543  and  $73,346,
respectively,  for the DWS LifeCompass  Retirement  Fund, DWS  LifeCompass  2015
Fund, DWS LifeCompass 2020 Fund and DWS LifeCompass 2030 Fund. In addition,  the
Advisor waived accounting fees of $73,346 for DWS LifeCompass 2030 Fund. For the
period  from June 1, 2006  through  August  31,  2006,  DIMA  received  $34,584,
$75,255,  $75,059  and  $12,500  as  compensation  for  administration  services
provided to DWS  LifeCompass  Retirement  Fund, DWS  LifeCompass  2015 Fund, DWS
LifeCompass 2020 Fund and DWS LifeCompass 2030 Fund,  respectively.  DIMA waived
$12,500 of administration services fees for DWS LifeCompass 2030 Fund.

For the year ended August 31, 2005,  the amount charged to the Funds by DWS-SFAC
for  accounting  services  aggregated  $43,008,  $39,484,  $37,651 and  $78,965,
respectively,  for the DWS LifeCompass  Retirement  Fund, DWS  LifeCompass  2015
Fund, DWS LifeCompass 2020 Fund and DWS LifeCompass 2030 Fund. In addition,  the
Advisor waived accounting fees of $78,965 for DWS LifeCompass 2030 Fund.

Because DWS LifeCompass 2040 has not commenced operations as of the date of this
Statement  of  Additional  Information,  it does  not  have  any  administrative
services fee information to report.

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.

Fees and Expenses of Underlying DWS Funds

As noted above,  the Funds will bear their pro rata share of the  Underlying DWS
Funds' fees and expenses. In addition, certain Underlying DWS Funds impose a fee
upon the redemption or exchange of shares held for less than one year. The fees,
which  amount to 2% of the net  asset  value of the  shares  being  redeemed  or
exchanged, are assessed and retained by the Underlying DWS Funds for the benefit
of the  remaining  shareholders.  The fee is  intended  to  encourage  long-term
investment in the  Underlying  DWS Fund. The fee is not a deferred sales charge,
is not a commission  paid to the Advisor or its  subsidiary and does not benefit
the Advisor in any way.  Each such  Underlying  DWS Fund  reserves  the right to
modify the terms of or terminate  this fee at any time. As a shareholder of such
Underlying  DWS Funds,  the Funds will be  subject  to such fees.  Under  normal
market conditions,  the Funds


                                       69
<PAGE>

will seek to avoid taking  action that would result in the  imposition of such a
fee.  However,  in the event that a fee is incurred,  the net assets of the Fund
would be reduced by the amount of such fees that are  assessed  and  retained by
the Underlying DWS Funds for the benefit of their shareholders.

The  management  fees and total  operating  expenses of the Underlying DWS Funds
during  their most  recent  fiscal  year as  reflected  in the funds'  currently
effective  prospectuses are described in the following table.  Reimbursement and
or waiver arrangements applicable to certain Underlying DWS Funds caused the net
fees and/or expenses for those funds to be lower than the values below.

<TABLE>
<CAPTION>

                                                                          Management                           Net
Name of Fund                                        Fiscal Year End         Fees (%)     Total Expenses     Expenses
------------                                        ---------------        --------      --------------     --------

<S>                                                        <C>                 <C>              <C>             <C>
DWS Blue Chip Fund                                        10/31              0.56              0.68            N/A
DWS Capital Growth Fund (1)                                9/30              0.56*             0.74           0.73
DWS Commodity Securities Fund (2)                          6/30              1.05+             1.36           1.25
DWS Disciplined Market Neutral Fund (3)                    8/31              1.35+             1.94           1.74
DWS Disciplined Long/Short Growth Fund (4)                 4/30              1.10+             3.52           2.36
DWS Disciplined Long/Short Value Fund (5)                  4/30              1.10+             3.40           2.31
DWS Emerging Markets Equity Fund (6)                      10/31              1.12**            1.60           1.55
DWS Emerging Markets Fixed Income Fund (7)                10/31              0.77*             1.14            N/A
DWS Equity 500 Index Fund (8) (9)                         12/31              0.18***           0.21            N/A
DWS Equity Partners Fund                                   5/31              0.83+             0.89            N/A
DWS Value Builder Fund                                     3/31              0.79**            0.88            N/A
DWS Communications Fund (10) (11)                         12/31              1.00**            1.14            N/A
DWS Core Fixed Income Fund (12) (13)                      10/31              0.50*             0.62            N/A
DWS Floating Rate Plus Fund (14)                           4/30              0.75+             1.20           1.05
DWS Global Thematic Fund (15)                              8/31              0.99*             1.28            N/A
DWS Global Bond Fund (16)                                 10/31              0.77*             1.29           1.06
DWS Global Opportunities Fund (17)                        10/31              1.12*             1.34            N/A
DWS GNMA Fund (18)                                         9/30              0.42*             0.57            N/A
DWS Gold & Precious Metals Fund (19)                      10/31              1.01**            1.25            N/A
DWS Europe Equity Fund (20)                               10/31              0.75*             0.90            N/A
DWS Growth & Income Fund (21)                             12/31              0.45*             0.51            N/A
DWS Health Care Fund                                       5/31              0.87+             1.09            N/A
DWS High Income Fund                                       9/30              0.54              0.67            N/A
DWS High Income Plus Fund (22) (23)                       10/31              0.60+             0.73           0.65
DWS Dreman Concentrated Value Fund (24) (25)              10/31              0.80              1.38           1.09
DWS Dreman Mid Cap Value Fund (26)                        10/31              0.75              1.37           1.00
DWS Dreman High Return Equity Fund (27)                   11/30              0.68              0.74            N/A
DWS Core Plus Income Fund                                  1/31              0.55*             0.73            N/A
DWS Inflation Protected Plus Fund (28) (29)                9/30              0.59+             1.31           0.75
DWS International Fund                                     8/31              0.69*             0.84            N/A
DWS International Select Equity Fund (30)                 10/31              0.81*             1.07            N/A
DWS International Value Opportunities Fund (31)            8/31              0.90+             1.31            N/A
DWS Japan Equity Fund                                      8/31              0.95**            1.31            N/A
DWS Large Cap Value Fund (32)                             11/30              0.52              0.57           0.66
DWS Large Company Growth Fund                              7/31              0.71*             0.80            N/A
DWS Latin America Equity Fund (33)                        10/31              1.22*             1.52            N/A
DWS Micro Cap Fund (34)                                    9/30              1.35**            1.72           1.38
DWS Mid Cap Growth Fund (35)                               9/30              0.72+             1.00            N/A
DWS Money Market Prime Series - DWS                        7/31              0.26              0.91            N/A
Cash Investment Trust (36)

                                       70
<PAGE>
                                                                          Management                           Net
Name of Fund                                        Fiscal Year End         Fees (%)     Total Expenses     Expenses
------------                                        ---------------        --------      --------------     --------

DWS Money Market Series --  Institutional                 12/31             0.23****           0.24           0.15
Shares(37)
DWS RREEF Global Real Estate Securities Fund (38)         12/31              1.10+             1.28            N/A
DWS RREEF Real Estate Securities Fund (39)                12/31              0.48**            0.55            N/A
DWS S&P 500 Index Fund (40) (41)                          12/31              0.18***           0.45           0.44
DWS Enhanced S&P 500 Index Fund (42)                       2/28              0.52+             1.05            N/A
DWS Short Duration Fund (43) (44)                         10/31              0.50**            0.82           0.72
DWS Short Duration Plus Fund (45)                          9/30              0.60**            0.79            N/A
DWS Small Cap Growth Fund (46)                             9/30              0.75+             0.83            N/A
DWS Small Cap Core Fund (47)                               9/30              0.77*             1.20            N/A
DWS Small Cap Value Fund                                   7/31              0.77*             1.02            N/A
DWS Dreman Small Cap Value Fund (48)                      11/30              0.72              0.85            N/A
DWS Technology Fund (49)                                  10/31              0.56              0.65            N/A
</TABLE>

*        Restated on an annualized  basis to reflect approved changes which took
         effect on June 1, 2006. Includes 0.10% administration fee.

**       Restated on an annualized  basis to reflect approved changes which took
         effect on July 1, 2006. Includes 0.10% administration fee.

***      Includes 0.10% administration fee for the fund and 0.03% administration
         fee for the master portfolio.

****     Restated on an annualized  basis to reflect fee changes that took place
         on July 27, 2007. The fee includes a 0.03% Portfolio administration fee
         and a 0.10% fund administration fee.

+        Includes 0.10% administration fee.

(1)      Through  November 30,  2008,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         operating  expenses of the fund to the extent necessary to maintain the
         fund's total operating expenses at a ratio no higher than 0.72% for the
         Institutional   Class  shares,   excluding  certain  expenses  such  as
         extraordinary expenses, taxes, brokerage,  interest, and organizational
         and offering expenses.

(2)      Through  September 30, 2008,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         certain  operating  expenses  of the fund to the  extent  necessary  to
         maintain the fund's total operating expenses at 1.25% for Institutional
         Class  shares,   excluding   certain  expenses  such  as  extraordinary
         expenses,  taxes,  brokerage,  interest and organizational and offering
         expenses.

(3)      Through  September  30, 2007,  the Advisor has agreed to waive all or a
         portion of its management  fee and reimburse or pay operating  expenses
         of the fund to the  extent  necessary  to  maintain  the  fund's  total
         operating expenses at 1.45% for Institutional  Class shares,  excluding
         certain expenses such as extraordinary  expenses,  taxes, brokerage and
         interest,  organizational and offering expenses (limited to 0.10%), and
         dividend expenses on short sales (estimated at 0.19%).

(4)      Through July 31, 2008, the Advisor has agreed to waive all or a portion
         of its  management  fee and reimburse or pay operating  expenses of the
         fund to the extent  necessary to maintain  the fund's  total  operating
         expenses at 1.20% for  Institutional  Class shares,  excluding  certain
         expenses such as extraordinary expenses, taxes, brokerage and interest,
         leverage expenses and dividend expenses on short sales.

                                       71
<PAGE>

(5)      Through July 31, 2008, the Advisor has agreed to waive all or a portion
         of its  management  fee and reimburse or pay operating  expenses of the
         fund to the extent  necessary to maintain  the fund's  total  operating
         expenses at 1.20% for  Institutional  Class shares,  excluding  certain
         expenses such as extraordinary expenses, taxes, brokerage and interest,
         leverage expenses and dividend expenses on short sales

(6)      Through April 13, 2009,, the Advisor has contractually  agreed to waive
         all or a portion of its  management  fee and reimburse or pay operating
         expenses of the fund to the extent  necessary  to  maintain  the fund's
         total operating expenses at 1.55% for Class S shares, excluding certain
         expenses such as extraordinary expenses,  taxes,  brokerage,  interest,
         proxy, and organizational and offering expenses.

(7)      Through  September 30, 2007,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         operating  expenses of the fund to the extent necessary to maintain the
         fund's  total  annual  operating  expenses at 1.14% for Class S shares,
         excluding  certain  expenses  such as  extraordinary  expenses,  taxes,
         brokerage,  interest,  proxy, and organizational and offering expenses.
         Although  there can be no  assurances  that the current  waiver/expense
         reimbursement arrangement will be maintained beyond September 30, 2007,
         the Advisor has committed to review the  continuance of  waiver/expense
         reimbursement arrangements by September 30, 2007.

(8)      Through  September 30, 2007,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         certain operating  expenses of the fund,  including  expenses allocated
         from the  Portfolio,  to the extent  necessary  to  maintain  the total
         operating expenses at 0.40% for Institutional  Class shares,  excluding
         certain  expenses such as  extraordinary  expenses,  taxes,  brokerage,
         interest,  proxy and  organizational  and offering  expenses.  Although
         there   can  be  no   assurances   that  the   current   waiver/expense
         reimbursement arrangement will be maintained beyond September 30, 2007,
         the Advisor has committed to review the  continuance of  waiver/expense
         reimbursement arrangements by September 30, 2007.

(9)      Effective  October 1, 2006, the Advisor has agreed to voluntarily waive
         a portion of its fees and reimburse or pay certain  operating  expenses
         for the fund,  including expenses allocated from the Portfolio,  to the
         extent necessary to maintain the total operating  expenses at 0.10% for
         Institutional   Class  shares,   excluding  certain  expenses  such  as
         extraordinary   expenses,   taxes,  brokerage,   interest,   proxy  and
         organizational  and  offering   expenses.   This  voluntary  waiver  or
         reimbursement  may be  terminated  at any  time  at the  option  of the
         Advisor.

(10)     Effective October 1, 2006, the Advisor has voluntarily  agreed to waive
         all or a portion of its fees and reimburse  expenses so that the fund's
         total operating expenses will not exceed 1.18% for Institutional  Class
         shares,  excluding  certain  expenses such as  extraordinary  expenses,
         taxes,  brokerage,  interest,  proxy and  organizational  and  offering
         expenses.  The Advisor,  at its  discretion,  may revise or discontinue
         this arrangement at any time.

(11)     Through  September 30, 2007,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         certain  operating  expenses  of the fund to the  extent  necessary  to
         maintain the fund's total operating expenses at 1.47% for Institutional
         Class  shares,   excluding   certain  expenses  such  as  extraordinary
         expenses,  taxes,  brokerage,  interest,  proxy and  organizational and
         offering expenses. Although there can be no assurances that the current
         waiver/expense  reimbursement  arrangement  will be  maintained  beyond
         September 30, 2007, the Advisor has committed to review the continuance
         of waiver/expense reimbursement arrangements by September 30, 2007.

(12)     Through  September 30, 2007,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         operating  expenses of the fund to the extent necessary to maintain the
         fund's  operating  expenses at 0.74% for  Institutional  Class  shares,
         excluding  certain  expenses  such as  extraordinary  expenses,  taxes,
         brokerage,  interest,  proxy and  organizational and offering expenses.
         Although  there can be no  assurances  that the current  waiver/expense
         reimbursement  arrangements  will be


                                       72
<PAGE>

         maintained  beyond  September  30, 2007,  the Advisor has  committed to
         review the continuance of waiver/expense  reimbursement arrangements by
         September 30, 2007.

(13)     Effective  October 1, 2006, 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 0.55% for Institutional Class shares, excluding certain expenses
         such as extraordinary expenses,  taxes, brokerage,  interest, proxy and
         organizational  and  offering   expenses.   This  voluntary  waiver  or
         reimbursement  may be  terminated  at any  time  at the  option  of the
         advisor.

(14)     Through  September 30, 2008,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         operating  expenses of the fund to the extent necessary to maintain the
         fund's  total  operating  expenses  at 0.95%  for  Institutional  Class
         shares,  excluding  certain  expenses such as  extraordinary  expenses,
         taxes, brokerage and interest, and organizational and offering expenses
         (limited to 0.10%) on net assets.

(15)     Through  September  30, 2007,  the Advisor has agreed to waive all or a
         portion of its management  fee and reimburse or pay operating  expenses
         of the fund to the extent  necessary to maintain  the fund's  operating
         expenses at 1.28%,  excluding  certain  expenses such as  extraordinary
         expenses,  taxes, proxy,  brokerage,  interest,  and organizational and
         offering expenses. Although there can be no assurances that the current
         waiver/expense  reimbursement  arrangement  will be  maintained  beyond
         September 30, 2007, the Advisor has committed to review the continuance
         of waiver/expense reimbursement arrangements by September 30, 2007.

(16)     Through  February 29,  2008,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         operating  expenses of the fund to the extent necessary to maintain the
         fund's total annual operating  expenses at a ratio no higher than 1.06%
         for Class S shares,  excluding  certain  expenses such as extraordinary
         expenses,  taxes,  brokerage,  interest,  proxy, and organizational and
         offering expenses.

(17)     Through  September 30, 2007,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         operating  expenses of the fund to the extent necessary to maintain the
         fund's total operating expenses at 1.40% for Class S shares,  excluding
         certain  expenses such as  extraordinary  expenses,  taxes,  brokerage,
         interest,  proxy, and organizational  and offering  expenses.  Although
         there can be no  assurances  that the current fee  waiver/reimbursement
         arrangement  will be maintained  beyond September 30, 2007, the Advisor
         has  committed  to  review  the  continuance  of   waiver/reimbursement
         arrangements by September 30, 2007.

(18)     Through  September 30, 2007,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         certain  operating   expenses   (excluding  certain  expenses  such  as
         extraordinary expenses,  taxes, brokerage,  interest and organizational
         and offering  expenses) to the extent  necessary to maintain the annual
         expenses  of Class S shares at 0.56% of the  Fund's  average  daily net
         assets.  Although  there  can be no  assurances  that the  current  fee
         waiver/expense  reimbursement  arrangement  will be  maintained  beyond
         September 30, 2007, the Advisor has committed to review the continuance
         of waiver/expense reimbursement arrangements by September 30, 2007.

(19)     Through  September 30, 2007,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         operating  expenses of the fund to the extent necessary to maintain the
         fund's total operating expenses at 1.29% for Class S, excluding certain
         expenses such as extraordinary expenses,  taxes,  brokerage,  interest,
         organizational  and offering  expenses,  and proxy  expenses.  Although
         there  can  be  no  assurances  that  the  current  fee  waiver/expense
         reimbursement arrangement will be maintained beyond September 30, 2007,
         the Advisor has committed to review the  continuance of  waiver/expense
         reimbursement arrangements by September 30, 2007.

(20)     Through March 13, 2008, the Advisor has  contractually  agreed to waive
         all or a portion of its  management  fee and reimburse or pay operating
         expenses of the fund to the extent  necessary  to  maintain  the fund's
         total


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<PAGE>

         operating expenses at 1.11% for Institutional  Class shares,  excluding
         certain  expenses such as  extraordinary  expenses,  taxes,  brokerage,
         interest, proxy, and organizational and offering expenses.

(21)     Through May 1, 2008, the Advisor has contractually  agreed to waive all
         or a portion  of its  management  fee and  reimburse  or pay  operating
         expenses of the fund to the extent  necessary  to  maintain  the fund's
         total  annual  operating  expenses  at a ratio no higher than 0.58% for
         Institutional   Class  shares,   excluding  certain  expenses  such  as
         extraordinary expenses,  taxes, brokerage,  interest and organizational
         and offering expenses.

(22)     Through  September 30, 2007,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         operating  expenses of the fund to the extent necessary to maintain the
         fund's  total  operating  expenses  at 0.50%  for  Institutional  Class
         shares,  excluding  certain  expenses such as  extraordinary  expenses,
         taxes,  brokerage,  interest,  proxy and  organizational  and  offering
         expenses.

(23)     Through May 15, 2008, the Advisor has contractually agreed to waive all
         or a portion  of its  management  fee and  reimburse  or pay  operating
         expenses of the fund to the extent  necessary  to  maintain  the fund's
         total  operating  expenses  at 0.65% for  Institutional  Class  shares,
         excluding  certain  expenses  such as  extraordinary  expenses,  taxes,
         brokerage,  interest,  and  organizational  and  offering  expenses and
         proxy.

(24)     Through  September 30, 2007,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         certain  operating  expenses  of the fund to the  extent  necessary  to
         maintain the fund's total operating expenses at 0.91% for Institutional
         Class shares excluding certain expenses such as extraordinary expenses,
         taxes, brokerage, interest and organizational and offering expenses.

(25)     From  October 1, 2007  through  February  29,  2008,  the  Advisor  has
         contractually  agreed to waive all or a portion of its  management  fee
         and  reimburse  or pay  certain  operating  expenses of the Fund to the
         extent  necessary to maintain the Fund's  total  operating  expenses at
         ratio no higher than 1.09% for  Institutional  Class  shares  excluding
         certain  expenses such as  extraordinary  expenses,  taxes,  brokerage,
         interest and organizational and offering expenses.

(26)     Through  February 28,  2009,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         certain  operating  expenses  of the Fund to the  extent  necessary  to
         maintain the Fund's total operating expenses at 1.00% excluding certain
         expenses such as extraordinary expenses, taxes, brokerage, interest and
         organizational and offering expenses.

(27)     Through October 20, 2009, the Advisor has contractually agreed to waive
         all or a portion of its  management  fee and  reimburse  or pay certain
         operating  expenses of the Fund to the extent necessary to maintain the
         Fund's  total  operating  expenses  at 0.83%  for  Institutional  Class
         shares,  excluding  certain  expenses such as  extraordinary  expenses,
         taxes, brokerage, interest and organizational and offering expenses.

(28)     The Advisor has  contractually  agreed  through  September  30, 2007 to
         waive a portion of its fees and reimburse expenses so that total annual
         operating  expenses will not exceed 0.65%,  excluding  certain expenses
         such  as  extraordinary  expenses,   taxes,  brokerage,   interest  and
         organizational and offering expenses and proxy expenses.

(29)     The Advisor has contractually  agreed through January 31, 2008 to waive
         a portion  of its fees and  reimburse  expenses  so that  total  annual
         operating  expenses will not exceed 0.75%,  excluding  certain expenses
         such  as  extraordinary  expenses,   taxes,  brokerage,   interest  and
         organizational and offering expenses and proxy expenses.

(30)     The Advisor has  contractually  agreed  through  September  30, 2007 to
         waive a portion of its fees and  reimburse  expenses to maintain  total
         annual  operating  expenses at 0.92% for  Institutional  Class  shares,

                                       74
<PAGE>

         excluding  certain  expenses  such as  extraordinary  expenses,  taxes,
         brokerage,  interest,  proxy and  organizational and offering expenses.
         Although  there can be no  assurances  that the current  waiver/expense
         reimbursement arrangement will be maintained beyond September 30, 2007,
         the Advisor has committed to review the  continuance of  waiver/expense
         reimbursement arrangements by September 30, 2007.

(31)     Through  September 30, 2007,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         operating  expenses of the fund to the extent necessary to maintain the
         fund's  total  operating  expenses  at 1.26%  for  Institutional  Class
         shares,  excluding  certain  expenses such as  extraordinary  expenses,
         taxes, brokerage, interest, and organizational and offering expenses.

(32)     Through March 31, 2008, the Advisor has  contractually  agreed to waive
         all or a portion of its  management  fee and  reimburse  or pay certain
         operating  expenses of the Fund to the extent necessary to maintain the
         fund's  total  operating  expenses  at 0.65%  for  Institutional  Class
         shares,  excluding  certain  expenses such as  extraordinary  expenses,
         taxes, brokerage, interest and organizational and offering expenses.

(33)     Through  September 30, 2007,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         operating  expenses of the fund to the extent necessary to maintain the
         fund's total operating expenses at 1.60% for Class S shares,  excluding
         certain  expenses such as  extraordinary  expenses,  taxes,  brokerage,
         interest,  proxy and  organizational  and offering  expenses.  Although
         there   can  be  no   assurances   that  the   current   waiver/expense
         reimbursement arrangement will be maintained beyond September 30, 2007,
         the Advisor has committed to review the  continuance of  waiver/expense
         reimbursement arrangements by September 30, 2007.

(34)     The Advisor has agreed  through  January 31, 2008 to waive a portion of
         its fee and reimburse  expenses so that total annual operating  expense
         will not exceed 1.38% for Institutional Class shares, excluding certain
         expenses such as extraordinary expenses,  taxes,  brokerage,  interest,
         organization and offering expenses, and proxy expenses.

(35)     The Advisor has  contractually  agreed to waive their fees or reimburse
         expenses until January 31, 2009 so that total  operating  expenses will
         not exceed 1.00%,  excluding  certain  expenses  such as  extraordinary
         expenses,  interest,  brokerage,  taxes,  organizational  and  offering
         expenses, and proxy.

(36)     For three years from the commencement of operations of the share class,
         the Advisor has  contractually  agreed to waive all or a portion of its
         management  fee and reimburse or pay operating  expenses of the fund to
         the extent  necessary to maintain  the fund's  total  annual  operating
         expenses at ratios no higher  than 0.96% for Class A shares,  1.67% for
         Class B shares and 1.60% for Class C shares, excluding certain expenses
         such as extraordinary expenses, taxes, brokerage and interest, taxes.

(37)     Through July 29, 2010, the administrator  has  contractually  agreed to
         waive all or a portion of its  administration  fee and reimburse or pay
         operating  expenses of the fund to the extent necessary to maintain the
         fund's operating expenses at 0.15% for Institutional Shares,  excluding
         certain  expenses  such  as  extraordinary   expenses,   taxes,  proxy,
         brokerage, interest and organizational and offering expenses.

(38)     Through  September 30, 2007,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         operating  expenses of the fund to the extent necessary to maintain the
         fund's  total  operating  expenses  at 1.35%  for  Institutional  Class
         shares,  excluding  certain  expenses such as  extraordinary  expenses,
         taxes,  brokerage,  interest,  proxy and  organizational  and  offering
         expenses.  Although  there  can  be  no  assurances  that  the  current
         waiver/expense  reimbursement  arrangement  will be  maintained  beyond
         September 30, 2007, the Advisor has committed to review the continuance
         of waiver/expense reimbursement arrangements by September 30, 2007.

(39)     Through June 30, 2007,  the Advisor has  contractually  agreed to waive
         all or a portion of its  management  fee and  reimburse  or pay certain
         operating  expenses of the fund to the extent necessary to maintain the
         fund's  total  operating  expenses  at 1.35%  for  Institutional  Class
         shares,  excluding  certain  expenses such as  extraordinary  expenses,
         taxes,  brokerage,  interest,  proxy and  organizational  and  offering
         expenses.

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<PAGE>

(40)     Through  September 30, 2007,  the Advisor has  contractually  agreed to
         waive  all or a  portion  of its  fees  and  reimburse  or pay  certain
         operating  expenses of the fund,  including expenses allocated from the
         Portfolio,  to the extent  necessary  to maintain  the total  operating
         expenses at 0.39% for Class S shares,  excluding  certain expenses such
         as  extraordinary  expenses,  taxes,  brokerage,  interest,  proxy  and
         organizational and offering expenses.

(41)     Effective  October 1, 2007  through  April 30,  2008,  the  Advisor has
         contractually  agreed  to  waive  all  or a  portion  of its  fees  and
         reimburse or pay certain  operating  expenses  for the fund,  including
         expenses allocated from the Portfolio, so that total operating expenses
         will not exceed 0.44% for Class S shares,  excluding  certain  expenses
         such as extraordinary expenses,  taxes, brokerage,  interest, proxy and
         organizational and offering expenses.

(42)     Through  September 30, 2007,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         operating  expenses of the fund to the extent necessary to maintain the
         fund's total operating expenses at 0.96% for Class S shares,  excluding
         certain  expenses such as  extraordinary  expenses,  taxes,  brokerage,
         interest,  proxy, and organizational  and offering  expenses.  Although
         there   can  be  no   assurances   that  the   current   waiver/expense
         reimbursements  arrangements  will be maintained  beyond  September 30,
         2007,  the  Advisor  is  committed  to review the  continuance  of such
         waiver/expense reimbursements arrangements by September 30, 2007.

(43)     Through  February 28,  2009,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         operating  expenses of the fund to the extent necessary to maintain the
         fund's  total  operating  expenses  at a ratio no higher than 0.72% for
         Institutional   Class  shares,   excluding  certain  expenses  such  as
         extraordinary   expenses,   taxes,  brokerage,   interest,   proxy  and
         organizational and offering expenses.

(44)     Effective  October 1, 2006, 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 0.45% for Institutional Class shares, excluding certain expenses
         such as extraordinary expenses,  taxes, brokerage,  interest, proxy and
         organizational  and  offering   expenses.   This  voluntary  waiver  or
         reimbursement  may be  terminated  at any  time  at the  option  of the
         advisor.

(45)     The Advisor has  contractually  agreed  through  September  30, 2007 to
         waive a portion of its fees and reimburse expenses so that total annual
         operating expenses will not exceed 0.86% for Class S shares,  excluding
         certain  expenses such as  extraordinary  expenses,  taxes,  brokerage,
         interest and  organizational  and offering expenses and proxy expenses.
         Although  there can be no  assurances  that the current  waiver/expense
         reimbursement arrangement will be maintained beyond September 30, 2007,
         the  Advisor  is   committed   to  review  the   continuance   of  such
         waiver/expense reimbursement arrangements by September 30, 2007.

(46)     The Advisor has  contractually  agreed to waive their fees or reimburse
         expenses until January 31, 2010 so that total  operating  expenses will
         not exceed  1.00%  excluding  certain  expenses  such as  extraordinary
         expenses,  interest,  brokerage,  taxes,  organizational  and  offering
         expenses and proxy expenses.

(47)     Through  September 30, 2007,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         operating  expenses of the fund to the extent necessary to maintain the
         fund's total annual operating  expenses at a ratio no higher than 1.09%
         for Class S shares,  excluding  certain  expenses such as extraordinary
         expenses,  taxes,  brokerage,  interest and organizational and offering
         expenses.  Although  there  can  be  no  assurances  that  the  current
         waiver/expense  reimbursement  arrangement  will be  maintained  beyond
         September 30, 2007, the Advisor has committed to review the continuance
         of waiver/expense reimbursement arrangements by September 30, 2007.

(48)     Through August 18, 2007, the Advisor has contractually  agreed to waive
         all or a portion of its  management  fee and  reimburse  or pay certain
         operating  expenses of the Fund to the extent necessary to maintain the

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<PAGE>

         Fund's  total  operating  expenses  at 0.92%  for  Institutional  Class
         shares,  excluding  certain  expenses such as  extraordinary  expenses,
         taxes, brokerage, interest and organizational and offering expenses.

(49)     Through  December 31,  2007,  the Advisor has  contractually  agreed to
         waive all or a  portion  of its  management  fee and  reimburse  or pay
         operating  expenses of the fund to the extent necessary to maintain the
         fund's total operating  expenses at 0.63% for the  Institutional  Class
         shares,  excluding  certain  expenses such as  extraordinary  expenses,
         taxes,  brokerage,  interest and  organizational and offering expenses.
         Although  there can be no  assurances  that the current  waiver/expense
         reimbursement  arrangement will be maintained beyond December 31, 2007,
         the Advisor has committed to review the  continuance of  waiver/expense
         reimbursement arrangements by December 31, 2007.

The Advisor may serve as advisor to other funds with  investment  objectives and
policies  similar  to those  of a Fund  that  may  have  different  distribution
arrangements or expenses, which may affect performance.

Codes of Ethics

The Funds,  the Advisor and the Funds'  principal  underwriter have each adopted
codes of ethics under Rule 17j-1 under the 1940 Act. Board members,  officers of
the Trust and employees of the Advisor and principal  underwriter  are permitted
to make personal securities  transactions,  including transactions in securities
that  may be  purchased  or held  by the  Funds,  subject  to  requirements  and
restrictions  set forth in the applicable Code of Ethics.  The Advisor's Code of
Ethics  contains  provisions and  requirements  designed to identify and address
certain  conflicts of interest  between personal  investment  activities and the
interests  of the  Funds.  Among  other  things,  the  Advisor's  Code of Ethics
prohibits  certain types of  transactions  absent prior  approval,  imposes time
periods  during  which  personal   transactions  may  not  be  made  in  certain
securities,  and requires the submission of duplicate broker  confirmations  and
quarterly reporting of securities transactions. Additional restrictions apply to
portfolio  managers,  traders,  research  analysts  and others  involved  in the
investment  advisory  process.  Exceptions to these and other  provisions of the
Advisor's Code of Ethics may be granted in particular circumstances after review
by appropriate personnel.

                             FUND SERVICE PROVIDERS

Underwriter

The  Trust,  on behalf of the  Funds,  has an  underwriting  agreement  with DWS
Scudder Distributors,  Inc., 222 South Riverside Plaza, Chicago,  Illinois 60606
("DWS-SDI"  or the  "Distributor"),  a  Massachusetts  corporation,  which  is a
subsidiary  of the Advisor,  a Delaware  corporation.  The Trust's  underwriting
agreement  dated April 5, 2002 initially  remained in effect until September 30,
2002 and  continues  from year to year  thereafter  only if its  continuance  is
approved  annually by a majority of the members of the Board of Trustees who are
not parties to such agreement or Interested Persons of any such party and either
by vote of a majority of the Board of Trustees or a majority of the  outstanding
voting securities of each Fund. The underwriting agreement of each Fund was last
approved by the Trustees on September 17, 2007.

Under the underwriting  agreement,  each Fund is responsible for: the payment of
all fees and expenses in connection with the preparation and filing with the SEC
of its registration  statement and prospectus and any amendments and supplements
thereto;  the registration  and  qualification of shares for sale in the various
states, including registering each 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 each Fund;  the cost of printing and
mailing  confirmations of purchases of shares and any prospectuses  accompanying
such  confirmations;  any issuance  taxes and/or any initial  transfer  taxes; a
portion of shareholder  toll-free  telephone charges and expenses of shareholder
service  representatives;  the cost of  wiring  funds for  share  purchases  and
redemptions (unless paid by the shareholder who initiates the transaction);  the
cost of printing and postage of business reply  envelopes;  and a portion of the
cost of computer terminals used by both the Funds and the Distributor.

The Distributor will pay for printing and  distributing  prospectuses or reports
prepared for its use in  connection  with the offering of each Fund's  shares to
the  public  and  preparing,  printing  and  mailing  any  other  literature  or

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<PAGE>

advertising  in  connection  with the  offering  of  shares  of each 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 each  Fund,  unless a Rule 12b-1 Plan is in effect
which provides that a Fund shall bear some or all of such expenses.

Note: Although Class S of the Funds does not have a 12b-1 Plan, and the Trustees
have no current  intention  of adopting  one, the Funds 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 each Fund on a continuous  basis to
investors  in all  states in which  shares of each 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 as no
sales commission or load is charged to the investor. The Distributor has made no
firm commitment to acquire shares of each Fund.

Independent Registered Public Accounting Firm and Reports to Shareholders

The financial  highlights of each Fund included in the Funds' prospectus and the
Financial  Statements  incorporated by reference in this Statement of Additional
Information  have been so included or  incorporated  by reference in reliance on
the report of PricewaterhouseCoopers LLP, 125 High Street, Boston, Massachusetts
02110, an independent  registered public accounting firm, given on the authority
of said firm as  experts  in  auditing  and  accounting.  PricewaterhouseCoopers
audits the financial  statements of the Funds and provides other audit,  tax and
related services.  Shareholders will receive annual audited financial statements
and semiannual unaudited financial statements.

Legal Counsel

Ropes & Gray LLP, One International Place,  Boston,  Massachusetts 02110, serves
as legal counsel to each Fund and its Independent Trustees.



Custodian, Transfer Agent and Shareholder Service Agent

State Street Bank and Trust  Company (the  "Custodian"  or "SSB"),  225 Franklin
Street, Boston, Massachusetts 02110, as custodian, has custody of all securities
and cash of the Funds. The Custodian  attends to the collection of principal and
income, and payment for and collection of proceeds of securities bought and sold
by the Funds.  The custodian's fee may be reduced by certain earnings credits in
favor of each Fund.

DWS Scudder Investments  Service Company  ("DWS-SISC" or "Transfer Agent"),  210
West 10th Street, Kansas City, Missouri 64105-1614, a subsidiary of the Advisor,
is the transfer,  shareholder  servicing and dividend  disbursing  agent for the
shares of each Fund.  DWS-SISC also  provides  subaccounting  and  recordkeeping
services for  shareholder  accounts in certain  retirement and employee  benefit
plans.

The Transfer  Agent receives an annual service fee for each account of the Fund,
based on the type of account.  For open retail  accounts,  the fee is a flat fee
ranging from $20.00 to $27.50 per account,  for open  wholesale  money funds the
fee is $32.50 per account, while for certain retirement accounts serviced on the
recordkeeping system of ADP, Inc., the fee is a flat fee up to $3.46 per account
(as of October  2006,  indexed to  inflation)  plus an asset  based fee of up to
0.25% of  average  net  assets.  1/12th of the  annual  service  charge for each
account is  charged  and  payable to the  Transfer  Agent each  month.  A fee is
charged for any account  which at any time during the month had a share  balance
in the  Fund.  Smaller  fees are also  charged  for  closed  accounts  for which
information  must be retained on the Transfer Agent's system for up to 18 months
after closing for tax reporting purposes.

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<PAGE>

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.

Effective April 1, 2007, DWS Scudder Investments Service Company is the Transfer
Agent for all  classes of all DWS funds.  Prior to April 1,  2007,  DWS  Scudder
Service  Corporation  ("DWS-SSC") served as Transfer Agent for Class S shares of
each Fund.

DWS LifeCompass  Retirement Fund: For the fiscal year ended August 31, 2005, the
amount charged by DWS-SSC aggregated $193,163 (of which $94,153 was not imposed)
for Class S shares.  For the fiscal  year  ended  August  31,  2006,  the amount
charged by DWS-SSC aggregated  $149,842 (of which $119,014 was waived) for Class
S shares.  For the fiscal  year ended  August 31,  2007,  the amount  charged by
DWS-SISC aggregated $190,474 (of which $90,206 was waived) for Class S shares.

DWS LifeCompass 2015 Fund: For the fiscal year ended August 31, 2005, the amount
charged by DWS-SSC  aggregated  $322,102 (of which  $76,366 was not imposed) for
Class S shares. For the fiscal year ended August 31, 2006, the amount charged by
DWS-SSC  aggregated  $446,472 (of which $220,438 was waived) for Class S shares.
For the  fiscal  year ended  August 31,  2007,  the amount  charged by  DWS-SISC
aggregated $294,143 (of which $69,411 was waived) for Class S shares.

DWS LifeCompass 2020 Fund: For the fiscal year ended August 31, 2005, the amount
charged by DWS-SSC  aggregated  $322,952 (of which $165,897 was not imposed) for
Class S shares. For the fiscal year ended August 31, 2006, the amount charged by
DWS-SSC aggregated  $292,930 (of which $ 169,140 was waived) for Class S shares.
For the  fiscal  year ended  August 31,  2007,  the amount  charged by  DWS-SISC
aggregated $429,456 (of which $176,799 was waived) for Class S shares.

DWS  LifeCompass  2030 Fund:  For the fiscal  period ended August 31, 2006,  the
amount charged by DWS-SSC  aggregated $4,931 (all of which was waived) for Class
S shares.  For the fiscal  year ended  August 31,  2007,  the amount  charged by
DWS-SISC aggregated $7,087 (of which $7,087 was waived) for Class S shares.

DWS LifeCompass 2040 Fund: Because the Fund has not yet commenced  operations as
of the date of this Statement of Additional Information,  the Fund does not have
any historical transfer agency fee information to report.

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

The Funds, 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 held in an
omnibus account.

Retirement  Service  Provider.  DWS Trust Company,  an affiliate of the Advisor,
provides  subaccounting and recordkeeping  services for shareholder  accounts in
certain  retirement  and employee  benefit plans  invested in the Funds.  Annual
service  fees  are  paid by each  Fund to DWS  Trust  Company,  11  Northeastern
Boulevard,  Salem, NH 03079 for such accounts.  Pursuant to an agreement between
DWS  Trust   Company  and  ADP,  DWS  Trust   Company  has   delegated   certain
sub-accounting  and  recordkeeping  functions  to ADP. The costs and expenses of
such delegation are borne by DWS Trust Company, not by the Funds.

Regulatory Matters and Legal Proceedings

On December 21, 2006,  Deutsche Asset Management  ("DeAM")  settled  proceedings
with the  Securities and Exchange  Commission  ("SEC") and the New York Attorney
General on behalf of Deutsche  Asset  Management,  Inc.


                                       79
<PAGE>

("DAMI") and DIMA,  the  investment  advisors to many of the DWS Scudder  funds,
regarding  allegations  of  improper  trading of fund  shares at DeAM and at the
legacy Scudder and Kemper  organizations  prior to their  acquisition by DeAM in
April 2002. These regulators  alleged that although the prospectuses for certain
funds in the  regulators'  view  indicated  that the funds did not permit market
timing, DAMI and DIMA breached their fiduciary duty to those funds in that their
efforts to limit  trading  activity in the funds were not  effective  at certain
times.  The regulators  also alleged that DAMI and DIMA breached their fiduciary
duty to certain funds by entering into certain market timing  arrangements  with
investors.  These trading  arrangements  originated  in businesses  that existed
prior to the currently  constituted DeAM organization,  which came together as a
result of various  mergers  of the legacy  Scudder,  Kemper  and  Deutsche  fund
groups,  and all of the  arrangements  were terminated prior to the start of the
regulatory  investigations  that  began in the summer of 2003.  No current  DeAM
employee   approved  these  trading   arrangements.   Under  the  terms  of  the
settlements, DAMI and DIMA neither admitted nor denied any wrongdoing.

The terms of the SEC settlement, which identified improper trading in the legacy
Deutsche and Kemper mutual funds only,  provide for payment of  disgorgement  in
the  amount  of $17.2  million.  The terms of the  settlement  with the New York
Attorney  General  provide for payment of  disgorgement  in the amount of $102.3
million, which is inclusive of the amount payable under the SEC settlement, plus
a civil penalty in the amount of $20 million.  The total amount payable by DeAM,
approximately  $122.3 million,  will be distributed to funds and/or 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")  announced  final  agreements  in  which  Deutsche  Investment
Management Americas Inc. ("DIMA"),  Deutsche Asset Management, Inc. ("DAMI") and
Scudder  Distributors,  Inc. ("DWS-SDI") (now known as DWS Scudder Distributors,
Inc.)  settled  administrative  proceedings  regarding  disclosure  of brokerage
allocation  practices in connection  with sales of the Scudder Funds' (now known
as the DWS Scudder Funds) shares during  2001-2003.  The agreements with the SEC
and NASD are reflected in orders which state, among other things,  that DIMA and
DAMI failed to disclose potential conflicts of interest to the funds' Boards and
to  shareholders   relating  to  DWS-SDI's  use  of  certain  funds'


                                       80
<PAGE>

brokerage  commissions to reduce revenue  sharing costs to  broker-dealer  firms
with whom it had  arrangements  to market and  distribute  Scudder  Fund shares.
These directed brokerage practices were discontinued in October 2003.

Under the terms of the  settlements,  in which DIMA,  DAMI and  DWS-SDI  neither
admitted  nor denied any of the  regulators'  findings,  DIMA,  DAMI and DWS-SDI
agreed to pay  disgorgement,  prejudgment  interest  and civil  penalties in the
total amount of $19.3 million. The portion of the settlements distributed to the
funds was approximately $17.8 million and was paid to the funds as prescribed by
the settlement  orders based upon the amount of brokerage  commissions from each
fund used to satisfy revenue sharing  agreements  with  broker-dealers  who sold
fund shares.

As part of the  settlements,  DIMA,  DAMI and DWS-SDI  also agreed to  implement
certain measures and undertakings relating to revenue sharing payments including
making  additional  disclosures  in the funds'  Prospectuses  or  Statements  of
Additional  Information,  adopting or modifying relevant policies and procedures
and providing regular reporting to the fund Boards.

Additional  information announced by DeAM regarding the terms of the settlements
is available at www.dws-scudder.com/regulatory_settlements.

The matters alleged in the regulatory  settlements described above also serve as
the general basis of a number of private class action lawsuits involving the DWS
funds. These lawsuits name as defendants various persons,  including certain DWS
funds,  the  funds'  investment  advisors  and  their  affiliates,  and  certain
individuals,  including  in some cases fund  Trustees/Directors,  officers,  and
other parties.  Each DWS fund's  investment  advisor has agreed to indemnify the
applicable  DWS funds in connection  with these  lawsuits,  or other lawsuits or
regulatory actions that may be filed making similar allegations.

Based on currently available information, the funds' investment advisors believe
the likelihood that the pending lawsuits will have a material adverse  financial
impact on a DWS fund is remote and such  actions  are not  likely to  materially
affect their ability to perform  under their  investment  management  agreements
with the DWS funds.

                             PORTFOLIO TRANSACTIONS

Portfolio Transactions of the Underlying DWS Funds

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

                                       81
<PAGE>

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.

                                       82
<PAGE>

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.

Money  market  instruments  are normally  purchased  in  principal  transactions
directly from the issuer or from an underwriter  or market maker.  There usually
are no brokerage commissions paid by a fund for such purchases.  During the last
three fiscal years each fund paid no portfolio brokerage commissions.  Purchases
from  underwriters will include a commission or concession paid by the issuer to
the  underwriter,  and  purchases  from  dealers  serving as market  makers will
include the spread between the bid and asked prices.

During  the last  three  fiscal  years,  none of the  Funds  paid any  brokerage
commissions.

Each Fund is required to identify  any  securities  of its  "regular  brokers or
dealers"  (as such term is defined in the 1940 Act) that each Fund has  acquired
during the most recent  fiscal year.  As of August 31,  2007,  each Fund did not
hold securities of its regular brokers or dealers.

Portfolio Turnover

Portfolio  turnover  rate is  defined  by the SEC as the ratio of the  lesser of
sales or purchases to the monthly average value of such securities  owned during
the year,  excluding all securities  whose  remaining  maturities at the time of
acquisition were one year or less.

Higher levels of activity by a fund result in higher  transaction  costs and may
also  result  in  taxes on  realized  capital  gains  to be borne by the  fund's
shareholders.  Purchases and sales are made whenever necessary, in the Advisor's
discretion, to meet a fund's objective.

                                       83
<PAGE>

Portfolio turnover rates for the two most recent fiscal periods are as follows:

<TABLE>
<CAPTION>

                                                                         FY 2007         FY 2006          FY 2005
                                                                        Portfolio       Portfolio        Portfolio
                                                         Fiscal Year     Turnover    Turnover Rate    Turnover Rate
Name of Fund                                                 End       Rate (%)(1)     (%) (1,2)         (%) (2)
------------                                                 ---       -----------     ----------         -------

<S>                                                          <C>            <C>           <C>              <C>
DWS LifeCompass Retirement Fund                              8/31           21             69               55
DWS LifeCompass 2015 Fund                                    8/31           21             52               35
DWS LifeCompass 2020 Fund                                    8/31           22             59               31
DWS LifeCompass 2030 Fund                                    8/31           20             63               28*
DWS LifeCompass 2040 Fund                                    8/31           NA(a)          NA(a)            NA(a)
DWS Blue Chip Fund                                          10/31           NA(3)         259              329
DWS Capital Growth Fund                                      9/30           NA(3)          15               19
DWS Commodity Securities Fund                                6/30          117             80               36*
DWS Disciplined Market Neutral Fund                          8/31          450**           NA(b)            NA(b)
DWS Disciplined Long/Short Growth Fund                       4/30          229             NA(c)            NA(c)
DWS Disciplined Long/Short Value Fund                        4/30          227             NA(c)            NA(c)
DWS Large Cap Value Fund                                    11/30           NA(3)          76               56
DWS Emerging Markets Equity Fund                            10/31           NA(3)         145              126
DWS Emerging Markets Fixed Income Fund                      10/31           NA(3)         224              283
DWS Equity 500 Index Fund                                   12/31           NA(3)           4                9
DWS Equity Partners Fund                                     5/31           13             10               11
DWS Value Builder Fund                                       3/31           11             19               17
DWS Communications Fund                                     12/31           NA(3)          27               21
DWS Core Fixed Income Fund                                  10/31           NA(3)         166(f)           162(f)(g)
DWS Floating Rate Plus Fund                                  4/30           NA(d)          NA(d)            NA(d)
DWS Global Thematic Fund                                     8/31          151            143               54
DWS Global Bond Fund                                        10/31           NA(3)          183              224
DWS Global Opportunities Fund                               10/31           NA(3)          29               31
DWS GNMA Fund                                                9/30           NA(3)          81(f)           105(f)
DWS Gold & Precious Metals Fund                             10/31           NA(3)          69               53
DWS Europe Equity Fund                                      10/31           NA(3)         203              168
DWS Growth & Income Fund                                     9/30           NA(3)         101               98
DWS Health Care Fund                                         5/31           31             56               61
DWS High Income Fund                                         9/30           NA(3)         100              113
DWS High Income Plus Fund                                   10/31           NA(3)         100              109(g)
DWS Dreman Concentrated Value Fund                          11/30           NA(3)          38                5(h)
DWS Dreman High Return Equity Fund                          11/30           NA(3)          32                9
DWS Dreman Mid Cap Value Fund                               11/30           NA(3)          34               10(i)
DWS Core Plus Income Fund                                    1/31          150(f)         184(f)           156(f)
DWS Inflation Protected Plus Fund                            9/30           NA(3)         331               28*
DWS International Fund                                       8/31          110             76               57
DWS International Select Equity Fund                        10/31           NA(3)         140(g)           122(g)
DWS International Value Opportunities Fund                   8/31          127              7**(j)          --
DWS Japan Equity Fund                                        8/31           52            105               60
DWS Large Company Growth Fund                                7/31           23             16               20
DWS Large Cap Value Fund                                    11/30           NA(3)          76               56
DWS Latin America Equity Fund                               10/31           NA(3)          70               73
DWS Micro Cap Fund                                           9/30           NA(3)         100              108
DWS Mid Cap Growth Fund                                      9/30           NA(3)          53               83
DWS Money  Market  Prime  Series - DWS Cash  Investment      7/31           --             --               --
     Trust (4)
DWS Money Market Series -- Institutional Shares (4)         12/31           --             --               --
DWS RREEF Global Real Estate Securities Fund                12/31           28**(e)        NA(e)            NA(e)

                                       84
<PAGE>
                                                                         FY 2007         FY 2006          FY 2005
                                                                        Portfolio       Portfolio        Portfolio
                                                         Fiscal Year     Turnover    Turnover Rate    Turnover Rate
Name of Fund                                                 End       Rate (%)(1)     (%) (1,2)         (%) (2)
------------                                                 ---       -----------     ----------         -------

DWS RREEF Real Estate Securities Fund                       12/31           NA(3)          60               66(g)
DWS S&P 500 Index Fund                                      12/31           NA(3)           4                9
DWS Enhanced S&P 500 Index Fund                              2/28           81             85               64
DWS Short Duration Fund                                     10/31           NA(3)         198              161
DWS Short Duration Plus Fund                                 9/30           NA(3)         129(k)           298
DWS Small Cap Growth Fund                                    9/30           NA(3)          74              119
DWS Small Cap Core Fund                                      9/30           NA(3)         205              198
DWS Small Cap Value Fund                                     7/31          109            117              90
DWS Dreman Small Cap Value Fund                             11/30           NA(3)          48              67
DWS Technology Fund                                         10/31           NA(3)          58              114
</TABLE>

(1)      As of each Underlying DWS Fund's most recent fiscal reporting period.

(2)      As of each Underlying DWS Fund's previous fiscal reporting period.

(3)      Fund has not yet filed its  fiscal  year  2007  financial  information,
         therefore information for fiscal year 2006 and 2005 are included.

(4)      DWS Money Market Series -- Institutional  Shares is a money market fund
         and by definition does not have a portfolio turnover rate.

*        Annualized

**       Not Annualized

(a)      Fund has not commenced  operations as of the date of this  Statement of
         Additional Information.

(b)      Commenced operations on October 16, 2006.

(c)      Commenced operations on November 16, 2006.

(d)      Commenced operations on June 29, 2007.

(e)      Commenced operations on July 5, 2006.

(f)      The  portfolio   turnover   rates   including   mortgage   dollar  roll
         transactions  were 289% and 300% for the periods  ended  September  30,
         2006  and 2005 for DWS GNMA  Fund;  151%,  196% and 190% for the  years
         ended January 31, 2007, 2006 and 2005 for DWS Core Plus Income Fund and
         173% and 177% for the years  ended  October  31,  2006 and 2005 for DWS
         Core Fixed Income Fund.

(g)      Excludes  portfolio  securities  delivered  as a result  of  processing
         redemption in-kind transactions.

(h)      Commenced operations on June 2, 2005.

(i)      Commenced operations on August 2, 2005.

(j)      Commenced operations on July 5, 2006.

(k)      On January 13, 2006,  the Scudder  Limited-Duration  Plus Portfolio was
         closed.  This  ratio  includes  the  purchase  and  sale  of  portfolio
         securities of the DWS Short Duration Plus Fund as a stand-alone fund in
         addition to the Scudder Limited-Duration Plus Portfolio.

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<PAGE>

For certain  Underlying DWS Funds, the increase in portfolio  turnover rates for
the  most  recent  fiscal  year was due to the  general  market  conditions  and
increased volatility.

                        PURCHASE OR REDEMPTION OF SHARES

General Information

Policies and procedures affecting  transactions in Fund shares can be changed at
any  time  without  notice,  subject  to  applicable  law.  Transactions  may be
contingent  upon proper  completion of application  forms and other documents by
shareholders  and their  receipt by the  Fund's  agents.  Transaction  delays in
processing (and changing account features) due to circumstances within or beyond
the  control  of the Fund and its  agents  may  occur.  Shareholders  (or  their
financial  service firms) are responsible for all losses and fees resulting from
bad checks,  cancelled orders or the failure to consummate transactions effected
pursuant to instructions reasonably believed to be genuine.

If  a  distribution   check  is  returned  to  the  Fund,  or  its  agents,   as
undeliverable;  such  distribution will be reinvested in shares of the same Fund
and class at the next  determined  net asset value after receipt by the Fund, or
its agents, of the returned distribution check.

Orders  will be  confirmed  at a price  based on the net asset value of the Fund
next determined after receipt in good order by DWS-SDI of the order  accompanied
by payment.  However,  orders  received by dealers or other  financial  services
firms prior to the  determination  of net asset value and received in good order
by DWS-SDI prior to the  determination of net asset value will be confirmed at a
price  based on the net asset  value next  determined  after  receipt by DWS-SDI
("trade date").

Additional  Minimum Balance Policies.  For fiduciary  accounts such as IRAs, and
custodial  accounts such as Uniform Gifts to Minor Act and Uniform  Transfers to
Minor Act accounts, the minimum balance is $1,000 for Class S. A shareholder may
open an account with at least $1,000 ($500 for fiduciary/custodial accounts), if
an  automatic  investment  plan (AIP) of  $50/month  is  established.  DWS group
retirement  plans and certain other accounts have similar or lower minimum share
balance requirements.

Reductions in value that result solely from market  activity will not trigger an
annual fee or involuntary  redemption.  Shareholders  with a combined  household
account  balance in any of the DWS Funds of $100,000  or more,  as well as group
retirement  and certain other accounts will not be subject to a fee or automatic
redemption.

Fiduciary  (e.g., IRA or Roth IRA) and custodial  accounts (e.g.,  UGMA or UTMA)
with balances below $100 are subject to automatic  redemption following 60 days'
written notice to applicable shareholders.

Certificates. Share certificates will not be issued. Share certificates now in a
shareholder's  possession may be sent to the Transfer Agent for cancellation and
book-entry  credit to such  shareholder's  account.  Certain telephone and other
procedures   require   book-entry   holdings.   Shareholders   with  outstanding
certificates bear the risk of loss.

Use of Financial  Services  Firms.  Investment  dealers and other firms  provide
varying  arrangements  for their clients to purchase and redeem a Fund's shares,
including higher minimum investments,  and may assess transaction or other fees.
Firms may arrange  with their  clients for other  investment  or  administrative
services.  Such firms may independently  establish and charge additional amounts
to their  clients for such  services.  Firms also may hold the Fund's  shares in
nominee or street  name as agent for and on behalf of their  customers.  In such
instances, the Fund's Transfer Agent will have no information with respect to or
control over the accounts of specific shareholders. Such shareholders may obtain
access to their  accounts and  information  about their accounts only from their
firm. Certain of these firms may receive  compensation from the Fund through the
Shareholder  Service Agent for  record-keeping  and other  expenses  relating to
these nominee  accounts.  In addition,  certain  privileges  with respect to the
purchase and  redemption of shares or the  reinvestment  of dividends may not be
available  through such firms.  Some firms may participate in a program allowing
them  access  to  their  clients'  accounts  for  servicing  including,  without
limitation,  transfers of  registration  and  dividend  payee  changes;  and may
perform functions such as generation of confirmation


                                       86
<PAGE>

statements and disbursement of cash dividends.  Such firms, including affiliates
of DWS-SDI, may receive compensation from a Fund through the Shareholder Service
Agent for these services.

The Funds have authorized one or more financial service institutions,  including
certain members of the Financial Industry  Regulatory  Authority ("FINRA") other
than  the  Distributor  ("financial  institutions"),   to  accept  purchase  and
redemption orders for each Fund's shares.  Such financial  institutions may also
designate other parties, including plan administrator intermediaries,  to accept
purchase and redemption  orders on each Fund's  behalf.  Orders for purchases or
redemptions  will be deemed to have been received by a Fund when such  financial
institutions or, if applicable,  their  authorized  designees accept the orders.
Subject  to  the  terms  of  the  contract  between  a Fund  and  the  financial
institution,  ordinarily  orders  will be priced at each  Fund's net asset value
next computed after  acceptance by such financial  institution or its authorized
designees and accepted by a Fund.  Further,  if purchases or redemptions of each
Fund's  shares are arranged and  settlement  is made at an  investor's  election
through any other authorized financial  institution,  that financial institution
may, at its discretion, charge a fee for that service. The Board of Trustees and
the  Distributor,  also a Fund's  principal  underwriter,  each has the right to
limit the amount of  purchases  by, and to refuse to sell to,  any  person.  The
Trustees and the  Distributor may suspend or terminate the offering of shares of
a Fund at any time for any reason.

DWS-SDI has adopted an Incentive Plan (the "Plan") covering wholesalers that are
regional vice presidents  ("DWS Scudder  Wholesalers").  Generally,  DWS Scudder
Wholesalers  market shares of the DWS funds to your  financial  advisor,  who in
turn may  recommend  that you  purchase  shares  of a DWS  fund.  The Plan is an
incentive program that combines a monthly  incentive  component with a quarterly
strategic bonus component.  Under the Plan, DWS Scudder Wholesalers will receive
a monetary  monthly  incentive based on the amount of sales generated from their
marketing of the funds,  and that incentive will differ depending on the product
category  of  the  fund.   Each  fund  is  assigned  to  one  of  four   product
categories--"Core,"    "Strategic,"   "Satellite"   or   "Non-CSS"-taking   into
consideration, among other things, the following criteria, where applicable:

o        The Fund's 3-year performance;
o        The Fund's Morningstar rating;
o        Market size for the fund category;
o        The Fund's size, including sales and redemptions of the Fund's shares;
o        The length of time the Fund's Portfolio Managers have managed the Fund;
         and
o        The Fund's consistency with DWS Scudder's branding.

This  information  and other factors are  presented to a committee  comprised of
representatives  from  various  groups  within  DWS  Scudder,  who  review  on a
quarterly basis the funds assigned to each product category described above, and
make any  changes to those  assignments  at that time.  No one  factor,  whether
positive or negative,  determines a fund's  placement in a given  category;  all
these factors together are considered, and the designation of funds in the Core,
Strategic and Satellite categories represents management's judgment based on the
above criteria.  In addition,  management may consider a fund's profile over the
course  of  several  review  periods  before  making  a change  to its  category
assignment.  These  category  assignments  will be posted  quarterly  to the DWS
funds' Web site at www.dws-scudder.com, approximately one month after the end of
each quarter.  DWS Scudder Wholesalers will receive the highest compensation for
Core and Strategic  funds,  less for Satellite  funds and the lowest for Non-CSS
funds.   The  level  of   compensation   among  these   categories   may  differ
significantly.

In the normal course of business,  DWS Scudder will from time to time  introduce
new funds into the DWS family of funds. As a general rule, all new funds will be
placed in the  Strategic  compensation  category  for a  minimum  period of four
consecutive quarters, and DWS Scudder Wholesalers will be paid at a rate that is
equivalent to that of the Core Fund  category.  After that four quarter  period,
each new fund in the  Strategic  category  will be reviewed by the committee and
either  assigned to one of the four  categories or continued as a Strategic fund
at that time.

The prospect of receiving,  or the receipt of, additional  compensation by a DWS
Scudder  Wholesaler  under the Plan may provide an incentive to favor  marketing
the Core,  Strategic  or  Satellite  funds  over the  Non-CSS  funds.  The Plan,
however,  will not change  the price that you pay for shares of a fund.  The DWS
Scudder  Compliance  Department  monitors DWS Scudder Wholesaler sales and other
activity  in an  effort  to  detect  unusual  activity  in  the


                                       87
<PAGE>

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. A 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, maximum $250,000) from or to a
shareholder's bank, savings and loan, or credit union account in connection with
an additional  purchase or redemption of Fund shares.  Shares purchased by check
or through  QuickBuy and QuickSell or Direct  Deposit may not be redeemed  under
this privilege  until such shares have been owned for at least 10 calendar days.
QuickBuy and  QuickSell  cannot be used with  passbook  savings  accounts or for
certain tax-deferred plans such as IRAs.

Share  Pricing.  Purchases  will be filled without sales charge at the net asset
value per share next computed  after receipt of the  application  in good order.
Net asset  value  normally  will be  computed  for each class as of the close of
regular  trading on the New York Stock  Exchange  (the  "Exchange")  on each day
during which the Exchange is open for trading.  Orders  received after the close
of regular  trading on the Exchange will be executed at the next business  day's
net asset value.  If the order has been placed by a member of FINRA,  other than
the Distributor,  it is the  responsibility of the member broker,  rather than a
Fund,  to  forward  the  purchase  order to the  Transfer  Agent by the close of
regular trading on the Exchange.

Dividend  Payment  Option.   Investors  may  have  dividends  and  distributions
automatically   deposited  to  their  predesignated  bank  account  through  DWS
Scudder's Dividend Payment Option request form. Shareholders whose predesignated
checking  account of record is with a member bank of  Automated  Clearing  House
Network  (ACH) can have  income and  capital  gain  distributions  automatically
deposited to their  personal  bank account  usually  within three  business days
after the Fund pays its distribution. A Dividend Payment Option request form can
be  obtained  by  visiting  our Web  site  at:  www.dws-scudder.com  or  calling
1-800-728-3337.  Confirmation  Statements  will be  mailed  to  shareholders  as
notification that distributions have been deposited.

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

o        Traditional,  Roth and Education IRAs. This includes Savings  Incentive
         Match Plan for  Employees  of Small  Employers  ("SIMPLE"),  Simplified
         Employee Pension Plan ("SEP") IRA accounts and prototype documents.

o        403(b)(7)  Custodial  Accounts.  This  type  of plan  is  available  to
         employees of most non-profit organizations.

o        Prototype  money  purchase  pension  and  profit-sharing  plans  may be
         adopted by employers.

Brochures  describing these plans as well as model defined benefit plans, target
benefit plans,  457 plans,  401(k) plans,  simple 401(k) plans and materials for
establishing them are available from the Shareholder Service Agent upon request.
Additional fees and transaction policies and procedures may apply to such plans.
Investors  should  consult with their own tax  advisors  before  establishing  a
retirement plan.

                                       88
<PAGE>

Purchases

The Funds  reserve the right to withdraw all or any part of the offering made by
their prospectuses and to reject purchase orders for any reason. Also, from time
to time, a 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
prospectus.

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

Clients  having a regular  investment  counsel  account  with the Advisor or its
affiliates and members of their  immediate  families,  officers and employees of
the Advisor or of any  affiliated  organization  and members of their  immediate
families,  members of FINRA and banks may, if they prefer,  subscribe  initially
for at least $2,500 for Class S through DWS Investor  Services,  Inc. by letter,
fax, or telephone.

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

Eligible Class S Investors.

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

A.        The  following  investors  may  purchase  Class S shares  of DWS Funds
          either (i) directly from DWS Scudder  Distributors,  Inc. ("DWS-SDI"),
          the Fund's  principal  underwriter;  or (ii)  through an  intermediary
          relationship  with a financial  services firm established with respect
          to the DWS Funds as of December 31, 2004.

          1.      Existing  shareholders of Class S shares of any DWS Fund as of
                  December 31, 2004, and household  members residing at the same
                  address.

          2.      Shareholders  of Class S of any DWS Fund  who  became  Class S
                  shareholders  in connection  with the  consolidation  of Class
                  AARP  and  Class S on July  17,  2006  and  household  members
                  residing at the same address.

          3.      Shareholders who have owned Class S shares  continuously since
                  December 31, 2004 and household  members  residing at the same
                  address  may open new  accounts  for Class S shares of any DWS
                  Fund.

          4.      Any  participant  who has owned Class S shares of any DWS Fund
                  through an  employee  sponsored  retirement,  employee  stock,
                  bonus,  pension  or profit  sharing  plan  continuously  since
                  December 31, 2004 may open a new individual  account for Class
                  S shares of any DWS Fund.

          5.      Any  participant  who  owns  Class S  shares  of any DWS  Fund
                  through a retirement, employee stock, bonus, pension or profit
                  sharing plan may complete a direct  rollover to an IRA account
                  that will hold Class S shares. This applies to individuals who
                  begin their retirement plan investments with a DWS Fund at any
                  time, including after December 31, 2004.

          6.      Officers, Fund Trustees and Directors, and full-time employees
                  and their family members, of the Advisor and its affiliates.

                                       89
<PAGE>

          7.      Class S shares are  available to any  accounts  managed by the
                  Advisor,  any  advisory  products  offered  by the  Advisor or
                  DWS-SDI  and to DWS Target  Date Series or other fund of funds
                  managed by the Advisor or its affiliates.

          8.      Shareholders  of Class S of DWS Emerging  Markets  Equity Fund
                  who became  shareholders  of the fund in  connection  with the
                  fund's acquisition of Scudder New Asia Fund, Inc. on April 17,
                  2006.

          9.      Shareholders  of Class S of any DWS Fund  who  became  Class S
                  shareholders in connection with the  consolidation  of Class M
                  and Class S on August 18, 2006 and household  members residing
                  at the same address.

          10.     Shareholders  of Class S of any DWS Fund  who  became  Class S
                  shareholders  in connection with the renaming or conversion of
                  Investment Class to Class S on October 23, 2006.

B. The following additional investors may purchase Class S shares of DWS Funds.

          1.      Broker-dealers,   banks  and  registered  investment  advisors
                  ("RIAs")  may  purchase  Class S shares in  connection  with a
                  comprehensive  or  "wrap"  fee  program  or  other  fee  based
                  program.

          2.      Any  group  retirement,  employee  stock,  bonus,  pension  or
                  profit-sharing plans.

          3.      Persons  who  purchase  shares as part of an  investment  only
                  placement in a 529 College Savings Plan.

          4.      Persons who purchase  shares through a Health Savings  Account
                  or a Voluntary Employees' Benefit Association ("VEBA") Trust.

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

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


                                       90
<PAGE>

particular fund or fund type or other measures as agreed to by the Advisor,  the
Distributor   and/or  their  affiliates  and  the  financial   advisors  or  any
combination  thereof.  The  amount  of  these  payments  is  determined  at  the
discretion of the Advisor,  the Distributor and/or their affiliates from time to
time, may be substantial,  and may be different for different financial advisors
based on, for  example,  the nature of the  services  provided by the  financial
advisor.

The Advisor,  the  Distributor  and/or their  affiliates  currently make revenue
sharing  payments  from  their own  assets in  connection  with the sale  and/or
distribution of DWS Fund shares, or the retention and/or servicing of investors,
to financial  advisors in amounts that  generally  range from .01% up to .50% of
assets of the Fund serviced and  maintained by the  financial  advisor,  .10% to
..25% of sales of the Fund attributable to the financial  advisor,  a flat fee of
$12,500 up to $500,000, or any combination thereof. These amounts are subject to
change  at  the  discretion  of  the  Advisor,   the  Distributor  and/or  their
affiliates.   Receipt  of,  or  the  prospect  of  receiving,   this  additional
compensation, may influence your financial advisor's recommendation of this Fund
or of any  particular  share class of the Fund. You should review your financial
advisor's  compensation  disclosure  and/or  talk to your  financial  advisor to
obtain  more  information  on how this  compensation  may have  influenced  your
financial advisor's recommendation of this Fund.

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

As of the date  hereof,  each  Fund  has been  advised  that  the  Advisor,  the
Distributor  and their  affiliates  expect that the following firms will receive
revenue sharing payments at different points during the coming year as described
above:

Channel: Broker-Dealers and Financial Advisors
A G Edwards & Sons Inc.
AIG Advisors Group
Ameriprise
Cadaret, Grant & Co. Inc.
Capital Analyst, Incorporated
Citigroup Global Markets, Inc. (dba Smith Barney)
Commonwealth  Equity Services,  LLP (dba Commonwealth  Financial  Network)
First Clearing/Wachovia Securities
HD Vest Investment Securities, Inc.
ING Group
LaSalle Financial Services, Inc. (dba ABN Amro)
Linsco/Private Ledger Corp.
Marsh Insurance and Investment Company
Merrill Lynch, Pierce, Fenner & Smith Inc.
Morgan Stanley
Oppenheimer & Co., Inc.
Pacific Select Distributors Group
Raymond James & Associates
Raymond James Financial Services
RBC Dain Rauscher, Inc
Securities America, Inc.
UBS Financial Services
Wells Fargo Investments, LLC

Channel: Cash Product Platform
ADP Clearing & Outsourcing
Allegheny Investments LTD

                                       91
<PAGE>

Bank of New York (Hare & Co.)
Bear, Stearns Securities Corp.
Brown Brothers Harriman
Brown Investment Advisory & Trust Company
Cadaret Grant & Co.
Chicago Mercantile Exchange
Citibank NA
D.A. Davidson & Company
Deutsche Bank Securities Inc.
Deutsche Bank Trust Company Americas
Emmett A. Larkin Company
Fiduciary Trust Co. - International
H.C. Denison Co.
Huntleigh Securities
Investors Bank & Trust
JPMorgan Chase
Lincoln Investment Planning
Linsco Private Ledger  Financial  Services Mellon  Financial  Markets LLC Penson
Financial Services Pershing Choice Platform ProFunds Distributors, Inc.
Romano Brothers and Company
SAMCO Capital Markets (Fund Services, Inc.)
Smith Moore & Company
State Street Bank & Trust Co.
Sungard Institutional Brokerage Inc.
US Bancorp
UBS Financial Services Inc.
William Blair & Company

Acacia National Life Insurance
Allmerica Financial Life Insurance Company
Allstate Life Insurance Company of New York
Ameritas Life Insurance Group
American General Life Insurance Company
Annuity Investors Life Insurance Company
Columbus Life Insurance Company
Commonwealth Annuity and Life Insurance Company
Companion Life Insurance Company
Connecticut General Life Insurance Company
Farmers New World Life Insurance Company
Fidelity Security Life Insurance Company
First Allmerica Financial Life Insurance Company
Genworth Life Insurance Company of New York
Genworth Life and Annuity Insurance Company
Great West Life and Annuity  Insurance  Company
Hartford Life Insurance Company
ICMG Registered Variable Life
Integrity Life Insurance Company
John Hancock Life Insurance companies
Kemper Investors Life Insurance Company
Lincoln Benefit Life Insurance Company
Lincoln Life & Annuity Company of New York

                                       92
<PAGE>

Lincoln National Life Insurance Company
Massachusetts Mutual Life Insurance Group
MetLife Group
Minnesota Life Insurance Company
Mutual of America Life Insurance Company
National Life Insurance Company
National Integrity Life Insurance Company
Nationwide Group
New York Life Insurance and Annuity Corporation
Phoenix Life Insurance Company
Protective Life Insurance
Provident Mutual Life Insurance
Prudential Insurance Company of America
Sun Life GroupSymetra Life Insurance Company
Transamerica Life Insurance Company
Union Central Life Insurance Company
United of Omaha Life Insurance Company
United Investors Life Insurance Company
Western Southern Life Assurance Company

Any additions,  modifications or deletions to the financial advisors  identified
above that have occurred since the date hereof are not reflected.

The Advisor,  the  Distributor  or their  affiliates  may enter into  additional
revenue sharing arrangements or change or discontinue existing arrangements with
financial advisors at any time without notice.

The  prospect  of  receiving,  or the  receipt  of  additional  compensation  or
promotional  incentives  described above by financial  advisors may provide such
financial advisors and/or their salespersons with an incentive to favor sales of
shares of the DWS Funds or a particular  DWS Fund over sales of shares of mutual
funds (or  non-mutual  fund  investments)  with  respect to which the  financial
advisor does not receive additional compensation or promotional  incentives,  or
receives  lower levels of additional  compensation  or  promotional  incentives.
Similarly,  financial advisors may receive different  compensation or incentives
that may influence  their  recommendation  of any particular  share class of the
Fund or of other funds. These payment arrangements, however, will not change the
price that an investor pays for Fund shares or the amount that the Fund receives
to invest on behalf of an investor and will not increase Fund expenses.  You may
wish to take  such  payment  arrangements  into  account  when  considering  and
evaluating  any  recommendations  relating to Fund shares and you should discuss
this matter with your  financial  advisor  and review your  financial  advisor's
disclosures.

Automatic  Investment  Plan. A shareholder may purchase  additional  shares of a
Fund through an automatic  investment program.  With the Direct Deposit Purchase
Plan ("Direct Deposit"),  investments are made automatically (minimum $1,000 and
maximum  $250,000  for  initial  investments  and a minimum  of $50 and  maximum
$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.  A Fund may  immediately
terminate a shareholder's Direct Deposit in the event that any item is unpaid by
the shareholder's financial institution.

Minimum Subsequent Investment Policies.  For current shareholders there is a $50
minimum investment  requirement for subsequent investments in the fund. There is
no  minimum  subsequent  investment  requirement  for  investments  on behalf of
participants in certain  fee-based and wrap programs  offered through  financial
intermediaries approved by the Advisor.

Payroll  Investment  Plans. A shareholder  may purchase  shares through  Payroll
Direct Deposit or Government  Direct  Deposit.  Under these  programs,  all or a
portion of a shareholder's  net pay or government check is invested each payment
period.  A shareholder may terminate  participation  in these programs by giving
written  notice  to  the  shareholder's   employer  or  government   agency,  as
appropriate.  (A  reasonable  time  to act  is  required.)  The  Funds  are


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not responsible  for the efficiency of the employer or government  agency making
the payment or any financial institutions transmitting payments.

Expedited Purchase Procedures for Existing  Shareholders.  Shareholders of other
DWS funds who have  submitted an account  application  and have  certified a tax
identification  number, clients having a regular investment counsel account with
the Advisor or its affiliates and members of their immediate families,  officers
and  employees  of the  Advisor  or of any  affiliated  organization  and  their
immediate  families,  members of FINRA, and banks may open an account by wire by
calling 1-800-728-3337 for instructions. The investor must send a duly completed
and signed  application  to the Fund promptly.  A subsequent  purchase order for
$10,000 or more that is not  greater  than four  times an  account  value may be
placed by telephone,  etc. by  established  shareholders  (except by DWS Scudder
Individual  Retirement  Account  (IRA),  DWS Scudder  Horizon Plan,  DWS Scudder
Profit  Sharing and Money  Purchase  Pension  Plans,  DWS 401(k) and DWS Scudder
403(b) Plan holders), members of FINRA, and banks.

It is our policy to offer purchase  privileges to current or former directors or
trustees of the Deutsche or DWS mutual funds,  employees,  their spouses or life
partners and children or step-children age 21 or younger of Deutsche Bank or its
affiliates  or a  sub-advisor  to any  fund  in the DWS  family  of  funds  or a
broker-dealer authorized to sell shares of the funds. Qualified individuals will
generally  be allowed to  purchase  shares in the class with the lowest  expense
ratio,  usually  the  Institutional  Class  shares.  If 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.

Redemptions

A Fund may suspend or postpone  redemptions as permitted by section 22(e) of the
Investment Company Act.

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

Redemption  requests  must be  unconditional.  Redemption  requests (and a stock
power for certificated  shares) must be duly endorsed by the account holder.  As
specified  in  the  prospectus,  signatures  may  need  to  be  guaranteed  by a
commercial bank, trust company,  savings and loan  association,  federal savings
bank,  member  firm  of  a  national  securities  exchange  or  other  financial
institution  permitted by SEC rule.  Additional  documentation  may be required,
particularly  from   institutional  and  fiduciary  account  holders,   such  as
corporations,  custodians  (e.g.,  under the Uniform  Transfers  to Minors Act),
executors, administrators, trustees or guardians.

If the proceeds of the  redemption  (prior to the  imposition of any  contingent
deferred  sales charge) are $100,000 or less and the proceeds are payable to the
shareholder of record at the address of record,  normally a telephone request or
a written  request by any one account  holder  without a signature  guarantee is
sufficient for  redemptions by individual or joint account  holders,  and trust,
executor  and  guardian  account  holders,  provided  the  trustee,  executor or
guardian  is named in the  account  registration.  Other  institutional  account
holders may  exercise  this special  privilege of redeeming  shares by telephone
request or  written  request  without  signature  guarantee  subject to the same
conditions as individual account holders,  provided that this privilege has been
pre-authorized by the institutional account holder by written instruction to the
Shareholder Service Agent with signatures guaranteed.  This privilege may not be
used to  redeem  shares  held in  certificated  form  and may not be used if the
shareholder's account has had an address change within 15 days of the redemption
request.

Wires.  Delivery of the proceeds of a wire redemption of $250,000 or more may be
delayed  by a 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 Funds are 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's  Shareholder  Service  Agent  with  signatures
guaranteed as described  above or contact the firm through which the Fund shares
were purchased.

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Automatic  Withdrawal  Plan.  The owner of $5,000 or more of a class of a Fund's
shares at the offering  price (net asset value) may provide for the payment from
the owner's account of any requested  dollar amount to be paid to the owner or a
designated  payee  monthly,  quarterly,  semiannually  or  annually.  The $5,000
minimum account size is not applicable to IRAs. The minimum  periodic payment is
$50. The maximum annual rate at which shares, 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  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.  Requests for increases in
withdrawal  amounts or to change the payee must be submitted in writing,  signed
exactly as the account is registered,  and contain signature  guarantee(s).  Any
such requests must be received by a 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 a Fund under the Plan have
been  liquidated  or upon  receipt  by the  Trust  of  notice  of  death  of the
shareholder.

An  Automatic   Withdrawal   Plan  request  form  can  be  obtained  by  calling
1-800-728-3337 for Class S.

In-kind  Redemptions.  A Fund  reserves  the  right to  honor  any  request  for
redemption  or  repurchase  by  making  payment  in whole or in part in  readily
marketable securities. These securities will be chosen by the Fund and valued as
they are for purposes of computing the Fund's net asset value. A shareholder may
incur transaction expenses in converting these securities to cash.

Checkwriting.  All new  investors and existing  shareholders  who apply to State
Street  Bank and  Trust  Company  for  checks  may use  them to pay any  person,
provided  that each check is for at least $100 and not more than $5 million.  By
using the checks,  the shareholder  will receive daily dividend credit on his or
her  shares  until the check has  cleared  the  banking  system.  Investors  who
purchased  shares by check may write checks against those shares only after they
have been on a Fund's book for seven  business days.  Shareholders  who use this
service  may also use other  redemption  procedures.  No  shareholder  may write
checks  against  certificated  shares.  A Fund  pays the bank  charges  for this
service.  However, each Fund will review the cost of operation  periodically and
reserve  the right to  determine  if direct  charges  to the  persons  who avail
themselves of this service would be appropriate.  Each Fund, DWS Scudder Service
Corporation  and State  Street Bank and Trust  Company  reserve the right at any
time to suspend or terminate the Checkwriting procedure.

Exchanges

Shareholders  may request a taxable  exchange of their  shares for shares of the
corresponding  class of other DWS Funds  without  imposition  of a sales charge,
subject to the provisions  below. For purposes of calculating any CDSC,  amounts
exchanged retain their original cost and purchase date.

Shares of money  market  funds that were  acquired  by purchase  (not  including
shares acquired by dividend  reinvestment)  are subject to the applicable  sales
charge on exchange.  Series of DWS Target Fund are  available  on exchange  only
during  the  offering  period for such  series as  described  in the  applicable
prospectus.  Cash Management Fund Investment, Tax Free Money Fund Investment, NY
Tax-Free Money Fund Investment,  Treasury Money Fund -- Class Investment,  Money
Market Fund Investment,  Cash Management Fund Institutional,  Cash Reserves Fund
Institutional,  Treasury Money Fund --  Institutional,  Cash Reserve Fund,  Inc.
Prime Series,  Cash Reserve Fund, Inc.  Treasury Series,  Tax-Exempt  California
Money Market Fund,  Cash Account Trust and Investors Cash Trust are available on
exchange but only through a financial  services firm having a services agreement
with DWS-SDI.  All  exchanges  among money funds must meet  applicable  investor
eligibility  and investment


                                       95
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requirements.  Exchanges  may only be made for funds that are available for sale
in the shareholder's state of residence.  Currently, Tax-Exempt California Money
Market Fund is available for sale only in California.

Shareholders must obtain prospectuses of the Funds they are exchanging into from
dealers, other firms or DWS-SDI.

Automatic Exchange Plan. The owner of $1,000 or more of any class of shares of a
DWS Fund may  authorize  the  automatic  exchange  of a  specified  amount  ($50
minimum) of such  shares for shares of the same class of another  such DWS Fund.
Exchanges  will  be  made  automatically  until  the  shareholder  or  the  Fund
terminates  the  privilege.  Exchanges  are subject to the terms and  conditions
described above.

                                    DIVIDENDS

The DWS  LifeCompass  Retirement  Fund and the DWS  LifeCompass  2015  Fund each
intend  to  distribute  investment  company  taxable  income,  exclusive  of net
short-term  capital  gains in  excess  of net  long-term  capital  losses,  on a
quarterly  basis,  and  distributions  of net capital gains realized  during the
fiscal year will be made in November  or December to avoid  federal  excise tax,
although  an  additional  distribution  may be made within  three  months of its
fiscal year end, if necessary.  The DWS  LifeCompass  2020 Fund, DWS LifeCompass
2030 Fund and DWS LifeCompass  2040 Fund intend to distribute  their  investment
company  taxable  income  and any net  realized  capital  gains in  November  or
December to avoid federal excise tax,  although any additional  distribution may
be made within three months of the Fund's fiscal year end, if necessary.

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 each Fund issues to each  shareholder  a  statement  of the
federal income tax status of all distributions in the prior calendar year.

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.  The
Fund will reinvest  dividend checks (and future dividends) in shares of the same
Fund and class if checks are  returned  as  undeliverable.  Dividends  and other
distributions  of  the  Fund  in  the  aggregate  amount  of  $10  or  less  are
automatically  reinvested  in shares of the same  class of the Fund  unless  the
shareholder  requests  in  writing  that a check be issued  for that  particular
distribution.

Each 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, a Fund
may make additional  distributions of net investment  income or capital gain net
income in order to satisfy the minimum  distribution  requirements  contained in
the Code.

                                      TAXES

The following is intended to be a general  summary of certain federal income tax
consequences  of  investing  in the  Funds.  It is not  intended  as a  complete
discussion  of all such  consequences,  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 a Fund.

Federal Taxation.  Each 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.  Each Fund  intends to continue to so qualify in each taxable


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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,  each
Fund must among other things:

(a)      derive at least 90% of its gross  income for each taxable year from (i)
         dividends, interest, payments with respect to certain securities loans,
         and gains from the sale or other  disposition  of stock,  securities or
         foreign currencies, or other income (including but not limited to gains
         from options,  futures,  or forward  contracts) derived with respect to
         its business of investing in such stock, securities, or currencies, and
         (ii) net income  derived from interests in "qualified  publicly  traded
         partnerships" (as defined below);

(b)      diversify  its  holdings  so that,  at the end of each  quarter  of the
         Fund's taxable year, (i) at least 50% of the market value of the Fund's
         total  assets is  represented  by cash and cash  items,  US  Government
         securities,  securities of other regulated  investment  companies,  and
         other  securities  limited  in respect of any one issuer to a value not
         greater  than 5% of the value of the Fund's  total  assets and not more
         than 10% of the outstanding  voting securities of such issuer, and (ii)
         not more than 25% of the value of the Fund's  total  assets is invested
         (x) in the  securities  (other than those of the US Government or other
         regulated  investment  companies)  of any one  issuer or of two or more
         issuers  which the Fund  controls  and which are  engaged  in the same,
         similar,  or related trades or businesses,  or (y) in the securities of
         one or more qualified publicly traded  partnerships (as defined below);
         and

(c)      distribute with respect to each taxable year at least 90% of the sum of
         its investment  company  taxable income (as that term is defined in the
         Code without  regard to the deduction for dividends  paid -- generally,
         taxable  ordinary  income and the  excess,  if any,  of net  short-term
         capital gains over net  long-term  capital  losses) and net  tax-exempt
         interest income, for such year.

In  general,  for  purposes of the 90% gross  income  requirement  described  in
paragraph  (a)  above,  income  derived  from a  partnership  will be treated as
qualifying  income only to the extent such  income is  attributable  to items of
income of the  partnership  which would be qualifying  income if realized by the
regulated investment company.  However, recent legislation provides that 100% of
the net  income  derived  from  an  interest  in a  "qualified  publicly  traded
partnership"  (defined as a partnership  (i) interests in which are traded on an
established  securities  market or readily tradable on a secondary market or the
substantial equivalent thereof and (ii) that derives less than 90% of its income
from the qualifying  income described in paragraph (a)(i) above) will be treated
as qualifying income. In addition, although in general the passive loss rules of
the Code do not apply to regulated investment companies,  such rules do apply to
a regulated investment company with respect to items attributable to an interest
in a qualified publicly traded partnership.  Finally,  for purposes of paragraph
(b) above, the term "outstanding  voting securities of such issuer" will include
the equity securities of a qualified publicly traded partnership.

If a Fund qualifies as a regulated  investment  company that is accorded special
tax  treatment,  the Fund will not be subject  to  federal  income tax on income
distributed  in a timely  manner to its  shareholders  in the form of  dividends
(including Capital Gain Dividends, as defined below).

If for any taxable year a Fund does not qualify for the special  federal  income
tax treatment afforded regulated investment companies, all of its taxable income
will be subject to federal  income tax at regular  corporate  rates (without any
deduction for distributions to its  shareholders),  and all  distributions  from
earnings and profits,  including any  distributions of net tax-exempt income and
net long-term capital gains, will be taxable to shareholders as ordinary income.
Such  distributions  could be eligible (i) to be treated as "qualified  dividend
income," in the case of individual and certain other noncorporate  shareholders,
subject to reduced rates of federal income  taxation for taxable years beginning
before January 1, 2011 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.

Each Fund is subject to a 4% nondeductible  excise tax on amounts required to be
but 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


                                       97
<PAGE>

year as well as  amounts  that were  neither  distributed  nor taxed to the Fund
during the prior  calendar  year.  Although  each Fund's  distribution  policies
should  enable it to avoid  excise  tax  liability,  a Fund may  retain  (and be
subject  to income or excise  tax on) a  portion  of its  capital  gain or other
income if it appears to be in the interest of such Fund.

Taxation  of  Distributions  from the Funds.  For federal  income tax  purposes,
distributions  of investment  income are generally  taxable as ordinary  income.
Taxes on  distributions  of capital  gains are  determined by how long the Funds
owned the investments  that generated  them,  rather than how long a shareholder
has owned his or her shares. Distributions of net capital gains from the sale of
investments  that a Fund  owned  for more  than  one year and that are  properly
designated by the Fund as capital gain dividends ("Capital Gain Dividends") will
be taxable as long-term  capital gains.  Distributions of gains from the sale of
investments  that a Fund owned for one year or less will be taxable as  ordinary
income.  For taxable years beginning before December 31, 2008,  distributions of
investment  income  designated  by a Fund as derived  from  "qualified  dividend
income" will be taxed in the hands of  individuals  at the rates  applicable  to
long-term capital gain,  provided holding period and other  requirements are met
at both the shareholder and Fund level.

Distributions  are taxable to shareholders  even if they are paid from income or
gains  earned  by the Fund  before a  shareholder's  investment  (and  thus were
included in the price the shareholder  paid).  Distributions are taxable whether
shareholders  receive them in cash or reinvest them in additional shares through
the reinvestment  privilege. A shareholder whose distributions are reinvested in
shares  will be treated as having  received a dividend  equal to the fair market
value of the new shares issued to the  shareholder.  Any gain resulting from the
sale or exchange of Fund shares generally will be taxable as capital gains.

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

In order for some portion of the dividends  received by a 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 each Fund's shares.  A dividend will not be treated as qualified
dividend income (at either the Fund or shareholder level) (1) if the dividend is
received  with  respect to any share of stock held for fewer than 61 days during
the  121-day  period  beginning  on the date which is 60 days before the date on
which such share becomes  ex-dividend  with respect to such dividend (or, in the
case of certain  preferred stock, 91 days during the 181-day period beginning 90
days  before  such  date),  (2) to the  extent  that the  recipient  is under an
obligation  (whether  pursuant  to a short sale or  otherwise)  to make  related
payments with respect to positions in substantially similar or related property,
(3) if the recipient  elects to have the dividend  income  treated as investment
interest,  or (4) if the dividend is received from a foreign corporation that is
(a) not eligible for the benefits of a comprehensive  income tax treaty with the
United States (with the  exception of dividends  paid on stock of such a foreign
corporation  readily tradable on an established  securities market in the United
States) or (b) treated as a passive foreign investment  company. As discussed in
the  Prospectus,  if a Fund receives  dividends from an Underlying DWS Fund that
qualifies  as a  regulated  investment  company  and  the  Underlying  DWS  Fund
designates  such dividends as qualified  dividend  income,  then the Fund may in
turn designate that portion of its distributions derived from those dividends as
qualified  dividend  income as well,  provided the Fund meets holding period and
other requirements with respect to shares of the Underlying DWS Fund.

In  general,  distributions  of  investment  income  designated  by each Fund 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,  then 100% of the Fund's
dividends (other than dividends  properly  designated as Capital Gain Dividends)
will be eligible to be treated as qualified  dividend income.  For this purpose,
the  only  gain  included  in the  term  "gross  income"  is the  excess  of net
short-term capital gain over net long-term capital loss.

If a fund receives  dividends  from an Underlying  DWS Fund that  qualifies as a
regulated  investment  company  and the  Underlying  DWS  Fund  designates  such
dividends as qualified dividend income, then the fund may in turn designate that
portion of its distributions  derived from those dividends as qualified dividend
income  as  well,


                                       98
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provided the fund meets the holding period and other  requirements  with respect
to shares of the Underlying DWS Fund.

Capital gains  distributions  may be reduced if Fund capital loss  carryforwards
are available.  Any capital loss  carryforwards  to which a Fund is entitled are
disclosed in a Fund's annual and semiannual reports to shareholders.

If dividends from domestic  corporations  constitute a substantial  part of each
Fund's gross income,  a portion of the income  distributions of such Fund may be
eligible  for  the  70%  deduction  for  dividends   received  by  corporations.
Shareholders will be informed of the portion of dividends which so qualify.  The
dividends-received  deduction is reduced to the extent the shares of a 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
a fund are deemed to have been held by the Fund or the shareholder,  as the case
may be, for less than 46 days during the 91-day period  beginning 45 days before
the shares become ex-dividend.

Fund-of-Funds  Structure.  The use of a fund-of-funds structure could affect the
amount, timing, and character of distributions from a Fund, and, therefore,  may
increase the amount of taxes payable by shareholders. Because a Fund will invest
all of its  assets in shares of the  Underlying  DWS  Funds,  its  distributable
income  and gains will  normally  consist  entirely  of  distributions  from the
Underlying  DWS Funds and gains and losses on the  disposition  of shares of the
Underlying  DWS Funds.  To the extent that an  Underlying  DWS Fund realizes net
losses on its  investments  for a given taxable year, a Fund will not be able to
recognize  its  shares of those  losses  (so as to offset  distributions  of net
income or capital gains from other the  Underlying  DWS Funds) until it disposes
of shares of the Underlying DWS Fund. Moreover,  even when a Fund does make such
a  disposition,  a portion of its loss may be recognized as a long-term  capital
loss,  which will not be treated as favorably for federal income tax purposes as
a short-term capital loss or an ordinary deduction.  In particular,  a Fund will
not be able to offset any capital losses from its dispositions of the Underlying
DWS Fund shares against its ordinary income (including  distributions of any net
short-term  capital gains realized by an Underlying DWS Fund).  In addition,  in
certain circumstances,  the "wash sale" rules under Section 1091 of the Code may
apply to a Fund's sales of shares of an Underlying  DWS Fund that have generated
losses.  A wash sale  occurs if shares of an  Underlying  DWS Fund are sold by a
Fund at a loss and the Fund acquires  additional  shares of that same Underlying
DWS Fund 30 days before or after the date of the sale. The wash-sale rules could
defer losses in the Fund's hands on sales of the  Underlying DWS Fund shares (to
the extent  such sales are wash  sales) for  extended  (and,  in certain  cases,
potentially indefinite) periods of time. As a result of the foregoing rules, and
certain other special  rules,  it is possible that the amounts of net investment
income and net  capital  gains that a Fund will be  required  to  distribute  to
shareholders  will be  greater  than such  amounts  would have been had the Fund
invested  directly in the securities  held by the  Underlying DWS Funds,  rather
than investing in shares of the Underlying DWS Funds. For similar  reasons,  the
character of distributions  from a Fund (e.g.,  long-term  capital gain,  exempt
interest,   eligibility  for  dividends-received   deduction,   etc.)  will  not
necessarily be the same as it would have been had the Fund invested  directly in
the securities held by the Underlying DWS Funds.

Transactions  in Fund Shares.  The sale,  exchange or  redemption of shares of a
Fund may give rise to a gain or loss. In general, any gain or loss realized upon
a taxable  disposition  of shares will be treated as  long-term  capital gain or
loss if the shares have been held for more than 12 months.  Otherwise,  the gain
or loss on the  taxable  disposition  of  shares of a Fund  will be  treated  as
short-term gain or loss.  However,  any loss realized upon a taxable disposition
of shares held for six months or less will be treated as long-term,  rather than
short-term,  to the extent of any long-term capital gain distributions  received
(or deemed  received) by the  shareholder  with respect to the shares.  All or a
portion of any loss  realized upon a taxable  disposition  of shares of the Fund
will be  disallowed  if  other  substantially  identical  shares  of a Fund  are
purchased  within 30 days before or after the  disposition.  In such a case, the
basis of the newly  purchased  shares will be adjusted to reflect the disallowed
loss.

Depending on a Fund's percentage ownership in an Underlying DWS Fund both before
and after a redemption of Underlying DWS Fund shares,  the Fund's  redemption of
shares of such Underlying DWS Fund may cause the Fund to be treated as receiving
a dividend  taxable as ordinary  income on the full  amount of the  distribution
instead of  receiving  capital gain income on the shares of the  Underlying  DWS
Fund.  This would be the case where the Fund holds a significant  interest in an
Underlying DWS Fund and redeems only a small portion of such interest.

                                       99
<PAGE>

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. Under current law, a fund of funds cannot
pass  through to  shareholders  foreign tax credits  borne in respect of foreign
securities income earned by an Underlying DWS Fund. A fund is permitted to elect
to pass  through to its  shareholders  foreign  income  taxes it pays only if it
directly  holds more than 50% of its assets in foreign  stock and  securities at
the close of its taxable year.  Foreign  securities held  indirectly  through an
Underlying DWS Fund do not contribute to this 50%  threshold.  As a result,  the
Funds will not be eligible to pass  through to  shareholders  its  proportionate
share of any foreign taxes paid, with the result that  shareholders  will not be
able to include  in  income,  and will not be  entitled  to take any  credits or
deductions for such foreign taxes.

Passive Foreign Investment Companies. Direct equity investments by an Underlying
DWS Fund of a Fund in certain "passive foreign investment  companies"  ("PFICs")
could  potentially  subject  the  Fund to a US  federal  income  tax  (including
interest  charges)  on  distributions  received  from the company or on proceeds
received  from the  disposition  of shares in the  company,  which tax cannot be
eliminated by making distributions to Fund shareholders.  However, such Fund may
elect to avoid the  imposition  of that tax. For example,  the Fund may elect to
treat a PFIC as a "qualified  electing fund" (a "QEF  election"),  in which case
the Fund would be required to include its share of the company's  income and net
capital gains annually,  regardless of whether it receives any distribution from
the  company.  Such Fund also may make an  election  to mark the gains (and to a
limited  extent  losses) in 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. Such gains and losses are treated as ordinary income and loss. The
QEF and  mark-to-market  elections  may  accelerate  the  recognition  of income
(without the receipt of cash) and increase the amount required to be distributed
by the Fund to avoid taxation.  Making either of these  elections  therefore may
require  such Fund to  liquidate  other  investments  (including  when it is not
advantageous  to do so) to meet its  distribution  requirement,  which  also may
accelerate the recognition of gain and affect the Fund's total return. The Funds
will  not  be  entitled  to  make  such   elections  with  respect  to  indirect
investments;  rather,  an Underlying  DWS Fund  investing in a PFIC would decide
whether to make such elections.  Dividends paid by PFICs will not be eligible to
be treated as "qualified dividend income."

Other Tax  Considerations.  All distributions by a Fund result in a reduction in
the net asset value of that Fund's shares.  Should a distribution reduce the net
asset  value  below  a  shareholder's   cost  basis,  such  distribution   would
nevertheless be taxable to the shareholder as ordinary income or capital gain as
described above, even though, from an investment standpoint, it may constitute a
partial  return of  capital.  In  particular,  investors  should be  careful  to
consider the tax implications of buying shares just prior to a distribution. The
price of shares  purchased at that time  includes the amount of the  forthcoming
distribution.  Those  purchasing  just prior to a  distribution  will  receive a
partial  return of capital upon the  distribution,  which will  nevertheless  be
taxable to them.

Under Treasury regulations,  if a shareholder  recognizes a loss with respect to
the Fund's  shares of $2 million or more for an  individual  shareholder  or $10
million or more for a corporate shareholder,  the shareholder must file with the
Internal   Revenue  Service  a  disclosure   statement  on  Form  8886.   Direct
shareholders  of Fund  securities are in many cases excepted from this reporting
requirement, but under current guidance,  shareholders of a regulated investment
company are not excepted.  Future guidance may extend the current exception from
this reporting  requirement to shareholders of most or all regulated  investment
companies.  The fact that a loss is reportable under these  regulations does not
affect the legal  determination of whether the taxpayer's  treatment of the loss
is proper.  Shareholders  should  consult  their tax advisors to  determine  the
applicability of these regulations in light of their individual circumstances.

Special tax rules apply to  investments  though defined  contribution  plans and
other  tax-qualified  plans.  Shareholders  should  consult their tax adviser to
determine  the  suitability  of shares of a fund as an  investment  through such
plans  and  the  precise  effect  of and  investment  on  their  particular  tax
situation.  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 a Fund
with their taxpayer  identification  numbers and  certifications as to their tax
status.

Non-US  Shareholders.  Capital Gain Dividends will not be subject to withholding
of federal income tax. In general,  dividends  other than Capital Gain Dividends
paid by a Fund to a shareholder  that is not a "US person" within the


                                      100
<PAGE>

meaning  of the Code  (such  shareholder,  a "foreign  person")  are  subject to
withholding  of US  federal  income  tax at a rate of 30% (or  lower  applicable
treaty  rate)  even if they are  funded by income  or gains  (such as  portfolio
interest,  short-term  capital gains,  or  foreign-source  dividend and interest
income)  that,  if paid to a foreign  person  directly,  would not be subject to
withholding.  However,  effective for taxable years of a Fund  beginning  before
January 1, 2008,  the Fund will not be required to withhold any amounts (i) with
respect to distributions  (other than distributions to a foreign person (w) that
has not provided a satisfactory  statement that the beneficial owner is not a US
person,  (x) to the extent that the dividend is attributable to certain interest
on an obligation if the foreign person is the issuer or is a 10%  shareholder of
the issuer,  (y) that is within certain  foreign  countries that have inadequate
information  exchange with the United States,  or (z) to the extent the dividend
is  attributable  to interest  paid by a person that is a related  person of the
foreign person and the foreign person is a controlled foreign  corporation) from
US-source  interest income that, in general,  would not be subject to US federal
income tax if earned  directly by an individual  foreign  person,  to the extent
such distributions are properly designated by the Fund, and (ii) with respect to
distributions  (other than  distributions to an individual foreign person who is
present in the United  States  for a period or periods  aggregating  183 days or
more during the year of the  distribution)  of net  short-term  capital gains in
excess of net long-term  capital losses,  to the extent such  distributions  are
properly designated by the Fund. Depending on the circumstances, a Fund may make
such designations with respect to all, some or none of its potentially  eligible
dividends  and/or treat such  dividends,  in whole or in part, as ineligible for
this  exemption  from  withholding.  In order to qualify for this exemption from
withholding,  a foreign person will need to comply with applicable certification
requirements relating to its non-US status (including, in general, furnishing an
IRS Form  W-8BEN or  substitute  Form).  In the case of shares  held  through an
intermediary,  the  intermediary may withhold even if a Fund makes a designation
with respect to a payment.  Foreign persons should contact their  intermediaries
with respect to the application of these rules to their accounts.

If a  beneficial  holder who is a foreign  person has a trade or business in the
United States,  and the dividends are effectively  connected with the conduct by
the beneficial holder of a trade or business in the United States,  the dividend
will be subject to US federal net income taxation at regular income tax rates.

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

                                 NET ASSET VALUE

The net  asset  value of  shares  of each  Fund is  computed  as of the close of
regular trading on the New York Stock Exchange (the  "Exchange") on each day the
Exchange is open for trading (the "Value Time"). The Exchange is scheduled to be
closed on the following  holidays:  New Year's Day, Dr. Martin Luther King,  Jr.
Day,  Presidents' Day, Good Friday,  Memorial Day,  Independence Day, Labor Day,
Thanksgiving  and Christmas,  and on the preceding  Friday or subsequent  Monday
when one of these  holidays  falls on a Saturday  or Sunday,  respectively.  Net
asset  value  per share is  determined  separately  for each  class of shares by
dividing  the  value  of the  total  assets  of a  Fund,  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 a
Fund because of higher expenses borne by these classes.

The net asset value of each  Underlying  DWS Fund is  determined  based upon the
nature  of the  securities  as set  forth in the  prospectus  and  statement  of
additional  information of such  Underlying DWS Fund.  Shares of each Underlying
DWS Fund in which a Fund may invest are valued at the net asset  value per share
of each  Underlying DWS Fund as of the close of regular  trading on the Exchange
on each day the Exchange is open for  trading.  The net asset value per share of
the  Underlying  DWS Funds will be  calculated  and  reported  to a Fund by each
Underlying DWS Fund's accounting agent.  Short-term  securities with a remaining
maturity of sixty days or less are valued by the amortized cost method.

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


                                      101
<PAGE>

valuation date,  based on valuation  procedures  adopted by the Fund's Board and
overseen primarily by the Fund's Pricing Committee.

                              TRUSTEES AND OFFICERS

The following table presents certain information  regarding the Board Members of
the Trust.  Each Board Member's year of birth is set forth in parentheses  after
his or her name.  Unless  otherwise  noted, (i) each Board Member has engaged in
the principal occupation(s) noted in the table for at least the most recent five
years,  although not  necessarily in the same capacity,  and (ii) the address of
each Board  Member  that is not an  "interested  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 with the Trust                                                                            Number of Funds
 and Length of Time        Business Experience and                                                  in DWS Fund
 Served                    Directorships During the Past 5 Years                                    Complex Overseen
-----------------------------------------------------------------------------------------------------------------------
<S>                        <C>                                                                              <C>
Dawn-Marie Driscoll (1946) President, Driscoll Associates (consulting firm); Executive Fellow,              76
Chairperson since 2004     Center for Business Ethics, Bentley College; formerly, Partner, Palmer
Board Member since         & Dodge (1988-1990); Vice President of Corporate Affairs and General
1987                       Counsel, Filene's (1978-1988). Directorships: Trustee of 8 open-end
                           mutual funds managed by Sun Capital Advisers, Inc. (since 2007);
                           Director of ICI Mutual Insurance Company (since 2007); Advisory Board,
                           Center for Business Ethics, Bentley College; Trustee, Southwest Florida
                           Community Foundation (charitable organization); Former Directorships:
                           Investment Company Institute (audit, executive, nominating committees)
                           and Independent Directors Council (governance, executive committees)
-----------------------------------------------------------------------------------------------------------------------
 Henry P. Becton, Jr.      Vice Chair, WGBH Educational Foundation. Directorships: Association of           76
 (1943)                    Public Television Stations; Becton Dickinson and Company(1) (medical
 Board Member since        technology company); Belo Corporation(1) (media company); Boston Museum
 1990                      of Science; Public Radio International. Former Directorships: American
                           Public Television; Concord Academy; New England Aquarium; Mass.
                           Corporation for Educational Telecommunications; Committee for Economic
                           Development; Public Broadcasting Service
-----------------------------------------------------------------------------------------------------------------------
Keith R. Fox (1954)        Managing General Partner, Exeter Capital Partners (a series of private           76
Board Member since         equity funds). Directorships: Progressive Holding Corporation (kitchen
1996                       goods importer and distributor); Natural History, Inc. (magazine
                           publisher); Box Top Media Inc. (advertising); The Kennel Shop (retailer)
-----------------------------------------------------------------------------------------------------------------------
Kenneth C. Froewiss        Clinical Professor of Finance, NYU Stern School of Business                      76
(1945)                     (1997-present); Member, Finance Committee, Association for Asian
Board Member since         Studies (2002-present); Director, Mitsui Sumitomo Insurance Group (US)
2005                       (2004-present); prior thereto, Managing Director, J.P. Morgan
                           (investment banking firm) (until 1996)
-----------------------------------------------------------------------------------------------------------------------

                                      102
<PAGE>
-----------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth,
 Position with the Trust                                                                            Number of Funds
 and Length of Time        Business Experience and                                                  in DWS Fund
 Served                    Directorships During the Past 5 Years                                    Complex Overseen
-----------------------------------------------------------------------------------------------------------------------
Martin J. Gruber           Nomura Professor of Finance, Leonard N. Stern School of Business, New            76
(1937)                     York University (since September 1965); Director, Japan Equity Fund,
Board Member since         Inc. (since January 1992), Thai Capital Fund, Inc. (since January
2006                       2000), Singapore Fund, Inc. (since January 2000), National Bureau of
                           Economic Research (since January 2006). Formerly, Trustee, TIAA
                           (pension funds) (January 1996-January 2000); Trustee, CREF and CREF
                           Mutual Funds (January 2000-March 2005); Chairman, CREF and CREF Mutual
                           Funds (February 2004-March 2005); and Director, S.G. Cowen Mutual Funds
                           (January 1985-January 2001)
-----------------------------------------------------------------------------------------------------------------------
Richard J. Herring         Jacob Safra Professor of International Banking and Professor, Finance            76
(1946)                     Department, The Wharton School, University of Pennsylvania (since July
Board Member since         1972); Co-Director, Wharton Financial Institutions Center (since July
2006                       2000); Director, Japan Equity Fund, Inc. (since September 2007), Thai
                           Capital Fund, Inc. (since September 2007), Singapore Fund, Inc. (since
                           September 2007). Formerly, Vice Dean and Director, Wharton
                           Undergraduate Division (July 1995-June 2000); Director, Lauder
                           Institute of International Management Studies (July 2000-June 2006)
-----------------------------------------------------------------------------------------------------------------------
Graham E. Jones            Senior Vice President, BGK Realty, Inc. (commercial real estate) (since          76
(1933)                     1995). Formerly, Trustee of various investment companies managed by Sun
Board Member since         Capital Advisors, Inc. (1998-2005), Morgan Stanley Asset Management
2006                       (1985-2001) and Weiss, Peck and Greer (1985-2005)
-----------------------------------------------------------------------------------------------------------------------
Rebecca W. Rimel           President and Chief Executive Officer, The Pew Charitable Trusts                 76
(1951)                     (charitable foundation) (1994 to present); Trustee, Thomas Jefferson
Board Member since         Foundation (charitable organization) (1994 to present); Trustee,
2006                       Executive Committee, Philadelphia Chamber of Commerce (2001 to
                           present). Formerly, Executive Vice President, The Glenmede Trust
                           Company (investment trust and wealth management) (1983 to 2004); Board
                           Member, Investor Education (charitable organization) (2004-2005);
                           Director, Viasys Health Care(1) (January 2007-June 2007)
-----------------------------------------------------------------------------------------------------------------------
Philip Saunders, Jr.       Principal, Philip Saunders Associates (economic and financial                    74
(1935)                     consulting) (since November 1988).  Formerly, Director, Financial
Board Member since         Industry Consulting, Wolf & Company (consulting) (1987-1988);
2006                       President, John Hancock Home Mortgage Corporation (1984-1986); Senior
                           Vice President of Treasury and Financial Services, John Hancock Mutual
                           Life Insurance Company, Inc. (1982-1986)
-----------------------------------------------------------------------------------------------------------------------
William N. Searcy, Jr.     Private investor since October 2003; Trustee of 8 open-end mutual funds          76
(1946)                     managed by Sun Capital Advisers, Inc. (since October 1998). Formerly,
Board Member since         Pension & Savings Trust Officer, Sprint Corporation((1))
2006                       (telecommunications) (November 1989-September 2003)
-----------------------------------------------------------------------------------------------------------------------
Jean Gleason Stromberg     Retired. Formerly, Consultant (1997-2001); Director, US Government               76
(1943)                     Accountability Office (1996-1997); Partner, Fulbright & Jaworski,
Board Member since         L.L.P. (law firm) (1978-1996). Directorships: The William and Flora
1999                       Hewlett Foundation; Service Source, Inc. Former Directorships: Mutual
                           Fund Directors Forum (2002-2004), American Bar Retirement Association
                           (funding vehicle for retirement plans) (1987-1990 and 1994-1996)
-----------------------------------------------------------------------------------------------------------------------

                                      103
<PAGE>
-----------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth,
 Position with the Trust                                                                            Number of Funds
 and Length of Time        Business Experience and                                                  in DWS Fund
 Served                    Directorships During the Past 5 Years                                    Complex Overseen
-----------------------------------------------------------------------------------------------------------------------
Carl W. Vogt               Retired Senior Partner, Fulbright & Jaworski, L.L.P. (law firm);                 74
(1936)                     formerly, President (interim) of Williams College (1999-2000);
Board Member since         formerly, President of certain funds in the Deutsche Asset Management
2002                       family of funds (formerly, Flag Investors family of funds) (registered
                           investment companies) (1999-2000). Directorships: Yellow Corporation
                           (trucking); American Science & Engineering (x-ray detection equipment).
                           Former Directorships: ISI Family of Funds (registered investment
                           companies, 4 funds overseen); National Railroad Passenger Corporation
                           (Amtrak) Waste Management, Inc. (solid waste disposal); formerly,
                           Chairman and Member, National Transportation Safety Board
-----------------------------------------------------------------------------------------------------------------------

Interested Board Member

-------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth,
 Position with the Trust                                                                         Number of Funds
 and Length of Time        Business Experience and                                                 in DWS Fund
 Served                    Directorships During the Past 5 Years                                Complex Overseen
-------------------------------------------------------------------------------------------------------------------
 Axel Schwarzer(2)         Managing Director(4), Deutsche Asset Management; Head of Deutsche            82
 (1958)                    Asset Management Americas; CEO of DWS Scudder; formerly board
 Board Member since        member of DWS Investments, Germany (1999-2005); formerly, Head of
 2006                      Sales and Product Management for the Retail and Private Banking
                           Division of Deutsche Bank in Germany (1997-1999); formerly, various
                           strategic and operational positions for Deutsche Bank Germany
                           Retail and Private Banking Division in the field of investment
                           funds, tax driven instruments and asset management for corporates
                           (1989-1996)
-------------------------------------------------------------------------------------------------------------------


Officers(3)

-------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth,
 Position with the Trust    Business Experience and
 and Length of Time Served  Directorships During the Past 5 Years
-------------------------------------------------------------------------------------------------------------------
 Michael G. Clark(5)        Managing Director(4), Deutsche Asset Management (2006-present); President of DWS
 (1965)                     family of funds; Director, ICI Mutual Insurance Company (since October 2007);
 President, 2006-present    formerly, Director of Fund Board Relations (2004-2006) and Director of Product
                            Development (2000-2004), Merrill Lynch Investment Managers; Senior Vice President
                            Operations, Merrill Lynch Asset Management (1999-2000)
-------------------------------------------------------------------------------------------------------------------
 John Millette(6) (1962)    Director(4), Deutsche Asset Management
 Vice President and
 Secretary, 1999-present
-------------------------------------------------------------------------------------------------------------------
 Paul H. Schubert(5)        Managing Director(4), Deutsche Asset Management (since July 2004); formerly,
 (1963)                     Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family of
 Chief Financial Officer,   Funds (1998-2004); Vice President and Director of Mutual Fund Finance at UBS Global
 2004-present               Asset Management (1994-1998)
 Treasurer, 2005-present
-------------------------------------------------------------------------------------------------------------------

                                      104
<PAGE>
-------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth,
 Position with the Trust    Business Experience and
 and Length of Time Served  Directorships During the Past 5 Years
-------------------------------------------------------------------------------------------------------------------
 Patricia DeFilippis(5)     Vice President, Deutsche Asset Management (since June 2005); Counsel, New York Life
 (1963)                     Investment Management LLC (2003-2005); legal associate, Lord, Abbett & Co. LLC
 Assistant Secretary,       (1998-2003)
 2005-present
-------------------------------------------------------------------------------------------------------------------
 Elisa D. Metzger(5)        Director(4), Deutsche Asset Management (since September 2005); Counsel, Morrison and
 (1962)                     Foerster LLP (1999-2005)
 Assistant Secretary,
 2005-present
-------------------------------------------------------------------------------------------------------------------
 Caroline Pearson(6)        Managing Director(4), Deutsche Asset Management
 (1962)
 Assistant Secretary,
 1997-present
-------------------------------------------------------------------------------------------------------------------
 Paul Antosca(6)            Director(4), Deutsche Asset Management (since 2006); Vice President, The
 (1957)                     Manufacturers Life Insurance Company (U.S.A.) (1990-2006)
 Assistant Treasurer,
 2007-present
-------------------------------------------------------------------------------------------------------------------
 Kathleen Sullivan          Director(4), Deutsche Asset Management
 D'Eramo(6)
 (1957)
 Assistant Treasurer,
 2003-present
-------------------------------------------------------------------------------------------------------------------
 Jason Vazquez(5) (1972)    Vice President, Deutsche Asset Management (since 2006); formerly, AML Operations
 Anti-Money Laundering      Manager for Bear Stearns (2004-2006), Supervising Compliance Principal and
 Compliance Officer,        Operations Manager for AXA Financial (1999-2004)
 2007-present
-------------------------------------------------------------------------------------------------------------------
 Robert Kloby(5) (1962)     Managing Director(4), Deutsche Asset Management (2004-present); formerly, Chief
 Chief Compliance           Compliance Officer/Chief Risk Officer, Robeco USA (2000-2004); Vice President, The
 Officer, 2006-present      Prudential Insurance Company of America (1988-2000); E.F. Hutton and Company
                            (1984-1988)
-------------------------------------------------------------------------------------------------------------------
 J. Christopher Jackson(5)  Director(4), Deutsche Asset Management (2006-present); formerly, Director, Senior
 (1951)                     Vice President, General Counsel, and Assistant Secretary, Hansberger Global
 Chief Legal Officer,       Investors, Inc. (1996-2006); Director, National Society of Compliance Professionals
 2006-present               (2002-2005)(2006-2009)
-------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)      A publicly held company with securities  registered pursuant to Section
         12 of the Securities Exchange Act of 1934.

(2)      The  mailing  address  of Axel  Schwarzer  is c/o  Deutsche  Investment
         Management  Americas Inc.,  345 Park Avenue,  New York, New York 10154.
         Mr.  Schwarzer is an interested Board Member by virtue of his positions
         with Deutsche Asset Management.  As an interested person, Mr. Schwarzer
         receives no compensation from the Funds.

(3)      As a result of their respective positions held with the Advisor,  these
         individuals are considered  "interested  persons" of the Advisor within
         the meaning of the 1940 Act. Interested persons receive no compensation
         from the Funds.

(4)      Executive title, not a board directorship.

(5)      Address:  345 Park Avenue, New York, New York 10154.

                                      105
<PAGE>

(6)      Address: Two International Place, Boston, Massachusetts 02110.

Each Officer also holds  similar  positions for other  investment  companies for
which DIMA or an affiliate serves as the advisor.

Officer's Role with Principal Underwriter:  DWS Scudder Distributors, Inc.

 Paul H. Schubert:                         Vice President
 Caroline Pearson:                         Secretary

Information Concerning Committees and Meetings of Board Members

The  Board of the  Trust met ten (10)  times  during  the  calendar  year  ended
December 31, 2006 and each Board Member attended at least 80% of the meetings of
the Board and meetings of the committees of the Board on which such Board Member
served.

Board  Committees.  Ms.  Driscoll  has served as Chair of the Board of the Funds
since June 2004.

The Board has established the following  standing  committees:  Audit Committee,
Nominating/Corporate Governance Committee, Valuation Committee, Equity Oversight
Committee, Fixed Income Oversight Committee,  Marketing/Distribution/Shareholder
Service Committee,  Legal/Regulatory/Compliance Committee and Expense/Operations
Committee.

The Audit  Committee  assists the Board in  fulfilling  its  responsibility  for
oversight of the quality and integrity of the accounting, auditing and financial
reporting  practices  of the  applicable  Fund.  It also  makes  recommendations
regarding the selection of an independent  registered public accounting firm for
a Fund,  reviews the  independence of such firm,  reviews the scope of audit and
internal  controls,  considers and reports to the Board on matters relating to a
Fund's  accounting and financial  reporting  practices,  and performs such other
tasks as the full Board deems  necessary  or  appropriate.  The Audit  Committee
receives  annual   representations   from  the  independent   registered  public
accounting firm as to its  independence.  The members of the Audit Committee are
Keith R. Fox (Chair and Audit Committee Financial Expert),  Kenneth C. Froewiss,
Richard J. Herring,  Graham E. Jones,  Philip Saunders,  Jr., William N. Searcy,
Jr. and Jean  Gleason  Stromberg.  The Audit  Committee  held eight (8) meetings
during the calendar year 2006.

The  Nominating/Corporate  Governance  Committee  (i)  recommends  to the  Board
candidates  to serve as Board  Members and (ii)  oversees  and, as  appropriate,
makes  recommendations  to the Board  regarding  other  fund  governance-related
matters,  including but not limited to Board compensation practices,  retirement
policies,  self-evaluations  of effectiveness,  review of possible  conflicts of
interest  and  independence  issues  involving  Board  Members,  allocations  of
assignments  and  functions  of  committees  of the Board,  and share  ownership
policies. The members of the Nominating/Corporate Governance Committee are Henry
P.  Becton,  Jr.  (Chair),  Graham E. Jones,  Rebecca W. Rimel and Jean  Gleason
Stromberg.  The  Nominating/Corporate  Governance Committee (previously known as
the  Committee on  Independent  Directors)  held three (3)  meetings  during the
calendar year 2006.

The Valuation  Committee  oversees Fund  valuation  matters,  reviews  valuation
procedures  adopted  by the  Board,  determines  the fair  value  of the  Fund's
securities as needed in accordance  with the valuation  procedures  and performs
such other tasks as the full Board deems necessary or  appropriate.  The members
of the Valuation  Committee  are Keith R. Fox,  Kenneth C.  Froewiss,  Martin J.
Gruber,  Richard J. Herring and Philip  Saunders,  Jr.  (Chair).  The  Valuation
Committee held six (6) meetings during the calendar year 2006.

The Board has established two Investment Oversight  Committees,  one focusing on
Funds  primarily   investing  in  equity   securities  (the  "Equity   Oversight
Committee")  and one  focusing  on Funds  primarily  investing  in fixed  income
securities  (the "Fixed Income  Oversight  Committee").  These  Committees  meet
regularly with Fund portfolio managers and other investment  personnel to review
the relevant  Funds'  investment  strategies  and  investment  performance.  The
members of the Equity  Oversight  Committee are Henry P. Becton,  Jr., Martin J.
Gruber (Chair),


                                      106
<PAGE>

Richard J. Herring, Rebecca W. Rimel, Philip Saunders, Jr. and Carl W. Vogt. The
members of the Fixed Income Oversight Committee are Dawn-Marie  Driscoll,  Keith
R. Fox, Kenneth C. Froewiss, Graham E. Jones, William N. Searcy, Jr. (Chair) and
Jean  Gleason  Stromberg.  Each  Investment  Oversight  Committee  held  six (6)
meetings during the calendar year 2006.

The  Marketing/Distribution/Shareholder   Service  Committee  oversees  (i)  the
quality, costs and types of shareholder services provided to the Funds and their
shareholders,  and (ii) the distribution-related  services provided to the Funds
and their  shareholders.  The members of the  Marketing/Distribution/Shareholder
Service Committee are Martin J. Gruber,  Richard J. Herring (Chair),  Rebecca W.
Rimel,     Jean     Gleason     Stromberg     and    Carl    W.    Vogt.     The
Marketing/Distribution/Shareholder  Service  Committee  held  six  (6)  meetings
during the calendar year 2006.

The  Legal/Regulatory/Compliance  Committee  oversees (i) the significant  legal
affairs of the Funds, including the handling of pending or threatened litigation
or  regulatory  action  involving  the Funds,  (ii) general  compliance  matters
relating   to  the  Funds  and  (iii)   proxy   voting.   The   members  of  the
Legal/Regulatory/Compliance  Committee  are  Henry P.  Becton,  Jr.,  Dawn-Marie
Driscoll,  Rebecca W. Rimel,  William N. Searcy, Jr., Jean Gleason Stromberg and
Carl W. Vogt (Chair).  The  Legal/Regulatory/Compliance  Committee  held six (6)
meetings during the calendar year 2006.

The Expense/Operations Committee (i) monitors the Fund's total operating expense
levels,  (ii)  oversees the  provision of  administrative  services to the Fund,
including the Fund's custody,  fund accounting and insurance  arrangements,  and
(iii) reviews the Fund's investment advisers' brokerage practices, including the
implementation  of  related  policies.  The  members  of the  Expense/Operations
Committee are Henry P. Becton, Jr., Dawn-Marie  Driscoll,  Keith R. Fox, Kenneth
C.  Froewiss,  Graham E. Jones  (Chair),  Philip  Saunders,  Jr. and  William N.
Searcy,  Jr. This  committee  held seven (7) meetings  during the calendar  year
2006.

Ad Hoc Committees.  In addition to the standing committees described above, from
time to time the Board also forms ad hoc committees to consider specific issues.
In 2006,  various ad hoc  committees of the Board held an  additional  seven (7)
meetings.

Remuneration.  Each Independent Board Member receives compensation from the Fund
for his or her services, which includes an annual retainer and an attendance fee
for each meeting attended. No additional compensation is paid to any Independent
Board Member for travel time to meetings,  attendance at directors'  educational
seminars  or  conferences,   service  on  industry  or  association  committees,
participation  as speakers at directors'  conferences or service on special fund
industry director task forces or subcommittees. Independent Board Members do not
receive any employee  benefits such as pension or retirement  benefits or health
insurance from the Fund or any fund in the DWS fund complex.

Members of the Board who are officers,  directors,  employees or stockholders of
Deutsche Asset Management or its affiliates receive no direct  compensation from
a Fund, although they are compensated as employees of Deutsche Asset Management,
or its affiliates,  and as a result may be deemed to participate in fees paid by
the Funds.  The following tables show  compensation  from the Fund and aggregate
compensation  from all of the  funds in the DWS fund  complex  received  by each
Board Member during the calendar year 2006. Mr. Schwarzer became a member of the
Board on May 5,  2006,  is an  interested  person of the Funds and  received  no
compensation  from the  Funds or any fund in the DWS  fund  complex  during  the
relevant periods.

<TABLE>
<CAPTION>

                                 Aggregate        Aggregate       Aggregate        Aggregate       Aggregate         Total
                                Compensation    Compensation     Compensation     Compensation    Compensation    Compensation
                                  from DWS        from DWS         from DWS         from DWS        from DWS     from Fund and
                                LifeCompass      LifeCompass     LifeCompass      LifeCompass     LifeCompass         DWS
Name of Board Member          Retirement Fund     2015 Fund       2020 Fund        2030 Fund       2040 Fund    Fund Complex(1)
--------------------          ---------------     ---------       ---------        ---------       ---------    ---------------

<S>                                  <C>          <C>               <C>                 <C>         <C>            <C>
Henry P. Becton, Jr.(3)             $488         $1,084            $1,011              $72         $0             $189,000
Dawn-Marie Driscoll (2)(3)(4)       $645         $1,435            $1,338              $94         $0             $251,000
Keith R. Fox (3)(4)                 $499         $1,108            $1,033              $73         $0             $195,000

                                      107
<PAGE>
                                 Aggregate        Aggregate       Aggregate        Aggregate       Aggregate         Total
                                Compensation    Compensation     Compensation     Compensation    Compensation    Compensation
                                  from DWS        from DWS         from DWS         from DWS        from DWS     from Fund and
                                LifeCompass      LifeCompass     LifeCompass      LifeCompass     LifeCompass         DWS
Name of Board Member          Retirement Fund     2015 Fund       2020 Fund        2030 Fund       2040 Fund    Fund Complex(1)
--------------------          ---------------     ---------       ---------        ---------       ---------    ---------------

Kenneth C. Froewiss (3)(4)          $514         $1,142            $1,067              $75         $0             $234,988
Martin J. Gruber (3)                $189           $416              $400              $30         $0             $188,000
Richard J. Herring (3)(4)           $182           $400              $384              $29         $0             $184,000
Graham E. Jones (3)(4)              $210           $462              $444              $33         $0             $206,000
Rebecca W. Rimel (3)                $185           $406              $390              $29         $0             $185,000
Philip Saunders,                    $210           $462              $444              $33         $0
Jr. (3)(4)                                                                                                        $207,000
William N. Searcy,                  $210           $462              $444              $33         $0
Jr. (3)(4)                                                                                                        $206,000
Jean Gleason Stromberg (3)(4)       $513         $1,139            $1,064              $76         $0             $202,000
Carl W. Vogt (3)                    $488         $1,084            $1,011              $72         $0             $189,000
</TABLE>

(1)      The DWS Fund Complex is composed of 155 funds as of December 31, 2006.

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

(3)      For each Board Member,  except Mr. Becton,  Mr.  Froewiss and Mr. Vogt,
         total  compensation  for calendar year 2006 includes  compensation  for
         service  on  the  boards  of  34  trusts/corporations  comprised  of 87
         funds/portfolios.  For Messrs.  Becton and Vogt total  compensation for
         calendar year 2006 includes  compensation  for service on the boards of
         32  trusts/corporations  comprised  of  85  funds/portfolios.  For  Mr.
         Froewiss   total   compensation   for  calendar   year  2006   includes
         compensation  for  services  on the  boards  of 37  trusts/corporations
         comprised of 90 funds/portfolios.

(4)      Aggregate  compensation  includes amounts paid to the Board Members for
         special  meetings of ad hoc committees of the board in connection  with
         the  possible  consolidation  of the various DWS Fund boards and funds,
         meetings for considering fund expense simplification  initiatives,  and
         consideration  of issues  specific  to the Funds'  direct  shareholders
         (i.e., those shareholders who did not purchase shares through financial
         intermediaries).  Such amounts totaled $16,000 for Ms. Driscoll, $1,000
         for Mr. Fox, $17,000 for Mr. Froewiss,  $1,000 for Dr. Herring, $16,000
         for Mr.  Jones,  $17,000 for Dr.  Saunders,  $16,000 for Mr. Searcy and
         $16,000  for Ms.  Stromberg.  These  meeting  fees  were  borne  by the
         applicable DWS Funds.

Board Member Ownership in the Funds(1)

The  following  table shows the dollar range of equity  securities  beneficially
owned by each Board  Member in the Funds and DWS Fund Complex as of December 31,
2006.

<TABLE>
<CAPTION>

                                            Dollar Range                                      Dollar Range    Aggregate Dollar
                          Dollar Range of   of Beneficial  Dollar Range of  Dollar Range of   of Beneficial  Range of Ownership
                             Beneficial     Ownership in      Beneficial       Beneficial     Ownership in      in all Funds
                            Ownership in         DWS         Ownership in     Ownership in         DWS        Overseen by Board
                          DWS LifeCompass    LifeCompass   DWS LifeCompass  DWS LifeCompass    LifeCompass    Member in the DWS
Board Member              Retirement Fund     2015 Fund       2020 Fund        2030 Fund        2040 Fund      Fund Complex(2)
------------              ---------------     ---------       ---------        ---------        ---------      --------------

Independent Board Member:
-------------------------

<S>                          <C>             <C>              <C>                <C>              <C>           <C>
Henry P. Becton, Jr.         $1-$10,000      $1-$10,000       $1-$10,000          None            None          Over $100,000
Dawn-Marie Driscoll       $10,001-$50,000  $10,001-$50,000 $10,001-$50,000     $1-$10,000         None          Over $100,000
Keith R. Fox                    None            None             None             None            None          Over $100,000
Kenneth C. Froewiss             None            None             None             None            None          Over $100,000

                                      108
<PAGE>
                                            Dollar Range                                      Dollar Range    Aggregate Dollar
                          Dollar Range of   of Beneficial  Dollar Range of  Dollar Range of   of Beneficial  Range of Ownership
                             Beneficial     Ownership in      Beneficial       Beneficial     Ownership in      in all Funds
                            Ownership in         DWS         Ownership in     Ownership in         DWS        Overseen by Board
                          DWS LifeCompass    LifeCompass   DWS LifeCompass  DWS LifeCompass    LifeCompass    Member in the DWS
Board Member              Retirement Fund     2015 Fund       2020 Fund        2030 Fund        2040 Fund      Fund Complex(2)
------------              ---------------     ---------       ---------        ---------        ---------      --------------

Martin J. Gruber                None            None             None             None            None          Over $100,000
Richard J. Herring              None            None             None             None            None          Over $100,000
Graham E. Jones                 None            None             None             None            None          Over $100,000
Rebecca W. Rimel                None            None             None             None            None          Over $100,000
Philip Saunders, Jr.            None            None             None             None            None          Over $100,000
William N. Searcy, Jr.          None            None             None             None            None          Over $100,000
Jean Gleason Stromberg          None       $10,001-$50,000       None             None            None          Over $100,000
Carl W. Vogt                    None            None             None             None            None          Over $100,000

Interested Board Member:
------------------------

Axel Schwarzer                  None            None             None             None                          Over $100,000
</TABLE>

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

(2)      Securities  beneficially  owned as defined  under the 1934 Act  include
         direct and/or indirect ownership of securities where the Board Member's
         economic interest is tied to the securities,  employment  ownership and
         securities  when the Board  Member can exert  voting power and when the
         Board Member has  authority to sell the  securities.  The dollar ranges
         are:  None,   $1-$10,000,   $10,001-$50,000,   $50,001-$100,000,   over
         $100,000.

Ownership in Securities of the Advisor and Related Companies

As  reported to the Funds,  the  information  in the  following  table  reflects
ownership by the Independent Board Members and their immediate family members of
certain  securities as of December 31, 2006. An immediate family member can be a
spouse,  children  residing in the same  household  including  step and adoptive
children and any dependents.  The securities  represent ownership in the Advisor
or principal  underwriter  of the Fund and any persons  (other than a registered
investment company) directly or indirectly controlling,  controlled by, or under
common control with the Advisor or principal underwriter of the Funds (including
Deutsche Bank AG).

<TABLE>
<CAPTION>

                                                                                   Value of        Percent of
                                   Owner and                                     Securities on     Class on an
Independent                     Relationship to                     Title of     an Aggregate       Aggregate
Board Member                      Board Member         Company        Class          Basis            Basis
------------                      ------------         -------        -----          -----            -----

<S>                                <C>                  <C>          <C>            <C>                <C>
Henry P. Becton, Jr.                                    None
Dawn-Marie Driscoll                                     None
Keith R. Fox                                            None
Kenneth C. Froewiss                                     None
Martin J. Gruber                                        None
Richard J. Herring                                      None
Graham E. Jones                                         None
Rebecca W. Rimel                                        None
Philip Saunders, Jr.                                    None
William N. Searcy, Jr.                                  None

                                      109
<PAGE>
                                                                                   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
------------                      ------------         -------        -----          -----            -----

Jean Gleason Stromberg                                  None
Carl W. Vogt                                            None
</TABLE>

Securities Beneficially Owned

As of October 26, 2007 the Board  Members and officers of the Trust owned,  as a
group, less than 1% of the outstanding shares of the Funds.

To the best of each Fund's knowledge,  as of October 26, 2007 no person owned of
record  or  beneficially  5% or more of any  class  of each  Fund's  outstanding
shares, except as noted below.

DWS Life Compass Retirement Fund

<TABLE>
<CAPTION>

Name and Address of Investor Ownership                          Shares                      % of Total Shares
--------------------------------------                          ------                      -----------------

<S>                                                             <C>                         <C>
DWS TRUST COMPANY TTEE                                          475,597.152                 12.61% of Class A
FBO COMMUNITY HEALTH SYSTEMS
INC 401K PLAN #XXXXXX
ATTN: ASSET RECON
SALEM NH  03079-1143

CITIGROUP GLOBAL MARKETS INC                                  62,563.724                    9.72% of Class B
XXXXXXXXXXX
ATTN PETER BOOTH 7TH FL
NEW YORK NY  10001-2402

MLPF&S FOR THE SOLE BENEFIT OF                                37,093.960                    5.76% of Class B
ITS CUSTOMERS
ATTN FUND ADMINISTRATION 97D93
JACKSONVILLE FL  32246-6484

MORGAN STANLEY & CO.                                            247,152.484                 22.05% of Class C
HARBORSIDE FINANCIAL CENTER
JERSEY CITY NJ  07311

MLPF&S FOR THE SOLE BENEFIT OF                                  152,386.984                 5.93% of Class C
ITS CUSTOMERS
ATTN FUND ADMINISTRATION 97D93
JACKSONVILLE FL  32246-6484

DWS LifeCompass 2015 Fund

Name and Address of Investor Ownership                          Shares                      % of Total Shares
--------------------------------------                          ------                      -----------------

DWS TRUST COMPANY TTEE                                       1,106,345.708                  10.48% of Class A
FBO COMMUNITY HEALTH SYSTEMS
INC 401K PLAN #XXXXXX
ATTN: ASSET RECON
SALEM NH  03079-1143

                                      110
<PAGE>
Name and Address of Investor Ownership                          Shares                      % of Total Shares
--------------------------------------                          ------                      -----------------

MORGAN STANLEY & CO.                                            263,984.399                 41.02% of Class B
HARBORSIDE FINANCIAL CENTER
JERSEY CITY NJ  07311

CITIGROUP GLOBAL MARKETS INC                                    153,763.539                 23.89% of Class B
XXXXXXXXXXX
ATTN PETER BOOTH 7TH FL
NEW YORK NY  10001-2402

MORGAN STANLEY & CO.                                            244,947.514                 9.54% of Class C
HARBORSIDE FINANCIAL CENTER
JERSEY CITY NJ  07311

MLPF&S FOR THE SOLE BENEFIT OF                                  335,549.283                 13.07% of Class C
ITS CUSTOMERS
ATTN FUND ADMINISTRATION 97D93
JACKSONVILLE FL  32246-6484

DWS TRUST COMPANY                                            1,068,687.786                  10.05% of Class S
DURHAM SCHOOL SERVICES 401(K) & PRO
ATTN ASSET RECON DEPT #
XXXXXX
SALEM NH  03079-1143

DWS TRUST COMPANY TTEE OF THE                                1,071,484.820                  10.07% of Class S
TIFFANY & CO EE P/S AND
RETIREMENT SAVINGS PLAN
ATTN: ASSET RECON
SALEM NH  03079-1143

DWS TRUST COMPANY TTEE                                       1,347,823.385                  12.67% of Class S
FBO ARCHDIOSESAN PENSION PLAN
FOR LAY EMPLOYEES
ATTN: ASSET RECON
SALEM NH  03079-1143

DWS Life Compass 2020 Fund

Name and Address of Investor Ownership                          Shares                      % of Total Shares
--------------------------------------                          ------                      -----------------

DWS TRUST COMPANY TTEE                                          537,960.306                 8.31% of Class A
FBO COMMUNITY HEALTH SYSTEMS
INC 401K PLAN #XXXXXX
ATTN: ASSET RECON
SALEM NH  03079-1143

CITIGROUP GLOBAL MARKETS INC                                    217,442.937                 11.97% of Class B
XXXXXXXXXXX
ATTN PETER BOOTH 7TH FL
NEW YORK NY  10001-2402

                                      111
<PAGE>
Name and Address of Investor Ownership                          Shares                      % of Total Shares
--------------------------------------                          ------                      -----------------

MORGAN STANLEY & CO.                                            254,705.250                 14.02% of Class B
HARBORSIDE FINANCIAL CENTER
JERSEY CITY NJ  07311

MORGAN STANLEY & CO.                                            141,571.899                 5.51% of Class C
HARBORSIDE FINANCIAL CENTER
JERSEY CITY NJ  07311

CITIGROUP GLOBAL MARKETS INC                                    201,071.762                 7.83% of Class C
XXXXXXXXXXX
ATTN PETER BOOTH 7TH FL
NEW YORK NY  10001-2402

MLPF&S FOR THE SOLE BENEFIT OF                                  300,610.405                 11.71% of Class C
ITS CUSTOMERS
ATTN FUND ADMINISTRATION 97D93
JACKSONVILLE FL  32246-6484

DWS TRUST COMPANY TTEE OF THE                                   798,436.703                 8.17% of Class S
TIFFANY & CO EE P/S AND
RETIREMENT SAVINGS PLAN
ATTN: ASSET RECON
SALEM NH  03079-1143

DWS Life Compass 2030 Fund

Name and Address of Investor Ownership                          Shares                      % of Total Shares
--------------------------------------                          ------                      -----------------

MLPF&S FOR THE SOLE BENEFIT OF                                   22,401.925                 7.06% of Class B
ITS CUSTOMERS
ATTN FUND ADMINISTRATION 97D93
JACKSONVILLE FL  32246-6484

MORGAN STANLEY & CO.                                             27,454.499                 8.65% of Class B
HARBORSIDE FINANCIAL CENTER
JERSEY CITY NJ  07311

RICHARD DIXON &                                               47,533.999                    14.98%of Class C
EUNICE E DIXON JTWROS TOD
TUCSON AZ  85739-9413

MORGAN STANLEY & CO.                                          84,479.497                    26.63% of Class C
HARBORSIDE FINANCIAL CENTER
JERSEY CITY NJ  07311

CHIA MEI CHEN TOD                                             42,536.481                    13.98% Of Class S
MOUNTAIN VIEW CA  94039-1290
</TABLE>

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 the Funds,  each Fund's  investment  advisor has agreed,
subject to  applicable  law and  regulation,  to indemnify and hold harmless the
applicable  Funds  against  any


                                      112
<PAGE>

and all loss,  damage,  liability  and expense,  arising  from market  timing or
marketing  and sales  matters  alleged  in any  enforcement  actions  brought by
governmental  authorities  involving or  potentially  affecting the Funds or the
investment  advisor  ("Enforcement  Actions")  or that are the basis for private
actions brought by shareholders of the Funds against the Funds,  their directors
and  officers,  the Funds'  investment  advisor  and/or  certain  other  parties
("Private Litigation"),  or any proceedings or actions that may be threatened or
commenced  in the future by any  person  (including  governmental  authorities),
arising  from or similar to the matters  alleged in the  Enforcement  Actions or
Private  Litigation.   In  recognition  of  its  undertaking  to  indemnify  the
applicable Funds and in light of the rebuttable  presumption  generally afforded
to  independent  directors/trustees  of investment  companies that they have not
engaged in disabling  conduct,  each Fund's investment  advisor has also agreed,
subject to applicable law and  regulation,  to indemnify the  applicable  Funds'
Independent  Trustees against certain  liabilities the Independent  Trustees may
incur from the matters alleged in any Enforcement  Actions or Private Litigation
or arising from or similar to the matters alleged in the Enforcement  Actions or
Private Litigation, and advance expenses that may be incurred by the Independent
Trustees in connection with any Enforcement Actions or Private  Litigation.  The
applicable   investment   advisor   is  not,   however,   required   to  provide
indemnification and advancement of expenses:  (1) with respect to any proceeding
or action with respect to which the applicable  Fund's Board determines that the
Independent  Trustee  ultimately would not be entitled to indemnification or (2)
for any liability of the Independent  Trustee 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 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 each Fund's investment advisor will survive the termination of the
investment  management  agreements between the applicable investment advisor and
the Funds.

                               TRUST ORGANIZATION

Organizational Description

The Funds are  portfolios  of DWS Target Date Series  (formerly  DWS  Allocation
Series) (the  "Trust"),  a  Massachusetts  business  trust  established  under a
Declaration of Trust dated June 27, 2006.  Prior to February 6, 2006, DWS Target
Date Series was known as Scudder Pathway Series.  The Trust's authorized capital
consists of an unlimited  number of shares of  beneficial  interest of $0.01 par
value,  all of which  are of one  class  and have  equal  rights  as to  voting,
dividends and  liquidation.  The Trust is comprised of five separate Funds:  DWS
LifeCompass Retirement Fund, DWS LifeCompass 2015 Fund, and DWS LifeCompass 2020
Fund,  all of which were organized on July 1, 1994;  DWS  LifeCompass  2030 Fund
which was organized on November 1, 2004 and DWS LifeCompass  2040 Fund which was
organized  on November 15, 2007.  Each Fund  consists of an unlimited  number of
shares.  Each Fund,  except DWS  LifeCompass  2040 Fund, is further divided into
four classes of shares,  Class S, Class A, Class B and Class C. DWS  LifeCompass
2040 Fund is divided into three classes of shares, Class S, Class A and Class C.
The Trustees have the authority to issue  additional  funds to the Trust. To the
extent that the Funds offer  additional  share  classes,  these  classes will be
offered in a separate  prospectus  and have  different  fees,  requirements  and
services.

The Trustees have the authority to create  additional funds and to designate the
relative  rights and  preferences as between the different  funds.  The Trustees
also may  authorize  the  division of shares of a Fund into  different  classes,
which may bear different  expenses.  All shares issued and outstanding are fully
paid and non-assessable,  transferable, have no pre-emptive or conversion rights
and are  redeemable as described in the SAI and in the 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.  The Trustees may also  terminate  any Fund or class by
notice to the shareholders without shareholder approval.

The  Trust  is a  Massachusetts  business  trust  organized  under  the  laws of
Massachusetts  and is governed by an Amended and Restated  Declaration  of Trust
that was  approved  by  shareholders  in the second  quarter of 2006,  as may be
further  amended  from time to time (the  "Declaration  of  Trust").  All shares
issued and outstanding are fully paid and non-assessable,  transferable, have no
pre-emptive  or conversion  rights  (except as may be determined by the Board of
Trustees) and are  redeemable  as described in the SAI and a Fund's  prospectus.
Each share has equal  rights


                                      113
<PAGE>

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 the  Shareholders;
(e) a merger, consolidation or sale of assets; (f) the adoption of an investment
advisory  or  management  contract;  (g) the  incorporation  of the Trust or any
series;  (h) any plan  adopted  pursuant to Rule 12b-1 (or any  successor  rule)
under the 1940 Act; and (i) 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 as the  Trustees may  determine  to be necessary or  desirable.
Shareholders also vote upon changes in fundamental policies or restrictions.

The Declaration of Trust provides that shareholder  meeting quorum  requirements
shall be established  in the Trust's  By-laws.  The By-laws  currently in effect
provide that the presence in person or by proxy of the holders of thirty percent
of the shares entitled to vote at a meeting (or of an individual series or class
if required to vote separately) shall constitute a quorum for the transaction of
business at meetings of shareholders of the Trust.

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.

Upon the  termination  of the Trust or any series,  after  paying or  adequately
providing for the payment of all liabilities which may include the establishment
of a liquidating  trust or similar  vehicle,  and upon receipt of such releases,
indemnities   and  refunding   agreements  as  they  deem  necessary  for  their
protection, the Trustees may distribute the remaining Trust property or property
of the series,  in cash or in kind or partly each,  to the  shareholders  of the
Trust or the series involved,  ratably  according to the number of shares of the
Trust or such  series  held by the  several  shareholders  of the  Trust or such
series on the date of termination,  except to the extent  otherwise  required or
permitted by the  preferences  and special or relative  rights and privileges of
any classes of shares of a series  involved,  provided that any  distribution to
the  shareholders  of a  particular  class  of  shares  shall  be  made  to such
shareholders  pro rata in  proportion to the number of shares of such class held
by  each  of  them.  The  composition  of


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any  such  distribution  (e.g.,  cash,  securities  or  other  assets)  shall be
determined  by the  Trust in its sole  discretion,  and may be  different  among
shareholders  (including  differences  among  shareholders in the same series or
class).

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

Each Fund has delegated proxy voting responsibilities to its investment advisor,
subject to each Board's general oversight.  Each Fund has delegated proxy voting
to the Advisor with the direction that proxies should be voted  consistent  with
each  Fund's  best  economic  interests.  The  Advisor has adopted its own Proxy
Voting  Policies  and  Procedures  ("Policies"),  and  Proxy  Voting  Guidelines
("Guidelines")  for this  purpose.  The Policies  address,  among other  things,
conflicts of interest that may arise between the interests of each Fund, and the
interests of the Advisor and its  affiliates,  including  each Fund's  principal
underwriter.  The Guidelines set forth the Advisor's general position on various
proposals, such as:

o        Shareholder  Rights -- The Advisor  generally  votes against  proposals
         that restrict shareholder rights.

o        Corporate  Governance -- The Advisor  generally votes for  confidential
         and cumulative voting and against supermajority voting requirements for
         charter and bylaw amendments. The Advisor generally votes for proposals
         to restrict a chief  executive  officer from serving on more than three
         outside  boards of  directors.  The  Advisor  generally  votes  against
         proposals  that  require a company  to  appoint  a  Chairman  who is an
         independent director.

o        Anti-Takeover Matters -- The Advisor generally votes for proposals that
         require shareholder ratification of poison pills or that request boards
         to redeem poison pills,  and votes against the adoption of poison pills
         if  they  are  submitted  for  shareholder  ratification.  The  Advisor
         generally votes for fair price proposals.

o        Compensation  Matters -- The Advisor generally votes for executive cash
         compensation  proposals,  unless they are unreasonably  excessive.  The
         Advisor generally votes against stock option plans that do not meet the
         Advisor's criteria.

o        Routine Matters -- The Advisor  generally votes for the ratification of
         auditors,  procedural matters related to the annual meeting and changes
         in company name, and against bundled proposals and adjournment.

The general provisions described above do not apply to investment companies. The
Advisor generally votes proxies solicited by investment  companies in accordance
with the  recommendations  of an  independent  third  party,  except for proxies
solicited by or with respect to investment companies for which the Advisor or an
affiliate  serves as investment  advisor or principal  underwriter  ("affiliated
investment companies").  The Advisor votes affiliated investment company proxies
in  the  same  proportion  as  the  vote  of  the  investment   company's  other
shareholders  (sometimes called "mirror" or "echo" voting).  Master fund proxies
solicited from feeder funds are voted in accordance with applicable requirements
of the Investment Company Act of 1940.

Although the  Guidelines  set forth the Advisor's  general  voting  positions on
various proposals,  the Advisor may, consistent with each Fund's best interests,
determine under some circumstances to vote contrary to those positions.

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<PAGE>

The  Guidelines  on a  particular  issue  may or may  not  reflect  the  view of
individual  members of each Board or of a majority of each Board.  In  addition,
the  Guidelines  may  reflect a voting  position  that  differs  from the actual
practices of the public  companies  within the Deutsche Bank  organization or of
the  investment  companies  for  which the  Advisor  or an  affiliate  serves as
investment advisor or sponsor.

The  Advisor  may  consider  the views of a portfolio  company's  management  in
deciding how to vote a proxy or in establishing general voting positions for the
Guidelines, but management's views are not determinative.

As mentioned above, the Policies  describe the way in which the Advisor resolves
conflicts  of  interest.  To  resolve  conflicts,   the  advisor,  under  normal
circumstances,  votes proxies in accordance with its Guidelines.  If the Advisor
departs  from  the  Guidelines  with  respect  to a  particular  proxy or if the
Guidelines do not specifically  address a certain proxy proposal, a proxy voting
committee established by the advisor will vote the proxy. Before voting any such
proxy,  however,  the  Advisor's  conflicts  review  committee  will  conduct an
investigation to determine whether any potential  conflicts of interest exist in
connection with the particular proxy proposal. If the conflicts review committee
determines  that the Advisor has a material  conflict  of  interest,  or certain
individuals on the proxy voting committee  should be recused from  participating
in a  particular  proxy vote,  it will  inform the proxy  voting  committee.  If
notified  that the Advisor has a material  conflict,  or fewer than three voting
members are eligible to  participate  in the proxy vote,  typically  the Advisor
will  engage an  independent  third  party to vote the proxy or follow the proxy
voting recommendations of an independent third party.

Under certain circumstances,  the Advisor may not be able to vote proxies or the
Advisor  may find that the  expected  economic  costs from voting  outweigh  the
benefits  associated with voting. For example,  the Advisor may not vote proxies
on certain foreign securities due to local restrictions or customs.  The Advisor
generally  does  not vote  proxies  on  securities  subject  to  share  blocking
restrictions.

You may  obtain  information  about  how 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-scudder.com  (click on "proxy voting" at the bottom of the
page).

                              FINANCIAL STATEMENTS

The financial statements,  including the portfolio of investments, of each Fund,
together with the Report of the Independent  Registered  Public Accounting Firm,
Financial  Highlights and notes to financial  statements in the Annual Report to
the  Shareholders  of the Fund  dated  August  31,  2007,  are  incorporated  by
reference  herein  and are  deemed to be a part of this  combined  Statement  of
Additional Information.

                             ADDITIONAL INFORMATION

The CUSIP number of the DWS LifeCompass Retirement Fund Class S is 23337A871.

The CUSIP number of the DWS LifeCompass 2015 Fund Class S is 23337A509.

The CUSIP number of the DWS LifeCompass 2020 Fund Class S is 23337A822.

The CUSIP number of the DWS LifeCompass 2030 Fund Class S is 23337A772.

The CUSIP number of the DWS LifeCompass 2040 Fund Class S is 23337A749.

Each Fund has a fiscal year end of August 31.

This Statement of Additional  Information contains the information of DWS Target
Date Series.  Each Fund,  through its combined  prospectus,  offers only its own
share  classes,  yet it is  possible  that one Fund  might  become  liable for a
misstatement  regarding  another Fund. The Trustees of each Fund have considered
this, and have approved the use of this Statement of Additional Information.

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<PAGE>

The Funds' prospectus and this Statement of Additional  Information omit certain
information  contained in the Registration  Statement which the Funds have 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 each Fund and
the securities  offered hereby.  This Registration  Statement and its amendments
are available for inspection by the public at the SEC in Washington, D.C.

                             RATINGS OF INVESTMENTS

Standard & Poor's Corporation Bond Ratings

AAA.  Debt  rated AAA had the  highest  rating  assigned  by  Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA. Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.

A. Debt  rated A has a strong  capacity  to pay  interest  and  repay  principal
although it is somewhat more  susceptible  to the adverse  effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB.  Debt rated BBB is regarded as having an adequate  capacity to pay interest
and  repay  principal.   Whereas  it  normally  exhibits   adequate   protection
parameters,  adverse  economic  conditions  or changing  circumstances  are more
likely to lead to a weakened  capacity to pay interest and repay  principal  for
debt in this category than in higher rated categories.

BB, B, CCC, CC and C. Debt rated BB, B, CCC, CC and C is  regarded,  on balance,
as predominantly  speculative with respect to capacity to pay interest and repay
principal in  accordance  with the terms of the  obligation.  BB  indicates  the
lowest degree of speculation and C the highest degree of speculation. While such
debt will likely have some  quality and  protective  characteristics,  these are
outweighed by large uncertainties or major risk exposures to adverse conditions.

CI. The rating CI is  reserved  for income  bonds on which no  interest is being
paid.

D. Debt rated D is in  default,  and  payment of interest  and/or  repayment  of
principal is in arrears.

Moody's Investors Service, Inc. Bond Ratings

AAA. Bonds which are rated Aaa are judged to be of the best quality.  They carry
the  smallest  degree  of  investment  risk  and are  generally  referred  to as
"gilt-edge."  Interest  payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change,  such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Aa. Bonds which are rated Aa are judged to be of high quality by all  standards.
Together with the Aaa group they comprise what are generally known as high-grade
bonds.  They are rated lower than the best bonds  because  margins of protection
may not be as large as in Aaa securities or  fluctuation of protective  elements
may be of greater  amplitude or there may be other  elements  present which make
the long term risks appear somewhat larger than in Aaa securities.

A. Bonds which are rated A possess many favorable investment  attributes and are
to be considered as upper medium grade  obligations.  Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

Baa. Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither  highly  protected nor poorly  secured.  Interest  payments and
principal  security  appear  adequate  for the present  but  certain  protective

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<PAGE>

elements may be lacking or may be  characteristically  unreliable over any great
length of time. Such bonds lack outstanding  investment  characteristics  and in
fact have speculative characteristics as well.

Ba.  Bonds  which are rated Ba are judged to have  speculative  elements;  their
future cannot be considered  as well assured.  Often the  protection of interest
and  principal  payments may be very  moderate and thereby not well  safeguarded
during  both  good  and bad  times  over the  future.  Uncertainty  of  position
characterizes bonds in this class.

B. Bonds  which are rated B  generally  lack  characteristics  of the  desirable
investment.  Assurance of interest and principal  payments or of  maintenance of
other terms of the contract over any long period of time may be small.

Caa.  Bonds  which are rated Caa are of poor  standing.  Such  issues  may be in
default or there may be present  elements of danger with respect to principal or
interest.

Ca. Bonds which are rated Ca represent  obligations  which are  speculative in a
high degree. Such issues are often in default or have other marked shortcomings.

C.  Bonds  which are rated C are the lowest  rated  class of bonds and issues so
rated can be regarded as having  extremely  poor prospects of ever attaining any
real investment standing.

Fitch Long-Term Debt Ratings

AAA.  Highest credit  quality.  "AAA" ratings  denote the lowest  expectation of
credit risk. They are assigned only in case of exceptionally strong capacity for
timely payment of financial commitments.  This capacity is highly unlikely to be
adversely affected by foreseeable events.

AA. Very high credit  quality.  "AA"` ratings  denote a very low  expectation of
credit risk.  They indicate very strong capacity for timely payment of financial
commitments.  This  capacity  is not  significantly  vulnerable  to  foreseeable
events.

A. High credit quality. "A" ratings denote a low expectation of credit risk. The
capacity for timely payment of financial  commitments is considered strong. This
capacity may, nevertheless, be more vulnerable to changes in circumstances or in
economic conditions than is the case for higher ratings.

BBB. Good credit quality.  "BBB" ratings  indicate that there is currently a low
expectation  of credit  risk.  The  capacity  for timely  payment  of  financial
commitments is considered adequate,  but adverse changes in circumstances and in
economic conditions are more likely to impair this capacity.  This is the lowest
investment-grade category.

BB.  Speculative.  "BB" ratings  indicate that there is a possibility  of credit
risk  developing,  particularly  as the result of adverse  economic  change over
time;  however,  business or  financial  alternatives  may be available to allow
financial  commitments  to be met.  Securities  rated in this  category  are not
investment grade.

B. Highly  speculative.  "B" ratings  indicate that  significant  credit risk is
present,  but a limited  margin of safety  remains.  Financial  commitments  are
currently being met; however,  capacity for continued payment is contingent upon
a sustained, favorable business and economic environment.

CCC,  CC, C. High  default  risk.  Default is a real  possibility.  Capacity for
meeting  financial  commitments  is solely  reliant  upon  sustained,  favorable
business or economic developments.  A "CC" rating indicates that default of some
kind appears probable. "C" ratings signal imminent default.

DDD, DD, D. Default.  The ratings of  obligations  in this category are based on
their prospects for achieving  partial or full recovery in a  reorganization  or
liquidation  of  the  obligor.   While  expected   recovery  values  are  highly
speculative  and cannot be estimated with any precision,  the following serve as
general  guidelines.  "DDD" obligations have the highest potential for recovery,
around  90%-100% of  outstanding  amounts and accrued  interest.


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"DD" indicates potential  recoveries in the range of 50%-90%, and "D" the lowest
recovery potential, i.e., below 50%.

Entities  rated  in  this  category  have  defaulted  on  some  or all of  their
obligations.  Entities  rated "DDD" have the highest  prospect for resumption of
performance  or  continued  operation  with or  without a formal  reorganization
process.  Entities  rated  "DD"  and  "D"  are  generally  undergoing  a  formal
reorganization or liquidation process;  those rated "DD" are likely to satisfy a
higher portion of their outstanding obligations, while entities rated "D" have a
poor prospect for repaying all obligations.

Fitch Short-Term Debt Ratings

F1.  Highest credit  quality.  Indicates the Best capacity for timely payment of
financial commitments;  may have an added "+" to denote any exceptionally strong
credit feature.

F2. Good credit quality. A satisfactory capacity for timely payment of financial
commitments,  but the  margin  of  safety  is not as great as in the case of the
higher ratings.

F3.  Fair  credit  quality.   The  capacity  for  timely  payment  of  financial
commitments is adequate;  however,  near-term  adverse changes could result in a
reduction to non-investment grade.

B.  Speculative.  Minimal capacity for timely payment of financial  commitments,
plus  vulnerability  to  near-term  adverse  changes in  financial  and economic
conditions.

C. High  default  risk.  Default is a real  possibility.  Capacity  for  meeting
financial commitments is solely reliant upon a sustained, favorable business and
economic environment.

D. Default. Denotes actual or imminent payment default.

Commercial Paper Ratings

Commercial  paper rated by Standard & Poor's  Ratings  Services  ("S&P") has the
following   characteristics:   Liquidity   ratios  are  adequate  to  meet  cash
requirements.  Long-term  senior  debt is rated "A" or  better.  The  issuer has
access to at least two additional channels of borrowing. Basic earnings and cash
flow  have an  upward  trend  with  allowance  made for  unusual  circumstances.
Typically, the issuer's industry is well established and the issuer has a strong
position  within the industry.  The  reliability  and quality of management  are
unquestioned.  Relative  strength  or weakness  of the above  factors  determine
whether the issuer's commercial paper is rated A-1 or A-2.

The ratings  Prime-1 and Prime-2 are the two highest  commercial  paper  ratings
assigned  by Moody's  Investors  Service,  Inc.  ("Moody's").  Among the factors
considered by it in assigning  ratings are the following:  (1) evaluation of the
management of the issuer;  (2) economic  evaluation of the issuer's  industry or
industries and an appraisal of  speculative-type  risks which may be inherent in
certain  areas;  (3)  evaluation  of  the  issuer's   products  in  relation  to
competition and customer  acceptance;  (4) liquidity;  (5) amount and quality of
long-term debt; (6) trend of earnings over a period of ten years;  (7) financial
strength of a parent company and the relationships  which exist with the issuer;
and (8) recognition by the management of obligations which may be present or may
arise as a result of public  interest  questions and  preparations  to meet such
obligations.  Relative  strength  or weakness  of the above  factors  determines
whether the issuer's commercial paper is rated Prime-1 or 2.

Municipal Notes

Moody's: The highest ratings for state and municipal short-term  obligations are
"MIG 1," "MIG 2," and "MIG 3" (or "VMIG 1," "VMIG 2" and "VMIG 3" in the case of
an issue having a variable rate demand feature). Notes rated "MIG 1" or "VMIG 1"
are judged to be of the "best  quality."  Notes rated "MIG 2" or "VMIG 2" are of
"high  quality," with margins or protection  "ample  although not as large as in
the  preceding  group."  Notes  rated  "MIG  3"


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or "VMIG 3" are of "favorable quality," with all security elements accounted for
but lacking the strength of the preceding grades.

S&P:  The  "SP-1"  rating  reflects  a "very  strong or strong  capacity  to pay
principal and interest". Notes issued with "overwhelming safety characteristics"
will be rated "SP-1+." The "SP-2" rating reflects a  "satisfactory  capacity" to
pay principal and interest.

Fitch:  The highest ratings for state and municipal  short-term  obligations are
"F-1+," "F-1," and "F-2."




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