As Filed with the Securities and Exchange Commission on April 7, 2008
Securities Act File No. 333-____________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. __ [ ]
Post-Effective Amendment No. __ [ ]
DWS VALUE SERIES, INC.
(Exact Name of Registrant as Specified in Charter)
345 Park Avenue
New York, New York 10154-0004
(Address of Principal Executive Offices) (Zip Code)
312-781-1121
(Registrant’s Area Code and Telephone Number)
John Millette, Secretary
Two International Place
Boston, Massachusetts 02110
(Name and Address of Agent for Service)
With copies to:
David A. Sturms, Esq.
Vedder Price P.C.
222 North LaSalle Street
Chicago, Illinois 60601 | John W. Gerstmayr, Esq.
Thomas R. Hiller, Esq.
Ropes & Gray LLP
One International Place
Boston, Massachusetts 02110 |
Approximate date of proposed public offering: As soon as practicable after the effective date of this Registration Statement.
TITLE OF SECURITIES BEING REGISTERED: Shares of Beneficial Interest (par value $0.01 per share) of the Registrant.
No filing fee is required because an indefinite number of shares have previously been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
Questions & Answers
DWS Small Cap Value Fund
Q&A
Q What is happening?
A Deutsche Asset Management (or “DeAM”, as defined on page [__] in the enclosed Prospectus/Proxy Statement) is proposing to merge DWS Small Cap Value Fund into DWS Dreman Mid Cap Value Fund.
Q What issue am I being asked to vote on?
A You are being asked to vote on the proposal to merge DWS Small Cap Value Fund into DWS Dreman Mid Cap Value Fund.
After carefully reviewing the proposal, your fund’s Board has determined that this action is in the best interests of the fund. The Board unanimously recommends that you vote for this proposal.
Q Why has this proposal been made for my fund?
A DeAM advised the Board of DWS Small Cap Value Fund that it had proposed the merger to address several related issues. First, DeAM noted that DWS Small Cap Value Fund was shrinking in size due to redemption activity, and faced limited prospects for future asset growth. Second, DeAM observed that due to this shrinking asset base, the fund’s gross expense ratio had increased and would continue to increase in the event of further loss of assets. Third, DeAM advised the Trustees that DeAM had carefully considered various alternatives to improve the fund’s performance, and had concluded that the best available alternative for fund shareholders would be to merge the fund into the DWS Dreman Mid Cap Value Fund, a fund that DeAM observed has provided superior risk-adjusted returns for its shareholders. Accordingly, DeAM proposed the merger of DWS Small Cap Value Fund into DWS Dreman Mid Cap Value Fund, which DeAM believes is similar in that it also invests primarily in “value” stocks, although the funds’ investment strategies differ in regard to average market capitalization. If the merger is approved by shareholders of DWS Small Cap Value Fund, DeAM expects that substantially all of DWS Small Cap Value Fund’s holdings will be liquidated and the proceeds reinvested in other securities so that at the time of the merger, DWS Small Cap Value Fund’s portfolio will conform to DWS Dreman Mid Cap Value Fund’s investment objective, policies, restrictions and strategies.
Q Will I have to pay taxes as a result of the merger?
A The merger is expected to be a tax-free reorganization for federal income tax purposes and will not take place unless special tax counsel provides an opinion to that effect. As a result of the merger, however, your fund may lose the benefit of certain tax losses that could have been used to offset or defer future gains. If you choose to redeem or exchange your shares before or after the merger, the redemption or exchange likely will generate taxable gain or loss; therefore, you may wish to consult a tax advisor before doing so. As noted above, substantially all of DWS Small Cap Value Fund’s holdings will be sold in connection with the merger. Any capital gains recognized in these sales on a net basis, after the application of any available capital loss carryforwards, will be distributed to DWS Small Cap Value Fund’s shareholders as capital gain dividends and/or ordinary dividends during or with respect to the year of sale, and such distributions would be taxable to shareholders. However, as of _____, 2008, the
liquidation of all of DWS Small Cap Value Fund’s assets was expected to generate net realized losses, in which case DWS Small Cap Value Fund would not have any related net realized gains to distribute to shareholders. Of course, you may also be subject to taxation as a result of the normal operations of your fund whether or not the merger occurs.
Q Upon merger, will I own the same number of shares?
A The aggregate value of your shares will not change as a result of the merger. However, the number of shares you own will change as a result of the merger because your shares will be exchanged at the net asset value per share of DWS Dreman Mid Cap Value Fund, which will probably be different from the net asset value per share of DWS Small Cap Value Fund.
Q When would the merger take place?
A If approved, the merger would occur on or about July 21, 2008 or as soon as reasonably practicable after shareholder approval is obtained. Shortly after completion of the merger, shareholders whose accounts are affected by the merger will receive a confirmation statement reflecting their new account number and the number of shares owned.
Q How can I vote?
A You can vote in any one of four ways:
■ | Through the Internet, by going to the website listed on your proxy card; |
■ | By telephone, with a toll-free call to the number listed on your proxy card; |
■ | By mail, by sending the enclosed proxy card, signed and dated, to us in the enclosed envelope; or |
■ | In person, by attending the special meeting. |
We encourage you to vote over the Internet or by telephone, following the instructions that appear on your proxy card. Whichever method you choose, please take the time to read the full text of the Prospectus/Proxy Statement before you vote.
Q Will I be able to continue to track my fund’s performance in the newspaper, on the Internet or through the voice response system?
A Yes. You will be able to track the DWS Dreman Mid Cap Value Fund’s performance through all these means.
Q Whom should I call for additional information about this Prospectus/Proxy Statement?
A Please call Computershare Fund Services, Inc., your fund’s proxy solicitor, at 1-877-225-6917.
DWS SMALL CAP VALUE FUND
A Message from the President
__________, 2008
Dear Shareholder:
I am writing to ask for your vote on an important matter that affects your investment in DWS Small Cap Value Fund (“Small Cap Fund”), a series of DWS Securities Trust (the “Trust”). While you are, of course, welcome to join us at the Small Cap Fund shareholders’ meeting, most shareholders cast their vote by filling out and signing the enclosed proxy card, or by voting by telephone or through the Internet.
We are asking for your vote on the following matter:
| Proposal: | Approving an Agreement and Plan of Reorganization and the transactions it contemplates, including the transfer of all of the assets of Small Cap Fund to DWS Dreman Mid Cap Value Fund (“Mid Cap Fund”), in exchange for shares of Mid Cap Fund and the assumption by Mid Cap Fund of all liabilities of Small Cap Fund, and the distribution of such shares, on a tax-free basis for federal income tax purposes, to the shareholders of Small Cap Fund in complete liquidation and termination of Small Cap Fund. |
Deutsche Asset Management (or “DeAM” as defined on page __ of the enclosed Prospectus/Proxy Statement) has proposed the merger of Small Cap Fund into Mid Cap Fund because it believes that the merger will benefit shareholders of Small Cap Fund by providing a tax-free method to transition into a Fund that has provided superior risk-adjusted returns for its shareholders. DeAM also believes that shareholders of Small Cap Fund will benefit from a larger pool of assets in the combined fund which should result in improved economies of scale and estimated expense ratios that are expected to be the same or lower than the current expense ratios of Small Cap Fund. The Board of Trustees of the Trust has approved the proposed merger.
In determining to approve the merger, the Board conducted a thorough review of the potential implications of the merger, and concluded that Small Cap Fund’s participation in the proposed merger would be in the best interests of Small Cap Fund and would not dilute the interests of its existing shareholders. A discussion of the factors the Board considered is included in the attached Prospectus/Proxy Statement. If the merger is approved, the Board expects that the proposed changes will take effect during the third calendar quarter of 2008.
Included in this booklet is information about the upcoming shareholders’ meeting:
| • | A Notice of a Special Meeting of Shareholders, which summarizes the issue for which you are being asked to provide voting instructions; and |
| • | A Prospectus/Proxy Statement, which provides detailed information on Mid Cap Fund, the specific proposal being considered at the shareholders’ meeting, and why the proposal is being made. |
Although we would like very much to have each shareholder attend the meeting, we realize this may not be possible. Whether or not you plan to be present, we need your vote. We urge you to review
the enclosed materials thoroughly. Once you’ve determined how you would like your interests to be represented, please promptly complete, sign, date and return the enclosed proxy card, vote by telephone or record your voting instructions on the Internet. A postage-paid envelope is enclosed for mailing, and telephone and Internet voting instructions are listed at the top of your proxy card. You may receive more than one proxy card. If so, please vote each one.
I’m sure that you, like most people, lead a busy life and are tempted to put this proxy aside for another day. Please don’t. Your prompt return of the enclosed proxy card (or your voting by telephone or through the Internet) may save the necessity and expense of further solicitations.
Your vote is important to us. We appreciate the time and consideration I am sure you will give to this important matter. If you have questions about the proposal, please call Computershare Fund Services, Inc., Small Cap Fund’s proxy solicitor, at 1-877-225-6917 or contact your financial advisor. Thank you for your continued support of DWS Scudder.
| Sincerely yours, /s/Michael Clark Michael Clark President DWS Securities Trust |
DWS SMALL CAP VALUE FUND
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
This is the formal agenda for your Fund’s shareholder meeting. It tells you what matter will be voted on and the time and place of the meeting, in the event you choose to attend in person.
To the Shareholders of DWS Small Cap Value Fund:
A Special Meeting of Shareholders of DWS Small Cap Value Fund (“Small Cap Fund”) will be held June 30, 2008 at 3:00 p.m. Eastern time, at the offices of Deutsche Investment Management Americas Inc., 345 Park Avenue, 27th Floor, New York, New York 10154 (the “Meeting”), to consider the following (the “Proposal”):
| Proposal: | Approving an Agreement and Plan of Reorganization and the transactions it contemplates, including the transfer of all of the assets of Small Cap Fund to DWS Dreman Mid Cap Value Fund (“Mid Cap Fund”), in exchange for shares of Mid Cap Fund and the assumption by Mid Cap Fund of all liabilities of Small Cap Fund, and the distribution of such shares, on a tax-free basis for federal income tax purposes, to the shareholders of Small Cap Fund in complete liquidation and termination of Small Cap Fund. |
The persons named as proxies will vote in their discretion on any other business that may properly come before the Meeting or any adjournments or postponements thereof.
Holders of record of shares of Small Cap Fund at the close of business on April 29, 2008 are entitled to vote at the Meeting and at any adjournments or postponements thereof.
The chairman of the Meeting may adjourn the Meeting without notice with respect to the proposal to be considered at a designated time and place, whether or not a quorum is present with respect to the proposal. Upon motion of the chairman of the Meeting, the question of adjournment may be submitted to a vote of the shareholders and any adjournment must be approved by the vote of the holders of a majority of the shares present and entitled to vote with respect to the proposal without further notice. The Board may postpone the Meeting of shareholders prior to the Meeting with notice to the shareholders entitled to vote at the Meeting.
| By order of the Trustees /s/John Millette John Millette Secretary |
_______________, 2008
WE URGE YOU TO MARK, SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE POSTAGE-PAID ENVELOPE PROVIDED OR RECORD YOUR VOTING INSTRUCTIONS BY
TELEPHONE OR THROUGH THE INTERNET SO THAT YOU WILL BE REPRESENTED AT THE MEETING.
IF YOU SIMPLY SIGN THE PROXY CARD, IT WILL BE VOTED IN ACCORDANCE WITH THE BOARD’S RECOMMENDATION ON THE PROPOSAL. YOUR PROMPT RETURN OF THE ENCLOSED PROXY CARD (OR YOUR VOTING BY TELEPHONE OR VIA THE INTERNET) MAY SAVE THE NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS.
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to you and avoid the time and expense involved in validating your vote if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party signing should conform exactly to the name shown in the registration on the proxy card.
3. All Other Accounts: The capacity of the individual signing the proxy card should be indicated unless it is reflected in the form of registration. For example:
| |
Corporate Accounts: | |
(1) ABC Corp. | ABC Corp |
| John Doe, Treasurer |
(2) ABC Corp. | John Doe, Treasurer |
(3) ABC Corp. c/o John Doe, Treasurer | John Doe |
(4) ABC Corp. Profit Sharing Plan | John Doe, Trustee |
Partnership Accounts | |
(1) The XYZ Partnership | Jane B. Smith, Partner |
(2) Smith and Jones, Limited Partnership | Jane B. Smith, General Partner |
Trust Accounts | |
(1) ABC Trust Account | Jane B. Doe, Trustee |
(2) Jane B. Doe, Trustee u/t/d 12/28/78 | Jane B. Doe |
Custodial or Estate Accounts | |
(1) John B. Smith, Cust. f/b/o John B. Smith Jr.
UGMA/UTMA | John B. Smith |
(2) Estate of John B. Smith | John B. Smith, Jr., Executor |
IMPORTANT INFORMATION
FOR SHAREHOLDERS OF
DWS SMALL CAP VALUE FUND
This document contains a Prospectus/Proxy Statement and a proxy card. A proxy card is, in essence, a ballot. When you vote your proxy, it tells us how to vote on your behalf on an important issue relating to your Fund. If you complete and sign the proxy (or tell us how you want to vote by voting by telephone or through the Internet), we’ll vote it exactly as you tell us. If you simply sign the proxy, we’ll vote it in accordance with the Trustees’ recommendation on page ____.
We urge you to review the Prospectus/Proxy Statement carefully, and either fill out your proxy card and return it to us by mail, vote by telephone or record your voting instructions through the Internet. Your prompt return of the enclosed proxy card (or your voting by telephone or through the Internet) may save the necessity and expense of further solicitations.
We want to know how you would like to vote and welcome your comments. Please take a few minutes to read these materials and return your proxy to us. If you have any questions, please call Computershare Fund Services, Inc., DWS Small Cap Value Fund’s proxy solicitor, at the special toll-free number we have set up for you 1-877-225-6917 or contact your financial advisor.
PROSPECTUS/PROXY STATEMENT
_______________, 2008
Acquisition of the assets of: | By and in exchange for shares of: |
DWS Small Cap Value Fund
a series of DWS Securities Trust | DWS Dreman Mid Cap Value Fund
a series of DWS Value Series, Inc. |
345 Park Avenue | 345 Park Avenue |
New York, NY 10154 | New York, NY 10154 |
800-621-1048 (Class A, B and C Shares) | 800-621-1048 (Class A, B and C Shares) |
800-728-3337 (Class S Shares) | 800-728-3337 (Class S Shares) |
This Prospectus/Proxy Statement is being furnished in connection with the proposed merger of DWS Small Cap Value Fund (“Small Cap Fund”) into DWS Dreman Mid Cap Value Fund (“Mid Cap Fund”). Small Cap Fund and Mid Cap Fund are referred to herein collectively as the “Funds,” and each is referred to herein individually as a “Fund.” As a result of the proposed merger, each shareholder of Small Cap Fund will receive a number of full and fractional shares of the corresponding class of Mid Cap Fund equal in value as of the Valuation Time (as defined below on page ___) to the total value of such shareholder’s Small Cap Fund shares.
This Prospectus/Proxy Statement is being mailed on or about ____________, 2008. It explains concisely what you should know before voting on the matter described herein or investing in Mid Cap Fund, a diversified series of an open-end management investment company. Please read it carefully and keep it for future reference.
The securities offered by this Prospectus/Proxy Statement have not been approved or disapproved by the Securities and Exchange Commission (the “SEC”), nor has the SEC passed upon the accuracy or adequacy of this Prospectus/Proxy Statement. Any representation to the contrary is a criminal offense.
The following documents have been filed with the SEC and are incorporated into this Prospectus/Proxy Statement by reference:
| (i) | the prospectus of Mid Cap Fund dated March 1, 2008, as supplemented from time to time, for Class A, B and C shares, a copy of which, if applicable, is included with this Prospectus/Proxy Statement; |
| (ii) | the prospectus of Mid Cap Fund dated March 1, 2008, as supplemented from time to time, for Class S shares, a copy of which, if applicable, is included with this Prospectus/Proxy Statement; |
| (iii) | the prospectus of Small Cap Fund dated December 1, 2007, as supplemented from time to time, for Class A, B and C shares; |
| (iv) | the prospectus of Small Cap Fund dated December 1, 2007, as supplemented from time to time, for Class S shares; |
| (v) | the statement of additional information of Small Cap Fund dated December 1, 2007, as supplemented from time to time, for Class A, B and C shares; |
| (vi) | the statement of additional information of Small Cap Fund dated December 1, 2007, as supplemented from time to time, for Class S shares; |
| (vii) | the statement of additional information relating to the proposed merger, dated _________, 2008 (the “Merger SAI”); and |
| (viii) | the audited financial statements and related independent registered public accounting firm’s report for Small Cap Fund contained in the Annual Report for the fiscal year ended |
July 31, 2007, and the updated unaudited financial statements contained in the Semi-annual Report for the six-month period ended January 31, 2008.
No other parts of Small Cap Fund’s Annual Report or Semi-annual Report are incorporated by reference herein.
The financial highlights for Mid Cap Fund contained in the Annual Report to shareholders for the period ended November 30, 2007, are attached to this Prospectus/Proxy Statement as Exhibit B.
Shareholders may get free copies of the Funds’ Annual Reports, Semi-annual Reports, prospectuses, statements of additional information (the “SAIs”) and/or the Merger SAI, request other information about a Fund, or make shareholder inquiries, by contacting their financial advisor or by calling the corresponding Fund at 1-800-621-1048 (1-800-728-3337 for Class S shares).
Like shares of Small Cap Fund, shares of Mid Cap Fund are not deposits or obligations of, or guaranteed or endorsed by, any financial institution, are not insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other agency, and involve risk, including the possible loss of the principal amount invested.
This document is designed to give you the information you need to vote on the proposal. Much of the information is required disclosure under rules of the SEC; some of it is technical. If there is anything you don’t understand, please contact Computershare Fund Services, Inc., Small Cap Fund’s proxy solicitor, at 1-877-225-6917, or contact your financial advisor.
Each Fund is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and in accordance therewith files reports and other information with the SEC. You may review and copy information about the Funds, including the SAIs, at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. You may call the SEC at 1-202-551-5850 for information about the operation of the public reference room. You may obtain copies of this information, with payment of a duplication fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the Public Reference Branch, Office of Consumer Affairs and Information Services, Securities and Exchange Commission, Washington, D.C. 20549. You may also access reports and other information about the Funds on the EDGAR database on the SEC’s Internet site at http://www.sec.gov.
I. SYNOPSIS
The responses to the questions that follow provide an overview of key points typically of concern to shareholders considering a proposed merger between mutual funds. These responses are qualified in their entirety by the remainder of this Prospectus/Proxy Statement, which you should read carefully because it contains additional information and further details regarding the proposed merger.
1. | What is being proposed? |
The Trustees of DWS Securities Trust (the “Trust”), of which Small Cap Fund is a series, are recommending that shareholders approve the transactions contemplated by the Agreement and Plan of Reorganization (as described below in Part IV and the form of which is attached hereto as Exhibit A), which we refer to as a merger of Small Cap Fund into Mid Cap Fund. If approved by shareholders, all of the assets of Small Cap Fund will be transferred to Mid Cap Fund solely in exchange for the issuance and delivery to Small Cap Fund of shares of Mid Cap Fund (“Merger Shares”) with a value equal to the value of Small Cap Fund’s assets net of liabilities and for the assumption by Mid Cap Fund of all liabilities of Small Cap Fund. All Merger Shares delivered to Small Cap Fund will be delivered at net asset value without a sales load, commission or other similar fee being imposed. Immediately following the transfer, the appropriate class of Merger Shares received by Small Cap Fund will be distributed pro rata, on a tax-free basis for federal income tax purposes, to its shareholders of record.
2. | What will happen to my shares of Small Cap Fund as a result of the merger? |
Your shares of Small Cap Fund will, in effect, be exchanged on a tax-free basis for shares of the same class of Mid Cap Fund with an equal aggregate net asset value as of the Valuation Time (as defined below on page ___).
3. | Why have the Trustees of the Trust recommended that shareholders approve the merger? |
DeAM advised the Trustees that it had proposed the merger to address several related issues. First, DeAM noted that Small Cap Fund was shrinking in size due to redemption activity, and faced limited prospects for future asset growth. Second, DeAM observed that due to this shrinking asset base, the Fund’s gross expense ratio had increased and would continue to increase in the event of further loss of assets. Third, DeAM advised the Trustees that it had carefully considered various alternatives to improve the Fund’s performance, and had concluded that the best available alternative for Fund shareholders would be to merge the Fund into the Mid Cap Fund, a Fund DeAM observed has provided superior risk-adjusted returns for its shareholders. In determining to recommend that shareholders of Small Cap Fund approve the merger, the Trustees considered, among others, the following factors:
| • | DeAM’s recommendation that Mid Cap Fund was the best available alternative for shareholders of the Small Cap Fund. |
| • | Similarities and differences between Small Cap Fund’s and Mid Cap Fund’s investment strategies. |
| • | Mid Cap Fund is subadvised by Dreman Value Management LLC, a well established and highly regarded investment manager. |
| • | The investment advisory fee schedule for Mid Cap Fund would be amended immediately prior to the merger so as to ensure that the effective advisory fees paid by the combined fund will be the same or lower at all asset levels as compared to the advisory fees paid by Small Cap Fund. |
| • | The estimated operating expense ratios of the combined fund are expected to be the same or lower than the current operating expense ratios of Small Cap Fund, and that DeAM has agreed to cap the total operating expense ratios of the combined fund at levels that are lower than the current total expense ratios of Small Cap Fund for at least the one year period following the merger. |
The Trustees of the Trust have concluded that: (1) the merger is in the best interests of Small Cap Fund and (2) the interests of the existing shareholders of Small Cap Fund will not be diluted as a result of the merger. Accordingly, the Trustees of the Trust unanimously recommend that shareholders approve the Agreement (as defined on page ___) effecting the merger. For a complete discussion of the Trustees’ considerations please see “Background and Trustees’ Considerations Relating to the Proposed Merger” below.
4. | What are the investment goals, policies and restrictions of the Funds? |
Small Cap Fund seeks long-term growth of capital. Under normal circumstances, Small Cap Fund invests at least 90% of total assets, including the amount of any borrowings for investment purposes, in undervalued common stocks of small US companies. The Fund invests primarily in companies whose market capitalizations fall within the normal range of the Russell 2000 Value Index (which, as of February 29, 2008, had a median market capitalization of approximately $493 million). Although it is not a principal investment strategy for the Fund, Small Cap Fund is permitted, but not required, to use various types of derivatives (contracts whose value is based on, for example, indices, currencies or securities). In particular, the Fund may use futures, options and covered call options. The Fund may use derivatives in circumstances where the portfolio 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.
Mid Cap Fund seeks long-term capital appreciation. Under normal circumstances, Mid Cap 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. Mid Cap Fund may also invest up to 20% of total assets in foreign securities. Although it is not a principal investment strategy for the Fund, Mid Cap Fund is permitted, but not required, to use various types of derivatives (contracts whose value is based on, for example, indices, currencies or securities). In particular, the Fund may use futures, currency options and forward currency transactions. The Fund may use derivatives in circumstances where the portfolio 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.
Due to substantial overlap in the investment universes that each Fund targets, DeAM believes that Mid Cap Fund should provide a comparable investment opportunity for shareholders of Small Cap Fund. However, there are significant differences in the portfolios of each Fund. DeAM expects that substantially all of Small Cap Fund’s holdings will be liquidated prior to the merger. Proceeds from the liquidation will be used to acquire securities consistent with Mid Cap Fund’s investment objective, policies, restrictions and strategies.
The following table sets forth a summary of the composition of each Fund’s investment portfolio as of February 29, 2008, and DeAM’s estimation of the portfolio composition of Mid Cap Fund assuming consummation of the proposed merger.
Portfolio Composition (as a % of Fund, excluding cash equivalents) |
| | | Mid Cap Fund—Estimated (assuming consummation
of merger)(1) |
Consumer Discretionary | 13.74% | 11.16% | 11.16% |
Consumer Staples | 2.57% | 9.01% | 9.01% |
Energy | 6.67% | 10.87% | 10.87% |
Financials | 29.30% | 18.07% | 18.07% |
Health Care | 5.31% | 10.57% | 10.57% |
Industrials | 14.81% | 16.40% | 16.40% |
Information Technology | 10.60% | 6.23% | 6.23% |
Materials | 6.52% | 7.17% | 7.17% |
Telecommunication Services | 2.05% | 1.72% | 1.72% |
Utilities | 4.74% | 8.79% | 8.79% |
Cash | 3.68% | 0.01% | 0.01% |
Total | 100.00% | 100.00% | 100.00% |
_____________
(1) | Reflects DeAM’s estimation of the portfolio composition of Mid Cap Fund subsequent to the merger, taking into account that prior to the merger, pursuant to the Agreement and Plan of Reorganization, substantially all of the portfolio of Small Cap Fund will be liquidated and the proceeds will be used to acquire other securities consistent with the investment objective, policies, restrictions and strategies of Mid Cap Fund. There can be no assurance as to actual portfolio composition of Mid Cap Fund subsequent to the merger. |
The table below sets forth the highest, lowest and average market capitalization of companies held in each Fund’s portfolio as of February 29, 2008.
| | |
High | $6,820,000,000 | $21,422,000,000 |
Low | $126,000,000 | $1,211,000,000 |
Average | $974,000,000 | $6,906,000,000 |
5. | How do the management fees and expense ratios of the two Funds compare, and what are they estimated to be following the merger? |
The following tables summarize the fees and expenses you may pay when investing in the Funds, the expenses that each of the Funds incurred for the 12-month period ended November 30, 2007 and the pro forma estimated expense ratios of Mid Cap Fund assuming consummation of the merger as of that date.
Shareholder Fees
(fees paid directly from your investment)
| | | | |
Maximum Sales Charge (Load) Imposed on Purchases (as % of offering price) | | | | |
Small Cap Fund | 5.75%(1) | None | None | None |
Mid Cap Fund | 5.75%(1) | None | None | None |
Maximum Contingent Deferred Sales Charge (Load) (as % of redemption proceeds) | | | | |
Small Cap Fund | None(2) | 4.00% | 1.00% | None |
Mid Cap Fund | None(2) | 4.00% | 1.00% | None |
Redemption/Exchange Fee on shares owned less than 15 days (as % of redemption proceeds)(3) | | | | |
Small Cap Fund | 2.00% | 2.00% | 2.00% | 2.00% |
Mid Cap Fund | 2.00% | 2.00% | 2.00% | 2.00% |
(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. |
(2) | The redemption of shares purchased at net asset value under the Large Order NAV Purchase Privilege 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. |
As shown below, the merger is expected to result in a lower total expense ratio for shareholders of Small Cap Fund. However, there can be no assurance that the merger will result in expense savings.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
| | Distribution/Service (12b-1) Fee | | Total Annual Fund Operating Expenses | Less Expense Waiver/ Reimburse-ments | Net Annual Fund Operating Expenses |
Small Cap Fund | | | | | | |
Class A | 0.67% | 0.24% | 0.57%(2) | 1.48% | — | 1.48% |
Class B | 0.67% | 0.99% | 0.71%(2) | 2.37% | — | 2.37% |
Class C | 0.67% | 0.99% | 0.53%(2) | 2.19% | — | 2.19% |
Class S | 0.67% | None | 0.48%(2) | 1.15% | — | 1.15% |
| | | | | | |
Mid Cap Fund | | | | | | |
Class A | 0.67%(1) | 0.23% | 0.50%(1)(2) | 1.40% | 0.05%(4) | 1.35% |
Class B | 0.67%(1) | 0.98% | 0.63%(1)(2) | 2.28% | 0.23%(4) | 2.05% |
Class C | 0.67%(1) | 0.99% | 0.50%(1)(2) | 2.16% | 0.11%(4) | 2.05% |
Class S | 0.67%(1) | None | 0.48%(1)(2) | 1.15% | 0.15%(4) | 1.00% |
| | | | | | |
Mid Cap Fund
(Pro forma combined) | | | | | | |
Class A | 0.66%(1) | 0.25% | 0.41%(1)(2)(3) | 1.32% | —(5) | 1.32% |
Class B | 0.66%(1) | 1.00% | 0.59%(1)(2)(3) | 2.25% | 0.20%(5) | 2.05% |
Class C | 0.66%(1) | 1.00% | 0.42%(1)(2)(3) | 2.08% | 0.03%(5) | 2.05% |
Class S | 0.66%(1) | None | 0.48%(1)(2)(3) | 1.14% | 0.14%(5) | 1.00% |
(1) | Restated on an annualized basis to reflect fee changes to be voted upon by shareholders of Mid Cap Fund at a meeting to be held on May 1, 2008. If approved, such fee changes would be effective June 1, 2008. |
(2) | Includes 0.10% paid to Deutsche Investment Management Americas Inc. (“DIMA” or “Advisor”), the investment manager for the Funds, for administrative and accounting services pursuant to an Administrative Services Agreement. |
(3) | Other expenses are estimated, accounting for the effect of the merger. |
(4) | Through February 28, 2009, DIMA 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%, 2.05%, 2.05% and 1.00% for Class A, Class B, Class C and Class S shares, respectively, excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest and organizational and offering expenses. |
(5) | Contingent upon completion of the merger, for one year from the completion of the merger, DIMA has contractually agreed to waive all or a portion of its management fee and/or reimburse or pay operating expenses of the combined fund to the extent necessary to maintain the combined fund’s total operating expenses at 1.35%, 2.05%, 2.05% and 1.00% for Class A, Class B, Class C and Class S shares, respectively, excluding certain expenses such as extraordinary expenses, taxes, brokerage, and interest. |
The tables are provided to help you understand the expenses of investing in the Funds and your share of the operating expenses that each Fund incurs and that DIMA expects the combined Fund to incur in the first year following the merger.
Examples
These examples translate the expenses shown in the preceding table into dollar amounts. By doing this, you can more easily compare the costs of investing in the Funds. The examples make certain assumptions. They assume that you invest $10,000 in a Fund for the time periods shown and reinvest all dividends and distributions. They also assume a 5% return on your investment each year and that a Fund’s operating expenses remain the same. The examples are hypothetical; your actual costs and returns may be higher or lower.
| | | | |
Small Cap Fund |
Assuming you sold your shares at the end of each period. |
Class A | $716 | $1,015 | $1,334 | $2,237 |
Class B | $640 | $1,038 | $1,463 | $2,276 |
Class C | $322 | $ 684 | $1,172 | $2,519 |
Class S | $117 | $ 364 | $ 630 | $1,392 |
Assuming you kept your shares. |
Class A | $716 | $1,015 | $1,334 | $2,237 |
Class B | $240 | $ 738 | $1,263 | $2,276 |
Class C | $222 | $ 684 | $1,172 | $2,519 |
Class S | $117 | $ 364 | $ 630 | $1,392 |
Mid Cap Fund |
Assuming you sold your shares at the end of each period. |
Class A(1) | $704 | $987 | $1,290 | $2,149 |
Class B(1) | $608 | $989 | $1,397 | $2,167 |
Class C(1) | $308 | $664 | $1,147 | $2,479 |
Class S(1) | $101 | $349 | $ 616 | $1,378 |
Assuming you kept your shares. |
Class A(1) | $704 | $987 | $1,290 | $2,149 |
Class B(1) | $208 | $689 | $1,197 | $2,167 |
Class C(1) | $208 | $664 | $1,147 | $2,479 |
Class S(1) | $101 | $349 | $ 616 | $1,378 |
Mid Cap Fund
(Pro forma combined) |
Assuming you sold your shares at the end of each period. |
Class A(1) | $702 | $969 | $1,257 | $2,074 |
Class B(1) | $608 | $984 | $1,387 | $2,118 |
Class C(1) | $308 | $649 | $1,116 | $2,408 |
Class S(1) | $102 | $348 | $ 614 | $1,374 |
Assuming you kept your shares. |
Class A(1) | $702 | $969 | $1,257 | $2,074 |
Class B(1) | $208 | $684 | $1,187 | $2,118 |
Class C(1) | $208 | $649 | $1,116 | $2,408 |
Class S(1) | $102 | $348 | $ 614 | $1,374 |
| (1) | Includes one year of capped expenses in each period. |
The tables below set forth the annual management fee schedules of the Funds, expressed as a percentage of net assets, as well as the proposed fee schedule for the Mid Cap Fund upon completion of the merger. As of November 30, 2007, Mid Cap Fund and Small Cap Fund had net assets of $92,004,575 and $219,313,373, respectively.
The fee schedule for each Fund is as follows:
| |
First $250 million | 0.665% | First $500 million | 0.665% |
Next $750 million | 0.635% | Thereafter | 0.615% |
Next $1.5 billion | 0.615% | | |
Next $1.5 billion | 0.595% | | |
Thereafter | 0.575% | | |
The proposed fee schedule for Mid Cap Fund post merger is as follows:
|
First $250 million | 0.665% |
Next $250 million | 0.635% |
Next $2.0 billion | 0.615% |
Next $1.5 billion | 0.595% |
Thereafter | 0.575% |
(1) | The fee schedule for Mid Cap Fund reflects the fee schedule under an Amended and Restated Investment Management Agreement to be voted upon by shareholders of Mid Cap Fund at a meeting to be held on May 1, 2008. |
(2) | In addition to the management fees shown in the tables above, each Fund pays a flat fee of 0.10% of its average daily net assets to DIMA for administrative and accounting services pursuant to an Administrative Services Agreement. |
6. | What are the federal income tax consequences of the proposed merger? |
For federal income tax purposes, no gain or loss is expected to be recognized by Small Cap Fund or its shareholders as a direct result of the merger. As a result of the merger, however, Small Cap Fund and its shareholders may lose the benefit of certain tax losses that could have been used to offset or defer future gains. In addition, the merger will require Small Cap Fund to distribute all of its net investment income and net capital gains as of the merger date to its shareholders. Further, Small Cap Fund’s sale of substantially all its assets in anticipation of the merger may result in increased distributions and potentially at a higher tax rate to shareholders than would have been the case under the normal operation of Small Cap Fund. For a more detailed discussion of the tax consequences of the merger, please see “Information about the Proposed Merger—Certain Federal Income Tax Consequences,” below.
7. | Will my dividends be affected by the merger? |
The merger will not result in a change in dividend policy.
8. | Do the procedures for purchasing, redeeming and exchanging shares of the two Funds differ? |
No. The procedures for purchasing and redeeming shares of a particular class for each Fund, and for exchanging shares of each Fund for shares of other DWS funds, are identical.
9. | How will I be notified of the outcome of the merger? |
If the proposed merger is approved by shareholders, you will receive confirmation after the merger is completed, indicating your new account number and the number of Merger Shares you are receiving. Otherwise, you will be notified in the next shareholder report of Small Cap Fund.
10. | Will the number of shares I own change? |
Yes, the number of shares you own will most likely change, but the total value of the shares of Mid Cap Fund you receive will equal the total value of the shares of Small Cap Fund that you hold at the Valuation Time (as defined on page ___). Even though the net asset value per share of each Fund is likely to be different, the total value of each shareholder’s holdings will not change as a result of the merger.
11. | What percentage of shareholders’ votes is required to approve the merger? |
Approval of the merger will require the “yes” vote of the holders of a majority of the outstanding voting securities of Small Cap Fund as defined in the Investment Company Act of 1940 (the “1940 Act”).
The Trustees of the Trust believe that the proposed merger is in the best interests of Small Cap Fund. Accordingly, the Trustees unanimously recommend that shareholders vote FOR approval of the proposed merger.
II. INVESTMENT STRATEGIES AND RISK FACTORS
What are the main investment strategies and related risks of Mid Cap Fund, and how do they compare with those of Small Cap Fund?
Objective and Strategies. Mid Cap Fund seeks long-term capital appreciation and Small Cap Fund seeks long-term growth of capital. Under normal circumstances, Mid Cap 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. Mid Cap 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. Mid Cap Fund’s equity investments are mainly common stocks, but may also include other types of equities such as preferred or convertible stocks.
In contrast, under normal circumstances, Small Cap Fund invests 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 February 29, 2008, the Russell 2000 Value Index had a median market capitalization of approximately $493 million). Small Cap Fund intends to invest primarily in companies whose market capitalizations fall within the normal range of the Russell 2000 Value Index.
The Funds use different investment processes. Portfolio managers for Mid Cap Fund screen for stocks of mid-cap companies with below market price-to-earnings ratios. The portfolio managers then compare the company’s stock price to its book value, cash flow and yield and analyze individual companies to identify those that are financially sound and appear to have strong potential for long-term capital appreciation and dividend growth. The portfolio managers assemble Mid Cap Fund’s portfolio from among the most attractive stocks, drawing on an analysis of economic outlooks for various sectors and industries. The Mid Cap Fund portfolio managers will normally sell a stock when it may no longer qualify as a mid-cap company, it reaches a target price, its fundamental factors change or other investments offer better opportunities. Portfolio managers for Small Cap Fund utilize a quantitative stock valuation model that compares each company’s stock price to the company’s earnings, book value, sales and other measures of performance potential. The portfolio managers also look for factors that may signal a rebound for a company, whether through a recovery in its markets, a change in business strategy or other factors. The portfolio management team also incorporates technical analysis to capture short-term price changes and evaluate the market’s responsiveness to new information. The Small Cap Fund’s portfolio is then assembled from among the qualifying stocks using sophisticated portfolio management software that analyzes the potential return and risk characteristics of each stock and the overall portfolio. The Small Cap Fund portfolio managers will normally sell a stock when the company no longer qualifies as a small company, when the managers no longer consider it to be undervalued or when the managers believe other investments offer better opportunities.
Other Investments. Mid Cap Fund may also invest up to 20% of total assets in foreign securities. Small Cap Fund may invest in the equity securities of real estate investment trusts (“REITs”). Although not one of its principal investment strategies, each Fund is permitted, but not required, to use various types of derivatives (contracts whose value is based on, for example, indices, currencies or securities). In particular, Mid Cap Fund may use futures, currency options and forward currency transactions while Small Cap Fund may use futures, options and covered call options. Each Fund may use derivatives in
circumstances where portfolio management believes they offer an economical means of gaining exposure to a particular asset class or to keep cash on hand to meet shareholder redemptions or other needs while maintaining exposure to the market.
Securities Lending. Each Fund may lend its investment securities in an amount up to 33?% of its total assets to approved institutional borrowers who need to borrow securities in order to complete certain transactions.
Other Policies. Although major changes tend to be infrequent, each Fund’s Board could change the Fund’s investment objective without seeking shareholder approval. The Board will provide shareholders with at least 60 days notice prior to making any changes to Mid Cap Fund’s 80% investment policy and Small Cap Fund’s 90% investment policy.
As a temporary defensive measure, each of Mid Cap Fund and Small Cap Fund could shift up to 50% and 100%, respectively, of its assets into investments such as money market securities or other short-term securities that offer comparable levels of risk. This could prevent losses, but while engaged in a temporary defensive position, a Fund will not be pursuing its investment objective. However, the portfolio managers may choose not to use these strategies for various reasons, even in very volatile market conditions.
Each Fund also may trade securities actively. This could raise transaction costs (thus lowering return) and could mean higher taxable distributions.
Although DeAM believes that Mid Cap Fund should provide a comparable investment opportunity for shareholders of Small Cap Fund, there are significant differences in the portfolios of each Fund. DeAM has estimated that 100% of the portfolio of Small Cap Fund will be liquidated prior to the merger. Proceeds from the liquidation will be used to acquire securities consistent with Mid Cap Fund’s investment objective, policies, restrictions and strategies.
Primary Risks. As with any investment, you may lose money by investing in Mid Cap Fund. Certain risks associated with an investment in Mid Cap Fund are summarized below. Subject to certain exceptions, the risks of an investment in Mid Cap Fund are similar to the risks of an investment in Small Cap Fund. More detailed descriptions of the risks associated with an investment in Mid Cap Fund can be found in the Mid Cap Fund prospectus and SAI.
The value of your investment in Mid Cap Fund will change with changes in the values of the investments held by Mid Cap Fund. A wide array of factors can affect those values. In this summary we describe the principal risks that may affect Mid Cap Fund’s investments as a whole. Mid Cap Fund could be subject to additional principal risks because the types of investments it makes can change over time.
Stock Market Risk. As with most stock funds, the most important factor affecting Mid Cap Fund is how the stock market performs (to the extent Mid Cap Fund invests in a particular market sector, the Fund’s performance may be proportionally 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 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 Mid Cap Fund makes and Mid Cap Fund may not be able to get attractive prices for them. An investment in Small Cap Fund is also subject to this risk.
Security Selection Risk. A risk that pervades all investing is the risk that the securities in a Fund’s portfolio may decline in value.
Value Investing Risk. At times, “value” investing may perform better than or worse than other investment styles and the overall market. If the portfolio managers overestimate the value or return potential of one or more common stocks, Mid Cap Fund may underperform the general equity market. Value stocks may also be out of favor for certain periods in relation to growth stocks. An investment in Small Cap Fund is also subject to this risk.
Medium-Sized Company Risk. Medium-sized company stocks tend to experience steeper price fluctuations – down as well as up – than stocks of larger companies. A shortage of reliable information – the same information gap that creates opportunity – can pose added risk. Industry-wide reversals may have a greater impact on medium-sized companies, since they usually lack a large company’s financial resources. Medium-sized company stocks are typically less liquid than large company stocks; when things are going poorly, it is harder to find a buyer for a medium-size company’s shares. An investment in Small Cap Fund is subject to similar risks related to investment in small companies.
Industry Risk. While Mid Cap Fund does not concentrate in any industry, to the extent that Mid Cap Fund has exposure to a given industry or sector, any factors affecting that industry or sector could affect the value of portfolio securities. For example, manufacturers of consumer goods could be hurt by a rise in unemployment, or technology companies could be hurt by such factors as market saturation, price competition and rapid obsolescence. An investment in Small Cap Fund is also subject to this risk.
Securities Lending Risk. Any loss in the market price of securities loaned by Mid Cap Fund that occurs during the term of the loan would be borne by Mid Cap Fund and would adversely affect Mid Cap Fund’s performance. Also, there may be delays in recovery of securities loaned or even a loss of rights in the collateral should the borrower of the securities fail financially while the loan is outstanding. However, loans will be made only to borrowers selected by Mid Cap Fund’s delegate after a review of relevant facts and circumstances, including the creditworthiness of the borrower. An investment in Small Cap Fund is also subject to this risk.
Other factors that could affect the performance of both Funds include:
| • | the portfolio managers could be wrong in their analysis of industries, companies, economic trends, the relative attractiveness of different securities or other matters |
| • | foreign securities may be more volatile than their US counterparts, for reasons such as currency fluctuations and political and economic uncertainty. |
Secondary Risks
Derivatives Risk. Risks associated with derivatives include: the risk that the derivative is not well correlated with the security, index or currency to which it relates; the risk that derivatives may result in losses or missed opportunities; the risk that Mid Cap Fund will be unable to sell the derivative because of an illiquid secondary market; the risk that a counterparty is unwilling or unable to meet its obligation; and the risk that the derivatives transaction could expose Mid Cap Fund to the effects of leverage, which could increase Mid Cap Fund’s exposure to the market and magnify potential losses. There is no guarantee that these derivatives, to the extent employed, will have the intended effect, and their use could cause lower returns or even losses to Mid Cap Fund. The use of derivatives by Mid Cap Fund to hedge risk may reduce the opportunity for gain by offsetting the positive effect of favorable price movements. An investment in Small Cap Fund is also subject to this risk.
Pricing Risk. At times, market conditions might make it hard to value some investments and Mid Cap Fund may use certain valuation methodologies for some 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 value realized upon such investment’s sale. If Mid Cap Fund has valued its securities too highly, you may end up paying too much for shares when you buy into Mid Cap Fund. If Mid Cap Fund underestimates the price of its securities, you may not receive the full market value when you sell your Mid Cap Fund shares. An investment in Small Cap Fund is also subject to this risk.
IPO Risk. Securities purchased in initial public offerings (IPOs) may be very volatile, rising and falling rapidly, often based, among other reasons, on investor perceptions rather than economic reasons. Additionally, investments in IPOs may magnify Mid Cap Fund’s performance if it has a small asset base. Mid Cap Fund may not experience a similar impact on its performance as its assets grow because it is unlikely Mid Cap Fund will be able to obtain proportionately larger IPO allocations.
Performance Information. The following information provides some indication of the risks of investing in each Fund. Of course, a Fund’s past performance is not an indication of future performance.
The bar charts show how the performance of each Fund’s Class S shares has varied from year to year, which may give some idea of risk. The tables following the charts show how each Fund’s performance compares with one or more broad-based market indices (which, unlike the Funds, do not have any fees or expenses). The tables include the effects of maximum sales loads. After-tax returns are shown for Class S only and will vary for other classes. 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.
Calendar Year Total Returns (%)
Mid Cap Fund – Class S Shares
For the periods included in the bar chart:
Best Quarter: 7.64%, Q2 2007 |
Worst Quarter: -3.99%, Q4 2007
|
Year-to-date performance through March 31, 2008: -7.27%. |
Small Cap Fund – Class S Shares
For the periods included in the bar chart:
Best Quarter: 18.11%, Q2 2003 |
Worst Quarter: -21.08%, Q3 2002
|
Year-to-date performance through March 31, 2008: -6.51%. |
Average Annual Total Returns (for periods ended December 31, 2007)
| | |
Mid Cap Fund | | |
Class S | | |
Return before Taxes | 5.72% | 10.79% |
Return after Taxes on Distributions | 3.67 | 9.54 |
Return after Taxes on Distributions and Sale of Fund Shares | 4.15** | 8.65 |
Class A (Return before Taxes) | -0.71 | 7.65 |
Class B (Return before Taxes) | 1.65 | 8.55 |
Class C (Return before Taxes) | 4.71 | 9.61 |
Russell Midcap™ Value Index (reflects no deductions for fees, expenses or taxes) | -1.42 | 8.12 |
________________ | | |
_____________
* | Inception date for the fund was August 2, 2005. Index comparison begins on July 31, 2005. |
** | Return after Taxes on Distributions and Sale of Fund Shares is higher than other return figures for the same period due to a capital loss occurring upon redemption resulting in an assumed tax deduction for the shareholder. |
Total return would have been lower had certain expenses not been reduced.
The Russell Midcap™ Value Index is an unmanaged index measuring the performance of those Russell Midcap companies with lower price-to-book ratios and lower forecasted growth values. The stocks are also members of the Russell 1000 Value Index.
| | | |
Small Cap Fund | | | |
Class S | | | |
Return before Taxes | -18.18% | 11.69% | 5.45% |
Return after Taxes on Distributions | -21.31 | 9.02 | 3.88 |
Return after Taxes on Distributions and Sale of Fund Shares | -9.83 | 9.77 | 4.40 |
Class A (Return before Taxes) | -23.11 | 10.05 | 4.53 |
Class B (Return before Taxes) | -21.13 | 10.31 | 4.30 |
Class C (Return before Taxes) | -19.06 | 10.51 | 4.35 |
Russell 2000® Value Index (reflects no deductions for fees, expenses or taxes) | -9.78 | 15.80 | 9.06 |
| | | |
_____________
Total returns for 1999 through 2001 would have been lower if operating expenses hadn’t been reduced.
Russell 2000® Value Index is an unmanaged index measuring the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values.
Current performance may be higher or lower than the performance data quoted above. For more recent performance information, call your financial advisor or 1-800-621-1048 (1-800-728-3337 for Class S shares) or visit our Web site at www.dws-scudder.com.
III. OTHER INFORMATION ABOUT THE FUNDS
Advisor and Portfolio Managers. DIMA, with headquarters at 345 Park Avenue, New York, NY 10154, is the investment advisor for each Fund. Under the oversight of the Board of each Fund, DIMA, or a subadvisor, makes investment decisions, buys and sells securities for each Fund and conducts research that leads to these purchase and sale decisions. DIMA provides a full range of global investment advisory services to institutional and retail clients.
DWS Scudder is part of DeAM, which is the marketing name in the U.S. for the asset management activities of Deutsche Bank AG, DIMA, Deutsche Bank Trust Company Americas and DWS Trust Company. DeAM is a global asset management organization that offers a wide range of investing expertise and resources, including hundreds of portfolio managers and analysts and an office network that reaches the world’s major investment centers. This well-resourced global investment platform brings together a wide variety of experience and investment insight across industries, regions, asset classes and investing styles. DIMA is an indirect, wholly owned subsidiary of Deutsche Bank AG. Deutsche Bank AG is a major global banking institution that is engaged in a wide range of financial services, including investment management, mutual funds, retail, private and commercial banking, investment banking and insurance.
Mid Cap Fund. The subadvisor for Mid Cap Fund is Dreman Value Management, L.L.C. (“DVM”), 520 East Cooper Avenue, Suite 230-4, Aspen, Colorado 81611. DVM was founded in 1977 and currently manages over $___ billion in assets, which is primarily comprised of institutional accounts and investment companies managed by DIMA. Pursuant to a subadvisory agreement with DIMA, DVM performs some of the functions of the Advisor, including making Mid Cap Fund’s investment decisions and buying and selling securities for Mid Cap Fund.
Mid Cap Fund is managed by a team of investment professionals who collaborate to develop and implement the Fund’s investment strategy. Each portfolio manager on the team has authority over all aspects of Mid Cap 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 the portfolio holdings. The following people handle the day-to-day management of Mid Cap Fund:
David N. Dreman is Co-Lead Portfolio Manager for Mid Cap Fund. Mr. Dreman is the Chairman, Chief Investment Officer and founder of DVM. He began his investment career in 1957. Mr. Dreman joined the investment team for Mid Cap Fund in 2005.
F. James Hutchinson is Co-Lead Portfolio Manager for Mid Cap Fund. Mr. Hutchinson is President of DVM. Mr. Hutchinson began his investment career in 1986 and joined the Fund’s portfolio management team in 2006. Prior to that, his experience includes over 30 years at The Bank of New York in both the corporate finance and trust/investment areas and as President of The Bank of New York (NJ).
Mark Roach is Co-Lead Portfolio Manager for Mid Cap Fund. Mr. Roach joined the investment team for Mid Cap Fund in 2006. Prior to that, his experience includes security analyst and portfolio manager positions with various institutions, most recently Vaughan Nelson Investment Management.
Mid Cap Fund’s statement of additional information provides additional information about the Portfolio Managers’ investments in the Fund, a description of their compensation structure and information regarding other accounts they manage.
Small Cap Fund. The investment portfolio for Small Cap Fund is managed by a team of investment professionals at DIMA who collaborate to develop and implement the Fund’s investment strategy. The following people handle the day-to-day management of Small Cap Fund:
Robert Wang is Portfolio Manager for Small Cap Fund. Mr. Wang is a Managing Director of DeAM. He joined the investment team for Small Cap Fund in 2005. Prior to that he had 23 years of investment experience, including 13 years of experience trading fixed income, foreign exchange and derivative products at J.P. Morgan.
Jin Chen is Portfolio Manager for Small Cap Fund. Ms. Chen is a Director of DeAM. She joined the investment team for Small Cap Fund in 2005. Prior to that she served as a portfolio manager for Absolute Return Strategies and as an equity analyst and portfolio manager of various funds in US large and small cap equities at Thomas White Asset Management.
Julie Abbett is Portfolio Manager for Small Cap Fund. Ms. Abbett is a Director of DeAM. She joined the investment team for Small Cap Fund in 2005. Prior to that she worked as a consultant and product developer for portfolio analysis products.
Small Cap Fund’s statement of additional information provides additional information about the Portfolio Managers’ investments in the Fund, a description of their compensation structure and information regarding other accounts they manage.
Distribution and Service Fees. Pursuant to separate Underwriting and Distribution Services Agreements, DWS Scudder Distributors, Inc. (“DWS SDI”), 222 South Riverside Plaza, Chicago, Illinois 60606, an affiliate of DIMA, is the principal underwriter and distributor for the Class A, Class B, Class C and Class S shares of Mid Cap Fund and Small Cap Fund, and acts as the agent of each Fund in the continuous offering of its shares. Mid Cap Fund has adopted distribution and/or service plans on behalf of the Class A, B and C shares in accordance with Rule 12b-1 under the 1940 Act that are substantially identical to the corresponding distribution and/or service plans for Small Cap Fund. The Rule 12b-1 plans allow the Funds to pay distribution and/or service fees for the sale and distribution of their shares and for services provided to shareholders. Because these fees are paid out of the Fund’s assets on an on-
going basis, over time these fees will increase the cost of your investment and may cost you more than other types of investments.
Class A shares of each Fund have a 12b-1 plan, under which a shareholder servicing fee of up to 0.25% is deducted from class assets each year. Class B and C shares of each Fund 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.
Directors/Trustees and Officers. As of April 1, 2008, the Directors overseeing Mid Cap Fund, a series of DWS Value Series, Inc., are the same as the Trustees who oversee Small Cap Fund, a series of the Trust: Dawn-Marie Driscoll (Chair), John W. Ballantine, Henry P. Becton, Keith R. Fox, Paul K. Freeman, Kenneth C. Froewiss, Richard J. Herring, William McClayton, Rebecca W. Rimel, Axel Schwarzer, William N. Searcy, Jr., Jean Gleason Stromberg and Robert H. Wadsworth. The officers of DWS Value Series, Inc. are the same as those of the Trust.
Independent Registered Public Accounting Firm (“Auditor”). Ernst & Young LLP, 200 Clarendon Street, Boston, MA 02116, serves as Mid Cap Fund’s independent registered public accounting firm. Ernst & Young LLP audits and reports on the Fund’s annual financial statements, reviews certain regulatory reports and the Fund’s federal income tax returns, and performs other professional accounting, auditing, tax and advisory services when engaged to do so by the Fund. PricewaterhouseCoopers LLC, 125 High Street, Boston, MA 02110 provides the same services for Small Cap Fund.
Charter Documents.
DWS Value Series, Inc. Mid Cap Fund is one of five series of DWS Value Series, Inc. (the “Corporation”). The Corporation was organized as a Maryland corporation in October 1987 and has an authorized capitalization of 4,775,000,000 shares of $0.01 par value common stock. Currently, Class A, Class B, Class C, Class S and Institutional Class shares are offered by Mid Cap Fund.
Shares. The Directors of the Corporation have the authority to create additional funds and to designate the relative rights and preferences as between the different funds. The Directors also may authorize the division of shares of Mid Cap 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 Mid Cap Fund’s prospectus. Each share has equal rights with each other share of the same class of the Mid Cap 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 Directors may also terminate Mid Cap Fund or any class by notice to the shareholders without shareholder approval.
Shareholder Meetings. The Corporation is not required to hold annual meetings of shareholders unless required by the 1940 Act. Special meetings of shareholders may be called by the Chairman, President or a majority of the members of the Board of Directors and shall be called by the Secretary upon the written request of the holders of at least twenty-five percent of the shares of the capital stock of the Corporation issued and outstanding and entitled to vote at such meeting.
Shareholder Liability. Pursuant to Maryland law, shareholders are generally not personally liable for the debts of the Corporation or any of its series.
Director Liability. The Corporation’s Articles of Incorporation, as amended, provide that the Directors of the Corporation, to the fullest extent permitted by the Maryland General Corporation Law and the 1940 Act, shall not be liable to the Corporation or its shareholders for damages. The By-Laws provide that the Corporation will indemnify Directors and officers of the Corporation against liabilities and expenses actually incurred in connection with litigation in which they may be involved because of their positions with the Corporation. However, nothing in the Articles of Incorporation, as amended, or the By-Laws protects or indemnifies a Director or officer against any liability to which he or she would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office.
Election and Term of Directors. Each Director of the Corporation serves until the next meeting of shareholders, if any, called for the purpose of electing Directors and until the election and qualification of a successor or until such Director sooner dies, resigns, retires or is removed. Any of the Directors may be removed (provided the aggregate number of Directors after such removal shall not be less than one) with cause, by the action of a majority of the remaining Directors. Any Director may be removed at any meeting of shareholders by vote of a majority of the outstanding shares. The Directors shall promptly call a meeting of the shareholders for the purpose of voting upon the question of removal of any such Director or Directors when requested in writing to do so by the holders of not less than ten percent of the outstanding shares, and in that connection, the Directors will assist shareholder communications to the extent provided for in Section 16(c) under the 1940 Act.
DWS Securities Trust. Small Cap Fund is a series of DWS Securities Trust (the “Trust”), a registered open-end management investment company organized as a business trust under the laws of Massachusetts on October 16, 1985. The Fund is currently divided into four classes of shares: Class A, Class B, Class C and Class S.
Shares. The Trustees of the Trust have the authority to create additional funds and to designate the relative rights and preferences as between the different funds. The Trustees of the Trust also may authorize the division of shares of Small Cap 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 Small Cap Fund’s prospectus.
Each share has equal rights with each other share of the same class of Small Cap 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 of the Trust may also terminate the Small Cap Fund or any class by notice to the shareholders without shareholder approval.
Shareholder Meetings. Small Cap Fund is generally not required to hold meetings of its shareholders. Under the Trust’s Declaration of Trust, as amended (“Declaration of Trust”), however, shareholders have the power to vote for: (a) the election or removal of trustees; (b) the termination of the Trust or a series; (c) any amendment of the Declaration of Trust to the extent and as provided in the Declaration of Trust; (d) such additional matters relating to the Trust as may be required by law; and (e) such additional matters as the Trustees may determine to be necessary or desirable. The shareholders also would vote upon changes in fundamental policies or restrictions.
Shareholder Liability. Under Massachusetts law, shareholders of a Massachusetts business trust could, under certain circumstances, be held personally liable for obligations of Small Cap Fund. The Declaration of Trust, however, disclaims shareholder liability for acts or obligations of Small Cap Fund and requires that notice of such disclaimer be given in each agreement, obligation, or instrument entered into or executed by the Small Cap Fund’s Trustees or officers. Moreover, the Declaration of Trust provides for indemnification out of Small Cap Fund property for all losses and expenses of any shareholder held personally liable for the obligations of Small Cap Fund and Small Cap Fund will 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 DIMA
remote and not material, since it is limited to circumstances in which a disclaimer is inoperative and Small Cap Fund itself is unable to meet its obligations.
Election and Term of Trustees. Each Trustee of the Trust serves until the next meeting of shareholders, if any, called for the purpose of electing Trustees and until the election and qualification of a successor or until such Trustee sooner dies, resigns, retires, is removed or incapacitated. Any Trustee who has become incapacitated by illness or injury as determined by a majority of the other Trustees may be retired by written instrument, signed by at least a majority of the number of Trustees prior to such removal, specifying the date upon which such removal shall become effective. Any Trustee may be removed with or without cause (i) by the vote of the shareholders holding two-thirds of the outstanding shares, or (ii) by the action of two-thirds of the remaining Trustees. The Trustees shall promptly call a meeting of the shareholders for the purpose of voting upon the question of removal of any Trustee or Trustees when requested in writing so to do by the holders of not less than ten percent of the outstanding shares, and in that connection, the Trustees will assist shareholder communications to the extent provided for in Section 16(c) under the 1940 Act.
The foregoing is only a summary of the charter documents of Mid Cap Fund and Small Cap Fund and is not a complete description of provisions contained in those sources. Shareholders should refer to the provisions of those documents and state law directly for a more thorough description.
Fund Accounting Fees. DWS Scudder Fund Accounting Corporation (“DWS SFAC”), Two International Place, Boston, Massachusetts 02110, a subsidiary of DIMA, is responsible for determining the net asset value per share of Mid Cap Fund and maintaining the portfolio and general accounting records for the Fund. For the fiscal year ended November 30, 2007, the amount charged to Mid Cap Fund for this service aggregated $105,295.
IV. INFORMATION ABOUT THE PROPOSED MERGER
General. The shareholders of Small Cap Fund are being asked to approve the merger pursuant to an Agreement and Plan of Reorganization between the Trust, on behalf of Small Cap Fund, and the Corporation, on behalf of Mid Cap Fund (the “Agreement”), the form of which is attached to this Prospectus/Proxy Statement as Exhibit A.
The merger is structured as a transfer of all of the assets of Small Cap Fund to Mid Cap Fund in exchange for the assumption by Mid Cap Fund of all the liabilities of Small Cap Fund and for the issuance and delivery of Merger Shares to Small Cap Fund equal in aggregate value to the net value of the assets transferred to Mid Cap Fund.
After receipt of the Merger Shares, Small Cap Fund will distribute the Merger Shares to its shareholders, in proportion to their existing shareholdings, in complete liquidation of Small Cap Fund, and the legal existence of Small Cap Fund will be terminated. Each shareholder of Small Cap Fund will receive a number of full and fractional Merger Shares of the same class(es) as, and equal in value as of the Valuation Time (as defined on page ___) to, the aggregate value of the shareholder’s Small Cap Fund shares.
Prior to the date of the merger, Small Cap Fund will sell all investments that are not consistent with the current investment objective, policies, restrictions and investment strategies of Mid Cap Fund, and declare a taxable distribution which, together with all previous distributions, will have the effect of distributing to shareholders all of its net investment income and net realized capital gains, if any, through the date of the merger. The sale of such investments may increase the taxable distribution to shareholders
of Small Cap Fund occurring prior to the merger above that which they would have received absent the merger.
The Trustees of the Trust have voted unanimously to approve the Agreement and the proposed merger and to recommend that shareholders also approve the merger. The actions contemplated by the Agreement and the related matters described therein will be consummated only if approved by the affirmative vote of the holders of a majority of the outstanding voting securities of Small Cap Fund, as defined in the 1940 Act.
In the event that the merger does not receive the required shareholder approval, each Fund will continue to be managed as a separate Fund in accordance with its current investment objective and policies, and the Trustees of the Trust and Directors of the Corporation may consider such alternatives as may be in the best interests of each Fund.
Background and Trustees’ Considerations Relating to the Proposed Merger. DeAM first discussed the merger with the Trustees in late 2007. DeAM advised the Trustees that it had proposed the merger to address several related issues. First, DeAM noted that Small Cap Fund was shrinking in size due to redemption activity, and faced limited prospects for future asset growth. Second, DeAM observed that due to this shrinking asset base, the Fund’s gross expense ratio had increased and would continue to increase in the event of further loss of assets. Third, DeAM advised the Trustees that it had carefully considered various alternatives to improve the Fund’s performance, and had concluded that the best available alternative for Fund shareholders would be to merge the Fund into the Mid Cap Fund, a Fund DeAM observed has provided superior risk-adjusted returns for its shareholders.
The Trustees of Small Cap Fund conducted a thorough review of the potential implications of the merger on the Fund’s shareholders. They were assisted in this review by their independent legal counsel. The Trustees met on several occasions to review and discuss the merger, both among themselves and with representatives of DeAM. In the course of their review, the Trustees requested and received substantial additional information. In particular, the Trustees requested and reviewed a detailed analysis from DeAM as to why DeAM had concluded that Mid Cap Fund was the best available alternative for Fund shareholders. As part of their deliberations, the Trustees also considered a report of the Board’s Independent Fee Consultant with respect to the reasonableness of the Mid Cap Fund’s fee schedule.
On March 30, 2008, the Trustees of Small Cap Fund, including all Trustees who are not “interested persons” of the Fund (as defined by the 1940 Act) (“Independent Trustees”), approved the terms of the merger. The Trustees also unanimously agreed to recommend that the merger be approved by Small Cap Fund’s shareholders.
In determining to recommend that the shareholders of Small Cap Fund approve the merger, the Trustees considered, among others, the factors described below:
| • | DeAM’s recommendation that Mid Cap Fund was the best available alternative for shareholders of Small Cap Fund. In this regard, DeAM advised the Trustees that DWS Dreman Small Cap Value Fund is subject to restrictions on new investments due to investment capacity constraints, and thus could not be considered as a potential merger partner. |
| • | Similarities and differences between Small Cap Fund’s and Mid Cap Fund’s investment strategies. In this regard, the Trustees observed that while the average market capitalization of Mid Cap Fund’s holdings is larger than that of Small Cap Fund (see response to Question #4 “What are the investment goals, policies and restrictions of the Funds?” in the “Synopsis”), both Funds invest primarily in “value” stocks. |
| • | Mid Cap Fund is subadvised by Dreman Value Management LLC, a well established and highly regarded investment manager. In this regard, the Trustees observed that DeAM had recommended this merger as the best available alternative for Fund shareholders, notwithstanding the fact that the merger would result in a loss of revenue to DeAM as a result of sharing a substantial portion of its investment advisory fee with an unaffiliated subadviser. |
| • | The investment advisory fee schedule for Mid Cap Fund would be amended immediately prior to the merger so as to ensure that the effective advisory fees paid by the combined fund will be the same or lower at all asset levels as compared to the advisory fees paid by Small Cap Fund. |
| • | The estimated operating expense ratios of the combined fund are expected to be the same or lower than the current operating expense ratios of Small Cap Fund, and that DeAM has agreed to cap the total operating expense ratios of the combined fund at levels that are lower than the current total expense ratios of Small Cap Fund for at least the one year period following the merger. |
| • | The investment performance of Small Cap Fund and Mid Cap Fund. In this regard, the Trustees observed that Small Cap Fund had experienced poor relative performance in recent periods, and considered DeAM’s recommendation that a merger into Mid Cap Fund represented the best opportunity to improve performance. |
| • | DeAM’s commitment to cap the expenses to be incurred by Small Cap Fund in connection with the merger. More specifically, DeAM has agreed to bear expenses incurred by Small Cap Fund in connection with the merger, including any incremental trading costs expected to be incurred by Small Cap Fund as a result of the merger, to the extent such expenses exceed $330,000, the expected cost savings to be realized by Small Cap Fund during the one year period following the merger. For these purposes, "incremental trading costs" means any positive difference between (a) and (b), where (a) equals the sum of (i) trading costs incurred by Mid Cap Fund during the twelve month period ended March 31, 2008 and (ii) trading costs incurred by Small Cap Fund in connection with the merger (in each case expressed in basis points), and (b) equals trading costs incurred by Small Cap Fund during the twelve month period ended March 31, 2008 (expressed in basis points). |
| • | The merger would provide continuity of privileges within the DWS fund family for shareholders of Small Cap Fund. The Trustees also considered that a merger with another DWS fund meant that shareholders would continue to be invested in a fund subject to the same compliance policies and procedures, and in this regard considered DeAM’s substantial commitment of resources to compliance matters. |
| • | The terms and conditions of the Agreement, which the Trustees concluded were fair and reasonable and consistent with industry practice. |
| • | The services available to shareholders of each class of Mid Cap Fund are substantially identical to those available to shareholders of the corresponding classes of Small Cap Fund. |
| • | The prospects for the combined fund to attract additional assets. In this regard, DeAM advised the Trustees that it believed that the combined fund is more likely to attract additional assets than Small Cap Fund, thus creating more opportunities for economies of scale. |
| • | The tax consequences of the merger on Small Cap Fund and its shareholders, as well as historical and pro forma attributes of Small Cap Fund (see “Certain Federal Income Tax Consequences”). The Trustees considered the potentially negative impact of the merger on shareholders and determined that any such impact was likely to be outweighed by the expected benefits, including those summarized above. The Trustees also considered that certain other alternatives, such as liquidating the Fund, could result in a taxable gain (or loss) to shareholders depending on their tax basis in their shares, whereas a tax-free reorganization allows shareholders whose share value exceeds their tax basis to avoid a recognition event. |
Based on all of the foregoing, the Trustees concluded that Small Cap Fund’s participation in the merger would be in the best interests of Small Cap Fund and would not dilute the interests of Small Cap Fund’s existing shareholders. The Trustees of Small Cap Fund, including the Independent Trustees, unanimously recommend that shareholders of the Fund approve the merger.
Agreement and Plan of Reorganization. The proposed merger will be governed by the Agreement, the form of which is attached as Exhibit A. The Agreement provides that Mid Cap Fund will acquire all of the assets of Small Cap Fund solely in exchange for the assumption by Mid Cap Fund of all liabilities of Small Cap Fund and for the issuance of Merger Shares equal in value to the value of the transferred assets net of assumed liabilities. The shares will be issued on the next full business day (the “Exchange Date”) following the time as of which the Funds’ shares are valued for determining net asset value for the merger (4:00 p.m. Eastern time, on July 18, 2008, or such other date and time as may be agreed upon by the parties (the “Valuation Time”)). The following discussion of the Agreement is qualified in its entirety by the full text of the Agreement.
Small Cap Fund will transfer all of its assets to Mid Cap Fund, and in exchange, Mid Cap Fund will assume all liabilities of Small Cap Fund and deliver to Small Cap Fund a number of full and fractional Merger Shares of each class having an aggregate net asset value equal to the value of the assets of Small Cap Fund attributable to shares of the corresponding class of Small Cap Fund, less the value of the liabilities of Small Cap Fund assumed by Mid Cap Fund attributable to shares of such class of Small Cap Fund. Immediately following the transfer of assets on the Exchange Date, Small Cap Fund will distribute pro rata to its shareholders of record as of the Valuation Time the full and fractional Merger Shares received by Small Cap Fund, with Merger Shares of each class being distributed to holders of shares of the corresponding class of Small Cap Fund. As a result of the proposed transaction, each shareholder of Small Cap Fund will receive a number of Merger Shares of each class equal in aggregate value at the Valuation Time to the value of Small Cap Fund shares of the corresponding class surrendered by the shareholder. This distribution will be accomplished by the establishment of accounts on the share records of Mid Cap Fund in the name of such Small Cap Fund shareholders, each account representing the respective number of full and fractional Merger Shares of each class due the respective shareholder. New certificates for Merger Shares will not be issued.
The Trustees of the Trust and the Directors of the Corporation have determined that the interests of their respective Fund’s shareholders will not be diluted as a result of the transactions contemplated by the Agreement, and the Trustees of the Trust and the Directors of the Corporation have determined that the proposed merger is in the best interests of their respective Fund.
The consummation of the merger is subject to the conditions set forth in the Agreement. The Agreement may be terminated and the merger abandoned (i) by mutual consent of Mid Cap Fund and Small Cap Fund, (ii) by either party if the merger shall not be consummated by October 31, 2008 or (iii) by either party if the other party shall have materially breached, or made a material and intentional misrepresentation in or in connection with the Agreement.
If shareholders of Small Cap Fund approve the merger, Small Cap Fund agrees to coordinate its portfolio with Mid Cap Fund’s portfolio from the date of the Agreement up to and including the Exchange Date in order that, when the assets of Small Cap Fund are added to the portfolio of Mid Cap Fund, the resulting portfolio will meet the investment objective, policies, restrictions and strategies of Mid Cap Fund. DeAM has represented that 100% of the portfolio of Small Cap Fund will be liquidated prior to the merger. Proceeds from the liquidation will be used to acquire other securities consistent with Mid Cap Fund’s investment objectives, policies, restrictions and strategies.
Fees and expenses, including legal and accounting expenses, SEC registration fees, portfolio transfer taxes (if any), the trading costs described above and any other expenses incurred in connection with the consummation of the merger and related transactions contemplated by the Agreement will be borne by Small Cap Fund. However, DeAM has agreed to bear expenses incurred by Small Cap Fund in connection with the merger, including any incremental trading costs expected to be incurred by Small Cap Fund as a result of the merger, to the extent such expenses exceed $330,000, the expected cost savings to be realized by Small Cap Fund during the one year period following the merger. For these purposes, "incremental trading costs" means any positive difference between (a) and (b), where (a) equals the sum of (i) trading costs incurred by Mid Cap Fund during the twelve month period ended March 31, 2008 and (ii) trading costs incurred by Small Cap Fund in connection with the merger (in each case expressed in basis points), and (b) equals trading costs incurred by Small Cap Fund during the twelve month period ended March 31, 2008 (expressed in basis points).
Description of the Merger Shares. Merger Shares will be issued to Small Cap Fund’s shareholders in accordance with the Agreement as described above. The Merger Shares are Class A, Class B, Class C and Class S shares of Mid Cap Fund.
Small Cap Fund shareholders receiving Merger Shares will not pay an initial sales charge on such shares. Each class of Merger Shares has the same characteristics as shares of the corresponding class of Small Cap Fund. In other words, your Merger Shares will be treated as having been purchased on the date you purchased your Small Cap Fund shares and for the price you originally paid. For more information on the characteristics of each class of Merger Shares, please see the applicable Mid Cap Fund prospectus, a copy of which was mailed with this Prospectus/Proxy Statement.
Certain Federal Income Tax Consequences. As a condition to each Fund’s obligation to consummate the reorganization, each Fund will receive a tax opinion from Willkie Farr & Gallagher LLP, special tax counsel, (which opinion will be based on certain factual representations of the Funds and certain customary assumptions), to the effect that, on the basis of the existing provisions of the US Internal Revenue Code of 1986, as amended (the “Code”), current administrative rules and court decisions, for federal income tax purposes:
The acquisition by Mid Cap Fund of all of the assets of Small Cap Fund solely in exchange for Merger Shares and the assumption by Mid Cap Fund of all of the liabilities of Small Cap Fund, followed by the distribution by Small Cap Fund to its shareholders of Merger Shares in complete liquidation of Small Cap Fund, all pursuant to the Agreement, constitutes a reorganization within the meaning of Section 368(a) of the Code, and Small Cap Fund and Mid Cap Fund will each be a “party to a reorganization” within the meaning of Section 368(b) of the Code.
Under Section 361 of the Code, Small Cap Fund will not recognize gain or loss upon the transfer of its assets to Mid Cap Fund in exchange for Merger Shares and the assumption of Small Cap Fund’s liabilities by Mid Cap Fund, and Small Cap Fund will not recognize gain or loss upon the distribution to its shareholders of the Merger Shares in liquidation of Small Cap Fund.
Under Section 354 of the Code, shareholders of Small Cap Fund will not recognize gain or loss on the receipt of Merger Shares solely in exchange for Small Cap Fund shares.
Under Section 358 of the Code, the aggregate basis of the Merger Shares received by each shareholder of Small Cap Fund will be the same as the aggregate basis of Small Cap Fund shares exchanged therefor.
Under Section 1223(1) of the Code, the holding period of the Merger Shares received by each Small Cap Fund shareholder will include the holding period of the Small Cap Fund shares exchanged therefor, provided that the Small Cap Fund shareholder held the Small Cap Fund shares at the time of the reorganization as a capital asset.
Under Section 1032 of the Code, Mid Cap Fund will not recognize gain or loss upon the receipt of the assets of Small Cap Fund in exchange for Merger Shares and the assumption by Mid Cap Fund of all the liabilities of Small Cap Fund.
Under Section 362(b) of the Code, the basis of the assets of Small Cap Fund transferred to Mid Cap Fund in the reorganization will be the same in the hands of Mid Cap Fund as the basis of such assets in the hands of Small Cap Fund immediately prior to the transfer.
Under Section 1223(2) of the Code, the holding periods of the assets of Small Cap Fund transferred to Mid Cap Fund in the reorganization in the hands of Mid Cap Fund will include the periods during which such assets were held by Small Cap Fund.
All or substantially all of the portfolio assets of Small Cap Fund will be sold in connection with the merger. The tax effect of such sales will depend on the holding periods of such assets and the difference between the price at which such portfolio assets are sold and Small Cap Fund’s basis in such assets. Any net capital gains recognized in these sales, after the application of any available capital loss carryforwards, will be distributed to Small Cap Fund’s shareholders as capital gain dividends. Any net short-term capital gains (in excess of any net long-term capital loss and after application of any available capital loss carryforwards) will be distributed as ordinary dividends. All such distributions will be made during or with respect to the year of sale and will be taxable to shareholders.
After the merger, the availability of Small Cap Fund’s pre-merger capital losses to offset or defer recognition of capital gains for the benefit of Small Cap Fund shareholders may be reduced. This will be true if Small Cap Fund has substantial realized losses at the time of the merger and Mid Cap Fund does not. In that case, Small Cap Fund’s losses will be spread over the larger asset base of the combined fund, causing a decrease for Small Cap Fund shareholders in the amount of losses available to offset future gains.
Also, the combined fund’s ability to use Small Cap Fund’s or Mid Cap Fund’s pre-merger capital losses may be limited under certain tax rules applicable to mergers of this type. The effect of these potential limitations, however, will depend on a number of factors including the amount of the losses, the amount of gains to be offset, the exact timing of the merger and the amount of unrealized capital gains in the funds at the time of the merger. If the merger had occurred on December 27, 2007, for example, some of these limitations would not have applied; others would likely not have had any economic impact.
This description of the federal income tax consequences of the merger is made without regard to the particular facts and circumstances of any shareholder. Shareholders are urged to consult their own tax advisors as to the specific consequences to them of the merger, including, without limitation, the applicability and effect of federal, state, local, non-US and other tax laws.
The portfolio turnover rate for Mid Cap Fund, i.e., the ratio of the lesser of annual sales or purchases to the monthly average value of the portfolio (excluding from both the numerator and the denominator securities with maturities at the time of acquisition of one year or less), for the period ended
November 30, 2007 was 82%. The portfolio turnover rate for Small Cap Fund for the period ended July 31, 2007 was 109%. A higher portfolio turnover rate involves greater brokerage and transaction expenses to a fund and may result in the realization of increased net capital gains, including increased net short-term capital gains, which would be taxable to shareholders when distributed (and in the case of net short-term capital gains, would be taxed as ordinary income).
Each Fund intends to distribute dividends from its investment company taxable income (computed without regard to any deduction for dividends paid) and net realized capital gains, after utilization of capital loss carryforwards, if any, annually in December. An additional distribution may be made if necessary. Shareholders of each Fund can have their dividends and distributions automatically invested in additional shares of the same class of that Fund, or a different fund in the same family of funds, at net asset value and credited to the shareholder’s account on the payment date or, at the shareholder’s election, sent to the shareholder by check. If an investment is in the form of a retirement plan, all dividends and capital gains distributions must be reinvested in the shareholder’s account. If the Agreement is approved by Small Cap Fund’s shareholders, Small Cap Fund will pay its shareholders a distribution of all undistributed net investment company taxable income (computed without regard to any deduction for dividends paid) and undistributed realized net capital gains (after reduction by any capital loss carryforwards) immediately prior to the Closing (as defined in the Agreement).
While as noted above, shareholders are not expected to recognize any gain or loss upon the exchange of their shares in the merger, increases in the Funds’ portfolio turnover rates, net investment income and net realized capital gains, and a potential decrease in capital losses available to offset future gains may result in future taxable distributions to shareholders arising indirectly from the merger.
Capitalization. The following table sets forth the capitalization of each Fund as of November 30, 2007, and of Mid Cap Fund on a pro forma combined basis, giving effect to the proposed acquisition of assets at net asset value as of that date.(1)
| | | | |
Net Assets | | | | |
Class A Shares | $12,730,512 | $48,013,582 | — | $60,744,094 |
Class B Shares | $2,308,981 | $3,516,662 | — | $5,825,643 |
Class C Shares | $5,827,776 | $19,741,880 | — | $25,569,656 |
Class S Shares | $197,861,078 | $13,876,712 | — | $211,737,790 |
Institutional Class | $— | $6,855,739 | — | $6,855,739 |
Total Net Assets | $218,728,347 | $92,004,575 | — | $310,732,922 |
Shares Outstanding | | | | |
Class A Shares | 621,968 | 3,808,662 | 387,876 | 4,818,506 |
Class B Shares | 119,310 | 280,783 | 65,047 | 465,140 |
Class C Shares | 299,788 | 1,578,106 | 166,067 | 2,043,961 |
Class S Shares | 9,663,413 | 1,097,742 | 5,988,740 | 16,749,895 |
Institutional Class | — | 541,703 | — | 541,703 |
Net Asset Value Per Share | | | | |
Class A Shares | $20.47 | $12.61 | | $12.61 |
Class B Shares | $19.35 | $12.52 | | $12.52 |
Class C Shares | $19.44 | $12.51 | | $12.51 |
Class S Shares | $20.48 | $12.64 | | $12.64 |
Institutional Class | — | $12.66 | | $12.66 |
(1) | Assumes the merger had been consummated on November 30, 2007, and is for information purposes only. No assurance can be given as to how many shares of Mid Cap Fund will be received by the shareholders of Small Cap Fund on the date the merger takes place, and the foregoing should not be relied upon to reflect the number of shares of Mid Cap Fund that actually will be received on or after such date. |
The Trustees of the Trust, a majority of whom are independent Trustees, unanimously recommend approval of the merger.
V. INFORMATION ABOUT VOTING AND THE SHAREHOLDER MEETING
General. This Prospectus/Proxy Statement is furnished in connection with the proposed merger of Small Cap Fund into Mid Cap Fund and the solicitation of proxies by and on behalf of the Trustees of the Trust for use at the Special Meeting of Small Cap Fund Shareholders (the “Meeting”). The Meeting is to be held on June 30, 2008 at 3:00 p.m. Eastern time at the offices of DIMA, 345 Park Avenue, 27th Floor, New York, New York 10154, or at such later time as is made necessary by adjournment or postponement. The Notice of the Special Meeting of Shareholders, the Prospectus/Proxy Statement and the enclosed form of proxy are being mailed to shareholders on or about ______________________, 2008.
As of April 29, 2008, Small Cap Fund had the following shares outstanding:
| |
Class A | |
Class B | |
Class C | |
Class S | |
Only shareholders of record on April 29, 2008 will be entitled to notice of and to vote at the Meeting. Each share is entitled to one vote, with fractional shares voting proportionally.
The Trustees of the Trust know of no matters other than those set forth herein to be brought before the Meeting. If, however, any other matters properly come before the Meeting, it is the Trustees’ intention that proxies will be voted on such matters in accordance with the judgment of the persons named in the enclosed form of proxy.
Required Vote. Proxies are being solicited from Small Cap Fund’s shareholders by the Trust’s Trustees for the Meeting. Unless revoked, all valid proxies will be voted in accordance with the specification thereon or, in the absence of specification, FOR approval of the Agreement. The transactions contemplated by the Agreement will be consummated only if approved by the affirmative vote of the holders of a majority of the outstanding voting securities of Small Cap Fund as defined in the 1940 Act as (A) 67% or more of the voting securities of Small Cap Fund present at the meeting, if the holders of more than 50% of the outstanding voting securities of Small Cap Fund are present or represented by proxy; or (B) more than 50% of the outstanding voting securities of Small Cap Fund, whichever is less.
Record Date, Quorum and Method of Tabulation. Shareholders of record of Small Cap Fund at the close of business on April 29, 2008 (the “Record Date”) will be entitled to vote at the Meeting or any adjournment thereof. The holders of at least thirty percent (30%) of the shares of Small Cap Fund outstanding at the close of business on the Record Date present in person or represented by proxy will constitute a quorum for the Meeting.
Votes cast by proxy or in person at the Meeting will be counted by persons appointed by Small Cap Fund as tellers for the Meeting. The tellers will count the total number of votes cast “FOR” approval
of the proposal for purposes of determining whether sufficient affirmative votes have been cast. The tellers will count shares represented by proxies that reflect abstentions and “broker non-votes” (i.e., shares held by brokers or nominees as to which (i) instructions have not been received from the beneficial owners or the persons entitled to vote, and (ii) the broker or nominee does not have the discretionary voting power on a particular matter) as shares that are present and entitled to vote on the matter for purposes of determining the presence of a quorum. Abstentions and broker non-votes will therefore have the effect of a negative vote on the proposal.
Share Ownership. As of April 29, 2008, the officers and Trustees of the Trust as a group beneficially owned [less than 1%] of the outstanding shares of Small Cap Fund and the officers and Directors of the Corporation as a group beneficially owned [less than 1%] of the outstanding shares of Mid Cap Fund. To the best of the knowledge of Small Cap Fund, the following shareholders owned of record or beneficially 5% or more of the outstanding shares of any class of Small Cap Fund as of such date:
| Shareholder Name and Address | |
| | |
| | |
| | |
To the best of the knowledge of Mid Cap Fund, the following shareholders owned of record or beneficially 5% or more of the outstanding shares of any class of Mid Cap Fund as of April 29, 2008:
| Shareholder Name and Address | |
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Solicitation of Proxies. In addition to soliciting proxies by mail, certain officers and representatives of the Trust, officers and employees of the Advisor and certain financial services firms and their representatives, who will receive no extra compensation for their services, may solicit proxies by telephone, telegram or personally.
All properly executed proxies received in time for the Meeting will be voted as specified in the proxy or, if no specification is made, in favor of the proposal.
Computershare Fund Services, Inc. (“Computershare”) has been engaged to assist in the solicitation of proxies, at an estimated cost of $38,259. As the Meeting date approaches, certain shareholders of Small Cap Fund may receive a telephone call from a representative of Computershare if their votes have not yet been received. Authorization to permit Computershare to execute proxies may be obtained by telephonic or electronically transmitted instructions from shareholders of Small Cap Fund. Proxies that are obtained telephonically or through the Internet will be recorded in accordance with the procedures described below. The Trustees believe that these procedures are reasonably designed to ensure that both the identity of the shareholder casting the vote and the voting instructions of the shareholder are accurately determined.
In all cases where a telephonic proxy is solicited, the Computershare representative is required to ask for each shareholder’s full name and address, or the zip code, or both, and to confirm that the shareholder has received the proxy materials in the mail. If the shareholder is a corporation or other entity, the Computershare representative is required to ask for the person’s title and confirmation that the person is authorized to direct the voting of the shares. If the information solicited agrees with the
information provided to Computershare, then the Computershare representative has the responsibility to explain the process, read the proposal on the proxy card, and ask for the shareholder’s instructions on the proposal. Although the Computershare representative is permitted to answer questions about the process, he or she is not permitted to recommend to the shareholder how to vote, other than to read any recommendation set forth in the Prospectus/Proxy Statement. Computershare will record the shareholder’s instructions on the card. Within 72 hours, the shareholder will be sent a letter or mailgram to confirm his or her vote and asking the shareholder to call Computershare immediately if his or her instructions are not correctly reflected in the confirmation.
Please see the instructions on your proxy card for telephone touch-tone voting and Internet voting. Shareholders will have an opportunity to review their voting instructions and make any necessary changes before submitting their voting instructions and terminating their telephone call or Internet link. Shareholders who vote via the Internet, in addition to confirming their voting instructions prior to submission, will also receive an e-mail confirming their instructions upon request.
If a shareholder wishes to participate in the Meeting, but does not wish to give a proxy by telephone or electronically, the shareholder may still submit the proxy card originally sent with the Prospectus/Proxy Statement or attend in person. Should shareholders require additional information regarding the proxy or replacement proxy card, they may contact Computershare toll-free at Computershare. Any proxy given by a shareholder is revocable until voted at the Meeting.
Persons holding shares as nominees will, upon request, be reimbursed for their reasonable expenses in soliciting instructions from their principals. The cost of preparing, printing and mailing the enclosed proxy card and Prospectus/Proxy Statement, and all other costs incurred in connection with the solicitation of proxies for Small Cap Fund, including any additional solicitation made by letter, telephone or telegraph, will be paid by Small Cap Fund (subject to the cap described above).
Revocation of Proxies. Proxies, including proxies given by telephone or over the Internet, may be revoked at any time before they are voted either (i) by a written revocation received by the Secretary of the Fund at Two International Place, Boston, MA 02110, (ii) by properly submitting a later-dated proxy that is received by the Fund at or prior to the Meeting or (iii) by attending the Meeting and voting in person. Merely attending the Meeting without voting, however, will not revoke a previously submitted proxy.
Adjournment and Postponement. The Meeting may, by action of the chairman of the Meeting, be adjourned without notice with respect to the proposal to be considered at the Meeting to a designated time and place, whether or not a quorum is present with respect to the proposal. Upon motion of the chairman of the Meeting, the question of adjournment may be submitted to a vote of the shareholders and any adjournment must be approved by the vote of the holders of a majority of the shares present and entitled to vote with respect to the proposal without further notice. Unless a proxy is otherwise limited in this regard, any shares present and entitled to vote at the Meeting that are represented by broker non-votes, may, at the discretion of the proxies, be voted in favor of such adjournment. The Board of Trustees may postpone the Meeting of shareholders prior to the Meeting with notice to the shareholders entitled to vote at the Meeting.
EXHIBIT A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the “Agreement”) is made as of this [ ] day of __________, 2008, by and among DWS Value Series, Inc. (the “Acquiring Corporation”), a Maryland corporation, on behalf of DWS Dreman Mid Cap Value Fund (the “Acquiring Fund”), a series of the Acquiring Corporation; DWS Securities Trust (the “Acquired Trust”), a Massachusetts business trust, on behalf of DWS Small Cap Value Fund (the “Acquired Fund” and, together with the Acquiring Fund, each a “Fund” and collectively the “Funds”); and Deutsche Investment Management Americas Inc. (“DIMA”), investment adviser to the Funds (for purposes of section 10.2 of the Agreement only). The principal place of business of the Acquiring Corporation is 222 South Riverside Plaza, Chicago, Illinois 60606 and the principal place of business for the Acquired Trust is Two International Place, Boston, Massachusetts 02110.
This Agreement is intended to be and is adopted as a plan of reorganization and liquidation within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). The reorganization (the “Reorganization”) will consist of the transfer of all of the assets of the Acquired Fund to the Acquiring Fund in exchange solely for Class A, Class B, Class C and Class S voting shares of beneficial interest (par value $0.01 per share) of the Acquiring Fund (the “Acquiring Fund Shares”), the assumption by the Acquiring Fund of all of the liabilities of the Acquired Fund and the distribution of the Acquiring Fund Shares to the Class A, Class B, Class C and Class S shareholders of the Acquired Fund in complete liquidation and termination of the Acquired Fund as provided herein, all upon the terms and conditions hereinafter set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the covenants and agreements hereinafter set forth, the parties hereto covenant and agree as follows:
1. Transfer of Assets of the Acquired Fund to the Acquiring Fund in Consideration for Acquiring Fund Shares, the Assumption of All Acquired Fund Liabilities and the Liquidation of the Acquired Fund
1.1 Subject to the terms and conditions herein set forth and on the basis of the representations and warranties contained herein, the Acquired Fund agrees to transfer to the Acquiring Fund all of the Acquired Fund’s assets as set forth in section 1.2, and the Acquiring Fund agrees in consideration therefor (i) to deliver to the Acquired Fund that number of full and fractional Class A, Class B, Class C and Class S Acquiring Fund Shares determined by dividing the value of the Acquired Fund’s assets net of any liabilities of the Acquired Fund with respect to the Class A, Class B, Class C and Class S shares of the Acquired Fund, computed in the manner and as of the time and date set forth in section 2.1, by the net asset value of one Acquiring Fund Share of the corresponding class, computed in the manner and as of the time and date set forth in section 2.2; and (ii) to assume all of the liabilities of the Acquired Fund, including, but not limited to, any deferred compensation to the Acquired Fund’s trustees. All Acquiring Fund Shares delivered to the Acquired Fund shall be delivered at net asset value without a sales load, commission or other similar fee being imposed. Such transactions shall take place at the closing provided for in section 3.1 (the “Closing”).
1.2 The assets of the Acquired Fund to be acquired by the Acquiring Fund (the “Assets”) shall consist of all assets, including, without limitation, all cash, cash equivalents, securities, commodities and futures contracts and dividends or interest or other receivables that are owned by the Acquired Fund and any deferred or prepaid expenses shown on the unaudited statement of assets and liabilities of the Acquired Fund prepared as of the effective time of the Closing in accordance with accounting principles
A-1
generally accepted in the United States of America (“GAAP”) applied consistently with those of the Acquired Fund’s most recent audited statement of assets and liabilities. The Assets shall constitute at least 90% of the fair market value of the net assets, and at least 70% of the fair market value of the gross assets, held by the Acquired Fund immediately before the Closing (excluding for these purposes assets used to pay the dividends and other distributions paid pursuant to section 1.4).
1.3 The Acquired Fund will endeavor, to the extent practicable, to discharge all of its liabilities and obligations that are accrued prior to the Closing Date as defined in section 3.1.
1.4 On or as soon as practicable prior to the Closing Date as defined in section 3.1, the Acquired Fund will declare and pay to its shareholders of record one or more dividends and/or other distributions so that it will have distributed substantially all of its investment company taxable income (computed without regard to any deduction for dividends paid) and realized net capital gain, if any, for the current taxable year through the Closing Date.
1.5 Immediately after the transfer of Assets provided for in section 1.1, the Acquired Fund will distribute to the Acquired Fund’s shareholders of record with respect to each class of its shares (the “Acquired Fund Shareholders”), determined as of the Valuation Time (as defined in section 2.1), on a pro rata basis within that class, the Acquiring Fund Shares of the same class received by the Acquired Fund pursuant to section 1.1 and will completely liquidate. Such distribution and liquidation will be accomplished with respect to each class of the Acquired Fund by the transfer of the Acquiring Fund Shares then credited to the account of the Acquired Fund on the books of the Acquiring Fund to open accounts on the share records of the Acquiring Fund in the names of the Acquired Fund Shareholders. The Acquiring Fund shall have no obligation to inquire as to the validity, propriety or correctness of such records, but shall assume that such transaction is valid, proper and correct. The aggregate net asset value of Class A, Class B, Class C and Class S Acquiring Fund Shares to be so credited to the Class A, Class B, Class C and Class S Acquired Fund Shareholders shall, with respect to each class, be equal to the aggregate net asset value of the Acquired Fund shares of the same class owned by such shareholders as of the Valuation Time. All issued and outstanding shares of the Acquired Fund will simultaneously be cancelled on the books of the Acquired Fund, although share certificates representing interests in Class A, Class B, Class C and Class S shares of the Acquired Fund, if any, will represent a number of Acquiring Fund Shares after the Closing Date as determined in accordance with section 2.3. The Acquiring Fund will not issue certificates representing Acquiring Fund Shares.
1.6 Ownership of Acquiring Fund Shares will be shown on the books of the Acquiring Fund. Shares of the Acquiring Fund will be issued in the manner described in the Acquiring Fund’s then-current prospectuses and statements of additional information for Class A, Class B, Class C and Class S shares.
1.7 Any reporting responsibility of the Acquired Fund including, without limitation, the responsibility for filing of regulatory reports, tax returns or other documents with the Securities and Exchange Commission (the “Commission”), any state securities commission and any federal, state or local tax authorities or any other relevant regulatory authority, is and shall remain the responsibility of the Acquired Fund.
1.8 All books and records of the Acquired Fund, including all books and records required to be maintained under the Investment Company Act of 1940, as amended (the “1940 Act”), and the rules and regulations thereunder, shall be available to the Acquiring Fund from and after the Closing Date and shall be turned over to the Acquiring Fund as soon as practicable following the Closing Date.
2.1 The value of the Assets and liabilities of the Acquired Fund shall be computed as of the close of regular trading on The New York Stock Exchange, Inc. (the “NYSE”) on the business day immediately preceding the Closing Date, as defined in section 3.1 (the “Valuation Time”) after the declaration and payment of any dividends and/or other distributions on that date, using the valuation procedures set forth in the Acquiring Corporation’s Articles of Amendment and Restatement and the Acquiring Fund’s then-current prospectuses or statements of additional information for Class A, Class B, Class C and Class S shares, copies of which have been delivered to the Acquired Fund.
2.2 The net asset value of a Class A, Class B, Class C and Class S Acquiring Fund Share shall be the net asset value per share computed with respect to that class as of the Valuation Time using the valuation procedures referred to in section 2.1.
2.3 The number of Class A, Class B, Class C and Class S Acquiring Fund Shares to be issued (including fractional shares, if any) in consideration for the Assets shall be determined with respect to each such class by dividing the value of the Assets net of liabilities with respect to Class A, Class B, Class C and Class S shares of the Acquired Fund, as the case may be, determined in accordance with section 2.1 by the net asset value of an Acquiring Fund Share of the same class determined in accordance with section 2.2.
2.4 All computations of value hereunder shall be made by or under the direction of each Fund’s respective accounting agent, if applicable, in accordance with its regular practice and the requirements of the 1940 Act and shall be subject to confirmation by such Fund’s respective Independent Registered Public Accounting Firm upon the reasonable request of the other Fund.
3. | Closing and Closing Date |
3.1 The Closing of the transactions contemplated by this Agreement shall be July 21, 2008, or such later date as the parties may agree in writing (the “Closing Date”). All acts taking place at the Closing shall be deemed to take place simultaneously as of 9:00 a.m., Eastern time, on the Closing Date, unless otherwise agreed to by the parties. The Closing shall be held at the offices of counsel to the Acquiring Fund, or at such other place and time as the parties may agree.
3.2 The Acquired Fund shall deliver to the Acquiring Fund on the Closing Date a schedule of Assets.
3.3 State Street Bank and Trust Company (“SSB”), custodian for the Acquired Fund, shall deliver at the Closing a certificate of an authorized officer stating that (a) the Assets shall have been delivered in proper form to SSB, also the custodian for the Acquiring Fund, prior to or on the Closing Date and (b) all necessary taxes in connection with the delivery of the Assets, including all applicable federal and state stock transfer stamps, if any, have been paid or provision for payment has been made. The Acquired Fund’s portfolio securities represented by a certificate or other written instrument shall be presented by the custodian for the Acquired Fund to the custodian for the Acquiring Fund for examination no later than five business days preceding the Closing Date and transferred and delivered by the Acquired Fund as of the Closing Date by the Acquired Fund for the account of Acquiring Fund duly endorsed in proper form for transfer in such condition as to constitute good delivery thereof. The Acquired Fund’s portfolio securities and instruments deposited with a securities depository, as defined in Rule 17f-4 under the 1940 Act, shall be delivered as of the Closing Date by book entry in accordance with the customary practices of such depositories and the custodian for the Acquiring Fund. The cash to be transferred by the Acquired Fund shall be delivered by wire transfer of federal funds on the Closing Date.
3.4 DWS Scudder Investments Service Company (“DWS SISC”), as transfer agent for the Acquired Trust, on behalf of the Acquired Fund, shall deliver at the Closing a certificate of an authorized officer stating that its records contain the names and addresses of the Acquired Fund Shareholders and the number and percentage ownership (to three decimal places) of outstanding Class A, Class B, Class C and Class S Acquired Fund shares owned by each such shareholder immediately prior to the Closing. The Acquiring Fund shall issue and deliver a confirmation evidencing the Acquiring Fund Shares to be credited on the Closing Date to the Acquired Fund or provide evidence satisfactory to the Acquired Fund that such Acquiring Fund Shares have been credited to the Acquired Fund’s account on the books of the Acquiring Fund. At the Closing, each party shall deliver to the other such bills of sale, checks, assignments, share certificates, if any, receipts or other documents as such other party or its counsel may reasonably request to effect the transactions contemplated by this Agreement.
3.5 In the event that immediately prior to the Valuation Time (a) the NYSE or another primary trading market for portfolio securities of the Acquiring Fund or the Acquired Fund shall be closed to trading or trading thereupon shall be restricted, or (b) trading or the reporting of trading on such Exchange or elsewhere shall be disrupted so that, in the judgment of the Board of Trustees/Directors (each a “Board”) of either party to this Agreement, accurate appraisal of the value of the net assets with respect to the Class A, Class B, Class C and Class S shares of the Acquiring Fund or the Acquired Fund is impracticable, the Closing Date shall be postponed until the first business day after the day when trading shall have been fully resumed and reporting shall have been restored.
3.6 The liabilities of the Acquired Fund shall include all of the Acquired Fund’s liabilities, debts, obligations, and duties of whatever kind or nature, whether absolute, accrued, contingent, or otherwise, whether or not arising in the ordinary course of business, whether or not determinable at the Closing Date, and whether or not specifically referred to in this Agreement, including but not limited to, any deferred compensation to the Acquired Fund’s trustees.
4. | Representations and Warranties |
4.1 The Acquired Trust, on behalf of the Acquired Fund, represents and warrants to the Acquiring Fund as follows:
(a) The Acquired Trust is a voluntary association with transferable shares commonly referred to as a Massachusetts business trust duly organized and validly existing under the laws of The Commonwealth of Massachusetts with power under the Acquired Trust’s Declaration of Trust, as amended, to own all of its properties and assets and to carry on its business as it is now being conducted and, subject to approval of shareholders of the Acquired Fund, to carry out the Agreement. The Acquired Fund is a separate series of the Acquired Trust duly designated in accordance with the applicable provisions of the Acquired Trust’s Declaration of Trust. The Acquired Trust and Acquired Fund are qualified to do business in all jurisdictions in which they are required to be so qualified, except jurisdictions in which the failure to so qualify would not have a material adverse effect on the Acquired Trust or Acquired Fund. The Acquired Fund has all material federal, state and local authorizations necessary to own all of the properties and assets and to carry on its business as now being conducted, except authorizations which the failure to so obtain would not have a material adverse effect on the Acquired Fund;
(b) The Acquired Trust is registered with the Commission as an open-end management investment company under the 1940 Act, and such registration is in full force and effect and the Acquired Fund is in compliance in all material respects with the 1940 Act and the rules and regulations thereunder;
(c) No consent, approval, authorization, or order of any court or governmental authority is required for the consummation by the Acquired Fund of the transactions contemplated herein, except such as have been obtained under the Securities Act of 1933, as amended (the “1933 Act”), the Securities Exchange Act of 1934, as amended (the “1934 Act”), and the 1940 Act and such as may be required by state securities laws;
(d) The Acquired Trust is not, and the execution, delivery and performance of this Agreement by the Acquired Trust will not result (i) in violation of Massachusetts law or of the Acquired Trust’s Declaration of Trust, as amended, or By-Laws, (ii) in a violation or breach of, or constitute a default under, any material agreement, indenture, instrument, contract, lease or other undertaking to which the Acquired Fund is a party or by which it is bound, and the execution, delivery and performance of this Agreement by the Acquired Fund will not result in the acceleration of any obligation, or the imposition of any penalty, under any agreement, indenture, instrument, contract, lease, judgment or decree to which the Acquired Fund is a party or by which it is bound, or (iii) in the creation or imposition of any lien, charge or encumbrance on any property or assets of the Acquired Fund;
(e) Other than as disclosed on a schedule provided by the Acquired Fund, no material litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or to its knowledge threatened against the Acquired Fund or any properties or assets held by it. The Acquired Fund knows of no facts which might form the basis for the institution of such proceedings which would materially and adversely affect its business, other than as disclosed in the foregoing schedule, and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body which materially and adversely affects its business or its ability to consummate the transactions herein contemplated;
(f) The Statements of Assets and Liabilities, Operations, and Changes in Net Assets, the Financial Highlights, and the Investment Portfolio of the Acquired Fund at and for the fiscal year ended July 31, 2007, have been audited by PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm, and are in accordance with GAAP consistently applied, and such statements (a copy of each of which has been furnished to the Acquiring Fund) present fairly, in all material respects, the financial position of the Acquired Fund as of such date in accordance with GAAP and there are no known contingent liabilities of the Acquired Fund required to be reflected on a statement of assets and liabilities (including the notes thereto) in accordance with GAAP as of such date not disclosed therein;
(g) Since July 31, 2007, there has not been any material adverse change in the Acquired Fund’s financial condition, assets, liabilities or business other than changes occurring in the ordinary course of business, or any incurrence by the Acquired Fund of indebtedness maturing more than one year from the date such indebtedness was incurred except as otherwise disclosed to and accepted in writing by the Acquiring Fund. For purposes of this subsection (g), a decline in net asset value per share of the Acquired Fund due to declines in market values of securities in the Acquired Fund’s portfolio, the discharge of Acquired Fund liabilities, or the redemption of Acquired Fund shares by Acquired Fund Shareholders shall not constitute a material adverse change;
(h) At the date hereof and at the Closing Date, all federal and other tax returns and reports of the Acquired Fund required by law to have been filed by such dates (including any extensions) shall have been filed and are or will be correct in all material respects, and all federal and other taxes shown as due or required to be shown as due on said returns and reports shall
have been paid or provision shall have been made for the payment thereof, and, to the best of the Acquired Fund’s knowledge, no such return is currently under audit and no assessment has been asserted with respect to such returns;
(i) For each taxable year of its operation (including the taxable year ending on the Closing Date), the Acquired Fund has met the requirements of Subchapter M of the Code for qualification as a regulated investment company and has elected to be treated as such, has been eligible to and has computed its federal income tax under Section 852 of the Code, and will have distributed all of its investment company taxable income (determined without regard to the deduction of dividends paid) and net capital gain (as such terms are defined in the Code) that has accrued through the Closing Date;
(j) All issued and outstanding shares of the Acquired Fund (i) have been offered and sold in every state and the District of Columbia in compliance in all material respects with applicable registration requirements of the 1933 Act and state securities laws, (ii) are, and on the Closing Date will be, duly and validly issued and outstanding, fully paid and non-assessable and not subject to preemptive or dissenter’s rights (recognizing that, under Massachusetts law, Acquired Fund Shareholders, under certain circumstances, could be held personally liable for obligations of the Acquired Fund), and (iii) will be held at the time of the Closing by the persons and in the amounts set forth in the records of DWS SISC, as provided in section 3.4. The Acquired Fund does not have outstanding any options, warrants or other rights to subscribe for or purchase any of the Acquired Fund shares, nor is there outstanding any security convertible into any of the Acquired Fund shares;
(k) At the Closing Date, the Acquired Fund will have good and marketable title to the Acquired Fund’s assets to be transferred to the Acquiring Fund pursuant to section 1.1 and full right, power, and authority to sell, assign, transfer and deliver such assets hereunder free of any liens or other encumbrances, except those liens or encumbrances as to which the Acquiring Fund has received notice at or prior to the Closing, and upon delivery and payment for such assets, the Acquiring Fund will acquire good and marketable title thereto, subject to no restrictions on the full transfer thereof, including such restrictions as might arise under the 1933 Act and the 1940 Act, except those restrictions as to which the Acquiring Fund has received notice and necessary documentation at or prior to the Closing;
(l) The execution, delivery and performance of this Agreement will have been duly authorized prior to the Closing Date by all necessary action on the part of the Board members of the Acquired Trust (including the determinations required by Rule 17a-8(a) under the 1940 Act), and, subject to the approval of the Acquired Fund Shareholders, this Agreement constitutes a valid and binding obligation of the Acquired Trust, on behalf of the Acquired Fund, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws relating to or affecting creditors’ rights and to general equity principles;
(m) The information to be furnished by the Acquired Fund for use in applications for orders, registration statements or proxy materials or for use in any other document filed or to be filed with any federal, state or local regulatory authority (including the Financial Industry Regulatory Authority (“FINRA”)), which may be necessary in connection with the transactions contemplated hereby, shall be accurate and complete in all material respects and shall comply in all material respects with federal securities and other laws and regulations applicable thereto;
(n) The current prospectuses and statements of additional information of the Acquired Fund conform in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations of the Commission thereunder and do not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not materially misleading; and
(o) The Registration Statement referred to in section 5.7, insofar as it relates to the Acquired Fund, will, on the effective date of the Registration Statement and on the Closing Date, (i) comply in all material respects with the provisions and regulations of the 1933 Act, the 1934 Act and the 1940 Act, as applicable, and (ii) not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements are made, not materially misleading; provided, however, that the representations and warranties in this section shall not apply to statements in or omissions from the Registration Statement made in reliance upon and in conformity with information that was furnished or should have been furnished by the Acquiring Fund for use therein.
4.2 The Acquiring Corporation, on behalf of the Acquiring Fund, represents and warrants to the Acquired Fund as follows:
(a) The Acquiring Corporation is a Maryland corporation duly organized and validly existing under the laws of the State of Maryland with power under the Acquiring Corporation’s Articles of Amendment and Restatement, to own all of its properties and assets and to carry on its business as it is now being conducted and to carry out the Agreement. The Acquiring Fund is a separate series of the Acquiring Corporation duly designated in accordance with the applicable provisions of the Acquiring Corporation’s Articles of Amendment and Restatement. The Acquiring Corporation and Acquiring Fund are qualified to do business in all jurisdictions in which they are required to be so qualified, except jurisdictions in which the failure to so qualify would not have a material adverse effect on the Acquiring Corporation or Acquiring Fund. The Acquiring Fund has all material federal, state and local authorizations necessary to own all of the properties and assets and to carry on its business as now being conducted, except authorizations which the failure to so obtain would not have a material adverse effect on the Acquiring Fund;
(b) The Acquiring Corporation is registered with the Commission as an open-end management investment company under the 1940 Act, and such registration is in full force and effect and the Acquiring Fund is in compliance in all material respects with the 1940 Act and the rules and regulations thereunder;
(c) No consent, approval, authorization, or order of any court or governmental authority is required for the consummation by the Acquiring Fund of the transactions contemplated herein, except such as have been obtained under the 1933 Act, the 1934 Act and the 1940 Act and such as may be required by state securities laws;
(d) The Acquiring Corporation is not, and the execution, delivery and performance of this Agreement by the Acquiring Corporation will not result (i) in violation of Maryland law or of the Acquiring Corporation’s Articles of Amendment and Restatement, or By-Laws, (ii) in a violation or breach of, or constitute a default under, any material agreement, indenture, instrument, contract, lease or other undertaking known to counsel to which the Acquiring Fund is a party or by which it is bound, and the execution, delivery and performance of this Agreement by the Acquiring Fund will not result in the acceleration of any obligation, or the imposition of
any penalty, under any agreement, indenture, instrument, contract, lease, judgment or decree to which the Acquiring Fund is a party or by which it is bound, or (iii) in the creation or imposition of any lien, charge or encumbrance on any property or assets of the Acquiring Fund;
(e) Other than as disclosed on a schedule provided by the Acquiring Fund, no material litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or to its knowledge threatened against the Acquiring Fund or any properties or assets held by it. The Acquiring Fund knows of no facts which might form the basis for the institution of such proceedings which would materially and adversely affect its business, other than as disclosed in the foregoing schedule, and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body which materially and adversely affects its business or its ability to consummate the transactions herein contemplated;
(f) The Statements of Assets and Liabilities, Operations, and Changes in Net Assets, the Financial Highlights, and the Investment Portfolio of the Acquiring Fund at and for the fiscal year ended November 30, 2007, have been audited by Ernst & Young LLP, Independent Registered Public Accounting Firm, and are in accordance with GAAP consistently applied, and such statements (a copy of each of which has been furnished to the Acquired Fund) present fairly, in all material respects, the financial position of the Acquiring Fund as of such date in accordance with GAAP, and there are no known contingent liabilities of the Acquiring Fund required to be reflected on a statement of assets and liabilities (including the notes thereto) in accordance with GAAP as of such date not disclosed therein;
(g) Since November 30, 2007, there has not been any material adverse change in the Acquiring Fund’s financial condition, assets, liabilities or business other than changes occurring in the ordinary course of business, or any incurrence by the Acquiring Fund of indebtedness maturing more than one year from the date such indebtedness was incurred except as otherwise disclosed to and accepted in writing by the Acquired Fund. For purposes of this subsection (g), a decline in net asset value per share of the Acquiring Fund due to declines in market values of securities in the Acquiring Fund’s portfolio, the discharge of Acquiring Fund liabilities, or the redemption of Acquiring Fund shares by Acquiring Fund shareholders shall not constitute a material adverse change;
(h) At the date hereof and at the Closing Date, all federal and other tax returns and reports of the Acquiring Fund required by law to have been filed by such dates (including any extensions) shall have been filed and are or will be correct in all material respects, and all federal and other taxes shown as due or required to be shown as due on said returns and reports shall have been paid or provision shall have been made for the payment thereof, and, to the best of the Acquiring Fund’s knowledge, no such return is currently under audit and no assessment has been asserted with respect to such returns;
(i) For each taxable year of its operation, the Acquiring Fund has met the requirements of Subchapter M of the Code for qualification as a regulated investment company and has elected to be treated as such, has been eligible to and has computed its federal income tax under Section 852 of the Code, and will do so for the taxable year including the Closing Date;
(j) All issued and outstanding shares of the Acquiring Fund (i) have been offered and sold in every state and the District of Columbia in compliance in all material respects with applicable registration requirements of the 1933 Act and state securities laws and (ii) are, and on the Closing Date will be, duly and validly issued and outstanding, fully paid and non-assessable,
and not subject to preemptive or dissenter’s rights. The Acquiring Fund does not have outstanding any options, warrants or other rights to subscribe for or purchase any of the Acquiring Fund Shares, nor is there outstanding any security convertible into any of the Acquiring Fund Shares;
(k) The Acquiring Fund Shares to be issued and delivered to the Acquired Fund, for the account of the Acquired Fund Shareholders, pursuant to the terms of this Agreement, will at the Closing Date have been duly authorized and, when so issued and delivered, will be duly and validly issued and outstanding Acquiring Fund Shares, and will be fully paid and non-assessable.
(l) At the Closing Date, the Acquiring Fund will have good and marketable title to the Acquiring Fund’s assets, free of any liens or other encumbrances, except those liens or encumbrances as to which the Acquired Fund has received notice at or prior to the Closing;
(m) The execution, delivery and performance of this Agreement will have been duly authorized prior to the Closing Date by all necessary action on the part of the Board members of the Acquiring Corporation (including the determinations required by Rule 17a-8(a) under the 1940 Act) and this Agreement will constitute a valid and binding obligation of the Acquiring Corporation, on behalf of the Acquiring Fund, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws relating to or affecting creditors’ rights and to general equity principles;
(n) The information to be furnished by the Acquiring Fund for use in applications for orders, registration statements or proxy materials or for use in any other document filed or to be filed with any federal, state or local regulatory authority (including FINRA), which may be necessary in connection with the transactions contemplated hereby, shall be accurate and complete in all material respects and shall comply in all material respects with federal securities and other laws and regulations applicable thereto;
(o) The current prospectuses and statements of additional information of the Acquiring Fund with respect to Class A, Class B, Class C and Class S shares conform in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations of the Commission thereunder and do not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not materially misleading;
(p) The Registration Statement, only insofar as it relates to the Acquiring Fund, will, on the effective date of the Registration Statement and on the Closing Date, (i) comply in all material respects with the provisions and regulations of the 1933 Act, the 1934 Act, and the 1940 Act and (ii) not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not materially misleading; provided, however, that the representations and warranties in this section shall not apply to statements in or omissions from the Registration Statement made in reliance upon and in conformity with information that was furnished or should have been furnished by the Acquired Fund for use therein; and
(q) The Acquiring Fund agrees to use all reasonable efforts to obtain the approvals and authorizations required by the 1933 Act, the 1940 Act and such of the state securities laws as may be necessary in order to continue its operations after the Closing Date.
5. | Covenants of the Acquiring Fund and the Acquired Fund |
5.1 The Acquiring Fund and the Acquired Fund each covenants to operate its business in the ordinary course between the date hereof and the Closing Date, it being understood that (a) such ordinary course of business will include (i) the declaration and payment of customary dividends and other distributions and (ii) such changes as are contemplated by the Funds’ normal operations; and (b) each Fund shall retain exclusive control of the composition of its portfolio until the Closing Date. No party shall take any action that would, or reasonably would be expected to, result in any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respect. The Acquired Trust and Acquiring Corporation covenant and agree to coordinate the respective portfolios of the Acquired Fund and Acquiring Fund from the date of the Agreement up to and including the Closing Date in order that at Closing, when the Assets are added to the Acquiring Fund’s portfolio, the resulting portfolio will meet the Acquiring Fund’s investment objective, policies, strategies and restrictions, as set forth in the Acquiring Fund’s prospectuses for Class A, Class B, Class C and Class S shares, copies of which have been delivered to the Acquired Fund.
5.2 Upon reasonable notice, the Acquiring Corporation’s officers and agents shall have reasonable access to the Acquired Fund’s books and records necessary to maintain current knowledge of the Acquired Fund and to ensure that the representations and warranties made by the Acquired Fund are accurate.
5.3 The Acquired Fund covenants to call a meeting of the Acquired Fund Shareholders entitled to vote thereon to consider and act upon this Agreement and to take all other reasonable action necessary to obtain approval of the transactions contemplated herein. Such meeting shall be scheduled for no later than August 25, 2008.
5.4 The Acquired Fund covenants that the Acquiring Fund Shares to be issued hereunder are not being acquired for the purpose of making any distribution thereof other than in accordance with the terms of this Agreement.
5.5 The Acquired Fund covenants that it will assist the Acquiring Fund in obtaining such information as the Acquiring Fund reasonably requests concerning the beneficial ownership of the Acquired Fund shares.
5.6 Subject to the provisions of this Agreement, the Acquiring Fund and the Acquired Fund will each take, or cause to be taken, all actions, and do or cause to be done, all things reasonably necessary, proper, and/or advisable to consummate and make effective the transactions contemplated by this Agreement.
5.7 Each Fund covenants to prepare in compliance with the 1933 Act, the 1934 Act and the 1940 Act the Registration Statement on Form N-14 (the “Registration Statement”) in connection with the meeting of the Acquired Fund Shareholders to consider approval of this Agreement and the transactions contemplated herein. The Acquiring Corporation will file the Registration Statement, including a proxy statement, with the Commission. The Acquired Fund will provide the Acquiring Fund with information reasonably necessary for the preparation of a prospectus, which will include a proxy statement, all to be included in the Registration Statement, in compliance in all material respects with the 1933 Act, the 1934 Act and the 1940 Act.
5.8 The Acquired Fund covenants that it will, from time to time, as and when reasonably requested by the Acquiring Fund, execute and deliver or cause to be executed and delivered all such assignments and other instruments, and will take or cause to be taken such further action as the Acquiring
Fund may reasonably deem necessary or desirable in order to vest in and confirm the Acquiring Fund’s title to and possession of all the Assets and otherwise to carry out the intent and purpose of this Agreement.
5.9 The Acquiring Fund covenants to use all reasonable efforts to obtain the approvals and authorizations required by the 1933 Act and 1940 Act, and such of the state securities laws as it deems appropriate in order to continue its operations after the Closing Date and to consummate the transactions contemplated herein; provided, however, that the Acquiring Fund may take such actions it reasonably deems advisable after the Closing Date as circumstances change.
5.10 The Acquiring Fund covenants that it will, from time to time, as and when reasonably requested by the Acquired Fund, execute and deliver or cause to be executed and delivered all such assignments, assumption agreements, releases, and other instruments, and will take or cause to be taken such further action, as the Acquired Fund may reasonably deem necessary or desirable in order to (i) vest and confirm to the Acquired Fund title to and possession of all Acquiring Fund Shares to be transferred to the Acquired Fund pursuant to this Agreement and (ii) assume all of the liabilities of the Acquired Fund.
5.11 As soon as reasonably practicable after the Closing, the Acquired Fund shall make a liquidating distribution to its shareholders consisting of the Acquiring Fund Shares received at the Closing.
5.12 The Acquiring Fund and the Acquired Fund shall each use its reasonable best efforts to fulfill or obtain the fulfillment of the conditions precedent to effect the transactions contemplated by this Agreement as promptly as practicable.
5.13 The intention of the parties is that the transaction will qualify as a reorganization within the meaning of Section 368(a) of the Code. Neither the Acquired Trust, the Acquiring Corporation, the Acquiring Fund nor the Acquired Fund shall take any action, or cause any action to be taken (including, without limitation, the filing of any tax return) that is inconsistent with such treatment or results in the failure of the transaction to qualify as a reorganization within the meaning of Section 368(a) of the Code. At or prior to the Closing Date, the Acquired Trust and the Acquired Fund, and the Acquiring Corporation and the Acquiring Fund will take such action, or cause such action to be taken, as is reasonably necessary to enable Willkie Farr & Gallagher LLP to render the tax opinion contemplated herein in section 8.5.
5.14 At or immediately prior to the Closing, the Acquired Fund will declare and pay to its shareholders a dividend or other distribution in an amount large enough so that it will have distributed substantially all (and in any event not less than 98%) of its investment company taxable income (computed without regard to any deduction for dividends paid) and realized net capital gain, if any, for the current taxable year through the Closing Date.
5.15 The Acquiring Fund agrees to identify in writing prior to the Closing Date any assets of the Acquired Fund that it does not wish to acquire because they are not consistent with the current investment objective, policies, restrictions and strategies of the Acquiring Fund, and the Acquired Fund agrees to dispose of such assets prior to the Closing Date. The Acquiring Fund agrees to identify in writing prior to the Closing Date any assets that it would like the Acquired Fund to purchase, consistent with the Acquiring Fund’s investment objective, policies, restrictions and strategies, and the Acquired Fund agrees to purchase such assets pursuant to the Acquiring Fund’s investment objective, policies, restrictions and strategies prior to the Closing Date.
6. | Conditions Precedent to Obligations of the Acquired Fund |
The obligations of the Acquired Fund to consummate the transactions provided for herein shall be subject, at its election, to the performance by the Acquiring Fund of all the obligations to be performed by it hereunder on or before the Closing Date, and, in addition thereto, the following further conditions:
6.1 All representations and warranties of the Acquiring Corporation, on behalf of the Acquiring Fund, contained in this Agreement shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the transactions contemplated by this Agreement, as of the Closing Date, with the same force and effect as if made on and as of the Closing Date; and there shall be (i) no pending or threatened litigation brought by any person (other than the Acquired Fund, its adviser or any of their affiliates) against the Acquiring Fund or its investment adviser(s), Board members or officers arising out of this Agreement and (ii) no facts known to the Acquiring Fund which the Acquiring Fund reasonably believes might result in such litigation.
6.2 The Acquiring Fund shall have delivered to the Acquired Fund on the Closing Date a certificate executed in its name by the Acquiring Corporation’s President or a Vice President, in a form reasonably satisfactory to the Acquired Trust, on behalf of the Acquired Fund, and dated as of the Closing Date, to the effect that the representations and warranties of the Acquiring Corporation, on behalf of the Acquiring Fund, made in this Agreement are true and correct on and as of the Closing Date, except as they may be affected by the transactions contemplated by this Agreement, and as to such other matters as the Acquired Fund shall reasonably request.
6.3 The Acquired Fund shall have received on the Closing Date an opinion of Vedder Price P.C., in a form reasonably satisfactory to the Acquired Fund, and dated as of the Closing Date, to the effect that:
| (a) | the Acquiring Corporation has been formed and is an existing corporation; |
(b) the Acquiring Fund has the power to carry on its business as presently conducted in accordance with the description thereof in the Acquiring Corporation’s registration statement under the 1940 Act;
(c) the Agreement has been duly authorized, executed and delivered by the Acquiring Corporation, on behalf of the Acquiring Fund, and constitutes a valid and legally binding obligation of the Acquiring Corporation, on behalf of the Acquiring Fund, enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and laws of general applicability relating to or affecting creditors’ rights and to general equity principles;
(d) the execution and delivery of the Agreement did not, and the issuance of Acquiring Fund Shares pursuant to the Agreement will not, violate the Acquiring Corporation’s Articles of Amendment and Restatement, or By-laws; and
(e) to the knowledge of such counsel, and without any independent investigation, (i) other than as disclosed on the schedule provided by the Acquiring Fund pursuant to section 4.2(e) of the Agreement, the Acquiring Fund is not subject to any litigation or other proceedings that might have a materially adverse effect on the operations of the Acquiring Fund, (ii) the Acquiring Corporation is registered as an investment company under the 1940 Act and no stop order suspending the effectiveness of its registration statement has been issued under the 1933 Act and no order of suspension or revocation of registration pursuant to Section 8(e) of the 1940 Act has been issued, and (iii) all regulatory consents, authorizations, approvals or filings required to be obtained or made by the Acquiring Fund under the federal laws of the United
States or the laws of the State of Maryland for the issuance of Acquiring Fund Shares, pursuant to the Agreement have been obtained or made.
The delivery of such opinion is conditioned upon receipt by Vedder Price P.C. of customary representations it shall reasonably request of each of the Acquiring Corporation and the Acquired Trust.
6.4 The Acquiring Fund shall have performed all of the covenants and complied with all of the provisions required by this Agreement to be performed or complied with by the Acquiring Fund on or before the Closing Date.
6.5 The Acquiring Corporation, on behalf of the Acquiring Fund, shall have adopted a revised management fee schedule under its [Amended and Restated Investment Management Agreement] as follows:
Net Assets | Management Fee |
First $250 million | 0.665% |
Next $250 million | 0.635% |
Next $2.0 billion | 0.615% |
Next $1.5 billion | 0.595% |
Thereafter | 0.575% |
6.6 The Acquiring Fund shall have entered into an expense cap agreement with DIMA limiting the expenses of the Class A, Class B, Class C and Class S shares of the Acquiring Fund to [1.35%], [2.05%], [2.05%] and [1.00%], respectively, excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest and organizational and offering expenses, for a period of one year commencing on the Closing Date, in a form reasonably satisfactory to the Acquired Fund.
7. | Conditions Precedent to Obligations of the Acquiring Fund |
The obligations of the Acquiring Fund to consummate the transactions provided for herein shall be subject, at its election, to the performance by the Acquired Fund of all of the obligations to be performed by it hereunder on or before the Closing Date and, in addition thereto, the following further conditions:
7.1 All representations and warranties of the Acquired Trust, on behalf of the Acquired Fund, contained in this Agreement shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the transactions contemplated by this Agreement, as of the Closing Date, with the same force and effect as if made on and as of the Closing Date; and there shall be (i) no pending or threatened litigation brought by any person (other than the Acquiring Fund, its adviser or any of their affiliates) against the Acquired Fund or its investment adviser, trustees or officers arising out of this Agreement and (ii) no facts known to the Acquired Fund which the Acquired Fund reasonably believes might result in such litigation.
7.2 The Acquired Fund shall have delivered to the Acquiring Fund a statement of the Acquired Fund’s assets and liabilities as of the Closing Date, certified by the Treasurer of the Acquired Trust.
7.3 The Acquired Fund shall have delivered to the Acquiring Fund on the Closing Date a certificate executed in its name by the Acquired Trust’s President or a Vice President, in a form reasonably satisfactory to the Acquiring Corporation, on behalf of the Acquiring Fund, and dated as of the Closing Date, to the effect that the representations and warranties of the Acquired Trust, on behalf of the
Acquired Fund, made in this Agreement are true and correct on and as of the Closing Date, except as they may be affected by the transactions contemplated by this Agreement, and as to such other matters as the Acquiring Fund shall reasonably request.
7.4 The Acquiring Fund shall have received on the Closing Date an opinion of Ropes & Gray LLP, in a form reasonably satisfactory to the Acquiring Fund, and dated as of the Closing Date, to the effect that:
(a) the Acquired Trust has been formed and is validly existing as a business trust;
(b) the Acquired Fund has the power to carry on its business as presently conducted in accordance with the description thereof in the Acquired Trust’s registration statement under the 1940 Act;
(c) the Agreement has been duly authorized, executed and delivered by the Acquired Trust, on behalf of the Acquired Fund, and constitutes a valid and legally binding obligation of the Acquired Trust, on behalf of the Acquired Fund, enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and laws of general applicability relating to or affecting creditors’ rights and to general equity principles;
(d) the execution and delivery of the Agreement did not, and the exchange of the Acquired Fund’s assets for Acquiring Fund Shares pursuant to the Agreement will not, violate the Acquired Trust’s Declaration of Trust, as amended, or By-laws; and
(e) to the knowledge of such counsel, and without any independent investigation, (i) other than as disclosed on the schedule provided by the Acquired Trust pursuant to section 4.1(e) of the Agreement, the Acquired Fund is not subject to any litigation or other proceedings that might have a materially adverse effect on the operations of the Acquired Fund, (ii) the Acquired Fund is duly registered as an investment company with the Commission and is not subject to any stop order, and (iii) all regulatory consents, authorizations, approvals or filings required to be obtained or made by the Acquired Fund under the federal laws of the United States or the laws of The Commonwealth of Massachusetts for the exchange of the Acquired Fund’s assets for Acquiring Fund Shares, pursuant to the Agreement have been obtained or made.
The delivery of such opinion is conditioned upon receipt by Ropes & Gray LLP of customary representations it shall reasonably request of each of the Acquiring Corporation and the Acquired Trust.
7.5 The Acquired Fund shall have performed all of the covenants and complied with all of the provisions required by this Agreement to be performed or complied with by the Acquired Fund on or before the Closing Date.
8. | Further Conditions Precedent to Obligations of the Acquiring Fund and the Acquired Fund |
If any of the conditions set forth below have not been met on or before the Closing Date with respect to the Acquired Fund or the Acquiring Fund, the other party to this Agreement shall, at its option, not be required to consummate the transactions contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein shall have been approved by the requisite vote of the holders of the outstanding shares of the Acquired Fund in accordance with the provisions of the Acquired Trust’s Declaration of Trust, as amended, and By-Laws, applicable Massachusetts law and the 1940 Act, and certified copies of the resolutions evidencing such approval
shall have been delivered to the Acquiring Fund. Notwithstanding anything herein to the contrary, neither the Acquiring Fund nor the Acquired Fund may waive the conditions set forth in this section 8.1.
8.2 On the Closing Date, no action, suit or other proceeding shall be pending or to its knowledge threatened before any court or governmental agency in which it is sought to restrain or prohibit, or obtain material damages or other relief in connection with, this Agreement or the transactions contemplated herein.
8.3 All consents of other parties and all other consents, orders and permits of federal, state and local regulatory authorities deemed necessary by the Acquiring Fund or the Acquired Fund to permit consummation, in all material respects, of the transactions contemplated hereby shall have been obtained, except where failure to obtain any such consent, order or permit would not involve a risk of a material adverse effect on the assets or properties of the Acquiring Fund or the Acquired Fund, provided that either party hereto may for itself waive any of such conditions.
8.4 The Registration Statement shall have become effective under the 1933 Act and no stop orders suspending the effectiveness thereof shall have been issued and, to the best knowledge of the parties hereto, no investigation or proceeding for that purpose shall have been instituted or be pending, threatened or contemplated under the 1933 Act.
8.5 The parties shall have received an opinion of Willkie Farr & Gallagher LLPaddressed to each of the Acquiring Fund and the Acquired Fund, in a form reasonably satisfactory to each such party to this Agreement, substantially to the effect that, based upon certain facts, assumptions and representations of the parties, for federal income tax purposes: (i) the acquisition by Acquiring Fund of all of the assets of Acquired Fund solely in exchange for Acquiring Fund Shares and the assumption by Acquiring Fund of all of the liabilities of Acquired Fund, followed by the distribution by Acquired Fund to its shareholders of Acquiring Fund Shares in complete liquidation of Acquired Fund, all pursuant to the Agreement, constitutes a reorganization within the meaning of Section 368(a) of the Code, and Acquiring Fund and Acquired Fund will each be a “party to a reorganization” within the meaning of Section 368(b) of the Code; (ii) under Section 361 of the Code, Acquired Fund will not recognize gain or loss upon the transfer of its assets to Acquiring Fund in exchange for Acquiring Fund Shares and the assumption of the Acquired Fund liabilities by Acquiring Fund, and Acquired Fund will not recognize gain or loss upon the distribution to its shareholders of the Acquiring Fund Shares in liquidation of Acquired Fund; (iii) under Section 354 of the Code, shareholders of Acquired Fund will not recognize gain or loss on the receipt of Acquiring Fund Shares solely in exchange for Acquired Fund shares; (iv) under Section 358 of the Code, the aggregate basis of the Acquiring Fund Shares received by each shareholder of Acquired Fund will be the same as the aggregate basis of Acquired Fund shares exchanged therefor; (v) under Section 1223(1) of the Code, the holding period of the Acquiring Fund Shares received by each Acquired Fund shareholder will include the holding period of Acquired Fund shares exchanged therefor, provided that the Acquired Fund shareholder held the Acquired Fund shares at the time of the reorganization as a capital asset; (vi) under Section 1032 of the Code, Acquiring Fund will not recognize gain or loss upon the receipt of assets of Acquired Fund in exchange for Acquiring Fund Shares and the assumption by Acquiring Fund of all of the liabilities of Acquired Fund; (vii) under Section 362(b) of the Code, the basis of the assets of Acquired Fund transferred to Acquiring Fund in the reorganization will be the same in the hands of Acquiring Fund as the basis of such assets in the hands of Acquired Fund immediately prior to the transfer; and (viii) under Section 1223(2) of the Code, the holding periods of the assets of Acquired Fund transferred to Acquiring Fund in the reorganization in the hands of Acquiring Fund will include the periods during which such assets were held by Acquired Fund. The delivery of such opinion is conditioned upon receipt by Willkie Farr & Gallagher LLP of representations it shall reasonably request of each of the Acquiring Corporation and Acquired Trust. Notwithstanding anything herein to the
contrary, neither the Acquiring Fund nor the Acquired Fund may waive the condition set forth in this Section 8.5.
9.1 The Acquiring Fund agrees to indemnify and hold harmless the Acquired Fund and each of the Acquired Trust’s trustees and officers from and against any and all losses, claims, damages, liabilities or expenses (including, without limitation, the payment of reasonable legal fees and reasonable costs of investigation) to which jointly and severally, the Acquired Trust or any of its trustees or officers may become subject, insofar as any such loss, claim, damage, liability or expense (or actions with respect thereto) arises out of or is based on any breach by the Acquiring Fund of any of its representations, warranties, covenants or agreements set forth in this Agreement.
9.2 The Acquired Fund agrees to indemnify and hold harmless the Acquiring Fund and each of the Acquiring Corporation’s directors and officers from and against any and all losses, claims, damages, liabilities or expenses (including, without limitation, the payment of reasonable legal fees and reasonable costs of investigation) to which jointly and severally, the Acquiring Corporation or any of its directors or officers may become subject, insofar as any such loss, claim, damage, liability or expense (or actions with respect thereto) arises out of or is based on any breach by the Acquired Fund of any of its representations, warranties, covenants or agreements set forth in this Agreement.
10.1 The Acquiring Corporation, on behalf of the Acquiring Fund, and the Acquired Trust, on behalf of the Acquired Fund, represents and warrants to the other that it has no obligations to pay any brokers or finders fees in connection with the transactions provided for herein.
10.2 The Acquired Fund will bear all the expenses associated with the Reorganization, including, but not limited to, any transaction costs payable by the Acquired Fund in connection with the reconfiguration of its portfolio, as designated by the Acquiring Fund, in anticipation of the Reorganization. DIMA agrees to bear expenses incurred by the Acquired Fund in connection with the Reorganization, including any incremental trading costs expected to be incurred by the Acquired Fund as a result of the Reorganization, to the extent such expenses exceed $330,000 during the one year period following the Reorganization. For these purposes, "incremental trading costs" means any positive difference between (a) and (b), where (a) equals the sum of (i) trading costs incurred by the Acquiring Fund during the twelve month period ended March 31, 2008 and (ii) trading costs incurred by the Acquired Fund in connection with the merger (in each case expressed in basis points), and (b) equals trading costs incurred by the Acquired Fund during the twelve month period ended March 31, 2008 (expressed in basis points).
The Acquiring Fund and the Acquired Fund agree that neither party has made any representation, warranty or covenant not set forth herein and that this Agreement constitutes the entire agreement between the parties.
This Agreement may be terminated and the transactions contemplated hereby may be abandoned (i) by mutual agreement of the parties, or (ii) by either party if the Closing shall not have occurred on or before October 31, 2008, unless such date is extended by mutual agreement of the parties, or (iii) by either party if the other party shall have materially breached its obligations under this Agreement or made a material and intentional misrepresentation herein or in connection herewith. In the event of any such
termination, this Agreement shall become void and there shall be no liability hereunder on the part of any party or their respective Board members or officers, except for any such material breach or intentional misrepresentation, as to each of which all remedies at law or in equity of the party adversely affected shall survive.
This Agreement may be amended, modified or supplemented in such manner as may be mutually agreed upon in writing by any authorized officer of the Acquired Fund and any authorized officer of the Acquiring Fund; provided, however, that following the meeting of the Acquired Fund Shareholders called by the Acquired Fund pursuant to section 5.3 of this Agreement, no such amendment may have the effect of changing the provisions for determining the number of the Acquiring Fund Shares to be issued to the Acquired Fund Shareholders under this Agreement to the detriment of such shareholders without their further approval.
Any notice, report, statement or demand required or permitted by any provisions of this Agreement shall be in writing and shall be deemed duly given if delivered by hand (including by Federal Express or similar express courier) or transmitted by facsimile or three days after being mailed by prepaid registered or certified mail, return receipt requested, addressed to the Acquired Fund, Two International Place, Boston, Massachusetts 02110, with a copy to Ropes & Gray LLP, One International Place, Boston, Massachusetts 02110-2624, Attention: John Gerstmayr, Esq., or to the Acquiring Fund, 222 South Riverside Plaza, Chicago, Illinois 60606, with a copy to Vedder Price P.C., 222 North LaSalle Street, Chicago, Illinois 60601, Attention: David A. Sturms, Esq. or to any other address that the Acquired Fund or the Acquiring Fund shall have last designated by notice to the other party.
15. | Headings; Counterparts; Assignment; Limitation of Liability |
15.1 The Article and section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
15.2 This Agreement may be executed in any number of counterparts, each of which shall be deemed an original.
15.3 This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, but no assignment or transfer hereof or of any rights or obligations hereunder shall be made by any party without the written consent of the other party. Nothing herein expressed or implied is intended or shall be construed to confer upon or give any person, firm or corporation, other than the parties hereto and the shareholders of the Acquiring Fund and the Acquired Fund and their respective successors and assigns, any rights or remedies under or by reason of this Agreement.
15.4 References in this Agreement to the Acquired Trust mean and refer to the trustees of the Acquired Trust from time to time serving under its Declaration of Trust on file with the Secretary of The Commonwealth of Massachusetts, as the same may be amended from time to time, pursuant to which the Acquired Trust conducts its business. References in this Agreement to the Acquiring Corporation mean and refer to the officers of the Acquiring Corporation from time to time serving under its Articles of Amendment and Restatement, as amended from time to time, pursuant to which the Acquiring Corporation conducts its business. It is expressly agreed that the obligations of the Acquired Trust and Acquiring Corporation hereunder shall not be binding upon any of the trustees, directors, shareholders,
nominees, officers, agents, or employees of the Acquired Trust, Acquiring Corporation or the Funds personally, but bind only the respective property of the Funds, as provided in the Acquired Trust’s and the Acquiring Corporation’s charter documents. Moreover, no series of either the Acquired Trust or the Acquiring Corporation other than the Funds shall be responsible for the obligations of the Acquired Trust and Acquiring Corporation hereunder, and all persons shall look only to the assets of the Funds to satisfy the obligations of the Acquired Trust and Acquiring Corporation hereunder. The execution and the delivery of this Agreement have been authorized by each of the Acquired Trust’s and Acquiring Corporation’s trustees/directors, on behalf of the applicable Fund, and this Agreement has been signed by authorized officers of each Fund acting as such, and neither such authorization by such trustees/directors, nor such execution and delivery by such officers, shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the respective property of the Funds, as provided in the Acquired Trust’s Declaration of Trust and the Acquiring Corporation’s charter documents.
Notwithstanding anything to the contrary contained in this Agreement, the obligations, agreements, representations and warranties with respect to each Fund shall constitute the obligations, agreements, representations and warranties of that Fund only (the “Obligated Fund”), and in no event shall any other series of the Acquired Trust or Acquiring Corporation or the assets of any such series be held liable with respect to the breach or other default by the Obligated Fund of its obligations, agreements, representations and warranties as set forth herein.
15.5 This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Maryland, without regard to its principles of conflicts of laws.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed by an authorized officer and its seal to be affixed thereto and attested by its Secretary or Assistant Secretary.
Attest: Secretary | DWS VALUE SERIES, INC., on behalf of DWS Dreman Mid Cap Value Fund
By:
Its: |
Attest:
Secretary
| DWS SECURITIES TRUST, on behalf of DWS Small Cap Value Fund By: Its: |
AGREED TO AND ACKNOWLEDGED ONLY WITH RESPECT TO SECTION 10.2 HERETO DEUTSCHE INVESTMENT MANAGEMENT AMERICAS INC. By:
Its:
| |
EXHIBIT B
FINANCIAL HIGHLIGHTS
Class A Years Ended November 30, | 2007 | 2006 | 2005a |
Selected Per Share Data |
Net asset value, beginning of period | $11.96 | $10.04 | $10.00 |
Income (loss) from investment operations: Net investment income (loss)b | .10 | .09 | (.01) |
Net realized and unrealized gain (loss) | .79 | 1.84 | .05 |
Total from investment operations | .89 | 1.93 | .04 |
Less distributions from: Net investment income | (.09) | (.01) | — |
Net realized gains | (.15) | — | — |
Total distributions | (.24) | (.01) | — |
Redemption fees | .00*** | .00*** | .00*** |
Net asset value, end of period | $12.61 | $11.96 | $10.04 |
Total Return (%)c,d | 7.54 | 19.20 | .40** |
Ratios to Average Net Assets and Supplemental Data |
Net assets, end of period ($ millions) | 48 | 21 | 4 |
Ratio of expenses before expense reductions (%) | 1.61 | 2.55 | 6.68* |
Ratio of expenses after expense reductions (%) | 1.35 | 1.25e | 2.81* |
Ratio of net investment income (loss) (%) | .79 | .86 | (.51)* |
Portfolio turnover rate (%) | 82 | 34 | 10 |
a For the period from August 2, 2005 (commencement of operations) to November 30, 2005. b Based on average shares outstanding during period. c Total return does not reflect the effect of any sales charges. d Total return would have been lower had certain expenses not been reduced. e The ratio of operating expenses includes reimbursement of the Fund’s organizational and offering cost incurred since inception of the Fund. The ratio without this reimbursement would have been 1.54%. * Annualized ** Not annualized *** Amount is less than $.005. |
Class B Years Ended November 30, | 2007 | 2006 | 2005a |
Selected Per Share Data |
Net asset value, beginning of period | $11.87 | $10.02 | $10.00 |
Income (loss) from investment operations: Net investment income (loss)b | .01 | .02 | (.03) |
Net realized and unrealized gain (loss) | .79 | 1.83 | .05 |
Total from investment operations | .80 | 1.85 | .02 |
Less distributions from: Net realized gains | (.15) | — | — |
Redemption fees | .00*** | .00*** | .00*** |
Net asset value, end of period | $12.52 | $11.87 | $10.02 |
Total Return (%)c,d | 6.72 | 18.46 | .20** |
Ratios to Average Net Assets and Supplemental Data |
Net assets, end of period ($ millions) | 4 | 3 | 1 |
Ratio of expenses before expense reductions (%) | 2.46 | 3.36 | 7.41* |
Ratio of expenses after expense reductions (%) | 2.05 | 1.95e | 3.51* |
Ratio of net investment income (loss) (%) | .09 | .16 | (1.21)* |
Portfolio turnover rate (%) | 82 | 34 | 10 |
a For the period from August 2, 2005 (commencement of operations) to November 30, 2005. b Based on average shares outstanding during the period. c Total return does not reflect the effect of any sales charges. d Total return would have been lower had certain expenses not been reduced. e The ratio of operating expenses includes reimbursement of the Fund’s organizational and offering cost incurred since the inception of the Fund. The ratio without this reimbursement would have been 2.24%. * Annualized ** Not annualized *** Amount is less than $.005. |
Class C Years Ended November 30, | 2007 | 2006 | 2005a |
Selected Per Share Data |
Net asset value, beginning of period | $11.86 | $10.02 | $10.00 |
Income (loss) from investment operations: Net investment income (loss)b | .01 | .02 | (.03) |
Net realized and unrealized gain (loss) | .79 | 1.82 | .05 |
Total from investment operations | .80 | 1.84 | .02 |
Less distributions from: Net realized gains | (.15) | — | — |
Redemption fees | .00*** | .00*** | .00*** |
Net asset value, end of period | $12.51 | $11.86 | $10.02 |
Total Return (%)c,d | 6.81 | 18.36 | .20** |
Ratios to Average Net Assets and Supplemental Data |
Net assets, end of period ($ millions) | 20 | 9 | 2 |
Ratio of expenses before expense reductions (%) | 2.37 | 3.34 | 7.46* |
Ratio of expenses after expense reductions (%) | 2.05 | 1.95e | 3.51* |
Ratio of net investment income (loss) (%) | .09 | .16 | (1.21)* |
Portfolio turnover rate (%) | 82 | 34 | 10 |
a For the period from August 2, 2005 (commencement of operations) to November 30, 2005. b Based on average shares outstanding during the period. c Total return does not reflect the effect of any sales charges. d Total return would have been lower had certain expenses not been reduced. e The ratio of operating expenses includes reimbursement of the Fund’s organizational and offering cost incurred since the inception of the Fund. The ratio without this reimbursement would have been 2.24%. * Annualized ** Not annualized *** Amount is less than $.005. |
Class S Years Ended November 30, | 2007 | 2006 | 2005a |
Selected Per Share Data |
Net asset value, beginning of period | $11.97 | $10.05 | $10.00 |
Income (loss) from investment operations: Net investment income (loss)b | .14 | .13 | (.00)*** |
Net realized and unrealized gain (loss) | .80 | 1.85 | .05 |
Total from investment operations | .94 | 1.98 | .05 |
Less distributions from: Net investment income | (.12) | (.06) | — |
Net realized gains | (.15) | — | — |
Total distributions | (.27) | (.06) | — |
Redemption fees | .00*** | .00*** | .00*** |
Net asset value, end of period | $12.64 | $11.97 | $10.05 |
Total Return (%)c | 7.88 | 19.88 | .50** |
Ratios to Average Net Assets and Supplemental Data |
Net assets, end of period ($ millions) | 14 | 6 | 2 |
Ratio of expenses before expense reductions (%) | 1.37 | 2.27 | 6.38* |
Ratio of expenses after expense reductions (%) | 1.00 | .90d | 2.46* |
Ratio of net investment income (loss) (%) | 1.14 | 1.21 | (.16)* |
Portfolio turnover rate (%) | 82 | 34 | 10 |
a For the period from August 2, 2005 (commencement of operations) to November 30, 2005. b Based on average shares outstanding during the period. c Total return would have been lower had certain expenses not been reduced. d The ratio of operating expenses includes reimbursement of the Fund’s organizational and offering cost incurred since the inception of the Fund. The ratio without this reimbursement would have been 1.19%. * Annualized ** Not annualized *** Amount is less than $.005. |
TABLE OF CONTENTS
Page
II. | INVESTMENT STRATEGIES AND RISK FACTORS | 10 |
III. | OTHER INFORMATION ABOUT THE FUNDS | 15 |
IV. | INFORMATION ABOUT THE PROPOSED MERGER | 19 |
V. | INFORMATION ABOUT VOTING AND THE SHAREHOLDER MEETING | 26 |
Exhibit A—Form of Agreement and Plan of Reorganization
Exhibit B—Financial Highlights
Proxy card enclosed.
For more information, please call your Fund’s proxy solicitor, Computershare Fund Services, Inc., at
1-877-225-6917.
[DWS SCUDDER LOGO]
DWS SECURITIES TRUST DWS SMALL CAP V ALUE FUND PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS 345 Park Avenue, 27th Floor, New York, New York 10154 [3:00 p.m.], Eastern time, on June 30, 2008 | PROXY CARD |
The undersigned hereby appoint(s) Patricia DeFilippis, Elisa Metzger and John Millette , and each of them, with full power of substitution, as proxy or proxies of the undersigned to vote all shares of the Fund that the undersigned is entitled in any capacity to vote at the above-stated Special Meeting of Shareholders, and at any and all adjournments or postponements therof (the “Special Meeting”), on the matter set forth in the Notice of Special Meeting of Shareholders and on this Proxy Card, and, in their discretion, upon all matters incident to the conduct of the Special Meeting and upon such other matters as may properly be brought before the Special Meeting. This proxy revokes all prior proxies given by the undersigned.
All properly executed proxies will be voted as directed. If no instructions are indicated on a properly executed proxy, the proxy will be voted FOR approval of the Proposal. All ABSTAIN votes will be counted in determining the existence of a quorum at the Special Meeting. Receipt of the Notice of Special Meeting and the related Proxy Statement/Prospectus is hereby acknowledged.
VOTE VIA THE INTERNET: https://vote.proxy-direct.com
VOTE VIA THE TELEPHONE: [_____________]
999 9999 9999 999
Note: Joint owners should EACH sign. Please sign EXACTLY as your name(s) appears on this proxy card. When signing as attorney, trustee, executor, administrator, guardian or corporate officer, please give your FULL title as such.
______________________________________
Signature(s) (Title(s), if applicable)
______________________________________
Date
VOTING OPTIONS
Read your proxy statement and have it at hand when voting.
[GRAPHIC OMITTED] | [GRAPHIC OMITTED] | [GRAPHIC OMITTED] | [GRAPHIC OMITTED] |
VOTE ON THE INTERNET | VOTE BY PHONE | VOTE BY MAIL | VOTE IN PERSON |
Log on to: | [_________________ ] | Vote, sign and date this Proxy | Attend Shareholder Meeting |
https://vote.proxy-direct.com | Follow the recorded | Card and return in the | 345 Park Avenue, 27th Floor |
Follow the on-screen instructions | instructions | postage-paid envelope | New York, NY 10154 |
available 24 hours | available 24 hours | | on June 30, 2008 |
If you vote on the Internet or by telephone, you need not return this proxy card.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES WITH RESPECT TO YOUR FUND. THE FOLLOWING MATTER IS PROPOSED BY YOUR FUND. THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE PROPOSAL.
TO VOTE, MARK A BLOCK BELOW IN BLUE OR BLACK INK. Example: | [_] |
VOTE ON PROPOSAL: | FOR | AGAINST | ABSTAIN |
| 1. | Approving an Agreement and Plan of Reorganization and the transactions it contemplates, including the transfer of all of the assets of DWS Small Cap Value Fund (“Small Cap Fund”) to DWS Dreman Mid Cap Value Fund (“Mid Cap Fund”), in exchange for shares of Mid Cap Fund and the assumption by Mid Cap Fund of all liabilities of Small Cap Fund, and the distribution of such shares, on a tax-free basis for federal income tax purposes, to the shareholders of Small Cap Fund in complete liquidation and termination of Small Cap Fund. |
The appointed proxies will vote on any other business as may properly come before the Special Meeting.
UNLESS VOTING BY TELEPHONE OR INTERNET, PLEASE SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
NO POSTAGE REQUIRED.
MARCH 1, 2008
PROSPECTUS
------------------
DWS LARGE CAP VALUE FUND - Classes A, B and C
DWS DREMAN CONCENTRATED VALUE FUND - Classes A, B and C
DWS DREMAN HIGH RETURN EQUITY FUND - Classes A, B, C and R
DWS DREMAN MID CAP VALUE FUND - Classes A, B and C
DWS DREMAN SMALL CAP VALUE FUND Classes A, B 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.
ONE GLOBAL FORCE. ONE FOCUS. YOU. [DWS SCUDDER Logo]
Deutsche Bank Group
CONTENTS
HOW EACH FUND WORKS
4 DWS Large Cap Value Fund
12 DWS Dreman Concentrated
Value Fund
20 DWS Dreman High Return
Equity Fund
27 DWS Dreman Mid Cap Value
Fund
35 DWS Dreman Small Cap Value
Fund
42 Other Policies and Secondary
Risks
44 Who Manages and Oversees
the Funds
50 Financial Highlights
HOW TO INVEST IN THE FUNDS
67 Choosing a Share Class
74 How to Buy Class A, B and C
Shares
75 How to Exchange or Sell
Class A, B and C Shares
76 How to Buy and Sell Class R
Shares
78 Policies You Should Know
About
93 Understanding Distributions
and Taxes
97 Appendix
HOW EACH FUND WORKS
On the next few pages, you'll find information about each fund's investment
objective, the main strategies each uses to pursue that objective and the main
risks that could affect performance.
Whether you are considering investing in a fund or are already a shareholder,
you'll want to LOOK THIS INFORMATION OVER CAREFULLY. You may want to keep it on
hand for reference as well.
CLASSES A, B AND C shares are generally intended for investors seeking the
advice and assistance of a financial advisor.
Remember that mutual funds are investments, not bank deposits. They're not
insured or guaranteed by the FDIC or any other government agency. Their share
prices will go up and down, and you could lose money by investing in them.
DWS Dreman Small Cap Value Fund is closed to new investors
(see "Policies You Should Know About" for additional information).
You can find DWS prospectuses on the Internet at WWW.DWS-SCUDDER.COM (the Web
site does not form a part of this prospectus).
Class A Class B Class C
ticker symbol KDCAX KDCBX KDCCX
fund number 086 286 386
DWS LARGE CAP VALUE FUND
THE FUND'S MAIN INVESTMENT STRATEGY
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 (Reg.
TM) Value Index (as of January 31, 2008, the Russell 1000 (Reg. TM)
Value Index had a median market capitalization of $4.9 billion) and
that the portfolio managers believe are undervalued. 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.
The portfolio managers begin by screening for stocks whose
price-to-earnings ratios are below the average for the S&P 500
Index. The portfolio managers then compare a company's stock price
to its book value, cash flow and yield, and analyze individual
companies to identify those that are financially sound and appear
to have strong potential for long-term growth.
4 | DWS Large Cap Value Fund
The portfolio managers assemble the fund's portfolio from among the
most attractive stocks, drawing on an analysis of economic outlooks
for various sectors and industries.
The portfolio managers will normally sell a stock when it believes
the stock's price is unlikely to go higher, its fundamental factors
have changed, other investments offer better opportunities or in
the course of adjusting its emphasis on a given industry.
OTHER INVESTMENTS. The fund is permitted, but not required, to use
various types of derivatives (contracts whose value is based on,
for example, indices, currencies or securities). Derivatives may be
used for hedging and for risk management or for non-hedging
purposes to seek to enhance potential gains. The fund may use
derivatives in circumstances where portfolio management believes
they offer an economical means of gaining exposure to a particular
asset class or to keep cash on hand to meet shareholder redemptions
or other needs while maintaining exposure to the market.
In particular, the fund may use futures, currency options and
forward currency transactions.
SECURITIES LENDING. The fund may lend its investment securities in
an amount up to 33 1/3% of its total assets to approved
institutional borrowers who need to borrow securities in order to
complete certain transactions.
DWS Large Cap Value Fund | 5
THE MAIN RISKS OF INVESTING IN THE FUND
There are several risk factors that could hurt the fund's
performance, cause you to lose money or cause the fund's
performance to trail that of other investments.
STOCK MARKET RISK. As with most stock funds, the most important
factor affecting this fund is how the stock market performs (to the
extent the fund invests in a particular 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 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.
SECURITY SELECTION RISK. A risk that pervades all investing is the
risk that the securities in the fund's portfolio may decline in
value.
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.
INDUSTRY RISK. While the fund does not concentrate in any industry
or sector, to the extent that the fund has exposure to a given
industry or sector, any factors affecting that industry or sector
could affect the value of portfolio securities. For example,
manufacturers of consumer goods could be hurt by a rise in
unemployment or technology companies could be hurt by such factors
as market saturation, price competition and rapid obsolescence.
SECURITIES LENDING RISK. Any loss in the market price of securities
loaned by the fund that occurs during the term of the loan would be
borne by the fund and would adversely affect the fund's
performance. Also, there may be delays in
THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS
This fund is designed for investors interested in diversifying a growth-oriented
portfolio or adding a core holding to a value-oriented portfolio.
6 | DWS Large Cap Value Fund
recovery of securities loaned or even a loss of rights in the
collateral should the borrower of the securities fail financially
while the loan is outstanding. However, loans will be made only to
borrowers selected by the fund's delegate after a review of
relevant facts and circumstances, including the creditworthiness of
the borrower.
Other factors that could affect performance include:
- portfolio management could be wrong in the analysis of
industries, companies, economic trends, the relative
attractiveness of different securities or other matters.
- foreign securities may be more volatile than their US
counterparts, for reasons such as currency fluctuations and
political and economic uncertainty.
- 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 Large Cap Value Fund | 7
THE FUND'S PERFORMANCE HISTORY
While a fund's past performance (before and after taxes) isn't necessarily a
sign of how it will do in the future, it can be valuable for an investor to
know.
The bar chart shows how the performance of the fund's Class A shares has varied
from year to year, which may give some idea of risk. The bar chart does not
reflect sales loads; if it did, total returns would be lower than those shown.
The table on the following page shows how fund performance compares to relevant
index performance (which, unlike fund performance, does not reflect fees or
expenses). The table includes the effects of maximum sales loads on fund
performance. The performance of both the fund and the index varies over time.
All figures assume reinvestment of dividends and distributions (in the case of
after-tax returns, reinvested net of assumed tax rates).
The table shows returns for Class A shares on a before-tax and after-tax basis.
After-tax returns are shown for Class A only and will vary for Classes B and C.
After-tax returns are estimates calculated using the historical highest
individual federal marginal income tax rates and do not reflect the impact of
state and local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown in the table. After-tax returns shown
are not relevant for investors who hold their shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts.
DWS Large Cap Value Fund
ANNUAL TOTAL RETURN (%) AS OF 12/31 EACH YEAR - CLASS A (Results do not reflect
sales loads; if they did, total returns would be lower than those shown.)
[GRAPHIC APPEARS HERE]
19.17 -10.73 15.69 1.56 -15.33 32.46 9.27 1.85 15.56 12.52
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
FOR THE PERIODS INCLUDED IN THE BAR CHART:
BEST QUARTER: 18.70%, Q2 2003 WORST QUARTER: -19.48%, Q3 2002
8 | DWS Large Cap Value Fund
AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2007 (Fund returns include the
effect of maximum sales load.)
1 YEAR 5 YEARS 10 YEARS
CLASS A
Return before Taxes 6.05 12.56 6.70
Return after Taxes on Distributions 2.41 11.06 5.15
Return after Taxes on Distributions
and Sale of Fund Shares 7.52* 10.72 5.22*
CLASS B (Return before Taxes) 8.81 12.83 6.43
CLASS C (Return before Taxes) 11.68 13.04 6.46
RUSSELL 1000 (Reg. TM) VALUE INDEX (reflects
no deductions for fees, expenses or
taxes) -0.17 14.63 7.68
S&P 500 INDEX (reflects no
deductions for fees, expenses or
taxes) 5.49 12.83 5.91
* Return after Taxes on Distributions and Sale of Fund Shares is higher than
other return figures for the same period due to a capital loss occurring
upon redemption resulting in an assumed tax deduction for the shareholder.
Total return would have been lower had certain expenses not been reduced.
RUSSELL 1000 (Reg. TM) VALUE INDEX is an unmanaged index that consists of
those stocks in the Russell 1000 Index with less-than-average growth
orientation. 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.
STANDARD & POOR'S 500 INDEX (S&P 500) is an unmanaged, capitalization-weighted
index of 500 stocks. The index is designed to measure performance of the broad
domestic economy through changes in the aggregate market value of 500 stocks
representing all major industries.
- --------------------------------------------------------------------------------
Current performance may be higher or lower than the performance data quoted
above. For more recent performance information, call your financial advisor or
(800) 621-1048 or visit our Web site at www.dws-scudder.com.
- --------------------------------------------------------------------------------
RETURN AFTER TAXES ON DISTRIBUTIONS assumes that an investor holds fund shares
at the end of the period. The return reflects taxes only on the fund's
distributions and not on a shareholder's gain or loss from selling fund shares.
RETURN AFTER TAXES ON DISTRIBUTIONS AND SALE OF FUND SHARES assumes that an
investor sold his or her fund shares at the end of the period. The return
reflects taxes on both the fund's distributions and a shareholder's gain or
loss from selling fund shares.
DWS Large Cap Value Fund | 9
HOW MUCH INVESTORS PAY
The table below describes the fees and expenses that you may pay if you buy and
hold fund shares. This information doesn't include any fees that may be charged
by your financial advisor.
FEE TABLE CLASS A CLASS B CLASS C
SHAREHOLDER FEES, paid directly from your investment
_____________________________________________________________________________________
Maximum Sales Charge (Load) Imposed
on Purchases (as % of offering price) 5.75%1 None None
Maximum Deferred Sales Charge (Load)
(as % of redemption proceeds) None 2 4.00% 1.00%
Redemption/Exchange fee on shares
owned less than 15 days (as % of
redemption proceeds) 3 2.00 2.00 2.00
ANNUAL OPERATING EXPENSES, deducted from fund assets
_____________________________________________________________________________________
Management Fee 0.42% 0.42% 0.42
Distribution and/or Service (12b-1) Fee 0.23 0.99 0.98
Other Expenses 4 0.35 0.42 0.34
TOTAL ANNUAL OPERATING EXPENSES 5 1.00 1.83 1.74
1 Because of rounding in the calculation of the offering price, the actual
maximum front-end sales charge paid by an investor may be higher than the
percentage noted (see "Choosing a Share Class - Class A shares").
2 The redemption of shares purchased at net asset value under the Large Order
NAV Purchase Privilege (see "Choosing a Share Class - Class A shares") may
be subject to a contingent deferred sales charge of 1.00% if redeemed
within 12 months of purchase and 0.50% if redeemed within the following six
months.
3 This fee is charged on all applicable redemptions or exchanges. Please see
"Policies You Should Know About - Policies about transactions" for further
information.
4 "Other Expenses" include an administrative services fee paid to the Advisor
in the amount of 0.10%.
5 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 1.14% for Class A shares and 1.89% for Class B and
Class C shares, respectively, excluding certain expenses such as
extraordinary expenses, taxes, brokerage and interest.
10 | DWS Large Cap Value Fund
Based on the costs above, this example helps you compare the expenses of the
fund to those of other mutual funds. This example assumes the expenses above
remain the same. It also assumes that you invested $10,000, earned 5% annual
returns and reinvested all dividends and distributions. This is only an
example; actual expenses will be different.
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
EXPENSES, assuming you sold your shares at the end of each period.
_________________________________________________________________________
Class A shares $671 $875 $1,096 $1,729
Class B shares* 586 876 1,190 1,730
Class C shares 277 548 944 2,052
EXPENSES, assuming you kept your shares.
_________________________________________________________________________
Class A shares $671 $875 $1,096 $1,729
Class B shares* 186 576 990 1,730
Class C shares 177 548 944 2,052
* Reflects conversion of Class B to Class A shares, which pay lower fees.
Conversion occurs six years after purchase.
DWS Large Cap Value Fund | 11
Class A Class B Class C
ticker symbol LOPEX LOPBX LOPCX
fund number 444 644 744
DWS DREMAN CONCENTRATED VALUE FUND
THE FUND'S MAIN INVESTMENT STRATEGY
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).
Compared to investment-grade bonds, junk bonds generally pay higher
yields, have higher volatility and higher risk of default on
payments of interest or principal.
The fund's equity investments are mainly common stocks, but may
also include other types of equities such as preferred or
convertible stocks.
The portfolio managers begin by screening for stocks whose
price-to-earnings ratios are below the average for the S&P 500
Index. The portfolio managers then compare the company's stock
price to its book value, cash flow and yield and analyze individual
companies to identify those that are financially sound and appear
to have strong potential for long-term capital appreciation and
dividend growth. Other fundamental factors that the portfolio
managers consider are liquidity ratios, debt management, and return
on equity.
12 | DWS Dreman Concentrated Value Fund
The portfolio managers assemble the fund's portfolio from among the
most attractive stocks, drawing on an analysis of economic outlooks
for various sectors and industries. Because of the fund's emphasis
on a limited number of issuers, the fund may have greater exposure
to a particular sector or sectors than a more diversified
portfolio.
The portfolio managers may favor securities from different sectors
and industries at different times, while still maintaining variety
in terms of industries and companies represented. The portfolio
managers will normally sell a stock when it reaches a target price,
its fundamental factors have changed or when other investments
offer better opportunities.
OTHER INVESTMENTS. The fund is permitted, but not required, to use
various types of derivatives (contracts whose value is based on,
for example, indices, currencies or securities). Derivatives may be
used for hedging and for risk management or for non-hedging
purposes to seek to enhance potential gains. The fund may use
derivatives in circumstances where portfolio management believes
they offer an economical means of gaining exposure to a particular
asset class or to keep cash on hand to meet shareholder redemptions
or other needs while maintaining exposure to the market.
In particular, the fund may use futures, currency options and
forward currency transactions.
SECURITIES LENDING. The fund may lend its investment securities in
an amount up to 33 1/3% of its total assets to approved
institutional borrowers who need to borrow securities in order to
complete certain transactions.
DWS Dreman Concentrated Value Fund | 13
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.
FOCUS RISK. A strategy of investing in a limited number of
securities may increase the volatility of the fund's investment
performance compared to a strategy of investing in a larger number
of securities.
NON-DIVERSIFICATION RISK. The fund is classified as non-diversified
under the Investment Company Act of 1940, as amended. This means
that the fund may invest in securities of relatively few issuers.
Thus, the performance of one or a small number of portfolio
holdings can affect overall performance more than if the fund
invested in a larger number of issuers.
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, which could affect
the fund's ability to sell them at an attractive price.
SECURITY SELECTION RISK. A risk that pervades all investing is the
risk that the securities in the fund's portfolio may decline in
value.
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.
THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS
This fund is designed for long-term investors who are interested in a large-cap
value fund that invests in a limited number of issuers and who can accept
somewhat higher volatility.
14 | DWS Dreman Concentrated Value Fund
SECURITIES LENDING RISK. Any loss in the market price of securities
loaned by the fund that occurs during the term of the loan would be
borne by the fund and would adversely affect the fund's
performance. Also, there may be delays in recovery of securities
loaned or even a loss of rights in the collateral should the
borrower of the securities fail financially while the loan is
outstanding. However, loans will be made only to borrowers selected
by the fund's delegate after a review of relevant facts and
circumstances, including the creditworthiness of the borrower.
Other factors that could affect performance include:
- portfolio management could be wrong in the analysis of
industries, companies, economic trends, the relative
attractiveness of different securities or other matters.
- foreign securities may be more volatile than their US
counterparts, for reasons such as currency fluctuations and
political and economic uncertainty.
- 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 Dreman Concentrated Value Fund | 15
THE FUND'S PERFORMANCE HISTORY
While a fund's past performance (before and after taxes) isn't necessarily a
sign of how it will do in the future, it can be valuable for an investor to
know.
The bar chart shows how the performance of the fund's Class A shares has varied
from year to year, which may give some idea of risk. The bar chart does not
reflect sales loads; if it did, total returns would be lower than those shown.
The table on the following page shows how fund performance compares to relevant
index performance (which, unlike fund performance, does not reflect fees or
expenses). The table includes the effects of maximum sales loads on fund
performance. The performance of both the fund and the index varies over time.
All figures assume reinvestment of dividends and distributions (in the case of
after-tax returns, reinvested net of assumed tax rates).
The table shows returns for Class A shares on a before-tax and after-tax basis.
After-tax returns are shown for Class A only and will vary for Classes B and C.
After-tax returns are estimates calculated using the historical highest
individual federal marginal income tax rates and do not reflect the impact of
state and local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown in the table. After-tax returns shown
are not relevant for investors who hold their shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts.
DWS Dreman Concentrated Value Fund
ANNUAL TOTAL RETURN (%) AS OF 12/31 EACH YEAR - CLASS A (Results do not reflect
sales loads; if they did, total returns would be lower than those shown.)
[GRAPHIC APPEARS HERE]
18.56 2.54
2006 2007
FOR THE PERIODS INCLUDED IN THE BAR CHART:
BEST QUARTER: 7.89%, Q2 2007 WORST QUARTER: -4.53%, Q4 2007
16 | DWS Dreman Concentrated Value Fund
AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2007 (Fund returns include the
effects of maximum sales load.)
1 YEAR SINCE INCEPTION*
CLASS A
Return before Taxes -3.35 7.16
Return after Taxes on Distributions -4.71 6.38
Return after Taxes on Distributions
and Sale of Fund Shares -1.23** 5.92
CLASS B (Return before Taxes) -1.19 7.85
CLASS C (Return before Taxes) 1.67 8.92
RUSSELL 1000 (Reg. TM) VALUE INDEX (reflects
no deductions for fees, expenses or
taxes) -0.17 10.62
S&P 500 INDEX (reflects no
deductions for fees, expenses or
taxes) 5.49 10.49
* Inception date for the fund was June 2, 2005. Index comparison begins on
May 31, 2005.
** Returns after Taxes on Distributions and Sale of Fund Shares is higher
than other return figures for the same period due to a capital loss
occurring upon redemption resulting in an assumed tax deduction to the
shareholder.
Total return would have been lower had certain expenses not been reduced.
RUSSELL 1000 (Reg. TM) VALUE INDEX is an unmanaged index that consists of
those stocks in the Russell 1000 Index with less-than-average growth
orientation. 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.
STANDARD & POOR'S 500 INDEX (S&P 500) is an unmanaged, capitalization-weighted
index of 500 stocks. The index is designed to measure performance of the broad
domestic economy through changes in the aggregate market value of 500 stocks
representing all major industries.
- --------------------------------------------------------------------------------
Current performance may be higher or lower than the performance data quoted
above. For more recent performance information, call your financial advisor or
(800) 621-1048 or visit our Web site at www.dws-scudder.com.
- --------------------------------------------------------------------------------
RETURN AFTER TAXES ON DISTRIBUTIONS assumes that an investor holds fund shares
at the end of the period. The return reflects taxes only on the fund's
distributions and not on a shareholder's gain or loss from selling fund shares.
RETURN AFTER TAXES ON DISTRIBUTIONS AND SALE OF FUND SHARES assumes that an
investor sold his or her fund shares at the end of the period. The return
reflects taxes on both the fund's distributions and a shareholder's gain or
loss from selling fund shares.
DWS Dreman Concentrated Value Fund | 17
HOW MUCH INVESTORS PAY
The table below describes the fees and expenses that you may pay if you buy and
hold fund shares. This information doesn't include any fees that may be charged
by your financial advisor.
FEE TABLE CLASS A CLASS B CLASS C
SHAREHOLDER FEES, paid directly from your investment
________________________________________________________________________________
Maximum Sales Charge (Load) Imposed
on Purchases (as % of offering price) 5.75%1 None None
Maximum Deferred Sales Charge (Load)
(as % of redemption proceeds) None 2 4.00% 1.00%
Redemption/Exchange fee on shares
owned less than 15 days (as % of
redemption proceeds) 3 2.00 2.00 2.00
ANNUAL OPERATING EXPENSES, deducted from fund assets
________________________________________________________________________________
Management Fee 0.80% 0.80% 0.80%
Distribution and/or Service (12b-1) Fee 0.24 0.99 0.99
Other Expenses 0.56 0.60 0.53
TOTAL ANNUAL OPERATING EXPENSES 1.60 2.39 2.32
Less Expense Waiver/Reimbursement 4 0.29 0.33 0.26
NET ANNUAL OPERATING EXPENSES 4 1.31 2.06 2.06
1 Because of rounding in the calculation of the offering price, the actual
maximum front-end sales charge paid by an investor may be higher than the
percentage noted (see "Choosing a Share Class - Class A shares").
2 The redemption of shares purchased at net asset value under the Large Order
NAV Purchase Privilege (see "Choosing a Share Class - Class A shares") may
be subject to a contingent deferred sales charge of 1.00% if redeemed
within 12 months of purchase and 0.50% if redeemed within the following six
months.
3 This fee is charged on all applicable redemptions or exchanges. Please see
"Policies You Should Know About - Policies about transactions" for further
information.
4 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 so that the total operating expenses will
not exceed 1.31% for Class A shares and 2.06% for both Class B and Class C
shares, respectively, excluding certain expenses such as extraordinary
expenses, taxes, brokerage and interest.
18 | DWS Dreman Concentrated Value Fund
Based on the costs above (including one year of capped expense in each period),
this example helps you compare the expenses of the fund to those of other
mutual funds. This example assumes the expenses above remain the same. It also
assumes that you invested $10,000, earned 5% annual returns and reinvested all
dividends and distributions. This is only an example; actual expenses will be
different.
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
EXPENSES, assuming you sold your shares at the end of each period.
_________________________________________________________________________
Class A shares $701 $1,024 $1,370 $2,343
Class B shares* 609 1,014 1,446 2,324
Class C shares 309 700 1,217 2,636
EXPENSES, assuming you kept your shares.
_________________________________________________________________________
Class A shares $701 $1,024 $1,370 $2,343
Class B shares* 209 714 1,246 2,324
Class C shares 209 700 1,217 2,636
* Reflects conversion of Class B to Class A shares, which pay lower fees.
Conversion occurs six years after purchase.
DWS Dreman Concentrated Value Fund | 19
Class A Class B Class C Class R
ticker symbol KDHAX KDHBX KDHCX KDHRX
fund number 087 287 387 1506
DWS DREMAN HIGH RETURN EQUITY FUND
THE FUND'S MAIN INVESTMENT STRATEGY
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, 2008, the S&P 500
Index had a median market capitalization of $11.8 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.
The portfolio managers begin by screening for stocks whose
price-to-earnings ratios are below the average for the S&P 500
Index. The portfolio managers then compare a company's stock price
to its book value, cash flow and yield and analyze individual
companies to identify those that are financially sound and appear
to have strong potential for long-term growth and income.
The portfolio managers assemble the fund's portfolio from among the
most attractive stocks, drawing on an analysis of economic outlooks
for various sectors and industries.
The portfolio managers will normally sell a stock when it reaches a
target price, its fundamental factors have changed or when other
investments offer better opportunities.
20 | DWS Dreman High Return Equity Fund
OTHER INVESTMENTS. The fund is permitted, but not required, to use
various types of derivatives (contracts whose value is based on,
for example, indices, currencies or securities). Derivatives may be
used for hedging and for risk management or for non-hedging
purposes to seek to enhance potential gains. The fund may use
derivatives in circumstances where portfolio management believes
they offer an economical means of gaining exposure to a particular
asset class or to keep cash on hand to meet shareholder redemptions
or other needs while maintaining exposure to the market.
In particular, the fund may use futures, currency options and
forward currency transactions.
SECURITIES LENDING. The fund may lend its investment securities in
an amount up to 33 1/3% of its total assets to approved
institutional borrowers who need to borrow securities in order to
complete certain transactions.
THE MAIN RISKS OF INVESTING IN THE FUND
There are several risk factors that could hurt the fund's
performance, cause you to lose money or cause the fund's
performance to trail that of other investments.
STOCK MARKET RISK. 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, which could affect
the fund's ability to sell them at an attractive price.
SECURITY SELECTION RISK. A risk that pervades all investing is the
risk that the securities in the fund's portfolio may decline in
value.
THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS
This fund is designed for long-term investors who are interested in a large-cap
value fund that may focus on certain sectors of the economy.
DWS Dreman High Return Equity Fund | 21
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.
INDUSTRY RISK. While the fund does not concentrate in any industry
or sector, to the extent that the fund has exposure to a given
industry or sector, any factors affecting that industry or sector
could affect the value of portfolio securities. For example,
manufacturers of consumer goods could be hurt by a rise in
unemployment or technology companies could be hurt by such factors
as market saturation, price competition and rapid obsolescence.
SECURITIES LENDING RISK. Any loss in the market price of securities
loaned by the fund that occurs during the term of the loan would be
borne by the fund and would adversely affect the fund's
performance. Also, there may be delays in recovery of securities
loaned or even a loss of rights in the collateral should the
borrower of the securities fail financially while the loan is
outstanding. However, loans will be made only to borrowers selected
by the fund's delegate after a review of relevant facts and
circumstances, including the creditworthiness of the borrower.
Other factors that could affect performance include:
- portfolio management could be wrong in the analysis of
industries, companies, economic trends, the relative
attractiveness of different securities or other matters.
- foreign securities may be more volatile than their US
counterparts, for reasons such as currency fluctuations and
political and economic uncertainty.
- 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.)
22 | DWS Dreman High Return Equity Fund
THE FUND'S PERFORMANCE HISTORY
While a fund's past performance (before and after taxes) isn't necessarily a
sign of how it will do in the future, it can be valuable for an investor to
know.
The bar chart shows how the performance of the fund's Class A shares has varied
from year to year, which may give some idea of risk. The bar chart does not
reflect sales loads; if it did, total returns would be lower than those shown.
The table on the following page shows how fund performance compares to relevant
index performance (which, unlike fund performance, does not reflect fees or
expenses). The table includes the effects of maximum sales loads on fund
performance. The performance of both the fund and the index varies over time.
All figures assume reinvestment of dividends and distributions (in the case of
after-tax returns, reinvested net of assumed tax rates).
The table shows returns for Class A shares on a before-tax and after-tax basis.
After-tax returns are shown for Class A only and will vary for Classes B and C.
After-tax returns are estimates calculated using the historical highest
individual federal marginal income tax rates and do not reflect the impact of
state and local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown in the table. After-tax returns shown
are not relevant for investors who hold their shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts.
In the table, the performance figures for Class R prior to its inception,
October 1, 2003, are based on the historical performance of the fund's original
share class (Class A), adjusted to reflect the higher gross total annual
operating expenses of Class R.
In addition, after-tax returns are not relevant for Class R shares.
DWS Dreman High Return Equity Fund
ANNUAL TOTAL RETURN (%) AS OF 12/31 EACH YEAR - CLASS A (Results do not reflect
sales loads; if they did, total returns would be lower than those shown.)
[GRAPHIC APPEARS HERE]
11.96 -13.23 41.32 1.23 -18.52 31.34 13.48 7.72 17.40 -1.14
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
FOR THE PERIODS INCLUDED IN THE BAR CHART:
BEST QUARTER: 22.77%, Q3 2000 WORST QUARTER: -17.61%, Q3 2002
DWS Dreman High Return Equity Fund | 23
AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2007 (Fund returns include the
effects of maximum sales load.)
1 YEAR 5 YEARS 10 YEARS
CLASS A
Return before Taxes -6.82 11.92 7.12
Return after Taxes on Distributions -8.53 11.23 6.04
Return after Taxes on Distributions
and Sale of Fund Shares -3.28* 10.27 5.67
CLASS B (Return before Taxes) -4.63 12.22 6.87
CLASS C (Return before Taxes) -1.85 12.41 6.92
CLASS R (Return before Taxes) -1.43 12.97 7.39
S&P 500 INDEX (reflects no
deductions for fees, expenses or
taxes) 5.49 12.83 5.91
* Return after Taxes on Distributions and Sale of Fund Shares is higher than
other return figures for the same period due to a capital loss occurring
upon redemption resulting in an assumed tax deduction for the shareholder.
Total return would have been lower had certain expenses not been reduced.
STANDARD & POOR'S 500 INDEX (S&P 500) is an unmanaged, capitalization-weighted
index of 500 stocks. The index is designed to measure performance of the broad
domestic economy through changes in the aggregate market value of 500 stocks
representing all major industries.
- --------------------------------------------------------------------------------
Current performance may be higher or lower than the performance data quoted
above. For more recent performance information, call your financial advisor or
(800) 621-1048 or visit our Web site at www.dws-scudder.com.
- --------------------------------------------------------------------------------
RETURN AFTER TAXES ON DISTRIBUTIONS assumes that an investor holds fund shares
at the end of the period. The return reflects taxes only on the fund's
distributions and not on a shareholder's gain or loss from selling fund shares.
RETURN AFTER TAXES ON DISTRIBUTIONS AND SALE OF FUND SHARES assumes that an
investor sold his or her fund shares at the end of the period. The return
reflects taxes on both the fund's distributions and a shareholder's gain or
loss from selling fund shares.
24 | DWS Dreman High Return Equity Fund
HOW MUCH INVESTORS PAY
The table below describes the fees and expenses that you may pay if you buy and
hold fund shares. This information doesn't include any fees that may be charged
by your financial advisor.
FEE TABLE CLASS A CLASS B CLASS C CLASS R
SHAREHOLDER FEES, paid directly from your investment
________________________________________________________________________________________
Maximum Sales Charge (Load) Imposed
on Purchases (as % of offering price) 5.75%1 None None None
Maximum Deferred Sales Charge (Load)
(as % of redemption proceeds) None2 4.00% 1.00% None
Redemption/Exchange fee on shares
owned less than 15 days (as % of
redemption proceeds) 3 2.00 2.00 2.00 2.00
ANNUAL OPERATING EXPENSES, deducted from fund assets
______________________________________________________________________________ ____
Management Fee 0.67% 0.67% 0.67% 0.67%
Distribution and/or Service (12b-1) Fee 0.24 1.00 0.99 0.41
Other Expenses 0.17 0.22 0.16 0.23
TOTAL ANNUAL OPERATING EXPENSES 4 1.08 1.89 1.82 1.31
1 Because of rounding in the calculation of the offering price, the actual
maximum front-end sales charge paid by an investor may be higher than the
percentage noted (see "Choosing a Share Class - Class A shares").
2 The redemption of shares purchased at net asset value under the Large Order
NAV Purchase Privilege (see "Choosing a Share Class - Class A shares") may
be subject to a contingent deferred sales charge of 1.00% if redeemed
within 12 months of purchase and 0.50% if redeemed within the following six
months.
3 This fee is charged on all applicable redemptions or exchanges. Please see
"Policies You Should Know About - Policies about transactions" for further
information.
4 Through February 28, 2010, 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 1.12% for Class A shares, 1.96% for
Class B shares and 1.87% for Class C shares, respectively, excluding
certain expenses such as extraordinary expenses, taxes, brokerage and
interest.
DWS Dreman High Return Equity Fund | 25
Based on the costs above, this example helps you compare the expenses of the
fund to those of other mutual funds. This example assumes the expenses above
remain the same. It also assumes that you invested $10,000, earned 5% annual
returns and reinvested all dividends and distributions. This is only an
example; actual expenses will be different.
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
EXPENSES, assuming you sold your shares at the end of each period.
_________________________________________________________________________
Class A shares $679 $899 $1,136 $1,816
Class B shares* 592 894 1,221 1,806
Class C shares 285 573 985 2,137
Class R shares 133 415 718 1,579
EXPENSES, assuming you kept your shares.
_________________________________________________________________________
Class A shares $679 $899 $1,136 $1,816
Class B shares* 192 594 1,021 1,806
Class C shares 185 573 985 2,137
Class R shares 133 415 718 1,579
* Reflects conversion of Class B to Class A shares, which pay lower fees.
Conversion occurs six years after purchase.
26 | DWS Dreman High Return Equity Fund
Class A Class B Class C
ticker symbol MIDVX MIDYX MIDZX
fund number 417 617 717
DWS DREMAN MID CAP VALUE FUND
THE FUND'S MAIN INVESTMENT STRATEGY
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
(Reg. TM) 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.
The portfolio managers begin their stock selection process by
screening for stocks of mid-cap companies with below market
price-to-earnings ratios. The portfolio managers then compare the
company's stock price to its book value, cash flow and yield and
analyze individual companies to identify those that are financially
sound and appear to have strong potential for long-term capital
appreciation and dividend growth.
The portfolio managers assemble the fund's portfolio from among the
most attractive stocks, drawing on an analysis of economic outlooks
for various sectors and industries.
The portfolio managers will normally sell a stock when it may no
longer qualify as a mid-cap company, it reaches a target price, its
fundamental factors change or other investments offer better
opportunities.
DWS Dreman Mid Cap Value Fund | 27
OTHER INVESTMENTS. The fund is permitted, but not required, to use
various types of derivatives (contracts whose value is based on,
for example, indices, currencies or securities). Derivatives may be
used for hedging and for risk management or for non-hedging
purposes to seek to enhance potential gains. The fund may use
derivatives in circumstances where portfolio management believes
they offer an economical means of gaining exposure to a particular
asset class or to keep cash on hand to meet shareholder redemptions
or other needs while maintaining exposure to the market.
In particular, the fund may use futures, currency options and
forward currency transactions.
SECURITIES LENDING. The fund may lend its investment securities in
an amount up to 33 1/3% of its total assets to approved
institutional borrowers who need to borrow securities in order to
complete certain transactions.
THE MAIN RISKS OF INVESTING IN THE FUND
There are several risk factors that could hurt the fund's
performance, cause you to lose money or cause the fund's
performance to trail that of other investments.
STOCK MARKET RISK. As with most stock funds, the most important
factor affecting this fund is how the stock market performs (to the
extent the fund invests in a particular 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 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.
SECURITY SELECTION RISK. A risk that pervades all investing is the
risk that the securities in the fund's portfolio may decline in
value.
28 | DWS Dreman Mid Cap Value Fund
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.
MEDIUM-SIZED COMPANY RISK. Medium-sized company stocks tend to
experience steeper price fluctuations - down as well as up - than
stocks of larger companies. A shortage of reliable information -
the same information gap that creates opportunity - can pose added
risk. Industry-wide reversals may have a greater impact on
medium-sized companies, since they usually lack a large company's
financial resources. Medium-sized company stocks are typically less
liquid than large company stocks; when things are going poorly, it
is harder to find a buyer for a medium-sized company's shares.
INDUSTRY RISK. While the fund does not concentrate in any industry
or sector, to the extent that the fund has exposure to a given
industry or sector, any factors affecting that industry or sector
could affect the value of portfolio securities. For example,
manufacturers of consumer goods could be hurt by a rise in
unemployment or technology companies could be hurt by such factors
as market saturation, price competition and rapid obsolescence.
SECURITIES LENDING RISK. Any loss in the market price of securities
loaned by the fund that occurs during the term of the loan would be
borne by the fund and would adversely affect the fund's
performance. Also, there may be delays in recovery of securities
loaned or even a loss of rights in the collateral should the
borrower of the securities fail financially while the loan is
outstanding. However, loans will be made only to borrowers selected
by the fund's delegate after a review of relevant facts and
circumstances, including the creditworthiness of the borrower.
DWS Dreman Mid Cap Value Fund | 29
Other factors that could affect performance include:
- portfolio management could be wrong in the analysis of
industries, companies, economic trends, the relative
attractiveness of different securities or other matters.
- foreign securities may be more volatile than their US
counterparts, for reasons such as currency fluctuations and
political and economic uncertainty.
- 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.)
30 | DWS Dreman Mid Cap Value Fund
THE FUND'S PERFORMANCE HISTORY
While a fund's past performance (before and after taxes) isn't necessarily a
sign of how it will do in the future, it can be valuable for an investor to
know.
The bar chart shows how the performance of the fund's Class A shares has varied
from year to year, which may give some idea of risk. The bar chart does not
reflect sales loads; if it did, total returns would be lower than those shown.
The table on the following page shows how fund performance compares to relevant
index performance (which, unlike fund performance, does not reflect fees or
expenses). The table includes the effects of maximum sales loads on fund
performance. The performance of both the fund and the index varies over time.
All figures assume reinvestment of dividends and distributions (in the case of
after-tax returns, reinvested net of assumed tax rates).
The table shows returns for Class A shares on a before-tax and after-tax basis.
After-tax returns are shown for Class A only and will vary for Classes B and C.
After-tax returns are estimates calculated using the historical highest
individual federal marginal income tax rates and do not reflect the impact of
state and local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown in the table. After-tax returns shown
are not relevant for investors who hold their shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts.
DWS Dreman Mid Cap Value Fund
ANNUAL TOTAL RETURN (%) AS OF 12/31 EACH YEAR - CLASS A (Results do not reflect
sales loads; if they did, total returns would be lower than those shown.)
[GRAPHIC APPEARS HERE]
17.58 5.35
2006 2007
FOR THE PERIODS INCLUDED IN THE BAR CHART:
BEST QUARTER: 7.56%, Q2 2007 WORST QUARTER: -4.09%, Q4 2007
DWS Dreman Mid Cap Value Fund | 31
AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2007 (Fund returns include the
effect of maximum sales load.)
1 YEAR SINCE INCEPTION*
CLASS A
Return before Taxes -0.71 7.65
Return after Taxes on Distributions -2.54 6.56
Return after Taxes on Distributions
and Sale of Fund Shares -0.08** 6.01
CLASS B (Return before Taxes) 1.65 8.55
CLASS C (Return before Taxes) 4.71 9.61
RUSSELL MIDCAP (Reg. TM) VALUE INDEX
(reflects no deductions for fees,
expenses or taxes) -1.42 8.12
* Inception date for the fund was August 2, 2005. Index comparison begins on
July 31, 2005.
** Return after Taxes on Distributions and Sale of Fund Shares is higher
than other return figures for the same period due to a capital loss
occurring upon redemption resulting in an assumed tax deduction for the
shareholder.
Total return would have been lower had certain expenses not been reduced.
The RUSSELL MIDCAP (Reg. TM) VALUE INDEX is an unmanaged index measuring the
performance of those Russell Midcap companies with lower price-to-book ratios
and lower forecasted growth values. The stocks are also members of the Russell
1000 Value Index.
- --------------------------------------------------------------------------------
Current performance may be higher or lower than the performance data quoted
above. For more recent performance information, call your financial advisor or
(800) 621-1048 or visit our Web site at www.dws-scudder.com.
- --------------------------------------------------------------------------------
RETURN AFTER TAXES ON DISTRIBUTIONS assumes that an investor holds fund shares
at the end of the period. The return reflects taxes only on the fund's
distributions and not on a shareholder's gain or loss from selling fund shares.
RETURN AFTER TAXES ON DISTRIBUTIONS AND SALE OF FUND SHARES assumes that an
investor sold his or her fund shares at the end of the period. The return
reflects taxes on both the fund's distributions and a shareholder's gain or
loss from selling fund shares.
32 | DWS Dreman Mid Cap Value Fund
HOW MUCH INVESTORS PAY
The table below describes the fees and expenses that you may pay if you buy and
hold fund shares. This information doesn't include any fees that may be charged
by your financial advisor.
FEE TABLE CLASS A CLASS B CLASS C
SHAREHOLDER FEES, paid directly from your investment
________________________________________________________________________________
Maximum Sales Charge (Load) Imposed
on Purchases (as % of offering price) 5.75%1 None None
Maximum Deferred Sales Charge (Load)
(as % of redemption proceeds) None2 4.00% 1.00%
Redemption/Exchange fee on shares
owned less than 15 days (as % of
redemption proceeds) 3 2.00 2.00 2.00
ANNUAL OPERATING EXPENSES, deducted from fund assets
________________________________________________________________________________
Management Fee 0.75% 0.75% 0.75%
Distribution and/or Service (12b-1) Fee 0.23 0.98 0.99
Other Expenses 0.63 0.73 0.63
TOTAL ANNUAL OPERATING EXPENSES 1.61 2.46 2.37
Less Expense Waiver/Reimbursement 4 0.26 0.41 0.32
NET ANNUAL OPERATING EXPENSES 4 1.35 2.05 2.05
1 Because of rounding in the calculation of the offering price, the actual
maximum front-end sales charge paid by an investor may be higher than the
percentage noted (see "Choosing a Share Class - Class A shares").
2 The redemption of shares purchased at net asset value under the Large Order
NAV Purchase Privilege (see "Choosing a Share Class - Class A shares") may
be subject to a contingent deferred sales charge of 1.00% if redeemed
within 12 months of purchase and 0.50% if redeemed within the following six
months.
3 This fee is charged on all applicable redemptions or exchanges. Please see
"Policies You Should Know About - Policies about transactions" for further
information.
4 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 1.35% for Class A shares, 2.05% for
Class B shares and 2.05% for Class C shares, respectively, excluding
certain expenses such as extraordinary expenses, taxes, brokerage and
interest.
DWS Dreman Mid Cap Value Fund | 33
Based on the costs above (including one year of capped expenses in each
period), this example helps you compare the expenses of the fund to those of
other mutual funds. This example assumes the expenses above remain the same. It
also assumes that you invested $10,000, earned 5% annual returns and reinvested
all dividends and distributions. This is only an example; actual expenses will
be different.
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
EXPENSES, assuming you sold your shares at the end of each period.
_________________________________________________________________________
Class A shares $705 $1,030 $1,378 $2,356
Class B shares* 608 1,027 1,474 2,361
Class C shares 308 709 1,237 2,682
EXPENSES, assuming you kept your shares.
_________________________________________________________________________
Class A shares $705 $1,030 $1,378 $2,356
Class B shares* 208 727 1,274 2,361
Class C shares 208 709 1,237 2,682
* Reflects conversion of Class B to Class A shares, which pay lower fees.
Conversion occurs six years after purchase.
34 | DWS Dreman Mid Cap Value Fund
Class A Class B Class C
ticker symbol KDSAX KDSBX KDSCX
fund number 088 288 388
DWS DREMAN SMALL CAP VALUE FUND
THE FUND'S MAIN INVESTMENT STRATEGY
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 (Reg. TM) Index (as of January 31, 2008, the
Russell 2000 (Reg. TM) Index had a median market capitalization of
$539 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.
The portfolio managers begin their stock selection process by
screening stocks of small companies with below market
price-to-earnings (P/E) ratios. The managers then seek companies
with a low price compared to the book value, cash flow and yield
and analyze individual companies to identify those that are
fundamentally sound and appear to have strong potential for
earnings and dividend growth over the Index.
From the remaining group, the managers then complete their
fundamental analysis and make their buy decisions from a group of
the most attractive stocks, drawing on an analysis of economic
outlooks for various industries.
The managers will normally sell a stock when it no longer qualifies
as a small company, when its P/E rises above that of the Index, its
fundamentals change or other investments offer better
opportunities.
DWS Dreman Small Cap Value Fund | 35
OTHER INVESTMENTS. The fund is permitted, but not required, to use
various types of derivatives (contracts whose value is based on,
for example, indices, currencies or securities). Derivatives may be
used for hedging and for risk management or for non-hedging
purposes to seek to enhance potential gains. The fund may use
derivatives in circumstances where portfolio management believes
they offer an economical means of gaining exposure to a particular
asset class or to keep cash on hand to meet shareholder redemptions
or other needs while maintaining exposure to the market.
In particular, the fund may use futures, currency options and
forward currency transactions.
SECURITIES LENDING. The fund may lend its investment securities in
an amount up to 33 1/3% of its total assets to approved
institutional borrowers who need to borrow securities in order to
complete certain transactions.
THE MAIN RISKS OF INVESTING IN THE FUND
There are several risk factors that could hurt the fund's
performance, cause you to lose money or cause the fund's
performance to trail that of other investments.
STOCK MARKET RISK. As with most stock funds, the most important
factor affecting this fund is how the stock market performs (to the
extent the fund invests in a particular 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
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.
SECURITY SELECTION RISK. A risk that pervades all investing is the
risk that the securities in the fund's portfolio may decline in
value.
THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS
This fund is designed for value-oriented investors who are interested in
small-cap market exposure.
36 | DWS Dreman Small Cap Value Fund
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.
INDUSTRY RISK. While the fund does not concentrate in any industry
or sector, to the extent that the fund has exposure to a given
industry or sector, any factors affecting that industry or sector
could affect the value of portfolio securities. For example,
manufacturers of consumer goods could be hurt by a rise in
unemployment or technology companies could be hurt by such factors
as market saturation, price competition and rapid obsolescence.
SECURITIES LENDING RISK. Any loss in the market price of securities
loaned by the fund that occurs during the term of the loan would be
borne by the fund and would adversely affect the fund's
performance. Also, there may be delays in recovery of securities
loaned or even a loss of rights in the collateral should the
borrower of the securities fail financially while the loan is
outstanding. However, loans will be made only to borrowers selected
by the fund's delegate after a review of relevant facts and
circumstances, including the creditworthiness of the borrower.
Other factors that could affect performance include:
- portfolio management could be wrong in the analysis of
industries, companies, economic trends, the relative
attractiveness of different securities or other matters.
- foreign securities may be more volatile than their US
counterparts, for reasons such as currency fluctuations and
political and economic uncertainty.
- 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 Dreman Small Cap Value Fund | 37
THE FUND'S PERFORMANCE HISTORY
While a fund's past performance (before and after taxes) isn't necessarily a
sign of how it will do in the future, it can be valuable for an investor to
know.
The bar chart shows how the performance of the fund's Class A shares has varied
from year to year, which may give some idea of risk. The bar chart does not
reflect sales loads; if it did, total returns would be lower than those shown.
The table on the following page shows how fund performance compares to relevant
index performance (which, unlike fund performance, does not reflect fees or
expenses). The table includes the effects of maximum sales loads on fund
performance. The performance of both the fund and the index varies over time.
All figures assume reinvestment of dividends and distributions (in the case of
after-tax returns, reinvested net of assumed tax rates).
The table shows returns for Class A shares on a before-tax and after-tax basis.
After-tax returns are shown for Class A only and will vary for Classes B and C.
After-tax returns are estimates calculated using the historical highest
individual federal marginal income tax rates and do not reflect the impact of
state and local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown in the table. After-tax returns shown
are not relevant for investors who hold their shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts.
DWS Dreman Small Cap Value Fund
ANNUAL TOTAL RETURN (%) AS OF 12/31 EACH YEAR - CLASS A (Results do not reflect
sales loads; if they did, total returns would be lower than those shown.)
[GRAPHIC APPEARS HERE]
- -12.82 0.65 -2.47 14.32 -10.79 42.64 25.31 9.71 23.85 2.48
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
FOR THE PERIODS INCLUDED IN THE BAR CHART:
BEST QUARTER: 22.19%, Q2 2003 WORST QUARTER: -24.07%, Q3 1998
38 | DWS Dreman Small Cap Value Fund
AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2007 (Fund returns include the
effects of maximum sales load.)
1 YEAR 5 YEARS 10 YEARS
CLASS A
Return before Taxes -3.41 18.59 7.43
Return after Taxes on Distributions -5.46 17.42 6.88
Return after Taxes on Distributions
and Sale of Fund Shares -0.51* 16.23 6.45
CLASS B (Return before Taxes) -1.10 18.87 7.16
CLASS C (Return before Taxes) 1.70 19.10 7.27
RUSSELL 2000 (Reg. TM) INDEX (reflects no
deductions for fees, expenses or
taxes) -1.57 16.25 7.08
RUSSELL 2000 (Reg. TM) VALUE INDEX (reflects
no deductions for fees, expenses or
taxes) -9.78 15.80 9.06
* Return after Taxes on Distributions and Sale of Fund Shares is higher than
other return figures for the same period due to a capital loss occurring
upon redemption resulting in an assumed tax deduction for the shareholder.
RUSSELL 2000 (Reg. TM) INDEX is an unmanaged capitalization-weighted measure
of approximately 2,000 small US stocks.
RUSSELL 2000 (Reg. TM) VALUE INDEX is an unmanaged index measuring the
performance of those Russell 2000 companies with lower price-to-book ratios
and lower forecasted growth values.
- --------------------------------------------------------------------------------
Current performance may be higher or lower than the performance data quoted
above. For more recent performance information, call your financial advisor or
(800) 621-1048 or visit our Web site at www.dws-scudder.com.
- --------------------------------------------------------------------------------
RETURN AFTER TAXES ON DISTRIBUTIONS assumes that an investor holds fund shares
at the end of the period. The return reflects taxes only on the fund's
distributions and not on a shareholder's gain or loss from selling fund shares.
RETURN AFTER TAXES ON DISTRIBUTIONS AND SALE OF FUND SHARES assumes that an
investor sold his or her fund shares at the end of the period. The return
reflects taxes on both the fund's distributions and a shareholder's gain or
loss from selling fund shares.
DWS Dreman Small Cap Value Fund | 39
HOW MUCH INVESTORS PAY
The table below describes the fees and expenses that you may pay if you buy and
hold fund shares. This information doesn't include any fees that may be charged
by your financial advisor.
FEE TABLE CLASS A CLASS B CLASS C
SHAREHOLDER FEES, paid directly from your investment
________________________________________________________________________________
Maximum Sales Charge (Load) Imposed
on Purchases (as % of offering price) 5.75%1 None None
Maximum Deferred Sales Charge (Load)
(as % of redemption proceeds) None2 4.00% 1.00%
Redemption/Exchange fee on shares
owned less than 15 days (as % of
redemption proceeds) 3 2.00 2.00 2.00
ANNUAL OPERATING EXPENSES, deducted from fund assets
________________________________________________________________________________
Management Fee 0.71% 0.71% 0.71%
Distribution and/or Service (12b-1) Fee 0.23 0.99 0.99
Other Expenses 0.26 0.32 0.25
Acquired Funds (Underlying Funds) Fees
and Expenses 4 0.01 0.01 0.01
TOTAL ANNUAL OPERATING EXPENSES 1.21 2.03 1.96
1 Because of rounding in the calculation of the offering price, the actual
maximum front-end sales charge paid by an investor may be higher than the
percentage noted (see "Choosing a Share Class - Class A shares").
2 The redemption of shares purchased at net asset value under the Large Order
NAV Purchase Privilege (see "Choosing a Share Class - Class A shares") may
be subject to a contingent deferred sales charge of 1.00% if redeemed
within 12 months of purchase and 0.50% if redeemed within the following six
months.
3 This fee is charged on all applicable redemptions or exchanges. Please see
"Policies You Should Know About - Policies about transactions" for further
information.
4 The amount indicated is based on the indirect next expenses associated with
the fund's investments in the underlying funds for the fiscal year ended
November 30, 2007.
40 | DWS Dreman Small Cap Value Fund
Based on the costs above, this example helps you compare the expenses of the
fund to those of other mutual funds. This example assumes the expenses above
remain the same. It also assumes that you invested $10,000, earned 5% annual
returns and reinvested all dividends and distributions. This is only an
example; actual expenses will be different.
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
EXPENSES, assuming you sold your shares at the end of each period.
_________________________________________________________________________
Class A shares $691 $937 $1,202 $ 1957
Class B shares* 606 937 1,293 1,954
Class C shares 299 615 1,057 2,285
EXPENSES, assuming you kept your shares.
_________________________________________________________________________
Class A shares $691 $937 $1,202 $1,957
Class B shares* 206 637 1,093 1,954
Class C shares 199 615 1,057 2,285
* Reflects conversion of Class B to Class A shares, which pay lower fees.
Conversion occurs six years after purchase.
DWS Dreman Small Cap Value Fund | 41
OTHER POLICIES AND SECONDARY RISKS
While the previous pages describe the main points of each fund's
strategy and risks, there are a few other issues to know about:
- Although major changes tend to be infrequent, each fund's Board
could change a fund's investment objective without seeking
shareholder approval. However, the Board will provide
shareholders with at least 60 days' notice prior to making any
changes to each fund's (except DWS Dreman Concentrated Value
Fund) 80% investment policy as described herein.
- As a temporary defensive measure, each fund could shift up to 50%
of assets into investments such as money market securities. This
could prevent losses, but, while engaged in a temporary defensive
position, a fund will not be pursuing its investment objective.
However, portfolio management may choose not to use these
strategies for various reasons, even in volatile market
conditions.
- Each fund may trade actively. This could raise transaction costs
(thus lowering return) and could mean distributions at higher tax
rates.
Secondary risks
The risk disclosure below applies to each fund, unless otherwise
noted.
DERIVATIVES RISK. Risks associated with derivatives include the risk
that the derivative is not well correlated with the security, index
or currency to which it relates; the risk that derivatives may
result in losses or missed opportunities; the risk that the fund
will be unable to sell the derivative because of an illiquid
secondary market; the risk that a counterparty is unwilling or
unable to meet its obligation; and the risk that the derivative
transaction could expose the fund to the effects of leverage, which
could increase the fund's exposure to the market and magnify
potential losses. There is no guarantee that derivatives, to the
extent employed, will have the intended effect, and their use could
cause lower returns or even losses to the fund. The use of
derivatives by the fund to hedge risk may reduce the opportunity for
gain by offsetting the positive effect of favorable price movements.
42 | Other Policies and Secondary Risks
PRICING RISK. At times, market conditions may make it difficult to
value some investments, and the fund may use certain valuation
methodologies for some of its investments, such as fair value
pricing. Given the subjective nature of such valuation
methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such
investment's sale. If the fund has valued its securities too highly,
you may pay too much for fund shares when you buy into the fund. If
the fund has underestimated the price of its securities, you may not
receive the full market value when you sell your fund shares.
IPO RISK. Securities purchased in initial public offerings (IPOs)
may be very volatile, rising and falling rapidly, often based, among
other reasons, on investor perceptions rather than on economic
reasons. Additionally, investments in IPOs may magnify the fund's
performance if it has a small asset base. The fund is less likely to
experience a similar impact on its performance as its assets grow
because it is unlikely that the fund will be able to obtain
proportionately larger IPO allocations.
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).
Keep in mind that there is no assurance that a fund will achieve its
objective.
A complete list of each fund's portfolio holdings is posted as of
the month-end on www.dws-scudder.com (the Web site does not form a
part of this prospectus) on or after the last day of the following
month. This posted information generally remains accessible at least
until the date on which a fund files its Form N-CSR or N-Q with the
Securities and Exchange Commission for the period that includes the
date as of which the posted information is current. In addition,
each fund's top ten equity holdings and other fund information is
posted on www.dws-scudder.com as of the calendar quarter-end on or
Other Policies and Secondary Risks | 43
after the 15th day following quarter-end. Each fund's Statement of
Additional Information includes a description of a fund's policies
and procedures with respect to the disclosure of a fund's portfolio
holdings.
WHO MANAGES AND OVERSEES THE FUNDS
The investment advisor
Deutsche Investment Management Americas Inc. ("DIMA" or the
"Advisor"), with headquarters at 345 Park Avenue, New York, NY
10154, is the investment advisor for each fund. Under the oversight
of the Board, the Advisor, or a subadvisor, makes investment
decisions, buys and sells securities for each fund and conducts
research that leads to these purchase and sale decisions. The
Advisor provides a full range of global investment advisory services
to institutional and retail clients.
DWS Scudder is part of Deutsche Asset Management, which is the
marketing name in the US for the asset management activities of
Deutsche Bank AG, DIMA, Deutsche Bank Trust Company Americas and DWS
Trust Company.
Deutsche Asset Management is a global asset management organization
that offers a wide range of investing expertise and resources,
including hundreds of portfolio managers and analysts and an office
network that reaches the world's major investment centers. This
well-resourced global investment platform brings together a wide
variety of experience and investment insight across industries,
regions, asset classes and investing styles.
The Advisor is an indirect, wholly owned subsidiary of Deutsche Bank
AG. Deutsche Bank AG is a major global banking institution that is
engaged in a wide range of financial services, including investment
management, mutual funds, retail, private and commercial banking,
investment banking and insurance.
44 | Who Manages and Oversees the Funds
MANAGEMENT FEE. The Advisor receives a management fee from each
fund. Below are the actual rates paid by each fund for the most
recent fiscal year, as a percentage of each fund's average daily net
assets.
FUND NAME FEE PAID
DWS Large Cap Value Fund 0.46%
DWS Dreman Concentrated Value Fund 0.54%*
DWS Dreman High Return Equity Fund 0.67%
DWS Dreman Mid Cap Value Fund 0.51%*
DWS Dreman Small Cap Value Fund 0.71%
* Reflects the effects of expense limitations and/or fee waivers
then in effect.
Effective April 25, 2007, DWS Large Cap Value Fund pays the Advisor
under a new investment management agreement a fee, calculated daily
and paid monthly, at the annual rate of 0.425% of the fund's average
daily net assets up to $1.5 billion, 0.400% of the next $500
million, 0.375% of the next $1 billion, 0.350% of the next $1
billion, 0.325% of the next $1 billion and 0.300% thereafter.
A discussion regarding the basis for the Board's approval of each
fund's investment management agreement and, as applicable,
subadvisory agreement, is contained in the most recent shareholder
reports for the annual period ended November 30 (see "Shareholder
reports" on the back cover).
The Advisor provides administrative services to DWS Large Cap Value
Fund under a separate administrative services agreement between the
fund and the Advisor. The funds, other than DWS Large Cap Value
Fund, each pay the Advisor for providing most of each fund's
administrative services under each fund's investment management
agreement.
Who Manages and Oversees the Funds | 45
The Subadvisors
Subadvisor for DWS Dreman Concentrated Value Fund, DWS Dreman High
Return Equity Fund, DWS Dreman Mid Cap Value Fund and DWS Dreman
Small Cap Value Fund
The subadvisor for DWS Dreman Concentrated Value Fund, DWS Dreman
High Return Equity Fund, DWS Dreman Mid Cap Value Fund and DWS
Dreman Small Cap Value Fund is Dreman Value Management, L.L.C.
("DVM"), 520 East Cooper Avenue, Suite 230-4, Aspen, CO 81611. DVM
was founded in 1977 and currently manages over $18.9 billion in
assets, which is primarily comprised of institutional accounts and
investment companies managed by the advisor. Pursuant to a
subadvisory agreement with DIMA, DVM performs some of the functions
of the Advisor, including making each fund's investment decisions
and buying and selling securities for each fund.
Subadvisor for DWS Large Cap Value Fund
The subadvisor for DWS Large Cap Value Fund is Deutsche Asset
Management International GmbH ("DeAMi"), Mainzer Landstrasse
178-190, Frankfurt am Main, Germany. DeAMi renders investment
advisory and management services to the fund. DeAMi is an investment
advisor registered with the Securities and Exchange Commission and
currently manages over $60 billion in assets, which is primarily
comprised of institutional accounts and investment companies. DeAMi
is a subsidiary of Deutsche Bank AG. DIMA compensates DeAMi out of
the management fee it receives from the fund.
46 | Who Manages and Oversees the Funds
Portfolio management
Each fund is managed by a team of investment professionals who collaborate to
develop and implement each fund's investment strategy. Each portfolio manager
on the teams has authority over all aspects of a fund's investment portfolio,
including but not limited to, purchases and sales of individual securities,
portfolio construction techniques, portfolio risk assessment and the management
of daily cash flows in accordance with the portfolio holdings.
The following people handle the day-to-day management of each fund:
DWS DREMAN HIGH RETURN EQUITY FUND
David N. Dreman
Chairman and Chief Investment Officer of Dreman Value Management, L.L.C. and
Lead Portfolio Manager.
- - Began investment career in 1957.
- - Joined the fund team in 1998.
- - Founder, Dreman Value Management, L.L.C.
F. James Hutchinson
President of Dreman Value Management, L.L.C. and Portfolio Manager.
- - Joined Dreman Value Management, L.L.C. in 2000.
- - Executive Vice President responsible for Marketing.
- - Began investment career in 1986.
- - Member of Investment Policy Committee.
- - Joined the fund team in 2001.
- - Prior to joining Dreman Value Management, L.L.C., 30 years of experience in
finance and trust/investment management with the Bank of New York.
E. Clifton Hoover, Jr.
Portfolio Manager.
- - Joined Dreman Value Management, L.L.C. in 2006 as a Managing Director and
Co-Chief Investment Officer of Large Cap Value Strategy.
- - Prior to joining Dreman Value Management, L.L.C., Managing Director and a
Portfolio Manager at NFJ Investment Group since 1997; Vice President -
Corporate Finance at Credit Lyonnais, 1992-1997; Financial Analyst at
Citibank, 1990-1992; and Credit Analyst/Corporate Loan Officer for
RepublicBank (now Bank of America), 1985-1990.
- - Over 21 years of investment industry experience.
- - Joined the fund team in 2006.
- - MS, Texas Tech University.
DWS LARGE CAP VALUE FUND
Thomas Schuessler, PhD
Director of Deutsche Asset Management and Portfolio Manager.
- - Joined Deutsche Asset Management in 2001 after 5 years at Deutsche Bank
where he managed various products and worked in the office of the Chairman
of the Management Board.
- - US and Global Fund Management: Frankfurt.
- - Joined the fund team in 2007.
- - PhD, University of Heidelberg, studies in physics and economics at
University of Heidelberg and University of Utah.
Who Manages and Oversees the Funds | 47
DWS DREMAN MID CAP VALUE FUND
David N. Dreman
Chairman and Chief Investment Officer of Dreman Value Management, L.L.C. and
Co-Lead Portfolio Manager.
- - Began investment career in 1957.
- - Joined the fund team in 2005.
- - Founder, Dreman Value Management, L.L.C.
F. James Hutchinson
President of Dreman Value Management, L.L.C. and Co-Lead Portfolio Manager.
- - Joined Dreman Value Management, L.L.C. in 2000.
- - Executive Vice President responsible for Marketing.
- - Began investment career in 1986.
- - Member of Investment Policy Committee.
- - Joined the fund team in 2006.
- - Prior to joining Dreman Value Management, L.L.C., 30 years of experience in
finance and trust/investment management with the Bank of New York.
Mark Roach
Co-Lead Portfolio Manager.
- - Joined Dreman Value Management, L.L.C. in November 2006 as a Managing
Director and Portfolio Manager of Small and Mid Cap products.
- - Joined the fund team in 2006.
- - Prior to that, Portfolio Manager at Vaughan Nelson Investment Management,
managing a small cap product from 2002 through 2006; security analyst from
1997 to 2001 for various institutions including Fifth Third Bank, Lynch,
Jones & Ryan and USAA.
- - BS, Baldwin Wallace College; MBA, University of Chicago.
DWS DREMAN SMALL CAP VALUE FUND
David N. Dreman
Chairman and Chief Investment Officer of Dreman Value Management, L.L.C. and
Lead Portfolio Manager.
- - Began investment career in 1957.
- - Joined the fund team in 2002.
- - Founder, Dreman Value Management, L.L.C.
Mark Roach
Portfolio Manager.
- - Joined Dreman Value Management, L.L.C. in November 2006 as a Managing
Director and Portfolio Manager of Small and Mid Cap products.
- - Joined the fund team in 2006.
- - Prior to that, Portfolio Manager at Vaughan Nelson Investment Management,
managing a small cap product from 2002 through 2006; security analyst from
1997 to 2001 for various institutions including Fifth Third Bank, Lynch,
Jones & Ryan and USAA.
- - BS, Baldwin Wallace College; MBA, University of Chicago.
E. Clifton Hoover, Jr.
Portfolio Manager.
- - Joined Dreman Value Management, L.L.C. in 2006 as a Managing Director and
Co-Chief Investment Officer of Large Cap Value Strategy.
- - Prior to joining Dreman Value Management, L.L.C., Managing Director and a
Portfolio Manager at NFJ Investment Group since 1997; Vice President -
Corporate Finance at Credit Lyonnais, 1992-1997; Financial Analyst at
Citibank, 1990-1992; and Credit Analyst/Corporate Loan Officer for
RepublicBank (now Bank of America), 1985-1990.
- - Over 21 years of investment industry experience.
- - Joined the fund team in 2006.
- - MS, Texas Tech University.
48 | Who Manages and Oversees the Funds
DWS DREMAN CONCENTRATED VALUE FUND
David N. Dreman
Chairman and Chief Investment Officer of Dreman Value Management, L.L.C. and
Lead Portfolio Manager.
- - Began investment career in 1957.
- - Joined the fund team in 2005.
- - Founder, Dreman Value Management, L.L.C.
F. James Hutchinson
President of Dreman Value Management, L.L.C. and Portfolio Manager.
- - Joined Dreman Value Management, L.L.C. in 2000.
- - Executive Vice President responsible for Marketing.
- - Began investment career in 1986.
- - Member of Investment Policy Committee.
- - Joined the fund team in 2005.
- - Prior to joining Dreman Value Management, L.L.C., 30 years of experience in
finance and trust/investment management with the Bank of New York.
E. Clifton Hoover, Jr.
Portfolio Manager.
- - Joined Dreman Value Management, L.L.C. in 2006 as a Managing Director and
Co-Chief Investment Officer of Large Cap Value Strategy.
- - Prior to joining Dreman Value Management, L.L.C., Managing Director and a
Portfolio Manager at NFJ Investment Group since 1997; Vice President -
Corporate Finance at Credit Lyonnais, 1992-1997; Financial Analyst at
Citibank, 1990-1992; and Credit Analyst/Corporate Loan Officer for
RepublicBank (now Bank of America), 1985-1990.
- - Over 21 years of investment industry experience.
- - Joined the fund team in 2006.
- - MS, Texas Tech University.
Each fund's Statement of Additional Information provides additional information
about a portfolio manager's investments in each fund, a description of the
portfolio management compensation structure and information regarding other
accounts managed.
Who Manages and Oversees the Funds | 49
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 Ernst & Young LLP, independent
registered public accounting firm, whose report, along with each fund's
financial statements, is included in each fund's annual report (see
"Shareholder reports" on the back cover).
DWS Large Cap Value Fund - Class A
YEARS ENDED NOVEMBER 30, 2007 2006 2005 2004 2003
SELECTED PER SHARE DATA
- --------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 24.40 $ 22.87 $ 22.15 $ 19.93 $ 17.09
- -------------------------------------- -------- -------- -------- -------- --------
Income (loss) from investment
operations:
Net investment income (loss) a .28 .38d .34 .30 .25
______________________________________ ________ ________ ________ ________ ________
Net realized and unrealized gain
(loss) 2.34 2.63 .79 2.16 2.81
- -------------------------------------- -------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 2.62 3.01 1.13 2.46 3.06
______________________________________ ________ ________ ________ ________ ________
Less distributions from:
Net investment income ( .36) ( .33) ( .41) ( .24) ( .22)
______________________________________ ________ ________ ________ ________ ________
Net realized gains ( 2.15) ( 1.15) - - -
______________________________________ ________ ________ ________ ________ ________
TOTAL DISTRIBUTIONS ( 2.51) ( 1.48) ( .41) ( .24) ( .22)
______________________________________ ________ ________ ________ ________ ________
Redemption fees .00* .00* .00* - -
- -------------------------------------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 24.51 $ 24.40 $ 22.87 $ 22.15 $ 19.93
- -------------------------------------- -------- -------- -------- -------- --------
Total Return (%)b 11.65c 13.98d 5.21c 12.34c 18.16c
- -------------------------------------- -------- -------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 300 363 364 283 152
______________________________________ ________ ________ ________ ________ ________
Ratio of expenses before expense
reductions (%) 1.00 1.02 1.06 1.32 1.30
______________________________________ ________ ________ ________ ________ ________
Ratio of expenses after expense
reductions (%) .99 1.02 1.05 1.21 1.29
______________________________________ ________ ________ ________ ________ ________
Ratio of net investment income (loss)
(%) 1.21 1.65d 1.52 1.39 1.41
______________________________________ ________ ________ ________ ________ ________
Portfolio turnover rate (%) 86 76 56 39 69
- -------------------------------------- -------- -------- -------- -------- --------
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 Includes non-recurring income from the Advisor recorded as a result of an
administrative proceeding regarding disclosure of brokerage allocation
practices in connection with sales of DWS Scudder Funds. The non-recurring
income resulted in an increase in net investment income of $0.033 per share
and an increase in the ratio of net investment income of 0.14%. Excluding
this non-recurring income, total return would have been 0.14% lower.
* Amount is less than $.005.
50 | Financial Highlights
DWS Large Cap Value Fund - Class B
YEARS ENDED NOVEMBER 30, 2007 2006 2005 2004 2003
SELECTED PER SHARE DATA
- -------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 24.41 $ 22.88 $ 22.14 $ 19.91 $ 17.07
- ------------------------------------- -------- -------- -------- -------- --------
Income (loss) from investment
operations:
Net investment income (loss) a .09 .18d .14 .14 .11
_____________________________________ ________ ________ ________ ________ ________
Net realized and unrealized gain
(loss) 2.34 2.64 .82 2.15 2.81
- ------------------------------------- -------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 2.43 2.82 .96 2.29 2.92
_____________________________________ ________ ________ ________ ________ ________
Less distributions from:
Net investment income ( .15) ( .14) ( .22) ( .06) ( .08)
_____________________________________ ________ ________ ________ ________ ________
Net realized gains ( 2.15) ( 1.15) - - -
_____________________________________ ________ ________ ________ ________ ________
TOTAL DISTRIBUTIONS ( 2.30) ( 1.29) ( .22) ( .06) ( .08)
_____________________________________ ________ ________ ________ ________ ________
Redemption fees .00* .00* .00* - -
- ------------------------------------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 24.54 $ 24.41 $ 22.88 $ 22.14 $ 19.91
- ------------------------------------- -------- -------- -------- -------- --------
Total Return (%)b 10.74c 13.04d 4.30c 11.51c 17.20c
- ------------------------------------- -------- -------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 30 37 48 50 50
______________________________________ ________ ________ ________ ________ ________
Ratio of expenses before expense
reductions (%) 1.83 1.89 1.98 2.21 2.16
______________________________________ ________ ________ ________ ________ ________
Ratio of expenses after expense
reductions (%) 1.82 1.89 1.90 1.96 2.11
______________________________________ ________ ________ ________ ________ ________
Ratio of net investment income (loss)
(%) .38 .78d .67 .64 .59
______________________________________ ________ ________ ________ ________ ________
Portfolio turnover rate (%) 86 76 56 39 69
- -------------------------------------- -------- -------- -------- -------- --------
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 Includes non-recurring income from the Advisor recorded as a result of an
administrative proceeding regarding disclosure of brokerage allocation
practices in connection with sales of DWS Scudder Funds. The non-recurring
income resulted in an increase in net investment income of $0.033 per share
and an increase in the ratio of net investment income of 0.14%. Excluding
this non-recurring income, total return would have been 0.15% lower.
* Amount is less than $.005.
Financial Highlights | 51
DWS Large Cap Value Fund - Class C
YEARS ENDED NOVEMBER 30, 2007 2006 2005 2004 2003
SELECTED PER SHARE DATA
- ---------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 24.40 $ 22.86 $ 22.13 $ 19.91 $ 17.07
- ------------------------------------ -------- -------- -------- -------- --------
Income (loss) from investment
operations:
Net investment income (loss) a .11 .21d .17 .14 .11
____________________________________ ________ ________ ________ ________ ________
Net realized and unrealized gain
(loss) 2.34 2.64 .79 2.15 2.82
- ------------------------------------ -------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 2.45 2.85 .96 2.29 2.93
____________________________________ ________ ________ ________ ________ ________
Less distributions from:
Net investment income ( .18) ( .16) ( .23) ( .07) ( .09)
____________________________________ ________ ________ ________ ________ ________
Net realized gains ( 2.15) ( 1.15) - - -
____________________________________ ________ ________ ________ ________ ________
TOTAL DISTRIBUTIONS ( 2.33) ( 1.31) ( .23) ( .07) ( .09)
____________________________________ ________ ________ ________ ________ ________
Redemption fees .00* .00* .00* - -
- ------------------------------------ -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 24.52 $ 24.40 $ 22.86 $ 22.13 $ 19.91
- ------------------------------------ -------- -------- -------- -------- --------
Total Return (%)b 10.86c 13.16d 4.38 11.51c 17.23c
- ------------------------------------ -------- -------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 32 36 42 38 21
______________________________________ ________ ________ ________ ________ ________
Ratio of expenses before expense
reductions (%) 1.74 1.75 1.81 2.08 2.09
______________________________________ ________ ________ ________ ________ ________
Ratio of expenses after expense
reductions (%) 1.73 1.75 1.81 1.96 2.07
______________________________________ ________ ________ ________ ________ ________
Ratio of net investment income (loss)
(%) .47 .93d .76 .64 .63
______________________________________ ________ ________ ________ ________ ________
Portfolio turnover rate (%) 86 76 56 39 69
- -------------------------------------- -------- -------- -------- -------- --------
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 Includes non-recurring income from the Advisor recorded as a result of an
administrative proceeding regarding disclosure of brokerage allocation
practices in connection with sales of DWS Scudder Funds. The non-recurring
income resulted in an increase in net investment income of $0.033 per share
and an increase in the ratio of net investment income of 0.14%. Excluding
this non-recurring income, total return would have been 0.15% lower.
* Amount is less than $.005.
52 | Financial Highlights
DWS Dreman Concentrated Value Fund - Class A
YEARS ENDED NOVEMBER 30, 2007 2006 2005a
SELECTED PER SHARE DATA
- ------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.94 $ 10.06 $ 10.00
- ------------------------------------------- -------- -------- --------
Income (loss) from investment operations:
Net investment income b .18 .18 .06
___________________________________________ ________ ________ ________
Net realized and unrealized gain (loss) .42 1.87 .00***
- ------------------------------------------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS .60 2.05 .06
___________________________________________ ________ ________ ________
Less distributions from:
Net investment income ( .18) ( .17) -
___________________________________________ ________ ________ ________
Net realized gains ( .08) - -
___________________________________________ ________ ________ ________
TOTAL DISTRIBUTIONS ( .26) ( .17) -
___________________________________________ ________ ________ ________
Redemption fees .00*** .00*** .00***
- ------------------------------------------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 12.28 $ 11.94 $ 10.06
- ------------------------------------------- -------- -------- --------
Total Return (%)c,d 5.01 20.56 .60**
- ------------------------------------------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 47 45 22
_______________________________________________ ________ ________ ________
Ratio of expenses before expense reductions (%) 1.60 1.77 2.81*
_______________________________________________ ________ ________ ________
Ratio of expenses after expense reductions (%) 1.29 1.19e 1.66*
_______________________________________________ ________ ________ ________
Ratio of net investment income (loss) (%) 1.44 1.58 1.18*
_______________________________________________ ________ ________ ________
Portfolio turnover rate (%) 58 38 5
- ----------------------------------------------- -------- -------- --------
a For the period from June 2, 2005 (commencement of operations) to November
30, 2005.
b Based on average shares outstanding during the period.
c Total return does not reflect the effect of any sales charges.
d Total return would have been lower had certain expenses not been reduced.
e The ratio of operating expenses includes reimbursement of the Fund's
organizational and offering costs incurred since inception of the Fund. The
ratio without this reimbursement would have been 1.31%.
* Annualized
** Not annualized
*** Amount is less than $.005.
Financial Highlights | 53
DWS Dreman Concentrated Value Fund - Class B
YEARS ENDED NOVEMBER 30, 2007 2006 200a
SELECTED PER SHARE DATA
- ------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.95 $ 10.03 $ 10.00
- ------------------------------------------------- -------- -------- --------
Income (loss) from investment operations:
Net investment income b .08 .10 .02
_________________________________________________ ________ ________ ________
Net realized and unrealized gain (loss) .42 1.88 .01
- ------------------------------------------------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS .50 1.98 .03
_________________________________________________ ________ ________ ________
Less distributions from:
Net investment income ( .09) ( .06) -
_________________________________________________ ________ ________ ________
Net realized gains ( .08) - -
_________________________________________________ ________ ________ ________
TOTAL DISTRIBUTIONS ( .17) ( .06) -
_________________________________________________ ________ ________ ________
Redemption fees .00*** .00*** .00***
- ------------------------------------------------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 12.28 $ 11.95 $ 10.03
- ------------------------------------------------- -------- -------- --------
Total Return (%)c,d 4.15 19.84 .30**
- ------------------------------------------------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------- --------
Net assets, end of period ($ millions) 2 2 2
_________________________________________________ ________ ________ ________
Ratio of expenses before expense reductions (%) 2.39 2.60 3.58*
_________________________________________________ ________ ________ ________
Ratio of expenses after expense reductions (%) 2.05 1.94e 2.41*
_________________________________________________ ________ ________ ________
Ratio of net investment income (loss) (%) .68 .83 .43*
_________________________________________________ ________ ________ ________
Portfolio turnover rate (%) 58 38 5
- ------------------------------------------------- -------- -------- --------
a For the period from June 2, 2005 (commencement of operations) to November
30, 2005.
b Based on average shares outstanding during the period.
c Total return does not reflect the effect of any sales charges.
d Total return would have been lower had certain expenses not been reduced.
e The ratio of operating expenses includes reimbursement of the Fund's
organizational and offering costs incurred since inception of the Fund. The
ratio without this reimbursement would have been 2.06%.
* Annualized
** Not annualized
*** Amount is less than $.005.
54 | Financial Highlights
DWS Dreman Concentrated Value Fund - Class C
YEARS ENDED NOVEMBER 30, 2007 2006 2005a
SELECTED PER SHARE DATA
- ------------------------------------------------------------------------------- -
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.94 $ 10.03 $ 10.00
- ------------------------------------------------- -------- -------- --------
Income (loss) from investment operations:
Net investment income b .09 .11 .02
_________________________________________________ ________ ________ ________
Net realized and unrealized gain (loss) .42 1.87 .01
- ------------------------------------------------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS .51 1.98 .03
_________________________________________________ ________ ________ ________
Less distributions from:
Net investment income ( .10) ( .07) -
_________________________________________________ ________ ________ ________
Net realized gains ( .08) - -
_________________________________________________ ________ ________ ________
TOTAL DISTRIBUTIONS ( .18) ( .07) -
_________________________________________________ ________ ________ ________
Redemption fees .00*** .00*** .00***
- ------------------------------------------------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 12.27 $ 11.94 $ 10.03
- ------------------------------------------------- -------- -------- --------
Total Return (%)c,d 4.23 19.87 .30**
- ------------------------------------------------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------- --------
Net assets, end of period ($ millions) 15 13 7
_________________________________________________ ________ ________ ________
Ratio of expenses before expense reductions (%) 2.32 2.54 3.54*
_________________________________________________ ________ ________ ________
Ratio of expenses after expense reductions (%) 2.02 1.84e 2.31*
_________________________________________________ ________ ________ ________
Ratio of net investment income (loss) (%) .71 .93 .53*
_________________________________________________ ________ ________ ________
Portfolio turnover rate (%) 58 38 5
- ------------------------------------------------- -------- -------- --------
a For the period from June 2, 2005 (commencement of operations) to November
30, 2005.
b Based on average shares outstanding during the period.
c Total return does not reflect the effect of any sales charges.
d Total return would have been lower had certain expenses not been reduced.
e The ratio of operating expenses includes reimbursement of the Fund's
organizational and offering costs incurred since inception of the Fund. The
ratio without this reimbursement would have been 1.96%.
* Annualized
** Not annualized
*** Amount is less than $.005.
Financial Highlights | 55
DWS Dreman High Return Equity Fund - Class A
YEARS ENDED NOVEMBER 30, 2007 2006 2005 2004 2003
SELECTED PER SHARE DATA
- -------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 50.80 $ 44.37 $ 41.25 $ 36.44 $ 30.15
- ------------------------------------- -------- -------- -------- -------- --------
Income (loss) from investment
operations:
Net investment income a .94 .85 .67 .59 .59
_____________________________________ ________ ________ ________ ________ ________
Net realized and unrealized gain
(loss) .02 7.20 3.05 4.81 6.28
- ------------------------------------- -------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS .96 8.05 3.72 5.40 6.87
_____________________________________ ________ ________ ________ ________ ________
Less distributions from:
Net investment income ( .98) ( .67) ( .60) ( .59) ( .58)
_____________________________________ ________ ________ ________ ________ ________
Net realized gains ( .42) ( .95) - - -
_____________________________________ ________ ________ ________ ________ ________
TOTAL DISTRIBUTIONS ( 1.40) ( 1.62) ( .60) ( .59) ( .58)
_____________________________________ ________ ________ ________ ________ ________
Redemption fees .00* .00* .00* - -
- ------------------------------------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 50.36 $ 50.80 $ 44.37 $ 41.25 $ 36.44
- ------------------------------------- -------- -------- -------- -------- --------
Total Return (%)b 1.84 18.33c 9.07 14.97 23.18
- ------------------------------------- -------- -------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 5,532 5,891 4,767 4,170 2,983
______________________________________ ________ ________ ________ ________ ________
Ratio of expenses before expense
reductions (%) 1.08 1.12 1.12 1.14 1.27
______________________________________ ________ ________ ________ ________ ________
Ratio of expenses after expense
reductions (%) 1.08 1.11 1.12 1.14 1.27
______________________________________ ________ ________ ________ ________ ________
Ratio of net investment income (%) 1.82 1.78 1.56 1.54 1.87
______________________________________ ________ ________ ________ ________ ________
Portfolio turnover rate (%) 27 32 9 10 14
- -------------------------------------- -------- -------- -------- -------- --------
a Based on average shares outstanding during the period.
b Total return does not reflect the effect of any sales charges.
c Total return would have been lower had certain expenses not been reduced.
* Amount is less than $.005.
56 | Financial Highlights
DWS Dreman High Return Equity Fund - Class B
YEARS ENDED NOVEMBER 30, 2007 2006 2005 2004 2003
SELECTED PER SHARE DATA
- --------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 50.60 $ 44.20 $ 41.08 $ 36.29 $ 30.01
- ---------------------------------------- -------- -------- -------- -------- --------
Income (loss) from investment
operations:
Net investment income a .53 .47 .32 .28 .34
________________________________________ ________ ________ ________ ________ ________
Net realized and unrealized gain
(loss) ( .01) 7.17 3.03 4.78 6.26
- ---------------------------------------- -------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS .52 7.64 3.35 5.06 6.60
________________________________________ ________ ________ ________ ________ ________
Less distributions from:
Net investment income ( .54) ( .29) ( .23) ( .27) ( .32)
________________________________________ ________ ________ ________ ________ ________
Net realized gains ( .42) ( .95) - - -
________________________________________ ________ ________ ________ ________ ________
TOTAL DISTRIBUTIONS ( .96) ( 1.24) ( .23) ( .27) ( .32)
________________________________________ ________ ________ ________ ________ ________
Redemption fees .00* .00* .00* - -
- ---------------------------------------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 50.16 $ 50.60 $ 44.20 $ 41.08 $ 36.29
- ---------------------------------------- -------- -------- -------- -------- --------
Total Return (%)b 1.01 17.36c 8.18 14.02 22.19
- ---------------------------------------- -------- -------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 525 763 761 915 1,150
________________________________________ ________ ________ ________ ________ ________
Ratio of expenses before expense
reductions (%) 1.89 1.93 1.95 1.96 2.08
________________________________________ ________ ________ ________ ________ ________
Ratio of expenses after expense
reductions (%) 1.89 1.93 1.95 1.96 2.08
________________________________________ ________ ________ ________ ________ ________
Ratio of net investment income (%) 1.02 .96 .73 .72 1.06
________________________________________ ________ ________ ________ ________ ________
Portfolio turnover rate (%) 27 32 9 10 14
- ---------------------------------------- -------- -------- -------- -------- --------
a Based on average shares outstanding during the period.
b Total return does not reflect the effect of any sales charges.
c Total return would have been lower had certain expenses not been reduced.
* Amount is less than $.005.
Financial Highlights | 57
DWS Dreman High Return Equity Fund - Class C
YEARS ENDED NOVEMBER 30, 2007 2006 2005 2004 2003
SELECTED PER SHARE DATA
- ------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 50.66 $ 44.25 $ 41.13 $ 36.34 $ 30.04
- -------------------------------------- -------- -------- -------- -------- --------
Income (loss) from investment
operations:
Net investment income a .57 .50 .35 .30 .35
______________________________________ ________ ________ ________ ________ ________
Net realized and unrealized gain
(loss) ( .01) 7.18 3.04 4.79 6.28
- -------------------------------------- -------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS .56 7.68 3.39 5.09 6.63
______________________________________ ________ ________ ________ ________ ________
Less distributions from:
Net investment income ( .58) ( .32) ( .27) ( .30) ( .33)
______________________________________ ________ ________ ________ ________ ________
Net realized gains ( .42) ( .95) - - -
______________________________________ ________ ________ ________ ________ ________
TOTAL DISTRIBUTIONS ( 1.00) ( 1.27) ( .27) ( .30) ( .33)
______________________________________ ________ ________ ________ ________ ________
Redemption fees .00* .00* .00* - -
- -------------------------------------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 50.22 $ 50.66 $ 44.25 $ 41.13 $ 36.34
- -------------------------------------- -------- -------- -------- -------- --------
Total Return (%)b 1.08 17.45c 8.26 14.08 22.27
- -------------------------------------- -------- -------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 1,038 1,100 858 683 549
______________________________________ ________ ________ ________ ________ ________
Ratio of expenses before expense
reductions (%) 1.82 1.86 1.88 1.92 2.02
______________________________________ ________ ________ ________ ________ ________
Ratio of expenses after expense
reductions (%) 1.82 1.85 1.88 1.92 2.02
______________________________________ ________ ________ ________ ________ ________
Ratio of net investment income (%) 1.09 1.04 .80 .76 1.12
______________________________________ ________ ________ ________ ________ ________
Portfolio turnover rate (%) 27 32 9 10 14
- -------------------------------------- -------- -------- -------- -------- --------
a Based on average shares outstanding during the period.
b Total return does not reflect the effect of any sales charges.
c Total return would have been lower had certain expenses not been reduced.
* Amount is less than $.005.
58 | Financial Highlights
DWS Dreman High Return Equity Fund - Class R
YEARS ENDED NOVEMBER 30, 2007 2006 2005 2004 2003a
SELECTED PER SHARE DATA
- ------------------------------------------------------------------------------------------------- -
NET ASSET VALUE, BEGINNING OF PERIOD $ 50.72 $ 44.29 $ 41.22 $ 36.43 $ 33.86
- ---------------------------------------- -------- -------- -------- -------- -------
Income (loss) from investment
operations:
Net investment income b .83 .79 .57 .46 .02
________________________________________ ________ ________ ________ ________ _______
Net realized and unrealized gain
(loss) .00*** 7.17 3.06 4.84 2.55
- ---------------------------------------- -------- -------- -------- -------- -------
TOTAL FROM INVESTMENT OPERATIONS .83 7.96 3.63 5.30 2.57
________________________________________ ________ ________ ________ ________ _______
Less distributions from:
Net investment income ( .89) ( .58) ( .56) ( .51) -
________________________________________ ________ ________ ________ ________ _______
Net realized gains ( .42) ( .95) - - -
________________________________________ ________ ________ ________ ________ _______
TOTAL DISTRIBUTIONS ( 1.31) ( 1.53) ( .56) ( .51) -
________________________________________ ________ ________ ________ ________ _______
Redemption fees .00*** .00*** .00*** - -
- ---------------------------------------- -------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD $ 50.24 $ 50.72 $ 44.29 $ 41.22 $ 36.43
- ---------------------------------------- -------- -------- -------- -------- -------
Total Return (%) 1.60 18.14c 8.87 14.67 7.59**
- ---------------------------------------- -------- -------- -------- -------- -------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------- -------
Net assets, end of period ($ millions) 29 31 11 2 .029
________________________________________ ________ ________ ________ ________ ________
Ratio of expenses before expense
reductions (%) 1.31 1.25 1.36 1.48 1.30*
________________________________________ ________ ________ ________ ________ ________
Ratio of expenses after expense
reductions (%) 1.31 1.24 1.36 1.48 1.30*
________________________________________ ________ ________ ________ ________ ________
Ratio of net investment income (%) 1.60 1.65 1.32 1.20 .38*
________________________________________ ________ ________ ________ ________ ________
Portfolio turnover rate (%) 27 32 9 10 14
- ---------------------------------------- -------- -------- -------- -------- --------
a For the period from October 1, 2003 (commencement of operations of Class R
shares) to November 30, 2003.
b Based on average shares outstanding during the period.
c Total return would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
*** Amount is less than $.005.
Financial Highlights | 59
DWS Dreman Mid Cap Value Fund - Class A
YEARS ENDED NOVEMBER 30, 2007 2006 2005a
SELECTED PER SHARE DATA
- ------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.96 $ 10.04 $ 10.00
- ------------------------------------------------- -------- -------- --------
Income (loss) from investment operations:
Net investment income (loss)b .10 .09 ( .01)
_________________________________________________ ________ ________ ________
Net realized and unrealized gain (loss) .79 1.84 .05
- ------------------------------------------------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS .89 1.93 .04
_________________________________________________ ________ ________ ________
Less distributions from:
Net investment income ( .09) ( .01) -
_________________________________________________ ________ ________ ________
Net realized gains ( .15) - -
_________________________________________________ ________ ________ ________
TOTAL DISTRIBUTIONS ( .24) ( .01) -
_________________________________________________ ________ ________ ________
Redemption fees .00*** .00*** .00***
- ------------------------------------------------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 12.61 $ 11.96 $ 10.04
- ------------------------------------------------- -------- -------- --------
Total Return (%)c,d 7.54 19.20 .40**
- ------------------------------------------------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------- --------
Net assets, end of period ($ millions) 48 21 4
_________________________________________________ ________ ________ ________
Ratio of expenses before expense reductions (%) 1.61 2.55 6.68*
_________________________________________________ ________ ________ ________
Ratio of expenses after expense reductions (%) 1.35 1.25e 2.81*
_________________________________________________ ________ ________ ________
Ratio of net investment income (loss) (%) .79 .86 ( .51)*
_________________________________________________ ________ ________ ________
Portfolio turnover rate (%) 82 34 10
- ------------------------------------------------- -------- -------- --------
a For the period from August 2, 2005 (commencement of operations) to November
30, 2005.
b Based on average shares outstanding during period.
c Total return does not reflect the effect of any sales charges.
d Total return would have been lower had certain expenses not been reduced.
e The ratio of operating expenses includes reimbursement of the Fund's
organizational and offering cost incurred since inception of the Fund. The
ratio without this reimbursement would have been 1.54%.
* Annualized
** Not annualized
*** Amount is less than $.005.
60 | Financial Highlights
DWS Dreman Mid Cap Value Fund - Class B
YEARS ENDED NOVEMBER 30, 2007 2006 2005a
SELECTED PER SHARE DATA
- ------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.87 $ 10.02 $ 10.00
- ------------------------------------------------- -------- -------- --------
Income (loss) from investment operations:
Net investment income (loss)b .01 .02 ( .03)
_________________________________________________ ________ ________ ________
Net realized and unrealized gain (loss) .79 1.83 .05
- ------------------------------------------------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS .80 1.85 .02
_________________________________________________ ________ ________ ________
Less distributions from:
Net realized gains ( .15) - -
_________________________________________________ ________ ________ ________
Redemption fees .00*** .00*** .00***
- ------------------------------------------------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 12.52 $ 11.87 $ 10.02
- ------------------------------------------------- -------- -------- --------
Total Return (%)c,d 6.72 18.46 .20**
- ------------------------------------------------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------- --------
Net assets, end of period ($ millions) 4 3 1
_________________________________________________ ________ ________ ________
Ratio of expenses before expense reductions (%) 2.46 3.36 7.41*
_________________________________________________ ________ ________ ________
Ratio of expenses after expense reductions (%) 2.05 1.95e 3.51*
_________________________________________________ ________ ________ ________
Ratio of net investment income (loss) (%) .09 .16 ( 1.21)*
_________________________________________________ ________ ________ ________
Portfolio turnover rate (%) 82 34 10
- ------------------------------------------------- -------- -------- --------
a For the period from August 2, 2005 (commencement of operations) to November
30, 2005.
b Based on average shares outstanding during the period.
c Total return does not reflect the effect of any sales charges.
d Total return would have been lower had certain expenses not been reduced.
e The ratio of operating expenses includes reimbursement of the Fund's
organizational and offering cost incurred since the inception of the Fund.
The ratio without this reimbursement would have been 2.24%.
* Annualized
** Not annualized
*** Amount is less than $.005.
Financial Highlights | 61
DWS Dreman Mid Cap Value Fund - Class C
YEARS ENDED NOVEMBER 30, 2007 2006 2005a
SELECTED PER SHARE DATA
- ------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.86 $ 10.02 $ 10.00
- ------------------------------------------------- -------- -------- --------
Income (loss) from investment operations:
Net investment income (loss)b .01 .02 ( .03)
_________________________________________________ ________ ________ ________
Net realized and unrealized gain (loss) .79 1.82 .05
- ------------------------------------------------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS .80 1.84 .02
_________________________________________________ ________ ________ ________
Less distributions from:
Net realized gains ( .15) - -
_________________________________________________ ________ ________ ________
Redemption fees .00*** .00*** .00***
- ------------------------------------------------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 12.51 $ 11.86 $ 10.02
- ------------------------------------------------- -------- -------- --------
Total Return (%)c,d 6.81 18.36 .20**
- ------------------------------------------------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------- --------
Net assets, end of period ($ millions) 20 9 2
_________________________________________________ ________ ________ ________
Ratio of expenses before expense reductions (%) 2.37 3.34 7.46*
_________________________________________________ ________ ________ ________
Ratio of expenses after expense reductions (%) 2.05 1.95e 3.51*
_________________________________________________ ________ ________ ________
Ratio of net investment income (loss) (%) .09 .16 ( 1.21)*
_________________________________________________ ________ ________ ________
Portfolio turnover rate (%) 82 34 10
- ------------------------------------------------- -------- -------- --------
a For the period from August 2, 2005 (commencement of operations) to November
30, 2005.
b Based on average shares outstanding during the period.
c Total return does not reflect the effect of any sales charges.
d Total return would have been lower had certain expenses not been reduced.
e The ratio of operating expenses includes reimbursement of the Fund's
organizational and offering cost incurred since the inception of the Fund.
The ratio without this reimbursement would have been 2.24%.
* Annualized
** Not annualized
*** Amount is less than $.005.
62 | Financial Highlights
DWS Dreman Small Cap Value Fund - Class A
YEARS ENDED NOVEMBER 30, 2007 2006 2005 2004 2003
SELECTED PER SHARE DATA
- ---------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 40.05 $ 35.36 $ 31.98 $ 25.27 $ 18.46
- --------------------------------------- -------- -------- -------- -------- --------
Income (loss) from investment
operations:
Net investment income (loss)a .16 .13 .17 .09 .17
_______________________________________ ________ ________ ________ ________ ________
Net realized and unrealized gain
(loss) .91 8.09 3.50 6.79 6.73
- --------------------------------------- -------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 1.07 8.22 3.67 6.88 6.90
_______________________________________ ________ ________ ________ ________ ________
Less distributions from:
Net investment income - ( .39) - ( .17) ( .09)
_______________________________________ ________ ________ ________ ________ ________
Net realized gains ( 2.11) ( 3.14) ( .29) - -
_______________________________________ ________ ________ ________ ________ ________
TOTAL DISTRIBUTIONS ( 2.11) ( 3.53) ( .29) ( .17) ( .09)
_______________________________________ ________ ________ ________ ________ ________
Redemption fees .00* .00* .00* - -
- --------------------------------------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 39.01 $ 40.05 $ 35.36 $ 31.98 $ 25.27
- --------------------------------------- -------- -------- -------- -------- --------
Total Return (%)b 2.79 25.45 11.55 27.37 37.49
- --------------------------------------- -------- -------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 1,405 1,206 703 579 351
__________________________________________ ________ ________ ________ ________ ________
Ratio of expenses (%) 1.20 1.19 1.27 1.29 1.43
__________________________________________ ________ ________ ________ ________ ________
Ratio of net investment income (loss)
(%) .42 .39 .52 .35 .91
__________________________________________ ________ ________ ________ ________ ________
Portfolio turnover rate (%) 60 48 67 64 67
- ------------------------------------------ -------- -------- -------- -------- --------
a Based on average shares outstanding during period.
b Total return does not reflect the effect of any sales charges.
* Amount is less than $.005.
Financial Highlights | 63
DWS Dreman Small Cap Value Fund - Class B
YEARS ENDED NOVEMBER 30, 2007 2006 2005 2004 2003
SELECTED PER SHARE DATA
- ------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 37.03 $ 32.84 $ 30.01 $ 23.76 $ 17.41
- ------------------------------------------ ------- ------- ------- ------- -------
Income (loss) from investment
operations:
Net investment income (loss)a ( .10) ( .13) ( .09) ( .12) .03
__________________________________________ _______ _______ _______ _______ _______
Net realized and unrealized gain
(loss) .77 7.46 3.21 6.37 6.32
- ------------------------------------------ ------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS .67 7.33 3.12 6.25 6.35
__________________________________________ _______ _______ _______ _______ _______
Less distributions from:
Net realized gains ( 2.11) ( 3.14) ( .29) - -
__________________________________________ _______ _______ _______ _______ _______
Redemption fees .00* .00* .00* - -
- ------------------------------------------ ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 35.59 $ 37.03 $ 32.84 $ 30.01 $ 23.76
- ------------------------------------------ ------- ------- ------- ------- -------
Total Return (%)b 1.92 24.39 10.50 26.30 36.47
- ------------------------------------------ ------- ------- ------- ------- -------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 92 117 109 125 133
__________________________________________ _______ _______ _______ _______ _______
Ratio of expenses (%) 2.02 2.06 2.19 2.16 2.27
__________________________________________ _______ _______ _______ _______ _______
Ratio of net investment income (loss)
(%) ( .40) ( .48) ( .40) ( .52) .07
__________________________________________ _______ _______ _______ _______ _______
Portfolio turnover rate (%) 60 48 67 64 67
- ------------------------------------------ ------- ------- ------- ------- -------
a Based on average shares outstanding during the period.
b Total return does not reflect the effect of any sales charges.
* Amount is less than $.005.
64 | Financial Highlights
DWS Dreman Small Cap Value Fund - Class C
YEARS ENDED NOVEMBER 30, 2007 2006 2005 2004 2003
SELECTED PER SHARE DATA
- ------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 37.51 $ 33.19 $ 30.28 $ 23.94 $ 17.54
- ----------------------------------------- -------- -------- -------- -------- --------
Income (loss) from investment
operations:
Net investment income (loss)a ( .08) ( .09) ( .05) ( .09) .04
_________________________________________ ________ ________ ________ ________ ________
Net realized and unrealized gain
(loss) .79 7.55 3.25 6.43 6.36
- ----------------------------------------- -------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS .71 7.46 3.20 6.34 6.40
_________________________________________ ________ ________ ________ ________ ________
Less distributions from:
Net realized gains ( 2.11) ( 3.14) ( .29) - -
_________________________________________ ________ ________ ________ ________ ________
Redemption fees .00* .00* .00* - -
- ----------------------------------------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 36.11 $ 37.51 $ 33.19 $ 30.28 $ 23.94
- ----------------------------------------- -------- -------- -------- -------- --------
Total Return (%)b 2.00 24.54 10.64 26.48 36.49
- ----------------------------------------- -------- -------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 249 270 152 106 71
_________________________________________ ________ ________ ________ ________ ________
Ratio of expenses (%) 1.95 1.93 2.05 2.04 2.21
_________________________________________ ________ ________ ________ ________ ________
Ratio of net investment income (loss)
(%) ( .33) ( .35) ( .26) ( .40) .13
_________________________________________ ________ ________ ________ ________ ________
Portfolio turnover rate (%) 60 48 67 64 67
- ----------------------------------------- -------- -------- -------- -------- --------
a Based on average shares outstanding during the period.
b Total return does not reflect the effect of any sales charges.
* Amount is less than $.005.
Financial Highlights | 65
HOW TO INVEST IN THE FUNDS
Offered in this prospectus are share classes noted on the cover of the
prospectus. Each class has its own fees and expenses, offering you a choice of
cost structures. Each fund may offer other classes of shares in a separate
prospectus. These shares are intended for investors seeking the advice and
assistance of a financial advisor, who will typically receive compensation for
those services. Class R shares are only available to participants in certain
retirement plans.
THE FOLLOWING PAGES TELL YOU HOW TO INVEST IN A FUND AND WHAT TO EXPECT AS A
SHAREHOLDER. The following pages also tell you about many of the services,
choices and benefits of being a shareholder. You'll also find information on
how to check the status of your account using the method that's most convenient
for you.
If you're investing directly with DWS Scudder, all of this information applies
to you. If you're investing through a "third party provider" - for example, a
workplace retirement plan, financial supermarket or financial advisor - your
provider may have its own policies or instructions and you should follow those.
You can find out more about the topics covered here by speaking with your
FINANCIAL ADVISOR OR A REPRESENTATIVE OF YOUR WORKPLACE RETIREMENT PLAN OR
OTHER INVESTMENT PROVIDER.
Before you invest, take a moment to look over the characteristics of each share
class, so that you can be sure to choose the class that's right for you. YOU
MAY WANT TO ASK YOUR FINANCIAL ADVISOR TO HELP YOU WITH THIS DECISION.
CHOOSING A SHARE CLASS
We describe each share class in detail on the following pages. But first, you
may want to look at the table below, which gives you a brief description and
comparison of the main features of each class.
CLASSES AND FEATURES POINTS TO HELP YOU COMPARE
CLASS A
- Sales charge of up to 5.75% charged - Some investors may be able to reduce
when you buy shares or eliminate their sales charge; see
"Class A shares"
- In most cases, no charge when you
sell shares - Total annual expenses are lower than
those for Class B or Class C
- Up to 0.25% annual shareholder
servicing fee
CLASS B
- No sales charge when you buy shares - The deferred sales charge rate falls to
zero after six years
- Deferred sales charge declining from
4.00%, charged when you sell shares - Shares automatically convert to
you bought within the last six years Class A after six years, which means
lower annual expenses going forward
- 0.75% annual distribution fee and up
to 0.25% annual shareholder servicing
fee
CLASS C
- No sales charge when you buy shares - The deferred sales charge rate for one
year is lower for Class C shares than
- Deferred sales charge of 1.00%,
Class B shares, but your shares never
charged when you sell shares you
convert to Class A, so annual expenses
bought within the last year
remain higher
- 0.75% annual distribution fee and up
to 0.25% annual shareholder servicing
fee
CLASS R
- No sales charge when you buy or sell - Class R is only available to participants
shares in certain retirement plans
- 0.25% annual distribution fee and up
to 0.25% annual shareholder servicing
fee
Your financial advisor will typically be paid a fee when you buy shares and may
receive different levels of compensation depending upon which class of shares
you buy. Each fund may pay financial advisors or other intermediaries
compensation for the services they provide to their clients. This compensation
may vary depending on the class share and fund you buy. Your financial advisor
may also receive compensation from the Advisor and/or its affiliates. Please
see "Financial intermediary support payments" for more information.
Choosing a Share Class | 67
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:
FRONT-END SALES FRONT-END SALES
CHARGE AS % CHARGE AS % OF YOUR
YOUR INVESTMENT OF OFFERING PRICE 1,2 NET INVESTMENT 2
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
1 The offering price includes the sales charge.
2 Because of rounding in the calculation of the offering price,
the actual front-end sales charge paid by an investor may be
higher or lower than the percentages noted.
YOU MAY BE ABLE TO LOWER YOUR CLASS A SALES CHARGE IF:
- you plan to invest at least $50,000 in Class A shares (including
Class A shares in other retail DWS funds) over the next 24 months
("Letter of Intent")
- the amount of Class A shares you already own (including Class A
shares in other retail DWS funds) plus the amount you're
investing now in Class A shares is at least $50,000 ("Cumulative
Discount")
- you are investing a total of $50,000 or more in Class A shares of
several retail DWS funds on the same day ("Combined Purchases")
68 | Choosing a Share Class
The point of these three features is to let you count investments
made at other times or in certain other funds for purposes of
calculating your present sales charge. Any time you can use the
privileges to "move" your investment into a lower sales charge
category, it's generally beneficial for you to do so.
For purposes of determining whether you are eligible for a reduced
Class A sales charge, you and your immediate family (your spouse or
life partner and your children or stepchildren age 21 or younger)
may aggregate your investments in the DWS family of funds. This
includes, for example, investments held in a retirement account, an
employee benefit plan or at a financial advisor other than the one
handling your current purchase. These combined investments will be
valued at their current offering price to determine whether your
current investment qualifies for a reduced sales charge.
To receive a reduction in your Class A initial sales charge, you
must let your financial advisor or Shareholder Services know at the
time you purchase shares that you qualify for such a reduction. You
may be asked by your financial advisor or Shareholder Services to
provide account statements or other information regarding related
accounts of you or your immediate family in order to verify your
eligibility for a reduced sales charge.
For more information about sales charge discounts, please visit
www.dws-scudder.com (click on the link entitled "Fund Sales Charge
and Breakpoint Schedule"), consult with your financial advisor or
refer to the section entitled "Purchase or Redemption of Shares" in
each fund's Statement of Additional Information.
IN CERTAIN CIRCUMSTANCES, YOU MAY BE ABLE TO BUY CLASS A SHARES
WITHOUT A SALES CHARGE. For example, the sales charge will be waived
if you are reinvesting dividends or distributions or if you are
exchanging an investment in Class A shares of another fund in the
DWS family of funds for an investment in Class A shares of a fund.
In addition, a sales charge waiver may apply to transactions by
certain retirement plans and certain other entities or persons
(e.g., affiliated persons of Deutsche Asset Management or the DWS
funds) and with respect to certain types of investments (e.g., an
investment advisory or agency commission program under which you pay
a fee to an investment advisor or other firm for portfolio
management or brokerage services).
Choosing a Share Class | 69
Details regarding the types of investment programs and categories of
investors eligible for a sales charge waiver are provided in each
fund's Statement of Additional Information.
There are a number of additional provisions that apply in order to
be eligible for a sales charge waiver. Each fund may waive the sales
charge for investors in other situations as well. Your financial
advisor or Shareholder Services can answer your questions and help
you determine if you are eligible.
IF YOU'RE INVESTING $1 MILLION OR MORE, either as a lump sum or
through one of the sales charge reduction features described above,
you may be eligible to buy Class A shares without a sales charge
("Large Order NAV Purchase Privilege"). However, you may be charged
a contingent deferred sales charge (CDSC) of 1.00% on any shares you
sell within 12 months of owning them and a similar charge of 0.50%
on shares you sell within the following six months. This CDSC is
waived under certain circumstances (see "Policies You Should Know
About"). Your financial advisor or Shareholder Services can answer
your questions and help you determine if you're eligible.
Class B shares
Class B shares may make sense for long-term investors who prefer to
see all of their investment go to work right away and can accept
somewhat higher annual expenses. Please note, however, that since
not all DWS funds offer Class B shares, exchange options may be
limited.
With Class B shares, you pay no up-front sales charge to a fund.
Class B shares have a 12b-1 plan, under which a distribution fee of
0.75% and a shareholder servicing fee of up to 0.25% are deducted
from class assets each year. This means the annual expenses for
Class B shares are somewhat higher (and their performance
correspondingly lower) compared to Class A shares. However, unlike
Class A shares, your entire investment goes to work immediately.
After six years, Class B shares automatically convert on a tax-free
basis to Class A shares, which has the net effect of lowering the
annual expenses from the seventh year on.
70 | Choosing a Share Class
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:
YEAR AFTER YOU BOUGHT SHARES CDSC ON SHARES YOU SELL
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)
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.
Choosing a Share Class | 71
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:
YEAR AFTER YOU BOUGHT SHARES CDSC ON SHARES YOU SELL
First year 1.00%
Second year and later None
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.
72 | Choosing a Share Class
Class R shares
Class R shares have no initial sales charge or deferred sales
charge. Class R shares have a 12b-1 plan, under which a distribution
fee of 0.25% and a shareholder servicing fee of up to 0.25% are
deducted from class assets each year. Because distribution fees are
continuous in nature, these fees may, over time, increase the cost
of your investment and may cost you more than paying other types of
sales charges.
Eligibility requirements
YOU MAY BUY CLASS R SHARES if you are a participant in any of the
following types of employer-sponsored plans that offer
Class R shares of the fund:
- All section 401(a) and 457 plans
- Certain section 403(b)(7) plans
- 401(k), profit sharing, money purchase pension and defined
benefit plans
- Non-qualified deferred compensation plans
Choosing a Share Class | 73
How to BUY Class A, B and C Shares
FIRST INVESTMENT ADDITIONAL INVESTMENTS
$1,000 or more for most accounts $50 or more for regular accounts and
$500 or more for IRAs IRAs
$500 or more for an account with an $50 or more for an account with an
Automatic Investment Plan Automatic Investment Plan
THROUGH A FINANCIAL ADVISOR
- To obtain an application, contact your - Contact your advisor using the
advisor method that's most convenient for you
BY MAIL OR EXPRESS MAIL (SEE BELOW)
- Fill out and sign an application - Send a check made payable to "DWS
Scudder" and an investment slip to us
- Send it to us at the appropriate
address, along with an investment - If you don't have an investment slip,
check made payable to "DWS simply include a letter with your
Scudder" name, account number, the full name
of the fund and the share class and
your investment instructions
BY WIRE
- Call (800) 621-1048 for instructions - Call (800) 621-1048 for instructions
BY PHONE
Not available - Call (800) 621-1048 for instructions
WITH AN AUTOMATIC INVESTMENT PLAN
- Fill in the information on our - To set up regular investments from a
application including a check for the bank checking account call (800) 621-
initial investment and a voided check 1048 ($50 minimum)
USING QuickBuy
Not available - Call (800) 621-1048 to make sure
QuickBuy is set up on your account; if
it is, you can request a transfer from
your bank account of any amount
between $50 and $250,000
ON THE INTERNET
Not available - Call (800) 621-1048 to ensure you have
electronic services
- Register at www.dws-scudder.com or
log in if already registered
- Follow the instructions for buying
shares with money from your bank
account
- --------------------------------------------------------------------------------
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
74 | How to Buy Class A, B and C Shares
How to EXCHANGE or SELL Class A, B and C Shares
EXCHANGING INTO ANOTHER FUND SELLING SHARES
Some transactions, including most for
- Exchanges into existing accounts:
over $100,000, can only be ordered in
$50 minimum per fund
writing with a signature guarantee;
- Exchanges into new accounts:
please see "Signature Guarantee"
$1,000 minimum per fund for most
accounts
$500 minimum for IRAs
THROUGH A FINANCIAL ADVISOR
- Contact your advisor using the - Contact your advisor by the method
method that's most convenient for you that's most convenient for you
BY PHONE BY PHONE OR WIRE
- Call (800) 621-1048 for instructions - Call (800) 621-1048 for instructions
BY MAIL OR EXPRESS MAIL
(see previous page for address)
Write a letter that includes: Write a letter that includes:
- the fund, class and account number - the fund, class and account number
you're exchanging out of from which you want to sell shares
- the dollar amount or number of shares - the dollar amount or number of shares
you want to exchange you want to sell
- the name and class of the fund you - your name(s), signature(s) and
want to exchange into address, as they appear on your
account
- your name(s), signature(s) and
address, as they appear on your - a daytime telephone number
account
- a daytime telephone number
WITH AN AUTOMATIC EXCHANGE PLAN WITH AN AUTOMATIC WITHDRAWAL PLAN
- To set up regular exchanges from a - Call (800) 621-1048 (minimum $50)
fund account, call (800) 621-1048
USING QuickSell
Not available - Call (800) 621-1048 to make sure
QuickSell is set up on your account; if
it is, you can request a transfer to your
bank account of any amount between
$50 and $250,000
ON THE INTERNET
- Register at www.dws-scudder.com or - Register at www.dws-scudder.com or
log in if already registered log in if already registered
- Follow the instructions for making on- - Follow the instructions for making on-
line exchanges line redemptions
- --------------------------------------------------------------------------------
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
How to Exchange or Sell Class A, B and C Shares | 75
How to BUY and SELL Class R Shares
If your plan sponsor has selected Class R shares as an investment
option, you may buy Class R shares through your securities dealer or
through any financial institution that is authorized to act as a
shareholder servicing agent ("shareholder servicing agent"). Contact
them for details on how to enter and pay for your order. Shareholder
servicing agents include brokers, financial representatives or any
other bank, dealer or other institution that has a sub-shareholder
servicing agreement with the funds. Shareholder servicing agents may
charge additional fees to investors for those services not otherwise
included in their sub-distribution or servicing agreement, such as
cash management or special trust or retirement investment reporting.
In addition, the Advisor or administrator may provide compensation
to shareholder servicing agents for distribution, administrative and
promotional services.
There are no minimum investments with respect to Class R shares.
Instructions for buying and selling shares must generally be
submitted by your employer-sponsored plan, not by plan participants
for whose benefit the shares are held. Please contact your
shareholder servicing agent for more information on how to open a
fund account.
Financial intermediary support payments
The Advisor, DWS Scudder Distributors, Inc. (the "Distributor")
and/or their affiliates may pay additional compensation, out of
their own assets and not as an additional charge to each fund, to
selected affiliated and unaffiliated brokers, dealers, participating
insurance companies or other financial intermediaries ("financial
advisors") in connection with the sale and/or distribution of fund
shares or the retention and/or servicing of fund investors and fund
shares ("revenue sharing"). Such revenue sharing payments are in
addition to any distribution or service fees payable under any Rule
12b-1 or service plan of each fund, any record keeping/sub-transfer
agency/networking fees payable by each fund (generally through the
Distributor or an affiliate) and/or the Distributor to certain
financial advisors for performing such services and any sales
charge, commissions, non-cash compensation arrangements expressly
permitted under applicable rules of the Financial Industry
Regulatory Authority or other concessions described in the fee table
or elsewhere in
76 | How to Buy and Sell Class R Shares
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.
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
How to Buy and Sell Class R Shares | 77
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 broker-dealers to
execute portfolio transactions for each fund. In addition, the
Advisor, the Distributor and/or their affiliates will not use fund
brokerage to pay for their obligation to provide additional
compensation to financial advisors as described above.
POLICIES YOU SHOULD KNOW ABOUT
Along with the information on the previous pages, the policies below
may affect you as a shareholder. Some of this information, such as
the section on distributions and taxes, applies to all investors,
including those investing through a financial advisor.
78 | Policies You Should Know About
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.
DWS DREMAN SMALL CAP VALUE FUND. Effective December 29, 2006, DWS
Dreman Small Cap Value Fund was closed to new investors except as
described below. Unless you fit into one of the investor eligibility
categories described below, you may not invest in the fund.
You may purchase fund shares through your existing fund account and
reinvest dividends and capital gains if, as of 4:00 p.m. Eastern
time December 29, 2006, you were:
- a current fund shareholder; or
- a participant in any group retirement, employee stock bonus,
pension or profit sharing plan that offers the fund as an
investment option.
New accounts may be opened for:
- transfers of shares from existing accounts in this fund
(including IRA rollovers);
- Officers, Trustees and Directors of the DWS Funds, and full-time
employees and their family members of DIMA and its affiliates;
Policies You Should Know About | 79
- any group retirement, employee stock bonus, pension or profit
sharing plan using the Flex subaccount recordkeeping system made
available through ADP Inc. under an alliance with DWS Scudder
Distributors, Inc. ("DWS-SDI") ("Flex Plans");
- any group retirement, employee stock bonus, pension or profit
sharing plan, other than a Flex Plan, that includes the fund as
an investment option as of December 29, 2006;
- purchases through any comprehensive or "wrap" fee program or
other fee based program; or
- accounts managed by DIMA, any advisory products offered by DIMA
or DWS-SDI and the portfolios of DWS Allocation Series or other
fund of funds managed by DIMA or its affiliates.
Except as otherwise noted, these restrictions apply to investments
made directly with DWS-SDI, the fund's principal underwriter or
through an intermediary relationship with a financial services firm
established with respect to the DWS Funds as of December 29, 2006.
Institutions that maintain omnibus account arrangements are not
allowed to open new sub-accounts for new investors, unless the
investor is one of the types listed above. Once an account is
closed, new investments will not be accepted unless you satisfy one
of the investor eligibility categories listed above.
Exchanges will not be permitted unless the exchange is being made
into an existing fund account.
DWS-SDI may, at its discretion, require appropriate documentation
that shows an investor is eligible to purchase fund shares.
The fund may resume sales of shares to additional investors at a
future date, but has no present intention to do so.
IRA ROLLOVERS. You may complete a direct rollover from an
employer-sponsored plan offering Class R shares to an IRA account by
reinvesting up to the full amount of your distribution in Class A
shares of any DWS fund at net asset value. Subsequent purchases of
Class A shares will be made at the public offering price as
described in the prospectus for Class A shares. Please note that if
you terminate your participation in an employer-sponsored plan and
transfer all of your Class R shares, you will lose the privilege of
purchasing Class R shares in the future. Rollovers to a DWS Class R
share IRA are not permitted.
80 | Policies You Should Know About
Policies about transactions
EACH FUND IS OPEN FOR BUSINESS each day the New York Stock Exchange
is open. Each fund calculates its share price for each class every
business day, as of the close of regular trading on the New York
Stock Exchange (typically 4:00 p.m. Eastern time, but sometimes
earlier, as in the case of scheduled half-day trading or unscheduled
suspensions of trading). You can place an order to buy or sell
shares at any time.
To help the government fight the funding of terrorism and money
laundering activities, federal law requires all financial
institutions to obtain, verify and record information that
identifies each person who opens an account. What this means to you:
When you open an account, we will ask for your name, address, date
of birth and other information that will allow us to identify you.
Some or all of this information will be used to verify the identity
of all persons opening an account.
We might request additional information about you (which may include
certain documents, such as articles of incorporation for companies)
to help us verify your identity and, in some cases, the information
and/or documents may be required to conduct the verification. The
information and documents will be used solely to verify your
identity.
We will attempt to collect any missing required and requested
information by contacting you or your financial advisor. If we are
unable to obtain this information within the time frames established
by each fund, then we may reject your application and order.
Each fund will not invest your purchase until all required and
requested identification information has been provided and your
application has been submitted in "good order." After we receive all
the information, your application is deemed to be in good order and
we accept your purchase, you will receive the net asset value per
share next calculated, 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.
Policies You Should Know About | 81
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, 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,
group retirement plans and certain other accounts having lower
minimum share balance requirements or Class R shares).
SUBSEQUENT INVESTMENTS. The minimum subsequent investment is $50.
However, there is no minimum investment requirement for subsequent
investments in Class A shares on behalf of participants in certain
fee-based and wrap programs offered through certain financial
intermediaries approved by the Advisor.
MARKET TIMING POLICIES AND PROCEDURES. Short-term and excessive
trading of fund shares may present risks to long-term shareholders,
including potential dilution in the value of fund shares,
interference with the efficient management of a fund's portfolio
(including losses on the sale of investments), taxable gains to
remaining shareholders and increased brokerage and administrative
costs. These risks may be more pronounced if a fund invests in
certain securities, such as those that trade in foreign markets, are
illiquid or do not otherwise have "readily
82 | Policies You Should Know About
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 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).
Policies You Should Know About | 83
Each fund may make exceptions to the roundtrip transaction policy
for certain types of transactions if, in the opinion of the Advisor,
the transactions do not represent short-term or excessive trading or
are not abusive or harmful to a fund, such as, but not limited to,
systematic transactions, required minimum retirement distributions,
transactions initiated by a fund or administrator and transactions
by certain qualified fund-of-fund(s).
In certain circumstances where shareholders hold shares of a fund
through a financial intermediary, the fund may rely upon the
financial intermediary's policy to deter short-term or excessive
trading if the Advisor believes that the financial intermediary's
policy is reasonably designed to detect and deter transactions that
are not in the best interests of a fund. A financial intermediary's
policy relating to short-term or excessive trading may be more or
less restrictive than the DWS Funds' policy, may permit certain
transactions not permitted by the DWS Funds' policies, or prohibit
transactions not subject to the DWS Funds' policies.
The Advisor may also accept undertakings from a financial
intermediary to enforce short-term or excessive trading policies on
behalf of a fund that provide a substantially similar level of
protection for each fund against such transactions. For example,
certain financial intermediaries may have contractual, legal or
operational restrictions that prevent them from blocking an account.
In such instances, the financial intermediary may use alternate
techniques that the Advisor considers to be a reasonable substitute
for such a block.
In addition, if a fund invests some portion of its assets in foreign
securities, it has adopted certain fair valuation practices intended
to protect the fund from "time zone arbitrage" with respect to its
foreign securities holdings and other trading practices that seek to
exploit variations in portfolio valuation that arise from the nature
of the securities held by a fund. (See "How each fund calculates
share price.")
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
84 | Policies You Should Know About
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, 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
Policies You Should Know About | 85
who transact business on an omnibus basis may implement the
redemption fees according to their own operational guidelines (which
may be different than the funds' policies) and remit the fees to the
funds.
The redemption fee will not be charged in connection with the
following exchange or redemption transactions: (i) transactions on
behalf of participants in certain research wrap programs; (ii)
transactions on behalf of a shareholder to return any excess IRA
contributions to the shareholder; (iii) transactions on behalf of a
shareholder to effect a required minimum distribution on an IRA;
(iv) transactions on behalf of any mutual fund advised by the
Advisor and its affiliates (e.g., "funds of funds") or, in the case
of a master/feeder relationship, redemptions by the feeder fund from
the master portfolio; (v) transactions on behalf of certain
unaffiliated mutual funds operating as funds of funds; (vi)
transactions following death or disability of any registered
shareholder, beneficial owner or grantor of a living trust with
respect to shares purchased before death or disability; (vii)
transactions involving hardship of any registered shareholder;
(viii) systematic transactions with pre-defined trade dates for
purchases, exchanges or redemptions, such as automatic account
rebalancing, or loan origination and repayments; (ix) transactions
involving shares purchased through the reinvestment of dividends or
other distributions; (x) transactions involving shares transferred
from another account in the same fund or converted from another
class of the same fund (the redemption fee period will carry over to
the acquired shares); (xi) transactions initiated by a fund or
administrator (e.g., redemptions for not meeting account minimums,
to pay account fees funded by share redemptions, or in the event of
the liquidation or merger of the fund); or (xii) transactions in
cases when there are legal or contractual limitations or
restrictions on the imposition of the redemption fee (as determined
by a fund or its agents in their sole discretion). It is the policy
of the DWS funds to permit approved fund platform providers to
execute transactions within the funds without the imposition of a
redemption fee if such providers have implemented alternative
measures that are determined by the Advisor to provide controls on
short-term and excessive trading that are comparable to the DWS
funds' policies.
86 | Policies You Should Know About
THE AUTOMATED INFORMATION LINE IS AVAILABLE 24 HOURS A DAY BY
CALLING (800) 621-1048. You can use our automated phone services to
get information on DWS funds generally and on accounts held directly
at DWS Scudder. You can also use this service to make exchanges and
to purchase and sell shares.
QUICKBUY AND QUICKSELL let you set up a link between a DWS fund
account and a bank account. Once this link is in place, you can move
money between the two with a phone call. You'll need to make sure
your bank has Automated Clearing House (ACH) services. Transactions
take two to three days to be completed and there is a $50 minimum
and a $250,000 maximum. To set up QuickBuy or QuickSell on a new
account, see the account application; to add it to an existing
account, call (800) 621-1048.
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.
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 | 87
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.
88 | Policies You Should Know About
- the death or disability of an account owner (including a joint
owner). This waiver applies only under certain conditions. Please
contact your financial advisor or Shareholder Services to determine
if the conditions exist
- withdrawals made through an automatic withdrawal plan up to a
maximum of 12% per year of the net asset value of the account
- withdrawals related to certain retirement or benefit plans
- redemptions for certain loan advances, hardship provisions or
returns of excess contributions from retirement plans
- for Class A shares purchased through the Large Order NAV Purchase
Privilege, redemption of shares whose dealer of record at the
time of the investment notifies the Distributor that the dealer
waives the applicable commission
- 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.
Policies You Should Know About | 89
MONEY FROM SHARES YOU SELL is normally sent out within one business
day of when your order is processed (not when it is received),
although it could be delayed for up to seven days. There are other
circumstances when it could be longer, including, but not limited
to, when you are selling shares you bought recently by check or ACH
(the funds will be placed under a 10 calendar day hold to ensure
good funds) or when unusual circumstances prompt the SEC to allow
further delays. Certain expedited redemption processes may also be
delayed when you are selling recently purchased shares or in the
event of closing of the Federal Reserve Bank's wire payment system.
In addition, each fund reserves the right to suspend or postpone
redemptions as permitted pursuant to Section 22(e) of the Investment
Company Act of 1940. Generally, those circumstances are when 1) the
New York Stock Exchange is closed other than customary weekend or
holiday closings; 2) trading on the New York Stock Exchange is
restricted; 3) an emergency exists which makes the disposal of
securities owned by a fund or the fair determination of the value of
a fund's net assets not reasonably practicable; or 4) the SEC, by
order, permits the suspension of the right of redemption. Redemption
payments by wire may also be delayed in the event of a non-routine
closure of the Federal Reserve wire payment system. For additional
rights reserved by each fund, please see "Other rights we reserve."
You may obtain additional information about other ways to sell your
shares by contacting your financial advisor.
How each fund calculates share price
To calculate net asset value, or NAV, each share class uses the
following equation:
TOTAL ASSETS - TOTAL LIABILITIES
----------------------------------------- = NAV
TOTAL NUMBER OF SHARES OUTSTANDING
The price at which you buy shares is based on the NAV per share
calculated after the order is received by the transfer agent,
although for Class A shares it will be adjusted to allow for any
applicable sales charge (see "Choosing a Share Class"). The price at
which you sell shares is also based on the NAV per share calculated
after the order is received by the transfer agent, although a CDSC
may be taken out of the proceeds (see "Choosing a Share Class").
90 | Policies You Should Know About
EACH FUND CHARGES A REDEMPTION FEE EQUAL TO 2.00% of the value of
shares redeemed or exchanged within 15 days of purchase. Please see
"Policies about transactions - Redemption fees" for further
information.
WE TYPICALLY VALUE SECURITIES USING INFORMATION FURNISHED BY AN
INDEPENDENT PRICING SERVICE OR MARKET QUOTATIONS, WHERE APPROPRIATE.
However, we may use methods approved by a fund's Board, such as a
fair valuation model, which are intended to reflect fair value when
pricing service information or market quotations are not readily
available or when a security's value or a meaningful portion of the
value of a fund's portfolio is believed to have been materially
affected by a significant event, such as a natural disaster, an
economic event like a bankruptcy filing, or a substantial
fluctuation in domestic or foreign markets that has occurred between
the close of the exchange or market on which the security is
principally traded (for example, a foreign exchange or market) and
the close of the New York Stock Exchange. In such a case, a fund's
value for a security is likely to be different from the last quoted
market price or pricing service information. In addition, due to the
subjective and variable nature of fair value pricing, it is possible
that the value determined for a particular asset may be materially
different from the value realized upon such asset's sale. It is
expected that the greater the percentage of fund assets that is
invested in non-US securities, the more extensive will be 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
Policies You Should Know About | 91
- withhold a portion of your distributions and redemption proceeds
for federal income tax purposes if we have been notified by the IRS
that you are subject to backup withholding or if you fail to provide
us with a correct taxpayer ID number and certain certifications
including certification that you are not subject to backup
withholding
- reject a new account application if you don't provide any
required or requested identifying information, or for any other
reason
- refuse, cancel, limit or rescind any purchase or exchange order,
without prior notice; freeze any account (meaning you will not be
able to purchase fund shares in your account); suspend account
services; and/or involuntarily redeem your account if we think
that the account is being used for fraudulent or illegal
purposes; one or more of these actions will be taken when, at our
sole discretion, they are deemed to be in a fund's best interests
or when a fund is requested or compelled to do so by governmental
authority or by applicable law
- close and liquidate your account if we are unable to verify your
identity, or for other reasons; if we decide to close your
account, your fund shares will be redeemed at the net asset value
per share next calculated after we determine to close your
account (less any applicable sales charge or redemption fee); you
may recognize a gain or loss on the redemption of your fund
shares and you may incur a tax liability
- pay you for shares you sell by "redeeming in kind," that is, by
giving you securities (which typically will involve brokerage
costs for you to liquidate) rather than cash, but which will be
taxable to the same extent as a redemption for cash; a fund
generally won't make a redemption in kind unless your requests
over a 90-day period total more than $250,000 or 1% of the value
of a fund's net assets, whichever is less
- change, add or withdraw various services, fees and account
policies (for example, we may adjust a fund's investment minimums
at any time)
92 | Policies You Should Know About
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 Large Cap Value Fund, DWS Dreman Concentrated Value Fund and DWS
Dreman High Return Equity Fund each intends to pay dividends to
shareholders quarterly. These funds also intend to pay distributions
annually in December. DWS Dreman Mid Cap Value Fund and DWS Dreman
Small Cap Value Fund each intends to pay dividends and distributions
to shareholders annually in December.
Dividends or distributions declared to shareholders of record in the
last quarter of a given calendar year are treated for federal income
tax purposes as if they were received on December 31 of that year,
provided such dividends or distributions are paid by the end of the
following January.
For federal income tax purposes, income and capital gains
distributions are generally taxable to shareholders. However,
dividends and distributions received by retirement plans qualifying
for tax exemption under federal income tax laws generally will not
be taxable.
YOU CAN CHOOSE HOW TO RECEIVE YOUR DIVIDENDS AND DISTRIBUTIONS. You
can have them all automatically reinvested in fund shares (at NAV),
all deposited directly to your bank account or all sent to you by
check, have one type reinvested and the other sent to you by check
or have them invested in a different fund. Tell us your preference
on your application. If you don't indicate a preference, your
dividends and distributions will all be reinvested in shares of the
fund without a sales charge (if applicable). Distributions are
treated the same for federal income tax purposes whether you receive
them in cash or reinvest them in additional shares. For
employer-sponsored qualified plans, and retirement plans,
reinvestment (at NAV) is the only option.
THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS
Because each shareholder's tax situation is unique, ask your tax professional
about the tax consequences of your investments, including any state and local
tax consequences.
Understanding Distributions and Taxes | 93
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 depends on their type:
GENERALLY TAXED AT LONG-TERM GENERALLY TAXED AT ORDINARY
CAPITAL GAIN RATES: INCOME RATES:
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
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
generally will not be entitled to claim a credit or deduction with
respect to foreign taxes paid by the fund. In addition, any
investments in foreign securities or foreign currencies may increase
or accelerate a fund's recognition of ordinary income and may affect
the timing or amount of the fund's distributions. If you invest in a
fund through a taxable account, your after-tax return could be
negatively impacted.
To the extent that a fund invests in certain debt obligations or
certain other securities, investments in these obligations or
securities may cause a fund to recognize taxable income in excess of
the cash generated by such obligations. Thus, a fund could be
required at times to liquidate other investments in order to satisfy
its distribution requirements.
94 | Understanding Distributions and Taxes
For taxable years beginning before January 1, 2011, distributions to
individuals and other noncorporate shareholders of investment income
designated by a fund as derived from qualified dividend income are
eligible for taxation for federal income tax purposes at the more
favorable long-term capital gain rates. Qualified dividend income
generally includes dividends from domestic and some foreign
corporations. It does not include income from investments in debt
securities or, generally, from REITs. In addition, a fund must meet
certain holding period and other requirements with respect to the
dividend-paying stocks in its portfolio and the shareholder must
meet certain holding period and other requirements with respect to a
fund's shares for the lower tax rates to apply.
For taxable years beginning before January 1, 2011, the maximum
federal income tax rate imposed on long-term capital gains
recognized by individuals and other noncorporate shareholders has
been reduced to 15%. For taxable years beginning on or after January
1, 2011, the long-term capital gain rate is scheduled to return to
20%.
YOUR FUND WILL SEND YOU DETAILED FEDERAL INCOME TAX INFORMATION
EVERY JANUARY. These statements tell you the amount and the federal
income tax classification of any dividends or distributions you
received. They also have certain details on your purchases and sales
of shares.
IF YOU INVEST RIGHT BEFORE A FUND PAYS A DIVIDEND, you'll be getting
some of your investment back as a taxable dividend. You can avoid
this by investing after a fund declares a dividend. In
tax-advantaged retirement accounts you do not need to worry about
this.
CORPORATIONS are taxed at the same rates on ordinary income and
capital gains but may be eligible for a dividends-received deduction
for a portion of the income dividends they receive from a fund,
provided certain holding period and other requirements are met.
The above discussion summarizes certain federal income tax
consequences for shareholders who are US persons. If you are a
non-US person, please consult your own tax advisor with respect to
the US tax consequences to you of an investment in a fund. For more
information, see "Taxes" in the Statement of Additional Information.
Understanding Distributions and Taxes | 95
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.
96 | Appendix
DWS Large Cap Value Fund - Class A
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
1 5.00% 1.00% -1.98% $ 9,802.00 $ 671.14
2 10.25% 1.00% 1.94% $ 10,194.08 $ 99.98
3 15.76% 1.00% 6.02% $ 10,601.84 $ 103.98
4 21.55% 1.00% 10.26% $ 11,025.92 $ 108.14
5 27.63% 1.00% 14.67% $ 11,466.95 $ 112.46
6 34.01% 1.00% 19.26% $ 11,925.63 $ 116.96
7 40.71% 1.00% 24.03% $ 12,402.66 $ 121.64
8 47.75% 1.00% 28.99% $ 12,898.76 $ 126.51
9 55.13% 1.00% 34.15% $ 13,414.71 $ 131.57
10 62.89% 1.00% 39.51% $ 13,951.30 $ 136.83
TOTAL $ 1,729.21
DWS Large Cap Value Fund - Class B
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
1 5.00% 1.83% 3.17% $ 10,317.00 $ 185.90
2 10.25% 1.83% 6.44% $ 10,644.05 $ 191.79
3 15.76% 1.83% 9.81% $ 10,981.47 $ 197.87
4 21.55% 1.83% 13.30% $ 11,329.58 $ 204.15
5 27.63% 1.83% 16.89% $ 11,688.73 $ 210.62
6 34.01% 1.83% 20.59% $ 12,059.26 $ 217.29
7 40.71% 1.00% 25.42% $ 12,541.63 $ 123.00
8 47.75% 1.00% 30.43% $ 13,043.29 $ 127.92
9 55.13% 1.00% 35.65% $ 13,565.03 $ 133.04
10 62.89% 1.00% 41.08% $ 14,107.63 $ 138.36
TOTAL $ 1,729.24
Appendix | 97
DWS Large Cap Value Fund - Class C
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
1 5.00% 1.74% 3.26% $ 10,326.00 $ 176.84
2 10.25% 1.74% 6.63% $ 10,662.63 $ 182.60
3 15.76% 1.74% 10.10% $ 11,010.23 $ 188.55
4 21.55% 1.74% 13.69% $ 11,369.16 $ 194.70
5 27.63% 1.74% 17.40% $ 11,739.80 $ 201.05
6 34.01% 1.74% 21.23% $ 12,122.51 $ 207.60
7 40.71% 1.74% 25.18% $ 12,517.71 $ 214.37
8 47.75% 1.74% 29.26% $ 12,925.79 $ 221.36
9 55.13% 1.74% 33.47% $ 13,347.17 $ 228.57
10 62.89% 1.74% 37.82% $ 13,782.28 $ 236.03
TOTAL $ 2,051.67
DWS Dreman Concentrated Value Fund - Class A
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
1 5.00% 1.31% -2.27% $ 9,772.78 $ 700.75
2 10.25% 1.60% 1.05% $ 10,105.06 $ 159.02
3 15.76% 1.60% 4.49% $ 10,448.63 $ 164.43
4 21.55% 1.60% 8.04% $ 10,803.88 $ 170.02
5 27.63% 1.60% 11.71% $ 11,171.21 $ 175.80
6 34.01% 1.60% 15.51% $ 11,551.04 $ 181.78
7 40.71% 1.60% 19.44% $ 11,943.77 $ 187.96
8 47.75% 1.60% 23.50% $ 12,349.86 $ 194.35
9 55.13% 1.60% 27.70% $ 12,769.75 $ 200.96
10 62.89% 1.60% 32.04% $ 13,203.93 $ 207.79
TOTAL $ 2,342.86
98 | Appendix
DWS Dreman Concentrated Value Fund - Class B
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
1 5.00% 2.06% 2.94% $ 10,294.00 $ 209.03
2 10.25% 2.39% 5.63% $ 10,562.67 $ 249.24
3 15.76% 2.39% 8.38% $ 10,838.36 $ 255.74
4 21.55% 2.39% 11.21% $ 11,121.24 $ 262.42
5 27.63% 2.39% 14.12% $ 11,411.50 $ 269.27
6 34.01% 2.39% 17.09% $ 11,709.34 $ 276.29
7 40.71% 1.60% 21.07% $ 12,107.46 $ 190.53
8 47.75% 1.60% 25.19% $ 12,519.12 $ 197.01
9 55.13% 1.60% 29.45% $ 12,944.77 $ 203.71
10 62.89% 1.60% 33.85% $ 13,384.89 $ 210.64
TOTAL 2,323.88
DWS Dreman Concentrated Value Fund - Class C
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
1 5.00% 2.06% 2.94% $ 10,294.00 $ 209.03
2 10.25% 2.32% 5.70% $ 10,569.88 $ 242.02
3 15.76% 2.32% 8.53% $ 10,853.15 $ 248.51
4 21.55% 2.32% 11.44% $ 11,144.02 $ 255.17
5 27.63% 2.32% 14.43% $ 11,442.68 $ 262.01
6 34.01% 2.32% 17.49% $ 11,749.34 $ 269.03
7 40.71% 2.32% 20.64% $ 12,064.22 $ 276.24
8 47.75% 2.32% 23.88% $ 12,387.54 $ 283.64
9 55.13% 2.32% 27.20% $ 12,719.53 $ 291.24
10 62.89% 2.32% 30.60% $ 13,060.41 $ 299.05
TOTAL $ 2,635.94
Appendix | 99
DWS Dreman High Return Equity Fund - Class A
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
1 5.00% 1.08% -2.06% $ 9,794.46 $ 678.79
2 10.25% 1.08% 1.78% $ 10,178.40 $ 107.85
3 15.76% 1.08% 5.77% $ 10,577.40 $ 112.08
4 21.55% 1.08% 9.92% $ 10,992.03 $ 116.47
5 27.63% 1.08% 14.23% $ 11,422.92 $ 121.04
6 34.01% 1.08% 18.71% $ 11,870.70 $ 125.79
7 40.71% 1.08% 23.36% $ 12,336.03 $ 130.72
8 47.75% 1.08% 28.20% $ 12,819.60 $ 135.84
9 55.13% 1.08% 33.22% $ 13,322.13 $ 141.17
10 62.89% 1.08% 38.44% $ 13,844.36 $ 146.70
TOTAL $ 1,816.45
DWS Dreman High Return Equity Fund - Class B
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
1 5.00% 1.89% 3.11% $ 10,311.00 $ 191.94
2 10.25% 1.89% 6.32% $ 10,631.67 $ 197.91
3 15.76% 1.89% 9.62% $ 10,962.32 $ 204.06
4 21.55% 1.89% 13.03% $ 11,303.25 $ 210.41
5 27.63% 1.89% 16.55% $ 11,654.78 $ 216.95
6 34.01% 1.89% 20.17% $ 12,017.24 $ 223.70
7 40.71% 1.08% 24.88% $ 12,488.32 $ 132.33
8 47.75% 1.08% 29.78% $ 12,977.86 $ 137.52
9 55.13% 1.08% 34.87% $ 13,486.59 $ 142.91
10 62.89% 1.08% 40.15% $ 14,015.26 $ 148.51
TOTAL $ 1,806.24
100 | Appendix
DWS Dreman High Return Equity Fund - Class C
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
1 5.00% 1.82% 3.18% $ 10,318.00 $ 184.89
2 10.25% 1.82% 6.46% $ 10,646.11 $ 190.77
3 15.76% 1.82% 9.85% $ 10,984.66 $ 196.84
4 21.55% 1.82% 13.34% $ 11,333.97 $ 203.10
5 27.63% 1.82% 16.94% $ 11,694.39 $ 209.56
6 34.01% 1.82% 20.66% $ 12,066.27 $ 216.22
7 40.71% 1.82% 24.50% $ 12,449.98 $ 223.10
8 47.75% 1.82% 28.46% $ 12,845.89 $ 230.19
9 55.13% 1.82% 32.54% $ 13,254.39 $ 237.51
10 62.89% 1.82% 36.76% $ 13,675.88 $ 245.07
TOTAL $ 2,137.25
DWS Dreman High Return Equity Fund - Class R
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
1 5.00% 1.31% 3.69% $ 10,369.00 $ 133.42
2 10.25% 1.31% 7.52% $ 10,751.62 $ 138.34
3 15.76% 1.31% 11.48% $ 11,148.35 $ 143.44
4 21.55% 1.31% 15.60% $ 11,559.72 $ 148.74
5 27.63% 1.31% 19.86% $ 11,986.28 $ 154.23
6 34.01% 1.31% 24.29% $ 12,428.57 $ 159.92
7 40.71% 1.31% 28.87% $ 12,887.19 $ 165.82
8 47.75% 1.31% 33.63% $ 13,362.72 $ 171.94
9 55.13% 1.31% 38.56% $ 13,855.81 $ 178.28
10 62.89% 1.31% 43.67% $ 14,367.09 $ 184.86
TOTAL $ 1,578.99
Appendix | 101
DWS Dreman Mid Cap Value Fund - Class A
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
1 5.00% 1.35% -2.31% $ 9,769.01 $ 704.56
2 10.25% 1.61% 1.00% $ 10,100.18 $ 159.95
3 15.76% 1.61% 4.43% $ 10,442.58 $ 165.37
4 21.55% 1.61% 7.97% $ 10,796.58 $ 170.98
5 27.63% 1.61% 11.63% $ 11,162.59 $ 176.77
6 34.01% 1.61% 15.41% $ 11,541.00 $ 182.76
7 40.71% 1.61% 19.32% $ 11,932.24 $ 188.96
8 47.75% 1.61% 23.37% $ 12,336.74 $ 195.37
9 55.13% 1.61% 27.55% $ 12,754.96 $ 201.99
10 62.89% 1.61% 31.87% $ 13,187.35 $ 208.84
TOTAL $ 2,355.55
DWS Dreman Mid Cap Value Fund - Class B
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
1 5.00% 2.05% 2.95% $ 10,295.00 $ 208.02
2 10.25% 2.46% 5.56% $ 10,556.49 $ 256.47
3 15.76% 2.46% 8.25% $ 10,824.63 $ 262.99
4 21.55% 2.46% 11.00% $ 11,099.57 $ 269.67
5 27.63% 2.46% 13.82% $ 11,381.50 $ 276.52
6 34.01% 2.46% 16.71% $ 11,670.59 $ 283.54
7 40.71% 1.61% 20.66% $ 12,066.23 $ 191.08
8 47.75% 1.61% 24.75% $ 12,475.27 $ 197.56
9 55.13% 1.61% 28.98% $ 12,898.18 $ 204.26
10 62.89% 1.61% 33.35% $ 13,335.43 $ 211.18
TOTAL $ 2,361.29
102 | Appendix
DWS Dreman Mid Cap Value Fund - Class C
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
1 5.00% 2.05% 2.95% $ 10,295.00 $ 208.02
2 10.25% 2.37% 5.66% $ 10,565.76 $ 247.20
3 15.76% 2.37% 8.44% $ 10,843.64 $ 253.70
4 21.55% 2.37% 11.29% $ 11,128.83 $ 260.37
5 27.63% 2.37% 14.22% $ 11,421.51 $ 267.22
6 34.01% 2.37% 17.22% $ 11,721.90 $ 274.25
7 40.71% 2.37% 20.30% $ 12,030.19 $ 281.46
8 47.75% 2.37% 23.47% $ 12,346.58 $ 288.86
9 55.13% 2.37% 26.71% $ 12,671.29 $ 296.46
10 62.89% 2.37% 30.05% $ 13,004.55 $ 304.26
TOTAL $ 2,681.80
DWS Dreman Small Cap Value Fund - Class A
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
1 5.00% 1.21% -2.18% $ 9,782.21 $ 691.20
2 10.25% 1.21% 1.53% $ 10,152.95 $ 120.61
3 15.76% 1.21% 5.38% $ 10,537.75 $ 125.18
4 21.55% 1.21% 9.37% $ 10,937.13 $ 129.92
5 27.63% 1.21% 13.52% $ 11,351.65 $ 134.85
6 34.01% 1.21% 17.82% $ 11,781.88 $ 139.96
7 40.71% 1.21% 22.28% $ 12,228.41 $ 145.26
8 47.75% 1.21% 26.92% $ 12,691.87 $ 150.77
9 55.13% 1.21% 31.73% $ 13,172.89 $ 156.48
10 62.89% 1.21% 36.72% $ 13,672.14 $ 162.41
TOTAL $ 1,956.64
Appendix | 103
DWS Dreman Small Cap Value Fund - Class B
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
1 5.00% 2.03% 2.97% $ 10,297.00 $ 206.01
2 10.25% 2.03% 6.03% $ 10,602.82 $ 212.13
3 15.76% 2.03% 9.18% $ 10,917.72 $ 218.43
4 21.55% 2.03% 12.42% $ 11,241.98 $ 224.92
5 27.63% 2.03% 15.76% $ 11,575.87 $ 231.60
6 34.01% 2.03% 19.20% $ 11,919.67 $ 238.48
7 40.71% 1.21% 23.71% $ 12,371.43 $ 146.96
8 47.75% 1.21% 28.40% $ 12,840.30 $ 152.53
9 55.13% 1.21% 33.27% $ 13,326.95 $ 158.31
10 62.89% 1.21% 38.32% $ 13,832.04 $ 164.31
TOTAL $ 1,953.68
DWS Dreman Small Cap Value Fund - Class C
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
1 5.00% 1.96% 3.04% $ 10,304.00 $ 198.98
2 10.25% 1.96% 6.17% $ 10,617.24 $ 205.03
3 15.76% 1.96% 9.40% $ 10,940.01 $ 211.26
4 21.55% 1.96% 12.73% $ 11,272.58 $ 217.68
5 27.63% 1.96% 16.15% $ 11,615.27 $ 224.30
6 34.01% 1.96% 19.68% $ 11,968.37 $ 231.12
7 40.71% 1.96% 23.32% $ 12,332.21 $ 238.15
8 47.75% 1.96% 27.07% $ 12,707.11 $ 245.39
9 55.13% 1.96% 30.93% $ 13,093.41 $ 252.85
10 62.89% 1.96% 34.91% $ 13,491.45 $ 260.53
TOTAL $ 2,285.29
104 | Appendix
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.
DWS SCUDDER SEC DISTRIBUTOR
- --------------------- -------------------- -------------------------------
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
SEC FILE NUMBER:
DWS Value Series, Inc. DWS Large Cap Value Fund 811-5385
DWS Value Series, Inc. DWS Dreman Concentrated Value Fund 811-5385
DWS Value Series, Inc. DWS Dreman High Return Equity Fund 811-5385
DWS Value Series, Inc. DWS Dreman Mid Cap Value Fund 811-5385
DWS Value Series, Inc. DWS Dreman Small Cap Value Fund 811-5385
(03/01/08) DVF1-1
[RECYCLE GRAPHIC APPEARS HERE]
[Logo]DWS
SCUDDER
Deutsche Bank Group
MARCH 1, 2008
PROSPECTUS
------------------
CLASS S
DWS LARGE CAP VALUE FUND
DWS DREMAN HIGH RETURN EQUITY FUND
DWS DREMAN MID CAP VALUE FUND
DWS DREMAN SMALL CAP VALUE 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
CONTENTS
HOW EACH FUND WORKS
4 DWS Large Cap Value Fund
11 DWS Dreman High Return
Equity Fund
17 DWS Dreman Mid Cap Value
Fund
24 DWS Dreman Small Cap Value
Fund
30 Other Policies and Secondary
Risks
32 Who Manages and Oversees
the Funds
37 Financial Highlights
HOW TO INVEST IN THE FUNDS
42 How to Buy Shares
43 How to Exchange or Sell
Shares
46 Policies You Should Know
About
59 Understanding Distributions
and Taxes
62 Appendix
HOW EACH FUND WORKS
On the next few pages, you'll find information about each fund's investment
objective, the main strategies each uses to pursue that objective and the main
risks that could affect performance.
Whether you are considering investing in a fund or are already a shareholder,
you'll want to LOOK THIS INFORMATION OVER CAREFULLY. You may want to keep it on
hand for reference as well.
CLASS S shares are generally only available to new investors through fee-based
programs of investment dealers that have special agreements with each fund's
distributor, through certain group retirement plans and through certain
registered investment advisors. These dealers and advisors typically charge
ongoing fees for services they provide.
Remember that mutual funds are investments, not bank deposits. They're not
insured or guaranteed by the FDIC or any other government agency. Their share
prices will go up and down, and you could lose money by investing in them.
DWS Dreman Small Cap Value Fund is closed to new investors
(see "Policies You Should Know About" for additional information).
You can find DWS prospectuses on the Internet at WWW.DWS-SCUDDER.COM (the Web
site does not form a part of this prospectus).
Class S
ticker symbol KDCSX
fund number 2312
DWS LARGE CAP VALUE FUND
THE FUND'S MAIN INVESTMENT STRATEGY
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 (Reg.
TM) Value Index (as of January 31, 2008, the Russell 1000 (Reg. TM)
Value Index had a median market capitalization of $4.9 billion) and
that the portfolio managers believe are undervalued. 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.
The portfolio managers begin by screening for stocks whose
price-to-earnings ratios are below the average for the S&P 500
Index. The portfolio managers then compare a company's stock price
to its book value, cash flow and yield, and analyze individual
companies to identify those that are financially sound and appear
to have strong potential for long-term growth.
4 | DWS Large Cap Value Fund
The portfolio managers assemble the fund's portfolio from among the
most attractive stocks, drawing on an analysis of economic outlooks
for various sectors and industries.
The portfolio managers will normally sell a stock when it believes
the stock's price is unlikely to go higher, its fundamental factors
have changed, other investments offer better opportunities or in
the course of adjusting its emphasis on a given industry.
OTHER INVESTMENTS. The fund is permitted, but not required, to use
various types of derivatives (contracts whose value is based on,
for example, indices, currencies or securities). Derivatives may be
used for hedging and for risk management or for non-hedging
purposes to seek to enhance potential gains. The fund may use
derivatives in circumstances where portfolio management believes
they offer an economical means of gaining exposure to a particular
asset class or to keep cash on hand to meet shareholder redemptions
or other needs while maintaining exposure to the market.
In particular, the fund may use futures, currency options and
forward currency transactions.
SECURITIES LENDING. The fund may lend its investment securities in
an amount up to 33 1/3% of its total assets to approved
institutional borrowers who need to borrow securities in order to
complete certain transactions.
DWS Large Cap Value Fund | 5
THE MAIN RISKS OF INVESTING IN THE FUND
There are several risk factors that could hurt the fund's
performance, cause you to lose money or cause the fund's
performance to trail that of other investments.
STOCK MARKET RISK. As with most stock funds, the most important
factor affecting this fund is how the stock market performs (to the
extent the fund invests in a particular 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 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.
SECURITY SELECTION RISK. A risk that pervades all investing is the
risk that the securities in the fund's portfolio may decline in
value.
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.
INDUSTRY RISK. While the fund does not concentrate in any industry
or sector, to the extent that the fund has exposure to a given
industry or sector, any factors affecting that industry or sector
could affect the value of portfolio securities. For example,
manufacturers of consumer goods could be hurt by a rise in
unemployment or technology companies could be hurt by such factors
as market saturation, price competition and rapid obsolescence.
SECURITIES LENDING RISK. Any loss in the market price of securities
loaned by the fund that occurs during the term of the loan would be
borne by the fund and would adversely affect the fund's
performance. Also, there may be delays in
THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS
This fund is designed for investors interested in diversifying a growth-oriented
portfolio or adding a core holding to a value-oriented portfolio.
6 | DWS Large Cap Value Fund
recovery of securities loaned or even a loss of rights in the
collateral should the borrower of the securities fail financially
while the loan is outstanding. However, loans will be made only to
borrowers selected by the fund's delegate after a review of
relevant facts and circumstances, including the creditworthiness of
the borrower.
Other factors that could affect performance include:
- portfolio management could be wrong in the analysis of
industries, companies, economic trends, the relative
attractiveness of different securities or other matters.
- foreign securities may be more volatile than their US
counterparts, for reasons such as currency fluctuations and
political and economic uncertainty.
- 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 Large Cap Value Fund | 7
THE FUND'S PERFORMANCE HISTORY
While a fund's past performance (before and after taxes) isn't necessarily a
sign of how it will do in the future, it can be valuable for an investor to
know.
The bar chart shows how the performance of the fund's Class S shares has varied
from year to year, which may give some idea of risk. The table on the following
page shows how fund performance compares to relevant index performance (which,
unlike fund performance, does not reflect fees or expenses). The performance of
both the fund and the index varies over time. All figures assume reinvestment
of dividends and distributions (in the case of after-tax returns, reinvested
net of assumed tax rates).
The table shows returns for Class S shares on a before-tax and after-tax basis.
After-tax returns are estimates calculated using the historical highest
individual federal marginal income tax rates and do not reflect the impact of
state and local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown in the table. After-tax returns shown
are not relevant for investors who hold their shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts.
DWS Large Cap Value Fund
ANNUAL TOTAL RETURN (%) AS OF 12/31 EACH YEAR - Class S
[GRAPHIC APPEARS HERE]
2.20 15.91 12.89
2005 2006 2007
FOR THE PERIODS INCLUDED IN THE BAR CHART:
Best Quarter: 6.05%, Q3 2006 Worst Quarter: -1.57%, Q1 2005
8 | DWS Large Cap Value Fund
AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2007
1 YEAR SINCE INCEPTION*
CLASS S
Return before Taxes 12.89 10.71
Return after Taxes on Distributions 8.92 8.38
Return after Taxes on Distributions
and Sale of Fund Shares 12.23** 8.94**
RUSSELL 1000 (Reg. TM) VALUE INDEX (reflects
no deductions for fees, expenses or
taxes) -0.17 9.32
S&P 500 INDEX (reflects no
deductions for fees, expenses or
taxes) 5.49 8.62
* Class S commenced operations on December 20, 2004. Index comparisons are
as of December 31, 2004.
** Return after Taxes on Distributions and Sale of Fund Shares is higher
than other return figures for the same period due to a capital loss
occurring upon redemption resulting in a assumed tax deduction for the
shareholder.
Total return would have been lower had certain expenses not been reduced.
RUSSELL 1000 (Reg. TM) VALUE INDEX is an unmanaged index that consists of
those stocks in the Russell 1000 Index with less-than-average growth
orientation. 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.
STANDARD & POOR'S 500 INDEX (S&P 500) is an unmanaged, capitalization-weighted
index of 500 stocks. The index is designed to measure performance of the broad
domestic economy through changes in the aggregate market value of 500 stocks
representing all major industries.
- --------------------------------------------------------------------------------
Current performance may be higher or lower than the performance data quoted
above. For more recent performance information, call your financial advisor or
(800) 728-3337 or visit our Web site at www.dws-scudder.com.
- --------------------------------------------------------------------------------
RETURN AFTER TAXES ON DISTRIBUTIONS assumes that an investor holds fund shares
at the end of the period. The return reflects taxes only on the fund's
distributions and not on a shareholder's gain or loss from selling fund shares.
RETURN AFTER TAXES ON DISTRIBUTIONS AND SALE OF FUND SHARES assumes that an
investor sold his or her fund shares at the end of the period. The return
reflects taxes on both the fund's distributions and a shareholder's gain or
loss from selling fund shares.
DWS Large Cap Value Fund | 9
HOW MUCH INVESTORS PAY
The table below describes the fees and expenses that you may pay if you buy and
hold fund shares. This information doesn't include any fees that may be charged
by your financial advisor.
FEE TABLE CLASS S
SHAREHOLDER FEES, paid directly from your investment
____________________________________________________________________________
Redemption/Exchange Fee on shares
owned less than 15 days (as % of
redemption proceeds) 1 2.00%
ANNUAL OPERATING EXPENSES, deducted from fund assets
____________________________________________________________________________
Management Fee 0.42%
Distribution and/or Service (12b-1) Fee None
Other Expenses 2 0.25
TOTAL ANNUAL OPERATING EXPENSES 3 0.67
1 This fee is charged on applicable redemptions or exchanges. Please see
"Policies You Should Know About - Policies about transactions" for further
information.
2 "Other Expenses" also include an administrative services fee paid to the
Advisor in the amount of 0.10%.
3 Through March 31, 2008, the Advisor has contractually agreed to waive all
or a portion of its management fee or pay certain operating expenses of the
fund to the extent necessary to maintain the fund's total operating
expenses at 0.80% for Class S shares, excluding certain expenses such as
extraordinary expenses, taxes, brokerage and interest.
Based on the costs above, this example helps you compare the expenses of the
fund to those of other mutual funds. This example assumes the expenses above
remain the same. It also assumes that you invested $10,000, earned 5% annual
returns and reinvested all dividends and distributions. This is only an
example; actual expenses will be different.
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class S shares $68 $214 $373 $835
10 | DWS Large Cap Value Fund
Class S
ticker symbol KDHSX
fund number 2387
DWS DREMAN HIGH RETURN EQUITY FUND
THE FUND'S MAIN INVESTMENT STRATEGY
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, 2008, the S&P 500
Index had a median market capitalization of $11.8 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.
The portfolio managers begin by screening for stocks whose
price-to-earnings ratios are below the average for the S&P 500
Index. The portfolio managers then compare a company's stock price
to its book value, cash flow and yield and analyze individual
companies to identify those that are financially sound and appear
to have strong potential for long-term growth and income.
The portfolio managers assemble the fund's portfolio from among the
most attractive stocks, drawing on an analysis of economic outlooks
for various sectors and industries.
The portfolio managers will normally sell a stock when it reaches a
target price, its fundamental factors have changed or when other
investments offer better opportunities.
DWS Dreman High Return Equity Fund | 11
OTHER INVESTMENTS. The fund is permitted, but not required, to use
various types of derivatives (contracts whose value is based on,
for example, indices, currencies or securities). Derivatives may be
used for hedging and for risk management or for non-hedging
purposes to seek to enhance potential gains. The fund may use
derivatives in circumstances where portfolio management believes
they offer an economical means of gaining exposure to a particular
asset class or to keep cash on hand to meet shareholder redemptions
or other needs while maintaining exposure to the market.
In particular, the fund may use futures, currency options and
forward currency transactions.
SECURITIES LENDING. The fund may lend its investment securities in
an amount up to 33 1/3% of its total assets to approved
institutional borrowers who need to borrow securities in order to
complete certain transactions.
THE MAIN RISKS OF INVESTING IN THE FUND
There are several risk factors that could hurt the fund's
performance, cause you to lose money or cause the fund's
performance to trail that of other investments.
STOCK MARKET RISK. 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, which could affect
the fund's ability to sell them at an attractive price.
SECURITY SELECTION RISK. A risk that pervades all investing is the
risk that the securities in the fund's portfolio may decline in
value.
THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS
This fund is designed for long-term investors who are interested in a large-cap
value fund that may focus on certain sectors of the economy.
12 | DWS Dreman High Return Equity Fund
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.
INDUSTRY RISK. While the fund does not concentrate in any industry
or sector, to the extent that the fund has exposure to a given
industry or sector, any factors affecting that industry or sector
could affect the value of portfolio securities. For example,
manufacturers of consumer goods could be hurt by a rise in
unemployment or technology companies could be hurt by such factors
as market saturation, price competition and rapid obsolescence.
SECURITIES LENDING RISK. Any loss in the market price of securities
loaned by the fund that occurs during the term of the loan would be
borne by the fund and would adversely affect the fund's
performance. Also, there may be delays in recovery of securities
loaned or even a loss of rights in the collateral should the
borrower of the securities fail financially while the loan is
outstanding. However, loans will be made only to borrowers selected
by the fund's delegate after a review of relevant facts and
circumstances, including the creditworthiness of the borrower.
Other factors that could affect performance include:
- portfolio management could be wrong in the analysis of
industries, companies, economic trends, the relative
attractiveness of different securities or other matters.
- foreign securities may be more volatile than their US
counterparts, for reasons such as currency fluctuations and
political and economic uncertainty.
- 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 Dreman High Return Equity Fund | 13
THE FUND'S PERFORMANCE HISTORY
While a fund's past performance (before and after taxes) isn't necessarily a
sign of how it will do in the future, it can be valuable for an investor to
know.
The bar chart shows how the performance of the fund's Class S shares has varied
from year to year, which may give some idea of risk. The table on the following
page shows how fund performance compares to relevant index performance (which,
unlike fund performance, does not reflect fees or expenses). The performance of
both the fund and the index varies over time. All figures assume reinvestment
of dividends and distributions (in the case of after-tax returns, reinvested
net of assumed tax rates).
The table shows returns for Class S shares on a before-tax and after-tax basis.
After-tax returns are estimates calculated using the historical highest
individual federal marginal income tax rates and do not reflect the impact of
state and local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown in the table. After-tax returns shown
are not relevant for investors who hold their shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts.
DWS Dreman High Return Equity Fund
ANNUAL TOTAL RETURN (%) AS OF 12/31 EACH YEAR - Class S
[GRAPHIC APPEARS HERE]
17.62 -1.03
2006 2007
FOR THE PERIODS INCLUDED IN THE BAR CHART:
BEST QUARTER: 6.75%, Q4 2006 WORST QUARTER: -5.85%, Q4 2007
14 | DWS Dreman High Return Equity Fund
AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2007
1 YEAR SINCE INCEPTION*
CLASS S
Return before Taxes -1.03 7.46
Return after Taxes on Distributions -2.88 6.44
Return after Taxes on Distributions
and Sale of Fund Shares 0.57** 6.18
S&P 500 (reflects no deductions for
fees, expenses or taxes) 5.49 9.30
* Inception date for Class S was February 28, 2005. Index comparison begins
on February 28, 2005.
** Return after Taxes on Distributions and Sale of Fund Shares is higher
than other return figures 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 had certain expenses not been reduced.
STANDARD & POOR'S 500 INDEX (S&P 500) is an unmanaged, capitalization-weighted
index of 500 stocks. The index is designed to measure performance of the broad
domestic economy through changes in the aggregate market value of 500 stocks
representing all major industries.
- --------------------------------------------------------------------------------
Current performance may be higher or lower than the performance data quoted
above. For more recent performance information, call your financial advisor or
(800) 728-3337 or visit our Web site at www.dws-scudder.com.
- --------------------------------------------------------------------------------
RETURN AFTER TAXES ON DISTRIBUTIONS assumes that an investor holds fund shares
at the end of the period. The return reflects taxes only on the fund's
distributions and not on a shareholder's gain or loss from selling fund shares.
RETURN AFTER TAXES ON DISTRIBUTIONS AND SALE OF FUND SHARES assumes that an
investor sold his or her fund shares at the end of the period. The return
reflects taxes on both the fund's distributions and a shareholder's gain or
loss from selling fund shares.
DWS Dreman High Return Equity Fund | 15
HOW MUCH INVESTORS PAY
The table below describes the fees and expenses that you may pay if you buy and
hold fund shares. This information doesn't include any fees that may be charged
by your financial advisor.
FEE TABLE CLASS S
SHAREHOLDER FEES, paid directly from your investment
____________________________________________________________________________
Redemption/Exchange Fee on shares
owned less than 15 days (as % of
redemption proceeds) 1 2.00%
ANNUAL OPERATING EXPENSES, deducted from fund assets
____________________________________________________________________________
Management Fee 0.67%
Distribution and/or Service (12b-1) Fee None
Other Expenses 0.31
TOTAL ANNUAL OPERATING EXPENSES 0.98
1 This fee is charged on applicable redemptions or exchanges. Please see
"Policies You Should Know About - Policies about transactions" for further
information.
Based on the costs above, this example helps you compare the expenses of the
fund to those of other mutual funds. This example assumes the expenses above
remain the same. 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.
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class S shares $100 $312 $542 $1,201
16 | DWS Dreman High Return Equity Fund
Class S
ticker symbol MIDTX
fund number 2117
DWS DREMAN MID CAP VALUE FUND
THE FUND'S MAIN INVESTMENT STRATEGY
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
(Reg. TM) 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.
The portfolio managers begin their stock selection process by
screening for stocks of mid-cap companies with below market
price-to-earnings ratios. The portfolio managers then compare the
company's stock price to its book value, cash flow and yield and
analyze individual companies to identify those that are financially
sound and appear to have strong potential for long-term capital
appreciation and dividend growth.
The portfolio managers assemble the fund's portfolio from among the
most attractive stocks, drawing on an analysis of economic outlooks
for various sectors and industries.
The portfolio managers will normally sell a stock when it may no
longer qualify as a mid-cap company, it reaches a target price, its
fundamental factors change or other investments offer better
opportunities.
DWS Dreman Mid Cap Value Fund | 17
OTHER INVESTMENTS. The fund is permitted, but not required, to use
various types of derivatives (contracts whose value is based on,
for example, indices, currencies or securities). Derivatives may be
used for hedging and for risk management or for non-hedging
purposes to seek to enhance potential gains. The fund may use
derivatives in circumstances where portfolio management believes
they offer an economical means of gaining exposure to a particular
asset class or to keep cash on hand to meet shareholder redemptions
or other needs while maintaining exposure to the market.
In particular, the fund may use futures, currency options and
forward currency transactions.
SECURITIES LENDING. The fund may lend its investment securities in
an amount up to 33 1/3% of its total assets to approved
institutional borrowers who need to borrow securities in order to
complete certain transactions.
THE MAIN RISKS OF INVESTING IN THE FUND
There are several risk factors that could hurt the fund's
performance, cause you to lose money or cause the fund's
performance to trail that of other investments.
STOCK MARKET RISK. As with most stock funds, the most important
factor affecting this fund is how the stock market performs (to the
extent the fund invests in a particular 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 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.
SECURITY SELECTION RISK. A risk that pervades all investing is the
risk that the securities in the fund's portfolio may decline in
value.
18 | DWS Dreman Mid Cap Value Fund
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.
MEDIUM-SIZED COMPANY RISK. Medium-sized company stocks tend to
experience steeper price fluctuations - down as well as up - than
stocks of larger companies. A shortage of reliable information -
the same information gap that creates opportunity - can pose added
risk. Industry-wide reversals may have a greater impact on
medium-sized companies, since they usually lack a large company's
financial resources. Medium-sized company stocks are typically less
liquid than large company stocks; when things are going poorly, it
is harder to find a buyer for a medium-sized company's shares.
INDUSTRY RISK. While the fund does not concentrate in any industry
or sector, to the extent that the fund has exposure to a given
industry or sector, any factors affecting that industry or sector
could affect the value of portfolio securities. For example,
manufacturers of consumer goods could be hurt by a rise in
unemployment or technology companies could be hurt by such factors
as market saturation, price competition and rapid obsolescence.
SECURITIES LENDING RISK. Any loss in the market price of securities
loaned by the fund that occurs during the term of the loan would be
borne by the fund and would adversely affect the fund's
performance. Also, there may be delays in recovery of securities
loaned or even a loss of rights in the collateral should the
borrower of the securities fail financially while the loan is
outstanding. However, loans will be made only to borrowers selected
by the fund's delegate after a review of relevant facts and
circumstances, including the creditworthiness of the borrower.
DWS Dreman Mid Cap Value Fund | 19
Other factors that could affect performance include:
- portfolio management could be wrong in the analysis of
industries, companies, economic trends, the relative
attractiveness of different securities or other matters.
- foreign securities may be more volatile than their US
counterparts, for reasons such as currency fluctuations and
political and economic uncertainty.
- 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 Dreman Mid Cap Value Fund
THE FUND'S PERFORMANCE HISTORY
While a fund's past performance (before and after taxes) isn't necessarily a
sign of how it will do in the future, it can be valuable for an investor to
know.
The bar chart shows how the performance of the fund's Class S shares has varied
from year to year, which may give some idea of risk. The table on the following
page shows how fund performance compares to relevant index performance (which,
unlike fund performance, does not reflect fees or expenses). The performance of
both the fund and the index varies over time. All figures assume reinvestment
of dividends and distributions (in the case of after-tax returns, reinvested
net of assumed tax rates).
The table shows returns for Class S shares on a before-tax and after-tax basis.
After-tax returns are estimates calculated using the historical highest
individual federal marginal income tax rates and do not reflect the impact of
state and local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown in the table. After-tax returns shown
are not relevant for investors who hold their shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts.
DWS Dreman Mid Cap Value Fund
ANNUAL TOTAL RETURN (%) AS OF 12/31 EACH YEAR - Class S
[GRAPHIC APPEARS HERE]
18.29 5.72
2006 2007
FOR THE PERIODS INCLUDED IN THE BAR CHART:
BEST QUARTER: 7.64%, Q2 2007 WORST QUARTER: -3.98%, Q4 2007
DWS Dreman Mid Cap Value Fund | 21
AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2007
1 YEAR SINCE INCEPTION*
CLASS S
Return before Taxes 5.72 10.79
Return after Taxes on Distributions 3.67 9.54
Return after Taxes on Distributions
and Sale of Fund Shares 4.15** 8.65
RUSSELL MIDCAP (Reg. TM) VALUE INDEX
(reflects no deductions for fees,
expenses or taxes) -1.42 8.12
* Inception date for the fund was August 2, 2005. Index comparison begins on
July 31, 2005.
** Return after Taxes on Distributions and Sale of Fund Shares is higher
than other return figures for the same period due to a capital loss
occurring upon redemption resulting in an assumed tax deduction for the
shareholder.
Total return would have been lower had certain expenses not been reduced.
The RUSSELL MIDCAP (Reg. TM) VALUE INDEX is an unmanaged index measuring the
performance of those Russell Midcap companies with lower price-to-book ratios
and lower forecasted growth values. The stocks are also members of the Russell
1000 Value Index.
- --------------------------------------------------------------------------------
Current performance may be higher or lower than the performance data quoted
above. For more recent performance information, call your financial advisor or
(800) 728-3337 or visit our Web site at www.dws-scudder.com.
- --------------------------------------------------------------------------------
RETURN AFTER TAXES ON DISTRIBUTIONS assumes that an investor holds fund shares
at the end of the period. The return reflects taxes only on the fund's
distributions and not on a shareholder's gain or loss from selling fund shares.
RETURN AFTER TAXES ON DISTRIBUTIONS AND SALE OF FUND SHARES assumes that an
investor sold his or her fund shares at the end of the period. The return
reflects taxes on both the fund's distributions and a shareholder's gain or
loss from selling fund shares.
22 | DWS Dreman Mid Cap Value Fund
HOW MUCH INVESTORS PAY
The table below describes the fees and expenses that you may pay if you buy and
hold fund shares. This information doesn't include any fees that may be charged
by your financial advisor.
FEE TABLE CLASS S
SHAREHOLDER FEES, paid directly from your investment
____________________________________________________________________________
Redemption/Exchange Fee on shares
owned less than 15 days (as % of
redemption proceeds) 1 2.00%
ANNUAL OPERATING EXPENSES, deducted from fund assets
____________________________________________________________________________
Management Fee 0.75%
Distribution and/or Service (12b-1) Fee None
Other Expenses 0.62
TOTAL ANNUAL OPERATING EXPENSES 1.37
Less Expense Waiver/Reimbursement 2 0.37
NET ANNUAL OPERATING EXPENSES 2 1.00
1 This fee is charged on applicable redemptions or exchanges. Please see
"Policies You Should Know About - Policies about transactions" for further
information.
2
Through February 28, 2009, the Advisor has contractually agreed to waive all
or a portion of its management fee or pay certain operating expenses of the
fund to the extent necessary to maintain the fund's total operating
expenses at 1.00% for Class S shares, excluding certain expenses such as
extraordinary expenses, taxes, brokerage and interest.
Based on the costs above (including one year of capped expenses in each
period), this example helps you compare the expenses of the fund to those of
other mutual funds. This example assumes the expenses above remain the same. It
also assumes that you invested $10,000, earned 5% annual returns and reinvested
all dividends and distributions. This is only an example; actual expenses will
be different.
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class S shares $102 $397 $715 $1,614
DWS Dreman Mid Cap Value Fund | 23
Class S
ticker symbol KDSSX
fund number 2389
DWS DREMAN SMALL CAP VALUE FUND
THE FUND'S MAIN INVESTMENT STRATEGY
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 (Reg. TM) Index (as of January 31, 2008, the
Russell 2000 (Reg. TM) Index had a median market capitalization of
$539 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.
The portfolio managers begin their stock selection process by
screening stocks of small companies with below market
price-to-earnings (P/E) ratios. The managers then seek companies
with a low price compared to the book value, cash flow and yield
and analyze individual companies to identify those that are
fundamentally sound and appear to have strong potential for
earnings and dividend growth over the Index.
From the remaining group, the managers then complete their
fundamental analysis and make their buy decisions from a group of
the most attractive stocks, drawing on an analysis of economic
outlooks for various industries.
The managers will normally sell a stock when it no longer qualifies
as a small company, when its P/E rises above that of the Index, its
fundamentals change or other investments offer better
opportunities.
24 | DWS Dreman Small Cap Value Fund
OTHER INVESTMENTS. The fund is permitted, but not required, to use
various types of derivatives (contracts whose value is based on,
for example, indices, currencies or securities). Derivatives may be
used for hedging and for risk management or for non-hedging
purposes to seek to enhance potential gains. The fund may use
derivatives in circumstances where portfolio management believes
they offer an economical means of gaining exposure to a particular
asset class or to keep cash on hand to meet shareholder redemptions
or other needs while maintaining exposure to the market.
In particular, the fund may use futures, currency options and
forward currency transactions.
SECURITIES LENDING. The fund may lend its investment securities in
an amount up to 33 1/3% of its total assets to approved
institutional borrowers who need to borrow securities in order to
complete certain transactions.
THE MAIN RISKS OF INVESTING IN THE FUND
There are several risk factors that could hurt the fund's
performance, cause you to lose money or cause the fund's
performance to trail that of other investments.
STOCK MARKET RISK. As with most stock funds, the most important
factor affecting this fund is how the stock market performs (to the
extent the fund invests in a particular 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
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.
SECURITY SELECTION RISK. A risk that pervades all investing is the
risk that the securities in the fund's portfolio may decline in
value.
THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS
This fund is designed for value-oriented investors who are interested in
small-cap market exposure.
DWS Dreman Small Cap Value Fund | 25
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.
INDUSTRY RISK. While the fund does not concentrate in any industry
or sector, to the extent that the fund has exposure to a given
industry or sector, any factors affecting that industry or sector
could affect the value of portfolio securities. For example,
manufacturers of consumer goods could be hurt by a rise in
unemployment or technology companies could be hurt by such factors
as market saturation, price competition and rapid obsolescence.
SECURITIES LENDING RISK. Any loss in the market price of securities
loaned by the fund that occurs during the term of the loan would be
borne by the fund and would adversely affect the fund's
performance. Also, there may be delays in recovery of securities
loaned or even a loss of rights in the collateral should the
borrower of the securities fail financially while the loan is
outstanding. However, loans will be made only to borrowers selected
by the fund's delegate after a review of relevant facts and
circumstances, including the creditworthiness of the borrower.
Other factors that could affect performance include:
- portfolio management could be wrong in the analysis of
industries, companies, economic trends, the relative
attractiveness of different securities or other matters.
- foreign securities may be more volatile than their US
counterparts, for reasons such as currency fluctuations and
political and economic uncertainty.
- 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.)
26 | DWS Dreman Small Cap Value Fund
THE FUND'S PERFORMANCE HISTORY
While a fund's past performance (before and after taxes) isn't necessarily a
sign of how it will do in the future, it can be valuable for an investor to
know.
The bar chart shows how the performance of the fund's Class S shares has varied
from year to year, which may give some idea of risk. The table on the following
page shows how fund performance compares to relevant index performance (which,
unlike fund performance, does not reflect fees or expenses). The performance of
both the fund and the index varies over time. All figures assume reinvestment
of dividends and distributions (in the case of after-tax returns, reinvested
net of assumed tax rates).
The table shows returns for Class S shares on a before-tax and after-tax basis.
After-tax returns are estimates calculated using the historical highest
individual federal marginal income tax rates and do not reflect the impact of
state and local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown in the table. After-tax returns shown
are not relevant for investors who hold their shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts.
DWS Dreman Small Cap Value Fund
ANNUAL TOTAL RETURN (%) AS OF 12/31 EACH YEAR - Class S
[GRAPHIC APPEARS HERE]
24.21 2.68
2006 2007
FOR THE PERIODS INCLUDED IN THE BAR CHART:
BEST QUARTER: 14.79%, Q1 2006 WORST QUARTER: -4.19%, Q3 2007
DWS Dreman Small Cap Value Fund | 27
AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2007
1 YEAR SINCE INCEPTION*
CLASS S
Return before Taxes 2.68 12.25
Return after Taxes on Distributions 0.47 10.38
Return after Taxes on Distributions
and Sale of Fund Shares 3.55** 10.21
RUSSELL 2000 (Reg. TM) INDEX (reflects no
deductions for fees, expenses or
taxes) -1.57 8.20
RUSSELL 2000 (Reg. TM) VALUE INDEX (reflects
no deductions for fees, expenses or
taxes) -9.78 6.33
* Inception date for Class S was February 28, 2005. Index comparisons began
on February 28, 2005.
** Return after Taxes on Distributions and Sale of Fund Shares is higher than
other return figures for the same period due to a capital loss occurring
upon redemption resulting in a assumed tax deduction for the shareholder.
RUSSELL 2000 (Reg. TM) INDEX is an unmanaged capitalization-weighted measure
of approximately
2,000 small US stocks.
RUSSELL 2000 (Reg. TM) VALUE INDEX is an unmanaged index measuring the
performance of those Russell 2000 companies with lower price-to-book ratios
and lower forecasted growth values.
- --------------------------------------------------------------------------------
Current performance may be higher or lower than the performance data quoted
above. For more recent performance information, call your financial advisor or
(800) 728-3337 or visit our Web site at www.dws-scudder.com.
- --------------------------------------------------------------------------------
RETURN AFTER TAXES ON DISTRIBUTIONS assumes that an investor holds fund shares
at the end of the period. The return reflects taxes only on the fund's
distributions and not on a shareholder's gain or loss from selling fund shares.
RETURN AFTER TAXES ON DISTRIBUTIONS AND SALE OF FUND SHARES assumes that an
investor sold his or her fund shares at the end of the period. The return
reflects taxes on both the fund's distributions and a shareholder's gain or
loss from selling fund shares.
28 | DWS Dreman Small Cap Value Fund
HOW MUCH INVESTORS PAY
The table below describes the fees and expenses that you may pay if you buy and
hold fund shares. This information doesn't include any fees that may be charged
by your financial advisor.
FEE TABLE CLASS S
SHAREHOLDER FEES, paid directly from your investment
____________________________________________________________________________
Redemption/Exchange Fee on shares
owned less than 15 days (as % of
redemption proceeds) 1 2.00%
ANNUAL OPERATING EXPENSES, deducted from fund assets
____________________________________________________________________________
Management Fee 0.71%
Distribution and/or Service (12b-1) Fee None
Other Expenses 0.34
Acquired Funds (Underlying Funds) Fees
and Expenses 2 0.01
TOTAL ANNUAL OPERATING EXPENSES 1.06
1 This fee is charged on applicable redemptions or exchanges. Please see
"Policies You Should Know About - Policies about transactions" for further
information.
2 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
November 30, 2007.
Based on the costs above, this example helps you compare the expenses of the
fund to those of other mutual funds. This example assumes the expenses above
remain the same. It also assumes that you invested $10,000, earned 5% annual
returns and reinvested all dividends and distributions. This is only an
example; actual expenses will be different.
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class S shares $108 $337 $585 $1,294
DWS Dreman Small Cap Value Fund | 29
OTHER POLICIES AND SECONDARY RISKS
While the previous pages describe the main points of each fund's
strategy and risks, there are a few other issues to know about:
- Although major changes tend to be infrequent, each fund's Board
could change a fund's investment objective without seeking
shareholder approval. However, the Board will provide
shareholders with at least 60 days' notice prior to making any
changes to each fund's 80% investment policy as described herein.
- As a temporary defensive measure, each fund could shift up to 50%
of assets into investments such as money market securities. This
could prevent losses, but, while engaged in a temporary defensive
position, a fund will not be pursuing its investment objective.
However, portfolio management may choose not to use these
strategies for various reasons, even in volatile market
conditions.
- Each fund may trade actively. This could raise transaction costs
(thus lowering return) and could mean distributions at higher tax
rates.
Secondary risks
The risk disclosure below applies to each fund, unless otherwise
noted.
DERIVATIVES RISK. Risks associated with derivatives include the risk
that the derivative is not well correlated with the security, index
or currency to which it relates; the risk that derivatives may
result in losses or missed opportunities; the risk that the fund
will be unable to sell the derivative because of an illiquid
secondary market; the risk that a counterparty is unwilling or
unable to meet its obligation; and the risk that the derivative
transaction could expose the fund to the effects of leverage, which
could increase the fund's exposure to the market and magnify
potential losses. There is no guarantee that derivatives, to the
extent employed, will have the intended effect, and their use could
cause lower returns or even losses to the fund. The use of
derivatives by the fund to hedge risk may reduce the opportunity for
gain by offsetting the positive effect of favorable price movements.
30 | Other Policies and Secondary Risks
PRICING RISK. At times, market conditions may make it difficult to
value some investments, and the fund may use certain valuation
methodologies for some of its investments, such as fair value
pricing. Given the subjective nature of such valuation
methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such
investment's sale. If the fund has valued its securities too highly,
you may pay too much for fund shares when you buy into the fund. If
the fund has underestimated the price of its securities, you may not
receive the full market value when you sell your fund shares.
IPO RISK. Securities purchased in initial public offerings (IPOs)
may be very volatile, rising and falling rapidly, often based, among
other reasons, on investor perceptions rather than on economic
reasons. Additionally, investments in IPOs may magnify the fund's
performance if it has a small asset base. The fund is less likely to
experience a similar impact on its performance as its assets grow
because it is unlikely that the fund will be able to obtain
proportionately larger IPO allocations.
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).
Keep in mind that there is no assurance that a fund will achieve its
objective.
A complete list of each fund's portfolio holdings is posted as of
the month-end on www.dws-scudder.com (the Web site does not form a
part of this prospectus) on or after the last day of the following
month. This posted information generally remains accessible at least
until the date on which a fund files its Form N-CSR or N-Q with the
Securities and Exchange Commission for the period that includes the
date as of which the posted information is current. In addition,
each fund's top ten holdings and other fund information is posted on
www.dws-scudder.com
Other Policies and Secondary Risks | 31
as of the calendar quarter-end on or after the 15th day following
quarter-end. Each fund's Statement of Additional Information
includes a description of a fund's policies and procedures with
respect to the disclosure of a fund's portfolio holdings.
WHO MANAGES AND OVERSEES THE FUNDS
The investment advisor
Deutsche Investment Management Americas Inc. ("DIMA" or the
"Advisor"), with headquarters at 345 Park Avenue, New York, NY
10154, is the investment advisor for each fund. Under the oversight
of the Board, the Advisor, or a subadvisor, makes investment
decisions, buys and sells securities for each fund and conducts
research that leads to these purchase and sale decisions. The
Advisor provides a full range of global investment advisory services
to institutional and retail clients.
DWS Scudder is part of Deutsche Asset Management, which is the
marketing name in the US for the asset management activities of
Deutsche Bank AG, DIMA, Deutsche Bank Trust Company Americas and DWS
Trust Company.
Deutsche Asset Management is a global asset management organization
that offers a wide range of investing expertise and resources,
including hundreds of portfolio managers and analysts and an office
network that reaches the world's major investment centers. This
well-resourced global investment platform brings together a wide
variety of experience and investment insight across industries,
regions, asset classes and investing styles.
The Advisor is an indirect, wholly owned subsidiary of Deutsche Bank
AG. Deutsche Bank AG is a major global banking institution that is
engaged in a wide range of financial services, including investment
management, mutual funds, retail, private and commercial banking,
investment banking and insurance.
32 | Who Manages and Oversees the Funds
MANAGEMENT FEE. The Advisor receives a management fee from each
fund. Below are the actual rates paid by each fund for the most
recent fiscal year, as a percentage of each fund's average daily net
assets.
FUND NAME FEE PAID
DWS Large Cap Value Fund 0.46 %
DWS Dreman High Return Equity Fund 0.67 %
DWS Dreman Mid Cap Value Fund 0.51%*
DWS Dreman Small Cap Value Fund 0.71 %
* Reflects the effects of expense limitations and/or fee waivers
then in effect.
Effective April 25, 2007, DWS Large Cap Value Fund pays the Advisor
under a new investment management agreement a fee, calculated daily
and paid monthly, at the annual rate of 0.425% of the fund's average
daily net assets up to $1.5 billion, 0.400% of the next $500
million, 0.375% of the next $1 billion, 0.350% of the next $1
billion, 0.325% of the next $1 billion and 0.300% thereafter.
A discussion regarding the basis for the Board's approval of each
fund's investment management agreement and, as applicable,
subadvisory agreement, is contained in the most recent shareholder
reports for the annual period ended November 30 (see "Shareholder
reports" on the back cover).
The Advisor provides administrative services to DWS Large Cap Value
Fund under a separate administrative services agreement between the
fund and the Advisor. The funds, other than DWS Large Cap Value
Fund, each pay the Advisor for providing most of each fund's
administrative services under each fund's investment management
agreement.
The Subadvisors
Subadvisor for DWS Dreman High Return Equity Fund, DWS Dreman Mid
Cap Value Fund and DWS Dreman Small Cap Value Fund
The subadvisor for DWS Dreman High Return Equity Fund, DWS Dreman
Mid Cap Value Fund and DWS Dreman Small Cap Value Fund is Dreman
Value Management, L.L.C. ("DVM"), 520 East Cooper Avenue, Suite
230-4, Aspen, CO 81611. DVM was founded in 1977 and currently
manages over $18.9 billion in assets, which is primarily comprised
of institutional accounts
Who Manages and Oversees the Funds | 33
and investment companies managed by the advisor. Pursuant to a
subadvisory agreement with DIMA, DVM performs some of the functions
of the Advisor, including making each fund's investment decisions
and buying and selling securities for each fund.
Subadvisor for DWS Large Cap Value Fund
The subadvisor for DWS Large Cap Value Fund is Deutsche Asset
Management International GmbH ("DeAMi"), Mainzer Landstrasse
178-190, Frankfurt am Main, Germany. DeAMi renders investment
advisory and management services to the fund. DeAMi is an investment
advisor registered with the Securities and Exchange Commission and
currently manages over $60 billion in assets, which is primarily
comprised of institutional accounts and investment companies. DeAMi
is a subsidiary of Deutsche Bank AG. DIMA compensates DeAMi out of
the management fee it receives from the fund.
34 | Who Manages and Oversees the Funds
Portfolio management
Each fund is managed by a team of investment professionals who collaborate to
develop and implement each fund's investment strategy. Each portfolio manager
on the teams has authority over all aspects of a fund's investment portfolio,
including but not limited to, purchases and sales of individual securities,
portfolio construction techniques, portfolio risk assessment and the management
of daily cash flows in accordance with the portfolio holdings.
The following people handle the day-to-day management of each fund:
DWS DREMAN HIGH RETURN EQUITY FUND
David N. Dreman
Chairman and Chief Investment Officer of Dreman Value Management, L.L.C. and
Lead Portfolio Manager.
- - Began investment career in 1957.
- - Joined the fund team in 1998.
- - Founder, Dreman Value Management, L.L.C.
F. James Hutchinson
President of Dreman Value Management, L.L.C. and Portfolio Manager.
- - Joined Dreman Value Management, L.L.C. in 2000.
- - Executive Vice President responsible for Marketing.
- - Began investment career in 1986.
- - Member of Investment Policy Committee.
- - Joined the fund team in 2001.
- - Prior to joining Dreman Value Management, L.L.C., 30 years of experience in
finance and trust/investment management with the Bank of New York.
E. Clifton Hoover, Jr.
Portfolio Manager.
- - Joined Dreman Value Management, L.L.C. in 2006 as a Managing Director and
Co-Chief Investment Officer of Large Cap Value Strategy.
- - Prior to joining Dreman Value Management, L.L.C., Managing Director and a
Portfolio Manager at NFJ Investment Group since 1997; Vice President -
Corporate Finance at Credit Lyonnais, 1992-1997; Financial Analyst at
Citibank, 1990-1992; and Credit Analyst/Corporate Loan Officer for
RepublicBank (now Bank of America), 1985-1990.
- - Over 21 years of investment industry experience.
- - Joined the fund team in 2006.
- - MS, Texas Tech University.
DWS LARGE CAP VALUE FUND
Thomas Schuessler, PhD
Director of Deutsche Asset Management and Portfolio Manager.
- - Joined Deutsche Asset Management in 2001 after 5 years at Deutsche Bank
where he managed various products and worked in the office of the Chairman
of the Management Board.
- - US and Global Fund Management: Frankfurt.
- - Joined the fund team in 2007.
- - PhD, University of Heidelberg, studies in physics and economics at
University of Heidelberg and University of Utah.
Who Manages and Oversees the Funds | 35
DWS DREMAN MID CAP VALUE FUND
David N. Dreman
Chairman and Chief Investment Officer of Dreman Value Management, L.L.C. and
Co-Lead Portfolio Manager.
- - Began investment career in 1957.
- - Joined the fund team in 2005.
- - Founder, Dreman Value Management, L.L.C.
F. James Hutchinson
President of Dreman Value Management, L.L.C. and Co-Lead Portfolio Manager.
- - Joined Dreman Value Management, L.L.C. in 2000.
- - Executive Vice President responsible for Marketing.
- - Began investment career in 1986.
- - Member of Investment Policy Committee.
- - Joined the fund team in 2006.
- - Prior to joining Dreman Value Management, L.L.C., 30 years of experience in
finance and trust/investment management with the Bank of New York.
Mark Roach
Co-Lead Portfolio Manager.
- - Joined Dreman Value Management, L.L.C. in November 2006 as a Managing
Director and Portfolio Manager of Small and Mid Cap products.
- - Joined the fund team in 2006.
- - Prior to that, Portfolio Manager at Vaughan Nelson Investment Management,
managing a small cap product from 2002 through 2006; security analyst from
1997 to 2001 for various institutions including Fifth Third Bank, Lynch,
Jones & Ryan and USAA.
- - BS, Baldwin Wallace College; MBA, University of Chicago.
DWS DREMAN SMALL CAP VALUE FUND
David N. Dreman
Chairman and Chief Investment Officer of Dreman Value Management, L.L.C. and
Lead Portfolio Manager.
- - Began investment career in 1957.
- - Joined the fund team in 2002.
- - Founder, Dreman Value Management, L.L.C.
Mark Roach
Portfolio Manager.
- - Joined Dreman Value Management, L.L.C. in November 2006 as a Managing
Director and Portfolio Manager of Small and Mid Cap products.
- - Joined the fund team in 2006.
- - Prior to that, Portfolio Manager at Vaughan Nelson Investment Management,
managing a small cap product from 2002 through 2006; security analyst from
1997 to 2001 for various institutions including Fifth Third Bank, Lynch,
Jones & Ryan and USAA.
- - BS, Baldwin Wallace College; MBA, University of Chicago.
E. Clifton Hoover, Jr.
Portfolio Manager.
- - Joined Dreman Value Management, L.L.C. in 2006 as a Managing Director and
Co-Chief Investment Officer of Large Cap Value Strategy.
- - Prior to joining Dreman Value Management, L.L.C., Managing Director and a
Portfolio Manager at NFJ Investment Group since 1997; Vice President -
Corporate Finance at Credit Lyonnais, 1992-1997; Financial Analyst at
Citibank, 1990-1992; and Credit Analyst/Corporate Loan Officer for
RepublicBank (now Bank of America), 1985-1990.
- - Over 21 years of investment industry experience.
- - Joined the fund team in 2006.
- - MS, Texas Tech University.
Each fund's Statement of Additional Information provides additional information
about a portfolio manager's investments in each fund, a description of the
portfolio management compensation structure and information regarding other
accounts managed.
36 | Who Manages and Oversees the Funds
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 Ernst & Young LLP, independent
registered public accounting firm, whose report, along with each fund's
financial statements, is included in each fund's annual report (see
"Shareholder reports" on the back cover).
DWS Large Cap Value Fund - Class S
YEARS ENDED NOVEMBER 30, 2007 2006 2005a
SELECTED PER SHARE DATA
- ----------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 24.40 $ 22.88 $ 22.21
- ------------------------------------------------- -------- -------- --------
Income (loss) from investment operations:
Net investment income (loss)b .36 .45d .40
_________________________________________________ ________ ________ ________
Net realized and unrealized gain (loss) 2.35 2.63 .55
- ------------------------------------------------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 2.71 3.08 .95
_________________________________________________ ________ ________ ________
Less distributions from:
Net investment income ( .44) ( .41) ( .28)
_________________________________________________ ________ ________ ________
Net realized gains ( 2.15) ( 1.15) -
_________________________________________________ ________ ________ ________
TOTAL DISTRIBUTIONS ( 2.59) ( 1.56) ( .28)
_________________________________________________ ________ ________ ________
Redemption fees .00*** .00*** .00***
- ------------------------------------------------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 24.52 $ 24.40 $ 22.88
- ------------------------------------------------- -------- -------- --------
Total Return (%) 12.06c 14.33d 4.33**
- ------------------------------------------------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------- --------
Net assets, end of period ($ millions) 1,394 1,438 1,483
_________________________________________________ ________ ________ ________
Ratio of expenses before expense reductions (%) .67 .71 .68*
_________________________________________________ ________ ________ ________
Ratio of expenses after expense reductions (%) .66 .71 .68*
_________________________________________________ ________ ________ ________
Ratio of net investment income (loss) (%) 1.54 1.96d 1.89*
_________________________________________________ ________ ________ ________
Portfolio turnover rate (%) 86 76 56
- ------------------------------------------------- -------- -------- --------
a For the period from December 20, 2004 (commencement of operations of Class
S shares) to November 30, 2005.
b Based on average shares outstanding during the period.
c Total return would have been lower had certain expenses not been reduced.
d Includes non-recurring income from the Advisor recorded as a result of an
administrative proceeding regarding disclosure of brokerage allocation
practices in connection with sales of DWS Scudder Funds. The non-recurring
income resulted in an increase in net investment income of $0.033 per share
and an increase in the ratio of net investment income of 0.14%. Excluding
this non-recurring income, total return would have been 0.15% lower.
* Annualized
** Not annualized
*** Amount is less than $.005.
Financial Highlights | 37
DWS Dreman High Return Equity Fund - Class S
YEARS ENDED NOVEMBER 30, 2007 2006 2005a
SELECTED PER SHARE DATA
- ---------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 50.75 $ 44.38 $ 43.74
- --------------------------------------------- -------- -------- --------
Income (loss) from investment operations:
Net investment income b 1.00 .91 .59
_____________________________________________ ________ ________ ________
Net realized and unrealized gain (loss) .01 7.22 .61
- --------------------------------------------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 1.01 8.13 1.20
_____________________________________________ ________ ________ ________
Less distributions from:
Net investment income ( 1.06) ( .81) ( .56)
_____________________________________________ ________ ________ ________
Net realized gains ( .42) ( .95) -
_____________________________________________ ________ ________ ________
TOTAL DISTRIBUTIONS ( 1.48) ( 1.76) ( .56)
_____________________________________________ ________ ________ ________
Redemption fees .00*** .00*** .00***
- --------------------------------------------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 50.28 $ 50.75 $ 44.38
- --------------------------------------------- -------- -------- --------
Total Return (%) 1.95 18.53c 2.77**
- --------------------------------------------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- -------------------------------------------------------------------------- --------
Net assets, end of period ($ millions) 288 171 38
_______________________________________________ ______ ________ ________
Ratio of expenses before expense reductions (%) .98 .98 .84*
_______________________________________________ ______ ________ ________
Ratio of expenses after expense reductions (%) .98 .97 .84*
_______________________________________________ ______ ________ ________
Ratio of net investment income (%) 1.93 1.92 1.81*
_______________________________________________ ______ ________ ________
Portfolio turnover rate (%) 27 32 9
- ----------------------------------------------- ------ -------- --------
a For the period from February 28, 2005 (commencement of operations of Class
S shares) to November 30, 2005.
b Based on average shares outstanding during the period.
c Total return would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
*** Amount is less than $.005.
38 | Financial Highlights
DWS Dreman Mid Cap Value Fund - Class S
YEARS ENDED NOVEMBER 30, 2007 2006 2005a
SELECTED PER SHARE DATA
- -------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.97 $ 10.05 $ 10.00
- ------------------------------------------------- -------- -------- --------
Income (loss) from investment operations:
Net investment income (loss)b .14 .13 ( .00)***
_________________________________________________ ________ ________ ________
Net realized and unrealized gain (loss) .80 1.85 .05
- ------------------------------------------------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS .94 1.98 .05
_________________________________________________ ________ ________ ________
Less distributions from:
Net investment income ( .12) ( .06) -
_________________________________________________ ________ ________ ________
Net realized gains ( .15) - -
_________________________________________________ ________ ________ ________
TOTAL DISTRIBUTIONS ( .27) ( .06) -
_________________________________________________ ________ ________ ________
Redemption fees .00*** .00*** .00***
- ------------------------------------------------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 12.64 $ 11.97 $ 10.05
- ------------------------------------------------- -------- -------- --------
Total Return (%)c 7.88 19.88 .50**
- ------------------------------------------------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 14 6 2
_________________________________________________ ________ ________ ________
Ratio of expenses before expense reductions (%) 1.37 2.27 6.38*
_________________________________________________ ________ ________ ________
Ratio of expenses after expense reductions (%) 1.00 .90d 2.46*
_________________________________________________ ________ ________ ________
Ratio of net investment income (loss) (%) 1.14 1.21 ( .16)*
_________________________________________________ ________ ________ ________
Portfolio turnover rate (%) 82 34 10
- ------------------------------------------------- -------- -------- --------
a For the period from August 2, 2005 (commencement of operations) to November
30, 2005.
b Based on average shares outstanding during the period.
c Total return would have been lower had certain expenses not been reduced.
d The ratio of operating expenses includes reimbursement of the Fund's
organizational and offering cost incurred since the inception of the Fund.
The ratio without this reimbursement would have been 1.19%.
* Annualized
** Not annualized
*** Amount is less than $.005.
Financial Highlights | 39
DWS Dreman Small Cap Value Fund - Class S
YEARS ENDED NOVEMBER 30, 2007 2006 2005a
SELECTED PER SHARE DATA
- --------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 40.37 $ 35.44 $ 33.09
- ------------------------------------------- -------- -------- --------
Income (loss) from investment operations:
Net investment income (loss)b .21 .23 .25
___________________________________________ ________ ________ ________
Net realized and unrealized gain (loss) .94 8.14 2.39
- ------------------------------------------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 1.15 8.37 2.64
___________________________________________ ________ ________ ________
Less distributions from:
Net investment income ( .02) ( .30) -
___________________________________________ ________ ________ ________
Net realized gains ( 2.11) ( 3.14) ( .29)
___________________________________________ ________ ________ ________
TOTAL DISTRIBUTIONS ( 2.13) ( 3.44) ( .29)
___________________________________________ ________ ________ ________
Redemption fees .00*** .00*** .00***
- ------------------------------------------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 39.39 $ 40.37 $ 35.44
- ------------------------------------------- -------- -------- --------
Total Return (%) 2.99 25.84 8.05**
- ------------------------------------------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Net assets, end of period ($ millions) 216 154 4
___________________________________________ ________ ________ ________
Ratio of expenses (%) 1.05 .89 .98*
___________________________________________ ________ ________ ________
Ratio of net investment income (loss) (%) .56 .69 .97*
___________________________________________ ________ ________ ________
Portfolio turnover rate (%) 60 48 67
- ------------------------------------------- -------- -------- --------
a For the period from February 28, 2005 (commencement of operations of Class
S shares) to November 30, 2005.
b Based on average shares outstanding during the period.
* Annualized
** Not annualized
*** Amount is less than $.005.
40 | Financial Highlights
HOW TO INVEST IN THE FUNDS
THE FOLLOWING PAGES TELL YOU HOW TO INVEST IN A FUND AND WHAT TO EXPECT AS A
SHAREHOLDER. The following pages also tell you about many of the services,
choices and benefits of being a shareholder. You'll also find information on
how to check the status of your account using the method that's most convenient
for you.
If you're investing directly with DWS Scudder, all of this information applies
to you. If you're investing through a "third party provider" - for example, a
workplace retirement plan, financial supermarket or financial advisor - your
provider may have its own policies or instructions and you should follow those.
Please remember, CLASS S shares are generally only available to new investors
through fee-based programs of investment dealers that have special agreements
with the funds' distributor, through certain group retirement plans and through
certain registered investment advisors. These dealers and advisors typically
charge ongoing fees for services they provide.
You can find out more about the topics covered here by speaking with your
FINANCIAL ADVISOR OR A REPRESENTATIVE OF YOUR WORKPLACE RETIREMENT PLAN OR
OTHER INVESTMENT PROVIDER.
How to BUY Shares
FIRST INVESTMENT ADDITIONAL INVESTMENTS
$2,500 or more for regular accounts $50 or more for regular accounts and
$1,000 or more for IRAs and UTMAs/ IRAs
UGMAs $50 or more for an account with an
$1,000 or more for an account with an Automatic Investment Plan
Automatic Investment Plan
BY MAIL OR EXPRESS MAIL (SEE BELOW)
Send a DWS Scudder investment slip or
- Fill out and sign an application
short note that includes:
- Send it to us at the appropriate
- fund and class name
address, along with an investment
check made payable to "DWS - account number
Scudder" - check payable to "DWS Scudder"
BY WIRE
- Call (800) 728-3337 for instructions - Call (800) 728-3337 for instructions
BY PHONE
Not available - Call (800) 728-3337 for instructions
WITH AN AUTOMATIC INVESTMENT PLAN
- Fill in the information on our - To set up regular investments from a
application including a check for the bank checking account, call
initial investment and a voided check (800) 728-3337 (minimum $50)
USING QuickBuy
Not available - Call (800) 728-3337 to make sure
QuickBuy is set up on your account; if
it is, you can request a transfer from
your bank account of any amount
between $50 and $250,000
ON THE INTERNET
- Register at www.dws-scudder.com or - Call (800) 728-3337 to ensure you have
log in if already registered electronic services
- Print out a prospectus and a new - Register at www.dws-scudder.com
account application or log in if already registered
- Complete and return the application - Follow the instructions for buying
with your check shares with money from your bank
account
- --------------------------------------------------------------------------------
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
42 | How to Buy Shares
How to EXCHANGE or SELL Shares
EXCHANGING INTO ANOTHER FUND SELLING SHARES
Some transactions, including most for
- Exchanges into existing accounts:
over $100,000, can only be ordered in
$50 minimum per fund
writing with a signature guarantee;
- Exchanges into new accounts:
please see "Signature Guarantee"
$2,500 minimum per fund
$1,000 minimum for IRAs and UTMAs/
UGMAs
BY PHONE BY PHONE OR WIRE
- Call (800) 728-3337 for instructions - Call (800) 728-3337 for instructions
USING THE AUTOMATED INFORMATION LINE
- Call (800) 728-3337 for instructions - Call (800) 728-3337 for instructions
BY MAIL OR EXPRESS MAIL
(see previous page for address)
Your instructions should include: Your instructions should include:
- the fund, class and account number - the fund, class and account number
you're exchanging out of from which you want to sell shares
- the dollar amount or number of shares - the dollar amount or number of shares
you want to exchange you want to sell
- the name and class of the fund you - your name(s), signature(s) and
want to exchange into address, as they appear on your
account
- your name(s), signature(s) and
address, as they appear on your - a daytime telephone number
account
- a daytime telephone number
WITH AN AUTOMATIC EXCHANGE PLAN WITH AN AUTOMATIC WITHDRAWAL PLAN
- To set up regular exchanges from a - To set up regular cash payments from
fund account, call (800) 728-3337 a DWS fund account, call
(800) 728-3337
USING QuickSell
Not available - Call (800) 728-3337 to make sure
QuickSell is set up on your account; if
it is, you can request a transfer to your
bank account of any amount between
$50 and $250,000
ON THE INTERNET
- Register at www.dws-scudder.com or - Register at www.dws-scudder.com or
log in if already registered log in if already registered
- Follow the instructions for making on- - Follow the instructions for making on-
line exchanges line redemptions
- --------------------------------------------------------------------------------
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
How to Sell or Exchange Shares | 43
Financial intermediary support payments
The Advisor, DWS Scudder Distributors, Inc. (the "Distributor")
and/or their affiliates may pay additional compensation, out of
their own assets and not as an additional charge to each fund, to
selected affiliated and unaffiliated brokers, dealers, participating
insurance companies or other financial intermediaries ("financial
advisors") in connection with the sale and/or distribution of fund
shares or the retention and/or servicing of fund investors and fund
shares ("revenue sharing"). Such revenue sharing payments are in
addition to any distribution or service fees payable under any Rule
12b-1 or service plan of each fund, any record keeping/sub-transfer
agency/networking fees payable by each fund (generally through the
Distributor or an affiliate) and/or the Distributor to certain
financial advisors for performing such services and any sales
charge, commissions, non-cash compensation arrangements expressly
permitted under applicable rules of the Financial Industry
Regulatory Authority or other concessions described in the fee table
or elsewhere in this prospectus or the Statement of Additional
Information as payable to all financial advisors. For example, the
Advisor, the Distributor and/or their affiliates may compensate
financial advisors for providing a fund with "shelf space" or access
to a third party platform or fund offering list or other marketing
programs, including, without limitation, inclusion of the fund on
preferred or recommended sales lists, mutual fund "supermarket"
platforms and other formal sales programs; granting the Distributor
access to the financial advisor's sales force; granting the
Distributor access to the financial advisor's conferences and
meetings; assistance in training and educating the financial
advisor's personnel; and obtaining other forms of marketing support.
The level of revenue sharing payments made to financial advisors may
be a fixed fee or based upon one or more of the following factors:
gross sales, current assets and/or number of accounts of each fund
attributable to the financial advisor, the particular fund or fund
type or other measures as agreed to by the Advisor, the Distributor
and/or their affiliates and the financial advisors or any
combination thereof. The amount of these revenue sharing payments is
determined at the discretion of the Advisor, the Distributor and/or
their affiliates from time to time, may be substantial, and may be
different for different financial advisors based on, for example,
the nature of the services provided by the financial advisor.
44 | How to Sell or Exchange Shares
The Advisor, the Distributor and/or their affiliates currently make
revenue sharing payments from their own assets in connection with
the sale and/or distribution of DWS Fund shares or the retention
and/or servicing of investors and DWS Fund shares to financial
advisors in amounts that generally range from .01% up to .50% of
assets of each fund serviced and maintained by the financial
advisor, .10% to .25% of sales of each fund attributable to the
financial advisor, a flat fee of $12,500 up to $500,000, or any
combination thereof. These amounts are subject to change at the
discretion of the Advisor, the Distributor and/or their affiliates.
Receipt of, or the prospect of receiving, this additional
compensation may influence your financial advisor's recommendation
of each fund or of any particular share class of each fund. You
should review your financial advisor's compensation disclosure
and/or talk to your financial advisor to obtain more information on
how this compensation may have influenced your financial advisor's
recommendation of each fund. Additional information regarding these
revenue sharing payments is included in each fund's Statement of
Additional Information, which is available to you on request at no
charge (see the back cover of this prospectus for more information
on how to request a copy of the Statement of Additional
Information).
The Advisor, the Distributor and/or their affiliates may also make
such revenue sharing payments to financial advisors under the terms
discussed above in connection with the distribution of both DWS
funds and non-DWS funds by financial advisors to retirement plans
that obtain record keeping services from ADP, Inc. on the DWS
Scudder branded retirement plan platform (the "Platform") with the
level of revenue sharing payments being based upon sales of both the
DWS funds and the non-DWS funds by the financial advisor on the
Platform or current assets of both the DWS funds and the non-DWS
funds serviced and maintained by the financial advisor on the
Platform.
It is likely that broker-dealers that execute portfolio transactions
for each fund will include firms that also sell shares of the DWS
funds to their customers. However, the Advisor will not consider
sales of DWS fund shares as a factor in the selection of
broker-dealers to execute portfolio transactions for the DWS funds.
Accordingly, the Advisor has implemented policies and procedures
reasonably designed to prevent its traders from considering sales of
DWS fund shares as a factor in the selection of
How to Sell or Exchange Shares | 45
broker-dealers to execute portfolio transactions for each fund. In
addition, the Advisor, the Distributor and/or their affiliates will
not use fund brokerage to pay for their obligation to provide
additional compensation to financial advisors as described above.
POLICIES YOU SHOULD KNOW ABOUT
Along with the information on the previous pages, the policies below
may affect you as a shareholder. Some of this information, such as
the section on distributions and taxes, applies to all investors,
including those investing through a financial advisor.
If you are investing through a financial advisor or through a
retirement plan, check the materials you received from them about
how to buy and sell shares because particular financial advisors or
other intermediaries may adopt policies, procedures or limitations
that are separate from those described by a fund. Please note that a
financial advisor may charge fees separate from those charged by a
fund and may be compensated by a fund.
Keep in mind that the information in this prospectus applies only to
the shares offered herein. Other share classes are described in
separate prospectuses and have different fees, requirements and
services.
In order to reduce the amount of mail you receive and to help reduce
expenses, we generally send a single copy of any shareholder report
and prospectus to each household. If you do not want the mailing of
these documents to be combined with those for other members of your
household, please contact your financial advisor or call (800)
728-3337.
DWS DREMAN SMALL CAP VALUE FUND. Effective December 29, 2006, DWS
Dreman Small Cap Value Fund was closed to new investors except as
described below. Unless you fit into one of the investor eligibility
categories described below, you may not invest in the fund.
You may purchase fund shares through your existing fund account and
reinvest dividends and capital gains if, as of 4:00 p.m. Eastern
time December 29, 2006, you were:
- a current fund shareholder; or
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.
46 | Policies You Should Know About
- a participant in any group retirement, employee stock bonus,
pension or profit sharing plan that offers the fund as an investment
option.
New accounts may be opened for:
- transfers of shares from existing accounts in this fund
(including IRA rollovers);
- Officers, Trustees and Directors of the DWS Funds, and full-time
employees and their family members of DIMA and its affiliates;
- any group retirement, employee stock bonus, pension or profit
sharing plan using the Flex subaccount recordkeeping system made
available through ADP Inc. under an alliance with DWS Scudder
Distributors, Inc. ("DWS-SDI") ("Flex Plans");
- any group retirement, employee stock bonus, pension or profit
sharing plan, other than a Flex Plan, that includes the fund as
an investment option as of December 29, 2006;
- purchases through any comprehensive or "wrap" fee program or
other fee based program; or
- accounts managed by DIMA, any advisory products offered by DIMA
or DWS-SDI and the portfolios of DWS Allocation Series or other
fund of funds managed by DIMA or its affiliates.
Except as otherwise noted, these restrictions apply to investments
made directly with DWS-SDI, the fund's principal underwriter or
through an intermediary relationship with a financial services firm
established with respect to the DWS Funds as of December 29, 2006.
Institutions that maintain omnibus account arrangements are not
allowed to open new sub-accounts for new investors, unless the
investor is one of the types listed above. Once an account is
closed, new investments will not be accepted unless you satisfy one
of the investor eligibility categories listed above.
Exchanges will not be permitted unless the exchange is being made
into an existing fund account.
DWS-SDI may, at its discretion, require appropriate documentation
that shows an investor is eligible to purchase fund shares.
The fund may resume sales of shares to additional investors at a
future date, but has no present intention to do so.
Policies You Should Know About | 47
Policies about transactions
EACH FUND IS OPEN FOR BUSINESS each day the New York Stock Exchange
is open. Each fund calculates its share price for each class every
business day, as of the close of regular trading on the New York
Stock Exchange (typically 4:00 p.m. Eastern time, but sometimes
earlier, as in the case of scheduled half-day trading or unscheduled
suspensions of trading). You can place an order to buy or sell
shares at any time.
To help the government fight the funding of terrorism and money
laundering activities, federal law requires all financial
institutions to obtain, verify and record information that
identifies each person who opens an account. What this means to you:
When you open an account, we will ask for your name, address, date
of birth and other information that will allow us to identify you.
Some or all of this information will be used to verify the identity
of all persons opening an account.
We might request additional information about you (which may include
certain documents, such as articles of incorporation for companies)
to help us verify your identity and, in some cases, the information
and/or documents may be required to conduct the verification. The
information and documents will be used solely to verify your
identity.
We will attempt to collect any missing required and requested
information by contacting you or your financial advisor. If we are
unable to obtain this information within the time frames established
by each fund, then we may reject your application and order.
Each fund will not invest your purchase until all required and
requested identification information has been provided and your
application has been submitted in "good order." After we receive all
the information, your application is deemed to be in good order and
we accept your purchase, you will receive the net asset value per
share next calculated.
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.
48 | Policies You Should Know About
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 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
Policies You Should Know About | 49
financial services firm, accounts maintained on behalf of
participants in certain fee based and wrap programs offered through
certain financial intermediaries approved by the Advisor and
participant level accounts in group retirement plans held on the
records of a retirement plan record keeper.
SUBSEQUENT INVESTMENTS. The minimum subsequent investment is $50.
However, there is no minimum investment requirement for subsequent
investments on behalf of participants in certain fee-based and wrap
programs offered through certain financial intermediaries approved
by the Advisor.
MARKET TIMING POLICIES AND PROCEDURES. Short-term and excessive
trading of fund shares may present risks to long-term shareholders,
including potential dilution in the value of fund shares,
interference with the efficient management of a fund's portfolio
(including losses on the sale of investments), taxable gains to
remaining shareholders and increased brokerage and administrative
costs. These risks may be more pronounced if a fund invests in
certain securities, such as those that trade in foreign markets, are
illiquid or do not otherwise have "readily available market
quotations." Certain investors may seek to employ short-term trading
strategies aimed at exploiting variations in portfolio valuation
that arise from the nature of the securities held by a fund (e.g.,
"time zone arbitrage"). Each fund discourages short-term and
excessive trading and has adopted policies and procedures that are
intended to detect and deter short-term and excessive trading.
Pursuant to its policies, each fund will impose a 2% redemption fee
on fund shares held for less than a specified holding period
(subject to certain exceptions discussed below under "Redemption
fees"). Each fund also reserves the right to reject or cancel a
purchase or exchange order for any reason without prior notice. For
example, a fund may in its discretion reject or cancel a purchase or
an exchange order even if the transaction is not subject to the
specific roundtrip transaction limitation described below if the
Advisor believes that there appears to be a pattern of short-term or
excessive trading activity by a shareholder or deems any other
trading activity harmful or disruptive to a fund. Each fund, through
its Advisor and transfer agent, will measure short-term and
excessive trading by the number of roundtrip transactions within a
shareholder's account during a rolling 12-month period. A
"roundtrip" transaction is defined as any combination of purchase
and redemption activity (including
50 | Policies You Should Know About
exchanges) of the same fund's shares. Each fund may take other
trading activity into account if a fund believes such activity is of
an amount or frequency that may be harmful to long-term shareholders
or disruptive to portfolio management.
Shareholders are limited to four roundtrip transactions in the same
DWS Fund (excluding money market funds) over a rolling 12-month
period. Shareholders with four or more roundtrip transactions in the
same DWS Fund within a rolling 12-month period generally will be
blocked from making additional purchases of, or exchanges into, that
DWS Fund. Each fund has sole discretion whether to remove a block
from a shareholder's account. The rights of a shareholder to redeem
shares of a DWS Fund are not affected by the four roundtrip
transaction limitation, but all redemptions remain subject to each
fund's redemption fee policy (see "Redemption fees" described
below).
Each fund may make exceptions to the roundtrip transaction policy
for certain types of transactions if, in the opinion of the Advisor,
the transactions do not represent short-term or excessive trading or
are not abusive or harmful to a fund, such as, but not limited to,
systematic transactions, required minimum retirement distributions,
transactions initiated by a fund or administrator and transactions
by certain qualified fund-of-fund(s).
In certain circumstances where shareholders hold shares of a fund
through a financial intermediary, the fund may rely upon the
financial intermediary's policy to deter short-term or excessive
trading if the Advisor believes that the financial intermediary's
policy is reasonably designed to detect and deter transactions that
are not in the best interests of a fund. A financial intermediary's
policy relating to short-term or excessive trading may be more or
less restrictive than the DWS Funds' policy, may permit certain
transactions not permitted by the DWS Funds' policies, or prohibit
transactions not subject to the DWS Funds' policies.
The Advisor may also accept undertakings from a financial
intermediary to enforce short-term or excessive trading policies on
behalf of a fund that provide a substantially similar level of
protection for each fund against such transactions. For example,
certain financial intermediaries may have contractual, legal or
Policies You Should Know About | 51
operational restrictions that prevent them from blocking an account.
In such instances, the financial intermediary may use alternate
techniques that the Advisor considers to be a reasonable substitute
for such a block.
In addition, if a fund invests some portion of its assets in foreign
securities, it has adopted certain fair valuation practices intended
to protect the fund from "time zone arbitrage" with respect to its
foreign securities holdings and other trading practices that seek to
exploit variations in portfolio valuation that arise from the nature
of the securities held by a fund. (See "How each fund calculates
share price.")
There is no assurance that these policies and procedures will be
effective in limiting short-term and excessive trading in all cases.
For example, the Advisor may not be able to effectively monitor,
detect or limit short-term or excessive trading by underlying
shareholders that occurs through omnibus accounts maintained by
broker-dealers or other financial intermediaries. The Advisor
reviews trading activity at the omnibus level to detect short-term
or excessive trading. If the Advisor has reason to suspect that
short-term or excessive trading is occurring at the omnibus level,
the Advisor will contact the financial intermediary to request
underlying shareholder level activity. Depending on the amount of
fund shares held in such omnibus accounts (which may represent most
of a fund's shares) short-term and/or excessive trading of fund
shares could adversely affect long-term shareholders in a fund. If
short-term or excessive trading is identified, the Advisor will take
appropriate action.
Each fund's market timing policies and procedures may be modified or
terminated at any time.
REDEMPTION FEES. Each fund imposes a redemption fee of 2% of the
total redemption amount (calculated at net asset value) on all fund
shares redeemed or exchanged within 15 days of buying them (either
by purchase or exchange). The redemption fee is paid directly to
each fund and is designed to encourage long-term investment and to
offset transaction and other costs 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.
52 | Policies You Should Know About
The redemption fee is applicable to fund shares purchased either
directly or through a financial intermediary, such as a
broker-dealer. Transactions through financial intermediaries
typically are placed with a fund on an omnibus basis and include
both purchase and sale transactions placed on behalf of multiple
investors. These purchase and sale transactions are generally netted
against one another and placed on an aggregate basis; consequently
the identities of the individuals on whose behalf the transactions
are placed generally are not known to a fund. For this reason, each
fund has undertaken to notify financial intermediaries of their
obligation to assess the redemption fee on customer accounts and to
collect and remit the proceeds to each fund. However, due to
operational requirements, the intermediaries' methods for tracking
and calculating the fee may be inadequate or differ in some respects
from each fund's.
The redemption fee will not be charged in connection with the
following exchange or redemption transactions: (i) transactions on
behalf of participants in certain research wrap programs; (ii)
transactions on behalf of a shareholder to return any excess IRA
contributions to the shareholder; (iii) transactions on behalf of a
shareholder to effect a required minimum distribution on an IRA;
(iv) transactions on behalf of any mutual fund advised by the
Advisor and its affiliates (e.g., "funds of funds") or, in the case
of a master/feeder relationship, redemptions by the feeder fund from
the master portfolio; (v) transactions on behalf of certain
unaffiliated mutual funds operating as funds of funds; (vi)
transactions following death or disability of any registered
shareholder, beneficial owner or grantor of a living trust with
respect to shares purchased before death or disability; (vii)
transactions involving hardship of any registered shareholder;
(viii) systematic transactions with pre-defined trade dates for
purchases, exchanges or redemptions, such as automatic account
rebalancing, or loan origination and repayments; (ix) transactions
involving shares purchased through the reinvestment of dividends or
other distributions; (x) transactions involving shares transferred
from another account in the same fund or converted from another
class of the same fund (the redemption fee period will carry over to
the acquired shares); (xi) transactions initiated by a fund or
administrator (e.g., redemptions for not meeting account minimums,
to pay account fees funded by share redemptions, or in the event of
the liquidation or merger of the fund); or (xii) transactions in
cases when there are legal or contractual limitations or
restrictions on the imposition of the redemption fee (as determined
by a fund or its agents in their
Policies You Should Know About | 53
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
to purchase and sell shares.
QUICKBUY AND QUICKSELL let you set up a link between a DWS fund
account and a bank account. Once this link is in place, you can move
money between the two with a phone call. You'll need to make sure
your bank has Automated Clearing House (ACH) services. Transactions
take two to three days to be completed and there is a $50 minimum
and a $250,000 maximum. To set up QuickBuy or QuickSell on a new
account, see the account application; to add it to an existing
account, call (800) 728-3337.
TELEPHONE AND ELECTRONIC TRANSACTIONS. Generally, you are
automatically entitled to telephone and electronic transaction
privileges, but you may elect not to have them when you open your
account or by contacting Shareholder Services at (800) 728-3337 at a
later date.
Since many transactions may be initiated by telephone or
electronically, it's important to understand that as long as we take
reasonable steps to ensure that an order to purchase or redeem
shares is genuine, such as recording calls or requesting
personalized security codes or other information, we are not
responsible for any losses that may occur as a result. For
transactions conducted over the Internet, we recommend the use of a
secure Internet browser. In addition, you should verify the accuracy
of your confirmation statements immediately after you receive them.
EACH FUND DOES NOT ISSUE SHARE CERTIFICATES. However, if you
currently have shares in certificated form, you must include the
share certificates properly endorsed or accompanied by a duly
executed stock power when exchanging or redeeming shares. You may
not exchange or redeem shares in certificate form by telephone or
via the Internet.
THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS
The DWS Scudder Web site can be a valuable resource for shareholders with
Internet access. Go to WWW.DWS-SCUDDER.COM to get up-to-date information, review
balances or even place orders for exchanges.
54 | Policies You Should Know About
WHEN YOU ASK US TO SEND OR RECEIVE A WIRE, please note that while we
don't charge a fee to send or receive wires, it's possible that your
bank may do so. Wire transactions are generally completed within 24
hours. Each fund can only send wires of $1,000 or more and accept
wires of $50 or more.
EACH FUND ACCEPTS PAYMENT FOR SHARES ONLY IN US DOLLARS by check,
bank or Federal Funds wire transfer or by electronic bank transfer.
Please note that a fund does not accept cash, money orders,
traveler's checks, starter checks, third party checks (except checks
for retirement plan asset transfers and rollovers or for Uniform
Gifts to Minors Act/Uniform Transfers to Minors Act accounts),
checks drawn on foreign banks or checks issued by credit card
companies or Internet-based companies. Thus, subject to the
foregoing exceptions for certain third party checks, checks that are
otherwise permissible must be drawn by the account holder on a
domestic bank and must be payable to a fund.
SIGNATURE GUARANTEE. When you want to sell more than $100,000 worth
of shares or send proceeds to a third party or to a new address,
you'll usually need to place your order in writing and include a
signature guarantee. However, if you want money 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.
THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS
If you ever have difficulty placing an order by phone or Internet, you can send
us your order in writing.
Policies You Should Know About | 55
SELLING SHARES OF TRUST ACCOUNTS AND BUSINESS OR ORGANIZATION
ACCOUNTS may require additional documentation. Please call (800)
728-3337 or contact your financial advisor for more information.
MONEY FROM SHARES YOU SELL is normally sent out within one business
day of when your order is processed (not when it is received),
although it could be delayed for up to seven days. There are other
circumstances when it could be longer, including, but not limited
to, when you are selling shares you bought recently by check or ACH
(the funds will be placed under a 10 calendar day hold to ensure
good funds) or when unusual circumstances prompt the SEC to allow
further delays. Certain expedited redemption processes may also be
delayed when you are selling recently purchased shares or in the
event of closing of the Federal Reserve Bank's wire payment system.
In addition, each fund reserves the right to suspend or postpone
redemptions as permitted pursuant to Section 22(e) of the Investment
Company Act of 1940. Generally, those circumstances are when 1) the
New York Stock Exchange is closed other than customary weekend or
holiday closings; 2) trading on the New York Stock Exchange is
restricted; 3) an emergency exists which makes the disposal of
securities owned by a fund or the fair determination of the value of
a fund's net assets not reasonably practicable; or 4) the SEC, by
order, permits the suspension of the right of redemption. Redemption
payments by wire may also be delayed in the event of a non-routine
closure of the Federal Reserve wire payment system. For additional
rights reserved by each fund, please see "Other rights we reserve."
You may obtain additional information about other ways to sell your
shares by contacting your financial advisor.
How each fund calculates share price
To calculate net asset value, or NAV, each share class uses the
following equation:
TOTAL ASSETS - TOTAL LIABILITIES
----------------------------------------- = NAV
TOTAL NUMBER OF SHARES OUTSTANDING
The price at which you buy and sell shares is the NAV.
56 | Policies You Should Know About
EACH FUND CHARGES A REDEMPTION FEE EQUAL TO 2.00% of the value of
shares redeemed or exchanged within 15 days of purchase. Please see
"Policies about transactions - Redemption fees" for further
information.
WE TYPICALLY VALUE SECURITIES USING INFORMATION FURNISHED BY AN
INDEPENDENT PRICING SERVICE OR MARKET QUOTATIONS, WHERE APPROPRIATE.
However, we may use methods approved by a fund's Board, such as a
fair valuation model, which are intended to reflect fair value when
pricing service information or market quotations are not readily
available or when a security's value or a meaningful portion of the
value of a fund's portfolio is believed to have been materially
affected by a significant event, such as a natural disaster, an
economic event like a bankruptcy filing, or a substantial
fluctuation in domestic or foreign markets that has occurred between
the close of the exchange or market on which the security is
principally traded (for example, a foreign exchange or market) and
the close of the New York Stock Exchange. In such a case, a fund's
value for a security is likely to be different from the last quoted
market price or pricing service information. In addition, due to the
subjective and variable nature of fair value pricing, it is possible
that the value determined for a particular asset may be materially
different from the value realized upon such asset's sale. It is
expected that the greater the percentage of fund assets that is
invested in non-US securities, the more extensive will be 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.)
Policies You Should Know About | 57
Other rights we reserve
You should be aware that we may do any of the following:
- withdraw or suspend the offering of shares at any time
- withhold a portion of your distributions and redemption proceeds
for federal income tax purposes if we have been notified by the
IRS that you are subject to backup withholding or if you fail to
provide us with a correct taxpayer ID number and certain
certifications including certification that you are not subject
to backup withholding
- reject a new account application if you don't provide any
required or requested identifying information, or for any other
reason
- refuse, cancel, limit or rescind any purchase or exchange order,
without prior notice; freeze any account (meaning you will not be
able to purchase fund shares in your account); suspend account
services; and/or involuntarily redeem your account if we think
that the account is being used for fraudulent or illegal
purposes; one or more of these actions will be taken when, at our
sole discretion, they are deemed to be in a fund's best interests
or when a fund is requested or compelled to do so by governmental
authority or by applicable law
- close and liquidate your account if we are unable to verify your
identity, or for other reasons; if we decide to close your
account, your fund shares will be redeemed at the net asset value
per share next calculated after we determine to close your
account (less any applicable redemption fee); you may recognize a
gain or loss on the redemption of your fund shares and you may
incur a tax liability
- pay you for shares you sell by "redeeming in kind," that is, by
giving you securities (which typically will involve brokerage
costs for you to liquidate) rather than cash, but which will be
taxable to the same extent as a redemption for cash; a fund
generally won't make a redemption in kind unless your requests
over a 90-day period total more than $250,000 or 1% of the value
of a fund's net assets, whichever is less
- change, add or withdraw various services, fees and account
policies (for example, we may adjust a fund's investment minimums
at any time)
58 | Policies You Should Know About
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 Large Cap Value Fund, and DWS Dreman High Return Equity Fund
each intends to pay dividends to shareholders quarterly. These funds
also intend to pay distributions annually in December. DWS Dreman
Mid Cap Value Fund and DWS Dreman Small Cap Value Fund each intends
to pay dividends and distributions to shareholders annually in
December.
Dividends or distributions declared to shareholders of record in the
last quarter of a given calendar year are treated for federal income
tax purposes as if they were received on December 31 of that year,
provided such dividends or distributions are paid by the end of the
following January.
For federal income tax purposes, income and capital gains
distributions are generally taxable to shareholders. However,
dividends and distributions received by retirement plans qualifying
for tax exemption under federal income tax laws generally will not
be taxable.
YOU CAN CHOOSE HOW TO RECEIVE YOUR DIVIDENDS AND DISTRIBUTIONS. You
can have them all automatically reinvested in fund shares (at NAV),
all deposited directly to your bank account or all sent to you by
check, have one type reinvested and the other sent to you by check
or have them invested in a different fund. Tell us your preference
on your application. If you don't indicate a preference, your
dividends and distributions will all be reinvested in shares of the
fund without a sales charge (if applicable). Distributions are
treated the same for federal income tax purposes whether you receive
them in cash or reinvest them in additional shares. For
employer-sponsored qualified plans, and retirement plans,
reinvestment (at NAV) is the only option.
THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS
Because each shareholder's tax situation is unique, ask your tax professional
about the tax consequences of your investments, including any state and local
tax consequences.
Understanding Distributions and Taxes | 59
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 depends on their type:
GENERALLY TAXED AT LONG-TERM GENERALLY TAXED AT ORDINARY
CAPITAL GAIN RATES: INCOME RATES:
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
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
generally will not be entitled to claim a credit or deduction with
respect to foreign taxes paid by the fund. In addition, any
investments in foreign securities or foreign currencies may increase
or accelerate a fund's recognition of ordinary income and may affect
the timing or amount of the fund's distributions. If you invest in a
fund through a taxable account, your after-tax return could be
negatively impacted.
To the extent that a fund invests in certain debt obligations or
certain other securities, investments in these obligations or
securities may cause a fund to recognize taxable income in excess of
the cash generated by such obligations. Thus, a fund could be
required at times to liquidate other investments in order to satisfy
its distribution requirements.
60 | Understanding Distributions and Taxes
For taxable years beginning before January 1, 2011, distributions to
individuals and other noncorporate shareholders of investment income
designated by a fund as derived from qualified dividend income are
eligible for taxation for federal income tax purposes at the more
favorable long-term capital gain rates. Qualified dividend income
generally includes dividends from domestic and some foreign
corporations. It does not include income from investments in debt
securities or, generally, from REITs. In addition, a fund must meet
certain holding period and other requirements with respect to the
dividend-paying stocks in its portfolio and the shareholder must
meet certain holding period and other requirements with respect to a
fund's shares for the lower tax rates to apply.
For taxable years beginning before January 1, 2011, the maximum
federal income tax rate imposed on long-term capital gains
recognized by individuals and other noncorporate shareholders has
been reduced to 15%. For taxable years beginning on or after January
1, 2011, the long-term capital gain rate is scheduled to return to
20%.
YOUR FUND WILL SEND YOU DETAILED FEDERAL INCOME TAX INFORMATION
EVERY JANUARY. These statements tell you the amount and the federal
income tax classification of any dividends or distributions you
received. They also have certain details on your purchases and sales
of shares.
IF YOU INVEST RIGHT BEFORE A FUND PAYS A DIVIDEND, you'll be getting
some of your investment back as a taxable dividend. You can avoid
this by investing after a fund declares a dividend. In
tax-advantaged retirement accounts you do not need to worry about
this.
CORPORATIONS are taxed at the same rates on ordinary income and
capital gains but may be eligible for a dividends-received deduction
for a portion of the income dividends they receive from a fund,
provided certain holding period and other requirements are met.
The above discussion summarizes certain federal income tax
consequences for shareholders who are US persons. If you are a
non-US person, please consult your own tax advisor with respect to
the US tax consequences to you of an investment in a fund. For more
information, see "Taxes" in the Statement of Additional Information.
Understanding Distributions and Taxes | 61
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.
62 | Appendix
DWS Large Cap Value Fund - Class S
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
1 5.00% 0.67% 4.33% $ 10,433.00 $ 68.45
2 10.25% 0.67% 8.85% $ 10,884.75 $ 71.41
3 15.76% 0.67% 13.56% $ 11,356.06 $ 74.51
4 21.55% 0.67% 18.48% $ 11,847.78 $ 77.73
5 27.63% 0.67% 23.61% $ 12,360.78 $ 81.10
6 34.01% 0.67% 28.96% $ 12,896.01 $ 84.61
7 40.71% 0.67% 34.54% $ 13,454.40 $ 88.27
8 47.75% 0.67% 40.37% $ 14,036.98 $ 92.10
9 55.13% 0.67% 46.45% $ 14,644.78 $ 96.08
10 62.89% 0.67% 42.79% $ 15,278.90 $ 100.24
TOTAL $ 834.50
DWS Dreman High Return Equity Fund - Class S
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
1 5.00% 0.98% 4.02% $ 10,402.00 $ 99.97
2 10.25% 0.98% 8.20% $ 10,820.16 $ 103.99
3 15.76% 0.98% 12.55% $ 11,255.13 $ 108.17
4 21.55% 0.98% 17.08% $ 11,707.59 $ 112.52
5 27.63% 0.98% 21.78% $ 12,178.23 $ 117.04
6 34.01% 0.98% 26.68% $ 12,667.80 $ 121.75
7 40.71% 0.98% 31.77% $ 13,177.04 $ 126.64
8 47.75% 0.98% 37.07% $ 13,706.76 $ 131.73
9 55.13% 0.98% 42.58% $ 14,257.77 $ 137.03
10 62.89% 0.98% 48.31% $ 14,830.93 $ 142.53
TOTAL $ 1,201.37
Appendix | 63
DWS Dreman Mid Cap Value Fund - Class S
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
1 5.00% 1.00% 4.00% $ 10,400.00 $ 102.00
2 10.25% 1.37% 7.78% $ 10,777.52 $ 145.07
3 15.76% 1.37% 11.69% $ 11,168.74 $ 150.33
4 21.55% 1.37% 15.74% $ 11,574.17 $ 155.79
5 27.63% 1.37% 19.94% $ 11,994.31 $ 161.44
6 34.01% 1.37% 24.30% $ 12,429.71 $ 167.30
7 40.71% 1.37% 28.81% $ 12,880.90 $ 173.38
8 47.75% 1.37% 33.48% $ 13,348.48 $ 179.67
9 55.13% 1.37% 38.33% $ 13,833.03 $ 186.19
10 62.89% 1.37% 43.35% $ 14,335.17 $ 192.95
TOTAL $ 1,614.12
DWS Dreman Small Cap Value Fund - Class S
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
1 5.00% 1.06% 3.94% $ 10,394.00 $ 108.09
2 10.25% 1.06% 8.04% $ 10,803.52 $ 112.35
3 15.76% 1.06% 12.29% $ 11,229.18 $ 116.77
4 21.55% 1.06% 16.72% $ 11,671.61 $ 121.37
5 27.63% 1.06% 21.31% $ 12,131.47 $ 126.16
6 34.01% 1.06% 26.09% $ 12,609.45 $ 131.13
7 40.71% 1.06% 31.06% $ 13,106.27 $ 136.29
8 47.75% 1.06% 36.23% $ 13,622.65 $ 141.66
9 55.13% 1.06% 41.59% $ 14,159.39 $ 147.24
10 62.89% 1.06% 47.17% $ 14,717.27 $ 153.05
TOTAL $ 1,294.11
64 | Appendix
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.
DWS SCUDDER SEC DISTRIBUTOR
- --------------------- -------------------- -------------------------------
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
SEC FILE NUMBER:
DWS Value Series, Inc. DWS Large Cap Value Fund 811-5385
DWS Value Series, Inc. DWS Dreman High Return Equity Fund 811-5385
DWS Value Series, Inc. DWS Dreman Mid Cap Value Fund 811-5385
DWS Value Series, Inc. DWS Dreman Small Cap Value Fund 811-5385
(03/01/08) 117/312/387/
389-2
[RECYCLE GRAPHIC APPEARS HERE]
[Logo]DWS
SCUDDER
Deutsche Bank Group
SUPPLEMENT TO THE CURRENTLY EFFECTIVE
PROSPECTUSES
-----------------
DWS Small Cap Value Fund
Deutsche Investment Management Americas Inc. ("DIMA"), the advisor of the
above-noted fund, is proposing the following fund merger.
- --------------------------------------------------------------------------------
Acquired Fund Acquiring Fund
- --------------------------------------------------------------------------------
DWS Small Cap Value Fund DWS Dreman Mid Cap Value Fund
- --------------------------------------------------------------------------------
Completion of this merger is subject to, among other things: (i) final approval
by the Board of the Acquired Fund, and (ii) approval by shareholders of the
Acquired Fund at a shareholder meeting expected to be held on or about June 27,
2008. Prior to the shareholder meeting, shareholders of the Acquired Fund will
receive (i) a Proxy Statement/Prospectus describing in detail the proposed
merger and the Board's considerations in recommending that shareholders approve
the merger, (ii) a proxy card and instructions on how to submit a vote, and
(iii) a Prospectus for the Acquiring Fund.
In the event the proposed merger is approved by shareholders, the Acquired Fund
will be closed to new investors except as described below. Unless you fit into
one of the investor eligibility categories described below, you may not invest
in the fund following shareholder approval of the merger.
You may continue to purchase fund shares following shareholder approval through
your existing fund account and reinvest dividends and capital gains if, as of
4:00 p.m. Eastern time on or about June 27, 2008, or such later date as
shareholder approval may occur, if you are:
o a current fund shareholder; or
o a participant in any group retirement, employee stock bonus, pension or
profit sharing plan that offers the fund as an investment option.
March 11, 2008 [DWS SCUDDER LOGO]
DSCVF-3600 Deutsche Bank Group
New accounts may be opened for:
o transfers of shares from existing accounts in this fund (including IRA
rollovers);
o officers, Trustees and Directors of the DWS Funds, and full-time employees
and their family members of DIMA and its affiliates;
o any group retirement, employee stock bonus, pension or profit sharing plan
using the Flex subaccount recordkeeping system made available through ADP
Inc. under an alliance with DWS Scudder Distributors, Inc. ("DWS-SDI")
("Flex Plans");
o any group retirement, employee stock bonus, pension or profit sharing plan,
other than a Flex Plan, that includes the fund as an investment option as
of June 27, 2008;
o purchases through any comprehensive or "wrap" fee program or other fee
based program; or
o accounts managed by DIMA, any advisory products offered by DIMA or DWS-SDI
and for the Portfolios of DWS Allocation Series or other fund of funds
managed by DIMA or its affiliates.
Except as otherwise noted, these restrictions apply to investments made directly
with DWS-SDI, the fund's principal underwriter or through an intermediary
relationship with a financial services firm established with respect to the DWS
Funds as of June 27, 2008. Institutions that maintain omnibus account
arrangements are not allowed to open new sub-accounts for new investors, unless
the investor is one of the types listed above. Once an account is closed, new
investments will not be accepted unless you satisfy one of the investor
eligibility categories listed above.
Exchanges into the Acquired Fund will not be permitted unless the exchange is
being made into an existing fund account.
DWS-SDI may, at its discretion, require appropriate documentation that shows an
investor is eligible to purchase Acquired Fund shares.
Please Retain This Supplement for Future Reference
March 11, 2008
DSCVF-3600
2
DECEMBER 1, 2007
PROSPECTUS
------------------
CLASSES A, B AND C
- --------------------------------------------------------------------------------
DWS EQUITY INCOME FUND
DWS SMALL CAP VALUE 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
CONTENTS
HOW EACH FUND WORKS
4 DWS Equity Income Fund
13 DWS Small Cap Value Fund
22 Other Policies and Secondary
Risks
24 Who Manages and Oversees
the Funds
28 Financial Highlights
HOW TO INVEST IN THE FUNDS
35 Choosing a Share Class
41 How to Buy Class A, B and C
Shares
42 How to Exchange or Sell
Class A, B and C Shares
45 Policies You Should Know
About
58 Understanding Distributions
and Taxes
61 Appendix
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.
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).
- --------------------------------------------------------------------------------
Class A Class B Class C
ticker symbol SDDAX SDDBX SDDCX
fund number 290 390 690
DWS EQUITY INCOME FUND
- --------------------------------------------------------------------------------
THE FUND'S MAIN INVESTMENT STRATEGY
The fund seeks high income consistent with preservation of capital
and, secondarily, long-term growth of capital. The fund seeks to
achieve its objectives by investing primarily in a diversified
portfolio of income-producing equity securities and debt
securities. The fund attempts to provide a yield that exceeds the
composite yield on the securities comprising the Standard & Poor's
500 Composite Stock Index (S&P 500).
Under normal circumstances, the fund invests at least 80% of its
assets in dividend-paying equity securities. These include common
stocks, preferred stocks, convertible securities and securities of
real estate investment trusts. By investing a significant portion
of the fund's assets in dividend-paying equity securities, the fund
seeks to help investors take advantage of lower federal tax rates
with respect to a portion of the dividend income generated by the
fund. The fund is not managed for tax efficiency. The fund may also
invest up to 20% of its assets in non-dividend-paying equity
securities and debt securities. Although the fund invests primarily
in US issuers, it may invest up to 25% of its assets in foreign
securities.
The fund emphasizes a value-investing style focusing primarily on
established companies that offer the prospects for future dividend
payments and capital growth and whose current stock prices appear
to be undervalued relative to the general market.
The portfolio managers begin by screening for stocks whose
price-to-earnings ratios are below the average for the S&P 500
Index. The portfolio managers then compare a company's stock price
to its book value, cash flow and yield, and analyze individual
companies to identify those that are financially sound and appear
to have strong potential for long-term growth.
4 | DWS Equity Income Fund
The portfolio managers assemble the fund's portfolio from among the
most attractive stocks, drawing on analysis of economic outlooks
for various sectors and industries. The portfolio managers may
favor securities from different sectors and industries at different
times while still maintaining variety in terms of industries and
companies represented.
The portfolio managers will normally sell a security when they
believe the income or growth potential of the security has changed,
other investments offer better opportunities, or in the course of
adjusting the emphasis on or within a given industry.
OTHER INVESTMENTS. Debt securities in which the fund invests
include those rated investment grade (i.e., BBB/Baa or above) and
below investment grade high yield/high risk bonds. The fund may
invest up to 15% of net assets in high yield/high risk bonds (i.e.,
rated BB/Ba and below). In addition, the fund may invest in
affiliated mutual funds. The fund expects to make part or all of
its investments in debt securities through investment in affiliated
mutual funds. By investing in affiliated mutual funds, the fund
will achieve greater diversification of its fixed income
investments (by holding more securities of varying sizes and risks)
than it could gain buying fixed income securities directly.
The fund is permitted, but not required, to use various types of
derivatives (contracts whose value is based on, for example,
indexes, currencies or securities). In particular, the fund may use
futures, options and covered call options. The 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.
DWS Equity Income Fund | 5
THE MAIN RISKS OF INVESTING IN THE FUND
There are several risk factors that could hurt the fund's
performance, cause you to lose money or cause the fund's
performance to trail that of other investments.
STOCK MARKET RISK. The fund is affected by how the stock market
performs. To the extent the fund invests in a particular
capitalization 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.
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.
INDUSTRY RISK.To the extent that an underlying fund has exposure to
a given industry or sector, any factors affecting that industry or
sector could affect the value of portfolio securities. For example,
the real estate sector could be hurt by rising interest rates or
the commodities sector could be hurt by factors affecting a
particular industry or commodity such as drought, floods, weather
or changes in storage costs. Real estate securities are susceptible
to the risks associated with direct ownership of real estate,
including declines in property values; increases in property taxes,
operating expenses, interest rates or competition; overbuilding;
zoning changes; and losses from casualty or condemnation.
6 | DWS Equity Income Fund
INTEREST RATE RISK. Generally, fixed income securities will
decrease in value when interest rates rise. The longer the
effective duration of the fund's securities, the more sensitive it
will be to interest rate changes. (As a general rule, a 1% rise in
interest rates means a 1% fall in value for every year of
duration.) As interest rates decline, the issuers of securities
held by the fund may prepay principal earlier than anticipated,
forcing the fund to reinvest in lower-yielding securities and may
reduce the fund's income. As interest rates increase, slower than
expected principal payments may extend the average life of fixed
income securities. This will have the effect of locking in a
below-market interest rate, increasing the fund's duration and
reducing the value of such a security.
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.
FOREIGN INVESTMENT RISK. To the extent the fund has exposure to
companies based outside the US, it faces the risks inherent in
foreign investing. Adverse political, economic or social
developments could undermine the value of the fund's investments or
prevent the fund from realizing their full value. Financial
reporting standards for companies based in foreign markets differ
from those in the US. Additionally, foreign securities markets
generally are smaller and less liquid than the US markets. These
risks tend to be greater in emerging markets so, to the extent the
fund invests in emerging markets, it takes on greater risks. The
currency of the country in which the fund has invested could
decline relative to the value of the US dollar, which decreases the
value of the investment to US investors. The investments of the
fund may be subject to foreign withholding taxes.
DWS Equity Income Fund | 7
Other factors that could affect performance include:
- portfolio management could be wrong in the analysis of
industries, companies, economic trends, the relative
attractiveness of different securities or other matters.
- at times, market conditions might make it hard to value some
investments or to get an attractive price for them.
- 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.)
- if the fund invests in shares of another investment company,
shareholders would bear not only their proportionate share of
the fund's expenses, but also similar expenses of the investment
company.
8 | DWS Equity Income Fund
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 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 is August 29, 2003.
ANNUAL TOTAL RETURN (%) AS OF 12/31 EACH YEAR - CLASS A (Results do not reflect
sales loads; if they did, total returns would be lower than those shown.)
[GRAPHIC APPEARS HERE]
11.05 4.22 18.83
2004 2005 2006
2007 TOTAL RETURN AS OF SEPTEMBER 30: 6.74%
FOR THE PERIODS INCLUDED IN THE BAR CHART:
BEST QUARTER: 8.11%, Q4 2004 WORST QUARTER: -0.65%, Q2 2006
DWS Equity Income Fund | 9
AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31 (Fund returns include the effects
of maximum sales load.)
- --------------------------------------------------------------------------------
1 YEAR SINCE INCEPTION*
- --------------------------------------------------------------------------------
CLASS A
- --------------------------------------------------------------------------------
Return before Taxes 12.00 11.98
- --------------------------------------------------------------------------------
Return after Taxes on Distributions 8.90 10.19
- --------------------------------------------------------------------------------
Return after Taxes on Distributions
and Sale of Fund Shares 9.81 ** 9.73
- --------------------------------------------------------------------------------
CLASS B (Return before Taxes) 14.93 12.63
- --------------------------------------------------------------------------------
CLASS C (Return before Taxes) 17.96 13.07
- --------------------------------------------------------------------------------
RUSSELL 1000 (Reg. TM) VALUE INDEX (reflects
no deductions for fees, expenses or
taxes) 22.25 17.75
- --------------------------------------------------------------------------------
Total returns would have been lower if operating expenses hadn't been reduced.
* The fund commenced operations on August 29, 2003. Index comparison begins
August 31, 2003.
** Return after Taxes on Distributions and Sale of Fund Shares is higher
than other return figures for the same period due to a capital loss
occurring upon redemption resulting in an assumed tax deduction for the
shareholder.
RUSSELL 1000 (Reg. TM) VALUE INDEX is an unmanaged index that consists of
those stocks in the Russell 1000 Index with less-than-average growth
orientation.
- --------------------------------------------------------------------------------
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.
10 | DWS Equity Income Fund
HOW MUCH INVESTORS PAY
This table describes the fees and expenses that you may pay if you buy and hold
fund shares. This information doesn't include any fees that may be charged by
your financial advisor.
- --------------------------------------------------------------------------------
FEE TABLE CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
SHAREHOLDER FEES, paid directly from your investment
- --------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed
on Purchases (as % of offering price) 5.75%1 None None
- --------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as % of redemption proceeds) None 2 4.00% 1.00%
- --------------------------------------------------------------------------------
Redemption/Exchange fee, on shares
owned less than 15 days (as % of
amount redeemed, if applicable) 3 2.00 2.00 2.00
- --------------------------------------------------------------------------------
ANNUAL OPERATING EXPENSES, deducted from fund assets
- --------------------------------------------------------------------------------
Management Fee 4,5 0.77% 0.77% 0.77%
- --------------------------------------------------------------------------------
Distribution/Service (12b-1) Fee 0.25 1.00 1.00
- --------------------------------------------------------------------------------
Other Expenses 0.25 0.28 0.24
- --------------------------------------------------------------------------------
Acquired Funds (Underlying Funds) Fees
and Expenses 6 0.07 0.07 0.07
- --------------------------------------------------------------------------------
TOTAL ANNUAL OPERATING EXPENSES 7 1.34 2.12 2.08
- --------------------------------------------------------------------------------
Less Expense Waivers/
Reimbursements 8 0.05 0.08 0.04
- --------------------------------------------------------------------------------
NET ANNUAL FUND AND ACQUIRED FUNDS
(UNDERLYING FUNDS) OPERATING
EXPENSES 1.29 2.04 2.04
- --------------------------------------------------------------------------------
1 Because of rounding in the calculation of the offering price, the actual
maximum front-end sales charge paid by an investor may be higher than the
percentage noted (see "Choosing a Share Class - Class A shares").
2 The redemption of shares purchased at net asset value under the Large Order
NAV Purchase Privilege (see "Choosing a Share Class - Class A shares") may
be subject to a contingent deferred sales charge of 1.00% if redeemed
within 12 months of purchase and 0.50% if redeemed within the following six
months.
3 This fee is charged on all applicable redemptions or exchanges. Please see
"Policies You Should Know About - Policies about transactions" for further
information.
4 To the extent the fund invests in other mutual funds advised by the advisor
and its affiliates ("Underlying Funds"), the advisor has agreed not to
impose its advisory fees on assets invested in such Underlying Funds.
5 Includes 0.10% administration fee.
6 "Acquired Funds (Underlying Funds) Fees and Expenses" are based on
estimated amounts for the current fiscal year. Actual expenses may be
different.
7 The "Total Annual Operating Expenses" do not correlate to the ratio of
expenses and average net assets in the fund's "Financial Highlights", which
reflects the operating expenses of the fund and does not include "Acquired
Funds (Underlying Funds) Fees and Expenses."
DWS Equity Income Fund | 11
8 The Advisor has contractually agreed until November 30, 2008 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 1.22% for Class A shares, and 1.97% for Class B and C shares,
excluding certain expenses such as extraordinary expenses, taxes, brokerage,
interest and acquired funds (underlying funds) fees and expenses.
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.
- --------------------------------------------------------------------------------
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
EXPENSES, assuming you sold your shares at the end of each period.
- --------------------------------------------------------------------------------
Class A shares $699 $970 $1,262 $2,091
- --------------------------------------------------------------------------------
Class B shares 607 956 1,332 2,064
- --------------------------------------------------------------------------------
Class C shares 307 648 1,115 2,407
- --------------------------------------------------------------------------------
EXPENSES, assuming you kept your shares.
- --------------------------------------------------------------------------------
Class A shares $699 $970 $1,262 $2,091
- --------------------------------------------------------------------------------
Class B shares 207 656 1,132 2,064
- --------------------------------------------------------------------------------
Class C shares 207 648 1,115 2,407
- --------------------------------------------------------------------------------
12 | DWS Equity Income Fund
- --------------------------------------------------------------------------------
Class A Class B Class C
ticker symbol SAAUX SABUX SACUX
fund number 450 650 750
DWS SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
THE FUND'S MAIN INVESTMENT STRATEGY
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
August 31, 2007, the Russell 2000 Value Index had a median market
capitalization of approximately $614 million). The fund intends to
invest primarily in companies whose market capitalizations fall
within the normal range of the Russell 2000 Value Index.
A quantitative stock valuation model compares each company's stock
price to the company's earnings, book value, sales and other
measures of performance potential. The portfolio managers also look
for factors that may signal a rebound for a company, whether
through a recovery in its markets, a change in business strategy or
other factors. The portfolio managers believe that by combining
techniques used by fundamental value investors with extensive
growth and earnings analysis they can minimize investment style
bias and ultimately produce a "pure" stock selection process that
seeks to add value in any market environment. The team also
incorporates technical analysis to capture short-term price changes
and evaluate the market's responsiveness to new information.
The fund's portfolio is then assembled from among the qualifying
stocks, using a tool known as Portfolio Optimizer - sophisticated
portfolio management software that analyzes the potential return
and risk characteristics of each stock and the overall portfolio.
The fund may invest in the equity securities of real estate
investment trusts ("REITs"). REITs come in several forms.
DWS Small Cap Value Fund | 13
Some REITs, called equity REITs, buy real estate and pay investors
income from the rents received from the real estate owned by the
REIT and from any profits on the sale of its properties. Other
REITs, called mortgage REITs, lend money to building developers and
other real estate companies and pay investors income from the
interest paid on those loans. There are also hybrid REITs which
engage in both owning real estate and making loans.
The fund's investments are diversified among many industries and
among many companies (typically over 150 companies).
The managers will normally sell a stock when the company no longer
qualifies as a small company, when the managers no longer consider
it to be undervalued or when the managers believe other investments
offer better opportunities.
OTHER INVESTMENTS. Although not one of its principal investment
strategies, the fund is permitted, but not required, to use various
types of derivatives (contracts whose value is based on, for
example, indices, currencies or securities). In particular, the
fund may use futures, options and covered call options. The fund
may use derivatives in circumstances where portfolio management
believes they offer an economical means of gaining exposure to a
particular asset class or to keep cash on hand to meet shareholder
redemptions or other needs while maintaining exposure to the
market.
SECURITIES LENDING. The fund may lend its investment securities in
an amount up to 33 1/3% of its total assets to approved
institutional borrowers who need to borrow securities in order to
complete certain transactions.
14 | DWS Small Cap Value Fund
THE MAIN RISKS OF INVESTING IN THE FUND
There are several risk factors that could hurt the fund's
performance, cause you to lose money or cause the fund's
performance to trail that of other investments.
STOCK MARKET RISK. The fund is affected by how the stock market
performs. To the extent the fund invests in a particular
capitalization 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.
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.
INDUSTRY RISK.To the extent that an underlying fund has exposure to
a given industry or sector, any factors affecting that industry or
sector could affect the value of portfolio securities. For example,
the real estate sector could be hurt by rising interest rates or the
commodities sector could be hurt by factors affecting a particular
industry or commodity such as drought, floods, weather or changes in
storage costs. Real estate securities are susceptible to the risks
associated with direct ownership of real estate, including declines
in property values; increases in property taxes, operating expenses,
interest rates or competition; overbuilding; zoning changes; and
losses from casualty or condemnation.
THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS
This fund is designed for long-term investors who are looking for a fund that
takes a value approach to investing in small company stocks.
DWS Small Cap Value Fund | 15
SMALL COMPANY CAPITALIZATION RISK. Small company stocks tend to
experience steeper price fluctuations - down as well as up - than
the stocks of larger companies. A shortage of reliable information
- the same information gap that creates opportunity in small
company investing - can also pose added risk. Industry-wide
reversals may have a greater impact on small companies, since they
lack a large company's financial resources. Small company stocks
are typically less liquid than large company stocks. Accordingly,
it may be harder to find a buyer for a small company's shares.
REAL ESTATE SECURITIES RISK. The value of real estate securities in
general, and REITs in particular, are subject to the same risks as
direct investments in real estate and will depend on the value of
the underlying properties or the underlying loans or interests. The
value of these securities will rise and fall in response to many
factors, including economic conditions, the demand for rental
property and interest rates. In particular, the value of these
securities may decline when interest rates rise and will also be
affected by the real estate market and by the management of the
underlying properties. REITs may be more volatile and/or more
illiquid than other types of equity securities.
SECURITIES LENDING RISK. Any loss in the market price of securities
loaned by the fund that occurs during the term of the loan would be
borne by the fund and would adversely affect the fund's
performance. Also, there may be delays in recovery of securities
loaned or even a loss of rights in the collateral should the
borrower of the securities fail financially while the loan is
outstanding. However, loans will be made only to borrowers selected
by the fund's delegate after a review of relevant facts and
circumstances, including the creditworthiness of the borrower.
16 | DWS Small Cap Value Fund
Other factors that could affect performance include:
- portfolio management could be wrong in the analysis of
industries, companies, economic trends, the relative
attractiveness of different securities or other matters.
- at times, market conditions might make it hard to value some
investments or to get an attractive price for them.
- 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 Small Cap Value Fund | 17
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 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 is December 3, 2001. In the bar
chart, the performance figures for Class A before that date are based on the
historical performance of the fund's original share class (Class S), adjusted
to reflect the higher gross total annual operating expenses of Class A. In the
table, the performance figures for each share class prior to its inception are
based on the historical performance of Class S, adjusted to reflect both the
higher gross total annual operating expenses of Class A, B or C and the current
applicable sales charge for Class A. Class S shares are offered in a different
prospectus.
ANNUAL TOTAL RETURN (%) AS OF 12/31 EACH YEAR - CLASS A (Results do not reflect
sales loads; if they did, total returns would be lower than those shown.)
[GRAPHIC APPEARS HERE]
36.64 -5.80 -12.09 12.45 14.89 -9.78 40.74 23.21 1.49 19.23
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
2007 TOTAL RETURN AS OF SEPTEMBER 30: -8.53%
FOR THE PERIODS INCLUDED IN THE BAR CHART:
BEST QUARTER: 18.13%, Q2 2003 WORST QUARTER: -21.14%, Q3 2002
18 | DWS Small Cap Value Fund
AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31 (Fund returns include the effects
of maximum sales load.)
- --------------------------------------------------------------------------------
1 YEAR 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
CLASS A
- --------------------------------------------------------------------------------
Return before Taxes 12.37 12.29 10.07
- --------------------------------------------------------------------------------
Return after Taxes on Distributions 9.01 10.03 8.84
- --------------------------------------------------------------------------------
Return after Taxes on Distributions
and Sale of Fund Shares 8.19 9.80 8.45
- --------------------------------------------------------------------------------
CLASS B (Return before Taxes) 15.20 12.56 9.82
- --------------------------------------------------------------------------------
CLASS C (Return before Taxes) 18.37 12.76 9.87
- --------------------------------------------------------------------------------
RUSSELL 2000 (Reg. TM) VALUE INDEX (reflects
no deductions for fees, expenses or taxes) 23.48 15.37 13.27
- --------------------------------------------------------------------------------
Total returns for 1997 and for 1999-2001 would have been lower if operating
expenses hadn't been reduced.
RUSSELL 2000 (Reg. TM) VALUE INDEX is an unmanaged index measuring the
performance of those Russell 2000 companies with lower price-to-book ratios
and lower forecasted growth values.
- --------------------------------------------------------------------------------
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 Small Cap Value Fund | 19
HOW MUCH INVESTORS PAY
This table below describes the fees and expenses that you may pay if you buy
and hold fund shares. This information doesn't include any fees that may be
charged by your financial advisor.
- --------------------------------------------------------------------------------
FEE TABLE CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
SHAREHOLDER FEES, paid directly from your investment
- --------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed
on Purchases (as % of offering price) 5.75% 1 None None
- --------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as % of redemption proceeds) None 2 4.00% 1.00%
- --------------------------------------------------------------------------------
Redemption/Exchange fee on shares
owned less than 15 days (as % of
amount redeemed, if applicable) 3 2.00 2.00 2.00
- --------------------------------------------------------------------------------
ANNUAL OPERATING EXPENSES, deducted from fund assets
- --------------------------------------------------------------------------------
Management Fee 4 0.77% 0.77% 0.77%
- --------------------------------------------------------------------------------
Distribution/Service (12b-1) Fee 0.24 0.99 0.99
- --------------------------------------------------------------------------------
Other Expenses 0.36 0.43 0.39
- --------------------------------------------------------------------------------
TOTAL ANNUAL OPERATING EXPENSES 1.37 2.19 2.15
- --------------------------------------------------------------------------------
1 Because of rounding in the calculation of the offering price, the actual
maximum front-end sales charge paid by an investor may be higher than the
percentage noted (see "Choosing a Share Class - Class A shares").
2 The redemption of shares purchased at net asset value under the Large Order
NAV Purchase Privilege (see "Choosing a Share Class - Class A shares") may
be subject to a contingent deferred sales charge of 1.00% if redeemed
within 12 months of purchase and 0.50% if redeemed within the following six
months.
3 This fee is charged on all applicable redemptions or exchanges. Please see
"Policies You Should Know About - Policies about transactions" for further
information.
4 Includes 0.10% administration fee.
20 | DWS Small Cap Value Fund
Based on the costs above, 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.
- --------------------------------------------------------------------------------
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
EXPENSES, assuming you sold your shares at the end of each period
- --------------------------------------------------------------------------------
Class A shares $706 $984 $1,282 $2,127
- --------------------------------------------------------------------------------
Class B shares 622 985 1,375 2,125
- --------------------------------------------------------------------------------
Class C shares 318 673 1,154 2,483
- --------------------------------------------------------------------------------
EXPENSES, assuming you kept your shares
- --------------------------------------------------------------------------------
Class A shares $706 $984 $1,282 $2,127
- --------------------------------------------------------------------------------
Class B shares 222 685 1,175 2,125
- --------------------------------------------------------------------------------
Class C shares 218 673 1,154 2,483
- --------------------------------------------------------------------------------
DWS Small Cap Value Fund | 21
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. The Board will provide shareholders with at
least 60 days notice prior to making any changes to DWS Equity
Income Fund's 80% investment policy and DWS Small Cap Value
Fund's 90% investment policy as described herein.
- Each fund may trade actively. This could raise transaction costs
(thus lowering return) and could mean higher taxable
distributions.
- As a temporary defensive measure, each fund could shift up to
100% of its assets into investments such as money market
securities or other short-term securities that offer comparable
levels of risk This could prevent losses, but, while engaged in a
temporary defensive position, 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.
- Due to DWS Equity Income Fund's investments in dividend-paying
equities, it is likely that a portion of fund distributions may
be eligible to be treated as qualified dividend income, provided
holding period and other requirements are met by the fund. In
addition, a portion of the fund's dividend income from
dividend-paying equity securities may not qualify. For more
information, please see "Understanding Distributions and Taxes,"
below, and "Federal Income Taxes" in the Statement of Additional
Information.
Secondary risks
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; and the risk
that the derivative transaction could expose the fund to the effects
of leverage, which could increase the fund's exposure to
22 | Other Policies and Secondary Risks
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.
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).
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
equity holdings and other fund information is posted on
www.dws-scudder.com as of the calendar quarter-end on or after the
15th day following quarter-end. Each fund's Statement of Additional
Information includes a description of a fund's policies and
procedures with respect to the disclosure of a fund's portfolio
holdings.
Other Policies and Secondary Risks | 23
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.
The Advisor is an indirect, wholly owned subsidiary of Deutsche Bank
AG. Deutsche Bank AG is a major global banking institution that is
engaged in a wide range of financial services, including investment
management, mutual funds, retail, private and commercial banking,
investment banking and insurance.
MANAGEMENT FEE. The Advisor receives a management fee from each
fund. Below are the actual rates paid by each fund for the most
recent fiscal year, as a percentage of each fund's average daily net
assets.
- --------------------------------------------------------------------------------
FUND NAME FEE PAID
- --------------------------------------------------------------------------------
DWS Equity Income Fund 0.61%
- --------------------------------------------------------------------------------
DWS Small Cap Value Fund 0.67%
- --------------------------------------------------------------------------------
24 | Who Manages and Oversees the Funds
A discussion regarding the basis for the Board's approval of each
fund's investment management agreement is contained in the most
recent shareholder reports for the semi-annual period ended January
31 (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 | 25
Portfolio management
The following person handles the day-to-day management of the fund.
DWS EQUITY INCOME FUND
David Hone, CFA
Director of Deutsche Asset Management and Lead Portfolio Manager of the fund.
- - Joined Deutsche Asset Management in 1996 as an equity analyst for consumer
cyclicals, consumer staples and financials.
- - Prior to that, eight years of experience as an analyst for Chubb & Son.
- - Portfolio manager for Large Cap Value; Lead portfolio manager for US Equity
Income Fund Strategy: New York.
- - Joined the fund in 2003.
- - BA, Villanova University.
26 | Who Manages and Oversees the Funds
The DWS Small Cap Value Fund is managed by a team of investment professionals
who collaborate to develop and implement the fund's investment strategy. Each
portfolio manager on the team has authority over all aspects of the 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 DWS Small Cap Value
Fund.
DWS SMALL CAP VALUE FUND
Jin Chen
Director of Deutsche Asset Management and Portfolio Manager of the fund.
- - Joined Deutsche Asset Management in 1999 previously serving as a portfolio
manager for Absolute Return Strategies, after four years of experience as a
fundamental equity analyst and portfolio manager of various funds in US
large and small cap equities at Thomas White Asset Management.
- - Senior portfolio manager for Quantitative strategies: New York.
- - BS, Nanjing University; MS, Michigan State University.
Julie Abbett
Director of Deutsche Asset Management and Portfolio Manager of the fund.
- - Joined Deutsche Asset Management in 2000 after four years of combined
experience at BARRA, Inc. as a Senior Consultant for Equity Trading
Services and as a Product Developer for FactSet Research Systems' portfolio
analytics products.
- - Senior portfolio manager for Quantitative Strategies: New York.
- - BA, University of Connecticut.
Robert Wang
Managing Director of Deutsche Asset Management and Portfolio Manager of the
fund.
- - Joined Deutsche Asset Management in 1995 as portfolio manager for asset
allocation after 13 years of experience of trading fixed income, foreign
exchange and derivative products at J.P. Morgan.
- - Global Head of Quantitative Strategies Portfolio Management: New York.
- - Joined the fund in 2005.
- - BS, The Wharton School, University of Pennsylvania.
Each fund's Statement of Additional Information provides additional information
about a portfolio manager's investments in each fund, a description of the
portfolio management compensation structure and information regarding other
accounts managed.
Who Manages and Oversees the Funds | 27
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).
DWS Equity Income Fund - Class A
- ------------------------------------------------------------------------------------------------
YEARS ENDED JULY 31, 2007 2006 2005 2004 a
- ------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA
- ------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.26 $ 12.12 $ 11.11 $ 10.00
- ------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income b .25 .29 .39 .25
- ------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) 1.27 .66 1.16 1.04
- ------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 1.52 .95 1.55 1.29
- ------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income ( .26) ( .29) ( .39) ( .18)
- ------------------------------------------------------------------------------------------------
Net realized gains ( 1.38) ( .52) ( .15) -
- ------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS ( 1.64) ( .81) ( .54) ( .18)
- ------------------------------------------------------------------------------------------------
Redemption fees .00*** .00*** .00*** -
- ------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.14 $ 12.26 $ 12.12 $ 11.11
- ------------------------------------------------------------------------------------------------
Total Return (%) c,d 12.66 8.31 14.35 12.83**
- ------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 71 69 84 70
- ------------------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions (%) 1.27 1.41 1.32 1.32*
- ------------------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%) 1.16 .97 .95 .95*
- ------------------------------------------------------------------------------------------------
Ratio of net investment income (%) 2.06 2.46 3.29 2.60*
- ------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 42 61 67 17*
- ------------------------------------------------------------------------------------------------
a For the period from August 29, 2003 (commencement of operations) to July
31, 2004.
b Based on average shares outstanding during the period.
c Total return does not reflect the effect of any sales charges.
d Total return would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
*** Amount is less than $.005.
28 | Financial Highlights
DWS Equity Income Fund - Class B
- -----------------------------------------------------------------------------------------------------
YEARS ENDED JULY 31, 2007 2006 2005 2004 a
- -----------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA
- -----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.25 $ 12.12 $ 11.10 $ 10.00
- -----------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income b .15 .20 .29 .17
- -----------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) 1.29 .64 1.17 1.04
- -----------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 1.44 .84 1.46 1.21
- -----------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income ( .16) ( .19) ( .29) ( .11)
- -----------------------------------------------------------------------------------------------------
Net realized gains ( 1.38) ( .52) ( .15) -
- -----------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS ( 1.54) ( .71) ( .44) ( .11)
- -----------------------------------------------------------------------------------------------------
Redemption fees .00*** .00*** .00*** -
- -----------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.15 $ 12.25 $ 12.12 $ 11.10
- -----------------------------------------------------------------------------------------------------
Total Return (%) c,d 11.91 7.31 13.39 12.13**
- -----------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 22 22 23 18
- -----------------------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions (%) 2.05 2.18 2.09 2.10*
- -----------------------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%) 1.95 1.79 1.77 1.77*
- -----------------------------------------------------------------------------------------------------
Ratio of net investment income (%) 1.27 1.64 2.47 1.78*
- -----------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 42 61 67 17*
- -----------------------------------------------------------------------------------------------------
a For the period from August 29, 2003 (commencement of operations) to July
31, 2004.
b Based on average shares outstanding during the period.
c Total return does not reflect the effect of any sales charges.
d Total return would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
*** Amount is less than $.005.
Financial Highlights | 29
DWS Equity Income Fund - Class C
- ------------------------------------------------------------------------------------------------
YEARS ENDED JULY 31, 2007 2006 2005 2004 a
- ------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA
- ------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.24 $ 12.11 $ 11.09 $ 10.00
- ------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income b .16 .20 .29 .17
- ------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) 1.28 .64 1.17 1.03
- ------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 1.44 .84 1.46 1.20
- ------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income ( .16) ( .19) ( .29) ( .11)
- ------------------------------------------------------------------------------------------------
Net realized gains ( 1.38) ( .52) ( .15) -
- ------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS ( 1.54) ( .71) ( .44) ( .11)
- ------------------------------------------------------------------------------------------------
Redemption fees .00*** .00*** .00*** -
- ------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.14 $ 12.24 $ 12.11 $ 11.09
- ------------------------------------------------------------------------------------------------
Total Return (%) c,d 11.93 7.33 13.41 12.04**
- ------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 40 41 49 46
- ------------------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions (%) 2.01 2.16 2.08 2.07*
- ------------------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%) 1.91 1.78 1.76 1.76*
- ------------------------------------------------------------------------------------------------
Ratio of net investment income (%) 1.31 1.65 2.48 1.79*
- ------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 42 61 67 17*
- ------------------------------------------------------------------------------------------------
a For the period from August 29, 2003 (commencement of operations) to July
31, 2004.
b Based on average shares outstanding during the period.
c Total return does not reflect the effect of any sales charges.
d Total return would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
*** Amount is less than $.005.
30 | Financial Highlights
DWS Small Cap Value Fund - Class A
- --------------------------------------------------------------------------------------------------------
YEARS ENDED JULY 31, 2007 2006 2005 2004 2003
- --------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA
- --------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 25.89 $ 28.16 $ 26.23 $ 20.85 $ 20.77
- --------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income (loss) a .15 c,d .02 ( .03) .08 .05
- --------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) .87 .80 5.76 5.32 2.28
- --------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 1.02 .82 5.73 5.40 2.33
- --------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income ( .02) - ( .13) ( .02) -
- --------------------------------------------------------------------------------------------------------
Net realized gains ( 4.02) ( 3.09) ( 3.67) - ( 2.25)
- --------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS ( 4.04) ( 3.09) ( 3.80) ( .02) ( 2.25)
- --------------------------------------------------------------------------------------------------------
Redemption fees .00* .00* .00* .00* .00*
- --------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 22.87 $ 25.89 $ 28.16 $ 26.23 $ 20.85
- --------------------------------------------------------------------------------------------------------
Total Return (%) b 2.78 c 3.66 22.75 25.84 13.11
- --------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 16 14 14 9 3
- --------------------------------------------------------------------------------------------------------
Ratio of expenses (%) 1.37 1.42 1.41 1.35 1.44
- --------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)(%) .57 c,d .10 ( .12) .35 .28
- --------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 109 117 90 135 168
- --------------------------------------------------------------------------------------------------------
a Based on average shares outstanding during the period.
b Total return does not reflect the effect of any sales charges.
c Includes non-recurring income from the Advisor recorded as a result of an
administrative proceeding regarding disclosure of brokerage allocation
practices in connection with sales of DWS Scudder Funds. The non-recurring
income resulted in an increase in net investment income of $0.003 per share
and an increase in the ratio of net investment income (loss) of 0.01%.
Excluding this non-recurring income, total return would have been 0.01%
lower.
d Net investment income (loss) per share and the ratio of net investment
income (loss) include non-recurring dividend income amounting to $0.06 per
share and 0.24% of average daily net assets, respectively.
* Amount is less than $.005.
Financial Highlights | 31
DWS Small Cap Value Fund - Class B
- --------------------------------------------------------------------------------------------------------
YEARS ENDED JULY 31, 2007 2006 2005 2004 2003
- --------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA
- --------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 24.91 $ 27.44 $ 25.72 $ 20.61 $ 20.71
- --------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income (loss) a (.04) c,d (.18) (.23) (.12) (.10)
- --------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) .84 .74 5.62 5.23 2.25
- --------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS .80 .56 5.39 5.11 2.15
- --------------------------------------------------------------------------------------------------------
Less distributions from:
Net realized gains (4.02) (3.09) (3.67) - (2.25)
- --------------------------------------------------------------------------------------------------------
Redemption fees .00* .00* .00* .00* .00*
- --------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 21.69 $ 24.91 $ 27.44 $ 25.72 $ 20.61
- --------------------------------------------------------------------------------------------------------
Total Return (%) b 1.87 c 2.74 21.72 24.79 12.21
- --------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions) 3 3 3 3 2
- -------------------------------------------------------------------------------------------------------
Ratio of expenses (%) 2.19 2.27 2.20 2.24 2.26
- -------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
(%) (.25) c,d (.75) (.91) (.54) (.54)
- -------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 109 117 90 135 168
- -------------------------------------------------------------------------------------------------------
a Based on average shares outstanding during the period.
b Total return does not reflect the effect of any sales charges.
c Includes non-recurring income from the Advisor recorded as a result of an
administrative proceeding regarding disclosure of brokerage allocation
practices in connection with sales of DWS Scudder Funds. The non-recurring
income resulted in an increase in net investment income of $0.003 per share
and an increase in the ratio of net investment income (loss) of 0.01%.
Excluding this non-recurring income, total return would have been 0.01%
lower.
d Net investment income (loss) per share and the ratio of net investment
income (loss) include non-recurring dividend income amounting to $0.06 per
share and 0.24% of average daily net assets, respectively.
* Amount is less than $.005.
32 | Financial Highlights
DWS Small Cap Value Fund - Class C
- -----------------------------------------------------------------------------------------------------
YEARS ENDED JULY 31, 2007 2006 2005 2004 2003
- -----------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA
- -----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 24.98 $ 27.47 $ 25.75 $ 20.61 $ 20.71
- -----------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income (loss) a (.03) c,d (.15) (.23) (.10) (.10)
- -----------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) .84 .75 5.62 5.24 2.25
- -----------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS .81 .60 5.39 5.14 2.15
- -----------------------------------------------------------------------------------------------------
Less distributions from:
Net realized gains (4.02) (3.09) (3.67) - (2.25)
- -----------------------------------------------------------------------------------------------------
Redemption fees .00* .00* .00* .00* .00*
- -----------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 21.77 $ 24.98 $ 27.47 $ 25.75 $ 20.61
- -----------------------------------------------------------------------------------------------------
Total Return (%) b 1.95 c 2.90 21.74 24.94 12.21
- -----------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 7 5 4 2 .66
- -----------------------------------------------------------------------------------------------------
Ratio of expenses (%) 2.15 2.13 2.19 2.08 2.25
- -----------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
(%) (.21) c,d (.61) (.90) (.38) (.53)
- -----------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 109 117 90 135 168
- -----------------------------------------------------------------------------------------------------
a Based on average shares outstanding during the period.
b Total return does not reflect the effect of any sales charges.
c Includes non-recurring income from the Advisor recorded as a result of an
administrative proceeding regarding disclosure of brokerage allocation
practices in connection with sales of DWS Scudder Funds. The non-recurring
income resulted in an increase in net investment income of $0.003 per share
and an increase in the ratio of net investment income (loss) of 0.01%.
Excluding this non-recurring income, total return would have been 0.01%
lower.
d Net investment income (loss) per share and the ratio of net investment
income (loss) include non-recurring dividend income amounting to $0.06 per
share and 0.24% of average daily net assets, respectively.
* Amount is less than $.005.
Financial Highlights | 33
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.
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.
- -----------------------------------------------------------------------------------------
CLASSES AND FEATURES POINTS TO HELP YOU COMPARE
- -----------------------------------------------------------------------------------------
CLASS A
- Sales charge of up to 5.75% charged - Some investors may be able to reduce
when you buy shares or eliminate their sales charge; see
"Class A shares"
- In most cases, no charge when you
sell shares - Total annual expenses are lower than
those for Class B or Class C
- Up to 0.25% annual shareholder
servicing fee
- -----------------------------------------------------------------------------------------
CLASS B
- No sales charge when you buy shares - The deferred sales charge rate falls to
zero after six years
- Deferred sales charge declining from
4.00%, charged when you sell shares - Shares automatically convert to
you bought within the last six years Class A after six years, which means
lower annual expenses going forward
- 0.75% annual distribution fee and up
to 0.25% annual shareholder servicing
fee
- -----------------------------------------------------------------------------------------
CLASS C
- No sales charge when you buy shares - The deferred sales charge rate for one
year is lower for Class C shares than
- Deferred sales charge of 1.00%, Class B shares, but your shares never
charged when you sell shares you convert to Class A, so annual expenses
bought within the last year remain higher
- 0.75% annual distribution fee and up
to 0.25% annual shareholder servicing
fee
- -----------------------------------------------------------------------------------------
Choosing a Share Class | 35
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:
- --------------------------------------------------------------------------------
FRONT-END SALES FRONT-END SALES
CHARGE AS % CHARGE AS % OF YOUR
YOUR INVESTMENT OF OFFERING PRICE 1,2 NET INVESTMENT 2
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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")
36 | Choosing a Share Class
- 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 | 37
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
38 | Choosing a Share Class
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:
- --------------------------------------------------------------------------------
YEAR AFTER YOU BOUGHT SHARES CDSC ON SHARES YOU SELL
- --------------------------------------------------------------------------------
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)
- --------------------------------------------------------------------------------
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 | 39
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:
- --------------------------------------------------------------------------------
YEAR AFTER YOU BOUGHT SHARES CDSC ON SHARES YOU SELL
- --------------------------------------------------------------------------------
First year 1.00%
- --------------------------------------------------------------------------------
Second year and later None
- --------------------------------------------------------------------------------
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.
40 | Choosing a Share Class
How to BUY Class A, B and C Shares
- -------------------------------------------------------------------------------------------
FIRST INVESTMENT ADDITIONAL INVESTMENTS
- -------------------------------------------------------------------------------------------
$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 investment slip to us at the
address, along with an investment appropriate address below
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
- --------------------------------------------------------------------------------
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 | 41
How to EXCHANGE or SELL Class A, B and C Shares
- -------------------------------------------------------------------------------------------
EXCHANGING INTO ANOTHER FUND SELLING SHARES
- -------------------------------------------------------------------------------------------
- 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
- --------------------------------------------------------------------------------
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
42 | How to Exchange or Sell Class A, B and C Shares
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 Financial Industry
Regulatory Authority ("FINRA") 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 | 43
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
44 | How to Exchange or Sell Class A, B and C Shares
broker-dealers to execute portfolio transactions for each fund. In
addition, the Advisor, the Distributor and/or their affiliates will
not use fund brokerage to pay for their obligation to provide
additional compensation to financial advisors as described above.
POLICIES YOU SHOULD KNOW ABOUT
Along with the information on the previous pages, the policies below
may affect you as a shareholder. Some of this information, such as
the section on distributions and taxes, applies to all investors,
including those investing through a financial advisor.
If you are investing through a financial advisor or through a
retirement plan, check the materials you received from them about
how to buy and sell shares because particular financial advisors or
other intermediaries may adopt policies, procedures or limitations
that are separate from those described by a fund. Please note that a
financial advisor may charge fees separate from those charged by a
fund and may be compensated by a fund.
Keep in mind that the information in this prospectus applies only to
the shares offered herein. Other share classes are described in
separate prospectuses and have different fees, requirements and
services.
In order to reduce the amount of mail you receive and to help reduce
expenses, we generally send a single copy of any shareholder report
and prospectus to each household. If you do not want the mailing of
these documents to be combined with those for other members of your
household, please contact your financial advisor or call (800)
621-1048.
Policies about transactions
EACH FUND IS OPEN FOR BUSINESS each day the New York Stock Exchange
is open. Each fund calculates its share price for each class every
business day, as of the close of regular trading on the New York
Stock Exchange (typically 4:00 p.m. Eastern time, but sometimes
earlier, as in the case of scheduled half-day trading or unscheduled
suspensions of trading). You can place an order to buy or sell
shares at any time.
Policies You Should Know About | 45
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.
Ordinarily, your investment will start to accrue dividends the next
business day after your purchase is processed. When selling shares,
you'll generally receive the dividend for the day on which your
shares were sold.
46 | Policies You Should Know About
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, 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.
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.
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).
MARKET TIMING POLICIES AND PROCEDURES. Short-term and excessive
trading of fund shares may present risks to long-term shareholders,
including potential dilution in the value of fund shares,
interference with the efficient management of a fund's portfolio
(including losses on the sale of investments), taxable gains to
remaining shareholders and increased brokerage and administrative
costs. These risks may be more pronounced if a fund invests in
certain securities, such as those that trade in foreign markets, are
illiquid or do not otherwise have "readily available market
quotations." Certain investors may seek to employ short-term trading
strategies aimed at exploiting variations in portfolio valuation
that arise from the nature of the securities held by a fund (e.g.,
"time zone arbitrage"). Each fund discourages short-term and
excessive trading and has adopted policies and procedures that are
intended to detect and deter short-term and excessive trading.
Policies You Should Know About | 47
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).
48 | Policies You Should Know About
In certain circumstances where shareholders hold shares of a fund
through a financial intermediary, the fund may rely upon the
financial intermediary's policy to deter short-term or excessive
trading if the Advisor believes that the financial intermediary's
policy is reasonably designed to detect and deter transactions that
are not in the best interests of a fund. A financial intermediary's
policy relating to short-term or excessive trading may be more or
less restrictive than the DWS Funds' policy, may permit certain
transactions not permitted by the DWS Funds' policies, or prohibit
transactions not subject to the DWS Funds' policies.
The Advisor may also accept undertakings from a financial
intermediary to enforce short-term or excessive trading policies on
behalf of a fund that provide a substantially similar level of
protection for each fund against such transactions. For example,
certain financial intermediaries may have contractual, legal or
operational restrictions that prevent them from blocking an account.
In such instances, the financial intermediary may use alternate
techniques that the Advisor considers to be a reasonable substitute
for such a block.
In addition, if a fund invests some portion of its assets in foreign
securities, it has adopted certain fair valuation practices intended
to protect the fund from "time zone arbitrage" with respect to its
foreign securities holdings and other trading practices that seek to
exploit variations in portfolio valuation that arise from the nature
of the securities held by a fund. (See "How each fund calculates
share price.")
There is no assurance that these policies and procedures will be
effective in limiting short-term and excessive trading in all cases.
For example, the Advisor may not be able to effectively monitor,
detect or limit short-term or excessive trading by underlying
shareholders that occurs through omnibus accounts maintained by
broker-dealers or other financial intermediaries. The Advisor
reviews trading activity at the omnibus level to detect short-term
or excessive trading. If the Advisor has reason to suspect that
short-term or excessive trading is occurring at the omnibus level,
the Advisor will contact the financial intermediary to request
underlying shareholder level activity. Depending on the amount of
fund shares held in such omnibus accounts (which may represent most
of a fund's shares) short-term and/or excessive trading of fund
shares could adversely affect long-term shareholders in a fund. If
short-term or excessive trading is identified, the Advisor will take
appropriate action.
Policies You Should Know About | 49
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
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.
50 | Policies You Should Know About
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 (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
Policies You Should Know About | 51
(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.
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
If you ever have difficulty placing an order by phone or Internet, you can send
us your order in writing.
52 | Policies You Should Know About
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 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
Policies You Should Know About | 53
- withdrawals made through an automatic withdrawal plan up to a
maximum of 12% per year of the net asset value of the account
- withdrawals related to certain retirement or benefit plans
- redemptions for certain loan advances, hardship provisions or
returns of excess contributions from retirement plans
- for Class A shares purchased through the Large Order NAV Purchase
Privilege, redemption of shares whose dealer of record at the
time of the investment notifies the Distributor that the dealer
waives the applicable commission
- for Class C shares, redemption of shares purchased through a
dealer-sponsored asset allocation program maintained on an
omnibus record-keeping system, provided the dealer of record has
waived the advance of the first year distribution and service
fees applicable to such shares and has agreed to receive such
fees quarterly
In each of these cases, there are a number of additional provisions
that apply in order to be eligible for a CDSC waiver. Your financial
advisor or Shareholder Services can answer your questions and help
you determine if you are eligible.
IF YOU SELL SHARES IN A DWS FUND AND THEN DECIDE TO INVEST WITH DWS
SCUDDER AGAIN WITHIN SIX MONTHS, you may be able to take advantage
of the "reinstatement feature." With this feature, you can put your
money back into the same class of a DWS fund at its current NAV and,
for purposes of a sales charge, it will be treated as if it had
never left DWS Scudder.
You'll be reimbursed (in the form of fund shares) for any CDSC you
paid when you sold. Future CDSC calculations will be based on your
original investment date, rather than your reinstatement date. There
is also an option that lets investors who sold Class B shares buy
Class A shares (if available) with no sales charge, although they
won't be reimbursed for any CDSC they paid. You can only use the
reinstatement feature once for any given group of shares. To take
advantage of this feature, contact Shareholder Services or your
financial advisor.
MONEY FROM SHARES YOU SELL is normally sent out within one business
day of when your order is processed (not when it is received),
although it could be delayed for up to seven days. There are other
circumstances when it could be longer: When you are selling shares
you bought recently by check (redemption
54 | Policies You Should Know About
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.
How each fund calculates share price
To calculate net asset value, or NAV, each share class uses the
following equation:
TOTAL ASSETS - TOTAL LIABILITIES
----------------------------------------- = NAV
TOTAL NUMBER OF SHARES OUTSTANDING
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 of purchase. Please see
"Policies about transactions - Redemption fees" for further
information.
Policies You Should Know About | 55
WE TYPICALLY VALUE SECURITIES USING INFORMATION FURNISHED BY AN
INDEPENDENT PRICING SERVICE OR MARKET QUOTATIONS, WHERE APPROPRIATE.
However, we may use methods approved by a fund's Board, such as a
fair valuation model, which are intended to reflect fair value when
pricing service information or market quotations are not readily
available or when a security's value or a meaningful portion of the
value of a fund's portfolio is believed to have been materially
affected by a significant event, such as a natural disaster, an
economic event like a bankruptcy filing, or a substantial
fluctuation in domestic or foreign markets that has occurred between
the close of the exchange or market on which the security is
principally traded (for example, a foreign exchange or market) and
the close of the New York Stock Exchange. In such a case, a fund's
value for a security is likely to be different from the last quoted
market price or pricing service information. In addition, due to the
subjective and variable nature of fair value pricing, it is possible
that the value determined for a particular asset may be materially
different from the value realized upon such asset's sale. It is
expected that the greater the percentage of fund assets that is
invested in non-US securities, the more extensive will be a fund's
use of fair value pricing. This is intended to reduce a fund's
exposure to "time zone arbitrage" and other harmful trading
practices. (See "Market timing policies and procedures.")
TO THE EXTENT THAT A FUND INVESTS IN SECURITIES THAT ARE TRADED
PRIMARILY IN FOREIGN MARKETS, the value of its holdings could change
at a time when you aren't able to buy or sell fund shares. This is
because some foreign markets are open on days or at times when a
fund doesn't price its shares. (Note that prices for securities that
trade on foreign exchanges can change significantly on days when the
New York Stock Exchange is closed and you cannot buy or sell fund
shares. Price changes in the securities a fund owns may ultimately
affect the price of fund shares the next time the NAV is
calculated.)
56 | Policies You Should Know About
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
- close and liquidate your account if we are unable to verify your
identity, or for other reasons; if we decide to close your
account, your fund shares will be redeemed at the net asset value
per share next calculated after we determine to close your
account (less any applicable sales charge or redemption fee); you
may recognize a gain or loss on the redemption of your fund
shares and incur a tax liability
- pay you for shares you sell by "redeeming in kind," that is, by
giving you securities (which typically will involve brokerage
costs for you to liquidate) rather than cash, but which will be
taxable to the same extent as a redemption for cash; a fund
generally won't make a redemption in kind unless your requests
over a 90-day period total more than $250,000 or 1% of the value
of a fund's net assets, whichever is less
- change, add or withdraw various services, fees and account
policies (for example, we may adjust a fund's investment minimums
at any time)
Policies You Should Know About | 57
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 Equity Income Fund intends to pay dividends to shareholders
quarterly and make distributions annually in December and, if
necessary, may make other distributions at other times as well.
DWS Small Cap Value Fund intends to pay dividends and make
distributions to shareholders in December and, if necessary, may
make other distributions 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 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.
58 | Understanding Distributions and Taxes
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:
- ---------------------------------------------------------------------------------------------------
GENERALLY TAXED AT LONG-TERM GENERALLY TAXED AT ORDINARY
CAPITAL GAIN RATES: INCOME RATES:
- ---------------------------------------------------------------------------------------------------
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
- ---------------------------------------------------------------------------------------------------
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
generally will not be entitled to claim a credit or deduction with
respect to foreign taxes paid by the fund. In addition, any
investments in foreign securities or foreign currencies may increase
or accelerate a fund's recognition of ordinary income and may affect
the timing or amount of the fund's distributions. If you invest in a
fund through a taxable account, your after-tax return could be
negatively impacted.
To the extent that a fund invests in certain debt obligations or
certain other securities, investments in these obligations or
securities may cause a fund to recognize taxable income in excess of
the cash generated by such obligations. Thus, a fund could be
required at times to liquidate other investments in order to satisfy
its distribution requirements.
Understanding Distributions and Taxes | 59
For taxable years beginning before January 1, 2011, distributions to
individuals and other noncorporate shareholders of investment income
designated by a fund as derived from qualified dividend income are
eligible for taxation for federal income tax purposes at the more
favorable long-term capital gain rates. Qualified dividend income
generally includes dividends from domestic and some foreign
corporations. It does not include income from investments in debt
securities or, generally, from REITs. In addition, a fund must meet
certain holding period and other requirements with respect to the
dividend-paying stocks in its portfolio and the shareholder must
meet certain holding period and other requirements with respect to a
fund's shares for the lower tax rates to apply.
For taxable years beginning before January 1, 2011, the maximum
federal income tax rate imposed on long-term capital gains
recognized by individuals and other noncorporate shareholders has
been reduced to 15%. For taxable years beginning on or after January
1, 2011, the long-term capital gain rate is scheduled to return to
20%. 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.
60 | Understanding Distributions and Taxes
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 | 61
DWS Equity Income Fund - Class A
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
- ---------------------------------------------------------------------------------------------------
1 5.00% 1.29% -2.25% $ 9,774.67 $ 698.84
- ---------------------------------------------------------------------------------------------------
2 10.25% 1.34% 1.32% $ 10,132.42 $ 133.38
- ---------------------------------------------------------------------------------------------------
3 15.76% 1.34% 5.03% $ 10,503.27 $ 138.26
- ---------------------------------------------------------------------------------------------------
4 21.55% 1.34% 8.88% $ 10,887.69 $ 143.32
- ---------------------------------------------------------------------------------------------------
5 27.63% 1.34% 12.86% $ 11,286.18 $ 148.56
- ---------------------------------------------------------------------------------------------------
6 34.01% 1.34% 16.99% $ 11,699.25 $ 154.00
- ---------------------------------------------------------------------------------------------------
7 40.71% 1.34% 21.27% $ 12,127.44 $ 159.64
- ---------------------------------------------------------------------------------------------------
8 47.75% 1.34% 25.71% $ 12,571.31 $ 165.48
- ---------------------------------------------------------------------------------------------------
9 55.13% 1.34% 30.31% $ 13,031.42 $ 171.54
- ---------------------------------------------------------------------------------------------------
10 62.89% 1.34% 35.08% $ 13,508.37 $ 177.82
- ---------------------------------------------------------------------------------------------------
TOTAL $ 2,090.84
- ---------------------------------------------------------------------------------------------------
DWS Equity Income Fund - Class B
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
- ---------------------------------------------------------------------------------------------------
1 5.00% 2.04% 2.96% $ 10,296.00 $ 207.02
- ---------------------------------------------------------------------------------------------------
2 10.25% 2.12% 5.93% $ 10,592.52 $ 221.42
- ---------------------------------------------------------------------------------------------------
3 15.76% 2.12% 8.98% $ 10,897.59 $ 227.80
- ---------------------------------------------------------------------------------------------------
4 21.55% 2.12% 12.11% $ 11,211.44 $ 234.36
- ---------------------------------------------------------------------------------------------------
5 27.63% 2.12% 15.34% $ 11,534.33 $ 241.11
- ---------------------------------------------------------------------------------------------------
6 34.01% 2.12% 18.67% $ 11,866.52 $ 248.05
- ---------------------------------------------------------------------------------------------------
7 40.71% 1.34% 23.01% $ 12,300.83 $ 161.92
- ---------------------------------------------------------------------------------------------------
8 47.75% 1.34% 27.51% $ 12,751.04 $ 167.85
- ---------------------------------------------------------------------------------------------------
9 55.13% 1.34% 32.18% $ 13,217.73 $ 173.99
- ---------------------------------------------------------------------------------------------------
10 62.89% 1.34% 37.02% $ 13,701.50 $ 180.36
- ---------------------------------------------------------------------------------------------------
TOTAL $ 2,063.88
- ---------------------------------------------------------------------------------------------------
62 | Appendix
DWS Equity Income Fund - Class C
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
- ---------------------------------------------------------------------------------------------------
1 5.00% 2.04% 2.96% $ 10,296.00 $ 207.02
- ---------------------------------------------------------------------------------------------------
2 10.25% 2.08% 5.97% $ 10,596.64 $ 217.28
- ---------------------------------------------------------------------------------------------------
3 15.76% 2.08% 9.06% $ 10,906.07 $ 223.63
- ---------------------------------------------------------------------------------------------------
4 21.55% 2.08% 12.25% $ 11,224.52 $ 230.16
- ---------------------------------------------------------------------------------------------------
5 27.63% 2.08% 15.52% $ 11,552.28 $ 236.88
- ---------------------------------------------------------------------------------------------------
6 34.01% 2.08% 18.90% $ 11,889.60 $ 243.80
- ---------------------------------------------------------------------------------------------------
7 40.71% 2.08% 22.37% $ 12,236.78 $ 250.91
- ---------------------------------------------------------------------------------------------------
8 47.75% 2.08% 25.94% $ 12,594.10 $ 258.24
- ---------------------------------------------------------------------------------------------------
9 55.13% 2.08% 29.62% $ 12,961.84 $ 265.78
- ---------------------------------------------------------------------------------------------------
10 62.89% 2.08% 33.40% $ 13,340.33 $ 273.54
- ---------------------------------------------------------------------------------------------------
TOTAL $ 2,407.24
- ---------------------------------------------------------------------------------------------------
DWS Small Cap Value Fund - Class A
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
- ---------------------------------------------------------------------------------------------------
1 5.00% 1.37% -2.33% $ 9,767.13 $ 706.47
- ---------------------------------------------------------------------------------------------------
2 10.25% 1.37% 1.22% $ 10,121.67 $ 136.24
- ---------------------------------------------------------------------------------------------------
3 15.76% 1.37% 4.89% $ 10,489.09 $ 141.18
- ---------------------------------------------------------------------------------------------------
4 21.55% 1.37% 8.70% $ 10,869.85 $ 146.31
- ---------------------------------------------------------------------------------------------------
5 27.63% 1.37% 12.64% $ 11,264.42 $ 151.62
- ---------------------------------------------------------------------------------------------------
6 34.01% 1.37% 16.73% $ 11,673.32 $ 157.12
- ---------------------------------------------------------------------------------------------------
7 40.71% 1.37% 20.97% $ 12,097.06 $ 162.83
- ---------------------------------------------------------------------------------------------------
8 47.75% 1.37% 25.36% $ 12,536.18 $ 168.74
- ---------------------------------------------------------------------------------------------------
9 55.13% 1.37% 29.91% $ 12,991.25 $ 174.86
- ---------------------------------------------------------------------------------------------------
10 62.89% 1.37% 34.63% $ 13,462.32 $ 181.21
- ---------------------------------------------------------------------------------------------------
TOTAL $ 2,126.58
- ---------------------------------------------------------------------------------------------------
Appendix | 63
DWS Small Cap Value Fund - Class B
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
- ---------------------------------------------------------------------------------------------------
1 5.00% 2.19% 2.81% $ 10,281.00 $ 222.08
- ---------------------------------------------------------------------------------------------------
2 10.25% 2.19% 5.70% $ 10,569.90 $ 228.32
- ---------------------------------------------------------------------------------------------------
3 15.76% 2.19% 8.67% $ 10,866.91 $ 234.73
- ---------------------------------------------------------------------------------------------------
4 21.55% 2.19% 11.72% $ 11,172.27 $ 241.33
- ---------------------------------------------------------------------------------------------------
5 27.63% 2.19% 14.86% $ 11,486.21 $ 248.11
- ---------------------------------------------------------------------------------------------------
6 34.01% 2.19% 18.09% $ 11,808.97 $ 255.08
- ---------------------------------------------------------------------------------------------------
7 40.71% 1.37% 22.38% $ 12,237.64 $ 164.72
- ---------------------------------------------------------------------------------------------------
8 47.75% 1.37% 26.82% $ 12,681.87 $ 170.70
- ---------------------------------------------------------------------------------------------------
9 55.13% 1.37% 31.42% $ 13,142.22 $ 176.89
- ---------------------------------------------------------------------------------------------------
10 62.89% 1.37% 36.19% $ 13,619.28 $ 183.32
- ---------------------------------------------------------------------------------------------------
TOTAL $ 2,125.28
- ---------------------------------------------------------------------------------------------------
DWS Small Cap Value Fund - Class C
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
- ---------------------------------------------------------------------------------------------------
1 5.00% 2.15% 2.85% $ 10,285.00 $ 218.06
- ---------------------------------------------------------------------------------------------------
2 10.25% 2.15% 5.78% $ 10,578.12 $ 224.28
- ---------------------------------------------------------------------------------------------------
3 15.76% 2.15% 8.80% $ 10,879.60 $ 230.67
- ---------------------------------------------------------------------------------------------------
4 21.55% 2.15% 11.90% $ 11,189.67 $ 237.24
- ---------------------------------------------------------------------------------------------------
5 27.63% 2.15% 15.09% $ 11,508.57 $ 244.01
- ---------------------------------------------------------------------------------------------------
6 34.01% 2.15% 18.37% $ 11,836.57 $ 250.96
- ---------------------------------------------------------------------------------------------------
7 40.71% 2.15% 21.74% $ 12,173.91 $ 258.11
- ---------------------------------------------------------------------------------------------------
8 47.75% 2.15% 25.21% $ 12,520.87 $ 265.47
- ---------------------------------------------------------------------------------------------------
9 55.13% 2.15% 28.78% $ 12,877.71 $ 273.03
- ---------------------------------------------------------------------------------------------------
10 62.89% 2.15% 32.45% $ 13,244.73 $ 280.82
- ---------------------------------------------------------------------------------------------------
TOTAL $ 2,482.65
- ---------------------------------------------------------------------------------------------------
64 | Appendix
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.
DWS SCUDDER SEC DISTRIBUTOR
- --------------------- -------------------- -------------------------------
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
SEC FILE NUMBER:
DWS Value Equity Trust DWS Equity Income Fund 811-1444
DWS Securities Trust DWS Small Cap Value Fund 811-2021
(12/01/07) DVF2-1
[RECYCLE GRAPHIC APPEARS HERE]
[DWS SCUDDER LOGO APPEARS HERE]
- --------------------------------------------------------------------------------
DECEMBER 1, 2007
PROSPECTUS
------------------
CLASS S
- --------------------------------------------------------------------------------
DWS EQUITY INCOME FUND
DWS SMALL CAP VALUE 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.
[DWS SCUDDER LOGO GRAPHIC APPEARS HERE]
- --------------------------------------------------------------------------------
CONTENTS
- --------------------------------------------------------------------------------
HOW EACH FUND WORKS
4 DWS Equity Income Fund
13 DWS Small Cap Value Fund
20 Other Policies and Secondary
Risks
22 Who Manages and Oversees
the Funds
26 Financial Highlights
HOW TO INVEST IN THE FUNDS
29 How to Buy, Sell and
Exchange Shares
33 Policies You Should Know
About
45 Understanding Distributions
and Taxes
48 Appendix
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.
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).
- --------------------------------------------------------------------------------
Class S
ticker symbol SDDSX
fund number 2490
DWS EQUITY INCOME FUND
- --------------------------------------------------------------------------------
THE FUND'S MAIN INVESTMENT STRATEGY
The fund seeks high income consistent with preservation of capital
and, secondarily, long-term growth of capital. The fund seeks to
achieve its objectives by investing primarily in a diversified
portfolio of income-producing equity securities and debt
securities. The fund attempts to provide a yield that exceeds the
composite yield on the securities comprising the Standard & Poor's
500 Composite Stock Index (S&P 500).
Under normal circumstances, the fund invests at least 80% of its
assets in dividend-paying equity securities. These include common
stocks, preferred stocks, convertible securities and securities of
real estate investment trusts. By investing a significant portion
of the fund's assets in dividend-paying equity securities, the fund
seeks to help investors take advantage of lower federal tax rates
with respect to a portion of the dividend income generated by the
fund. The fund is not managed for tax efficiency. The fund may also
invest up to 20% of its assets in non-dividend-paying equity
securities and debt securities. Although the fund invests primarily
in US issuers, it may invest up to 25% of its assets in foreign
securities.
The fund emphasizes a value-investing style focusing primarily on
established companies that offer the prospects for future dividend
payments and capital growth and whose current stock prices appear
to be undervalued relative to the general market.
The portfolio managers begin by screening for stocks whose
price-to-earnings ratios are below the average for the S&P 500
Index. The portfolio managers then compare a company's stock price
to its book value, cash flow and yield, and analyze individual
companies to identify those that are financially sound and appear
to have strong potential for long-term growth.
4 | DWS Equity Income Fund
The portfolio managers assemble the fund's portfolio from among the
most attractive stocks, drawing on analysis of economic outlooks
for various sectors and industries. The portfolio managers may
favor securities from different sectors and industries at different
times while still maintaining variety in terms of industries and
companies represented.
The portfolio managers will normally sell a security when they
believe the income or growth potential of the security has changed,
other investments offer better opportunities, or in the course of
adjusting the emphasis on or within a given industry.
OTHER INVESTMENTS. Debt securities in which the fund invests
include those rated investment grade (i.e., BBB/Baa or above) and
below investment grade high yield/high risk bonds. The fund may
invest up to 15% of net assets in high yield/high risk bonds (i.e.,
rated BB/Ba and below). In addition, the fund may invest in
affiliated mutual funds. The fund expects to make part or all of
its investments in debt securities through investment in affiliated
mutual funds. By investing in affiliated mutual funds, the fund
will achieve greater diversification of its fixed income
investments (by holding more securities of varying sizes and risks)
than it could gain buying fixed income securities directly.
The fund is permitted, but not required, to use various types of
derivatives (contracts whose value is based on, for example,
indexes, currencies or securities). In particular, the fund may use
futures, options and covered call options. The 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.
DWS Equity Income Fund | 5
THE MAIN RISKS OF INVESTING IN THE FUND
There are several risk factors that could hurt the fund's
performance, cause you to lose money or cause the fund's
performance to trail that of other investments.
STOCK MARKET RISK. The fund is affected by how the stock market
performs. To the extent the fund invests in a particular
capitalization 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.
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.
INDUSTRY RISK.To the extent that an underlying fund has exposure to
a given industry or sector, any factors affecting that industry or
sector could affect the value of portfolio securities. For example,
the real estate sector could be hurt by rising interest rates or
the commodities sector could be hurt by factors affecting a
particular industry or commodity such as drought, floods, weather
or changes in storage costs. Real estate securities are susceptible
to the risks associated with direct ownership of real estate,
including declines in property values; increases in property taxes,
operating expenses, interest rates or competition; overbuilding;
zoning changes; and losses from casualty or condemnation.
6 | DWS Equity Income Fund
INTEREST RATE RISK. Generally, fixed income securities will
decrease in value when interest rates rise. The longer the
effective duration of the fund's securities, the more sensitive it
will be to interest rate changes. (As a general rule, a 1% rise in
interest rates means a 1% fall in value for every year of
duration.) As interest rates decline, the issuers of securities
held by the fund may prepay principal earlier than anticipated,
forcing the fund to reinvest in lower-yielding securities and may
reduce the fund's income. As interest rates increase, slower than
expected principal payments may extend the average life of fixed
income securities. This will have the effect of locking in a
below-market interest rate, increasing the fund's duration and
reducing the value of such a security.
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.
FOREIGN INVESTMENT RISK. To the extent the fund has exposure to
companies based outside the US, it faces the risks inherent in
foreign investing. Adverse political, economic or social
developments could undermine the value of the fund's investments or
prevent the fund from realizing their full value. Financial
reporting standards for companies based in foreign markets differ
from those in the US. Additionally, foreign securities markets
generally are smaller and less liquid than the US markets. These
risks tend to be greater in emerging markets so, to the extent the
fund invests in emerging markets, it takes on greater risks. The
currency of the country in which the fund has invested could
decline relative to the value of the US dollar, which decreases the
value of the investment to US investors. The investments of the
fund may be subject to foreign withholding taxes.
DWS Equity Income Fund | 7
Other factors that could affect performance include:
- portfolio management could be wrong in the analysis of
industries, companies, economic trends, the relative
attractiveness of different securities or other matters.
- at times, market conditions might make it hard to value some
investments or to get an attractive price for them.
- 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.)
- if the fund invests in shares of another investment company,
shareholders would bear not only their proportionate share of
the fund's expenses, but also similar expenses of the investment
company.
8 | DWS Equity Income Fund
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 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.
ANNUAL TOTAL RETURN (%) AS OF 12/31 EACH YEAR - Class S
[BAR CHART GRAPHIC APPEARS HERE]
4.19 18.90
2005 2006
2007 TOTAL RETURN AS OF SEPTEMBER 30: 6.89%
FOR THE PERIODS INCLUDED IN THE BAR CHART:
BEST QUARTER: 7.30%, Q3 2006 WORST QUARTER: -0.65%, Q2 2006
DWS Equity Income Fund | 9
AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31
- --------------------------------------------------------------------------------
1 YEAR SINCE INCEPTION*
- --------------------------------------------------------------------------------
CLASS S
- --------------------------------------------------------------------------------
Return before Taxes 18.90 11.92
- --------------------------------------------------------------------------------
Return after Taxes on Distributions 15.62 9.30
- --------------------------------------------------------------------------------
Return after Taxes on Distributions
and Sale of Fund Shares 14.42 9.34**
- --------------------------------------------------------------------------------
RUSSELL 1000 (Reg. TM) VALUE INDEX (reflects
no deductions for fees, expenses or
taxes) 22.25 15.60
- --------------------------------------------------------------------------------
Total returns would have been lower if operating expenses hadn't been reduced.
* Class S commenced operations on December 1, 2004. Index comparison begins
November 30, 2004.
** Return after Taxes on Distributions and Sale of Fund Shares is higher than
other return figures for the same period due to a capital loss occurring
upon redemption resulting in an assumed tax deduction for the shareholder.
RUSSELL 1000 (Reg. TM) VALUE INDEX is an unmanaged index that consists of
those stocks in the Russell 1000 Index with less-than-average growth
orientation.
- --------------------------------------------------------------------------------
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.
10 | DWS Equity Income Fund
HOW MUCH INVESTORS PAY
This fund's Class S shares have no sales charge or other shareholder fees. This
information doesn't include any fees that may be charged by your financial
advisor. The fund does have annual operating expenses and as a shareholder of
Class S shares, you pay them indirectly.
- --------------------------------------------------------------------------------
FEE TABLE
- --------------------------------------------------------------------------------
SHAREHOLDER FEES, paid directly from
your investment None
- --------------------------------------------------------------------------------
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, 3 0.77%
- --------------------------------------------------------------------------------
Distribution/Service (12b-1) Fee None
- --------------------------------------------------------------------------------
Other Expenses 0.38
- --------------------------------------------------------------------------------
Acquired Funds (Underlying Funds) Fees
and Expenses 4 0.07
- --------------------------------------------------------------------------------
TOTAL ANNUAL OPERATING EXPENSES 5 1.22
- --------------------------------------------------------------------------------
Less Expense Waivers/
Reimbursements 6 0.18
- --------------------------------------------------------------------------------
NET ANNUAL FUND AND ACQUIRED FUNDS
(UNDERLYING FUNDS) OPERATING
EXPENSES 6 1.04
- --------------------------------------------------------------------------------
1 This fee is charged on applicable redemptions or exchanges. Please see
"Policies You Should Know About - Policies about transactions" for further
information.
2 To the extent the fund invests in other mutual funds advised by the Advisor
and its affiliates ("Underlying Funds"), the Advisor has agreed not to
impose its advisory fees on assets invested in such other Underlying Funds.
3 Includes 0.10% administration fee.
4 "Acquired Funds (Underlying Funds) Fees and Expenses" are based on estimated
amounts for the current fiscal year. Actual expenses may be different.
5 The "Total Annual Operating Expenses" do not correlate to the ratio of
expenses and average net assets in the fund's "Financial Highlights," which
reflects the operating expenses of the fund and does not include "Acquired
Funds (Underlying Funds) Fees and Expenses."
6 The Advisor has contractually agreed until November 30, 2008 to waive all or
a portion of its management fee or pay operating expenses of the fund to the
extent necessary to maintain the fund's total operating expenses at 0.97%
for Class S shares, excluding certain expenses such as extraordinary
expenses, taxes, brokerage, interest and acquired funds (underlying funds)
fees and expenses.
DWS Equity Income Fund | 11
Based on the costs above, this example (including one year of capped expenses
in each period) helps you compare this fund's expenses 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.
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EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
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Class S shares $106 $369 $653 $1,461
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12 | DWS Equity Income Fund
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Class S
ticker symbol SCSUX
fund number 2078
DWS SMALL CAP VALUE FUND
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THE FUND'S MAIN INVESTMENT STRATEGY
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
August 31, 2007, the Russell 2000 Value Index had a median market
capitalization of approximately $614 million). The fund intends to
invest primarily in companies whose market capitalizations fall
within the normal range of the Russell 2000 Value Index.
A quantitative stock valuation model compares each company's stock
price to the company's earnings, book value, sales and other
measures of performance potential. The portfolio managers also look
for factors that may signal a rebound for a company, whether
through a recovery in its markets, a change in business strategy or
other factors. The portfolio managers believe that by combining
techniques used by fundamental value investors with extensive
growth and earnings analysis they can minimize investment style
bias and ultimately produce a "pure" stock selection process that
seeks to add value in any market environment. The team also
incorporates technical analysis to capture short-term price changes
and evaluate the market's responsiveness to new information.
The fund's portfolio is then assembled from among the qualifying
stocks, using a tool known as Portfolio Optimizer - sophisticated
portfolio management software that analyzes the potential return
and risk characteristics of each stock and the overall portfolio.
The fund may invest in the equity securities of real estate
investment trusts ("REITs"). REITs come in several forms.
DWS Small Cap Value Fund | 13
