Investment products: No bank guarantee I Not FDIC insured I May lose value Inflation Understanding one of the greatest risks to retirement savings PRESENTER.

Investment products: No bank guarantee I Not FDIC insured I May lose value

Inflation Understanding one of the greatest risks to retirement savings

PRESENTER NAME

LOCATION, DATE

Investment products: No bank guarantee I Not FDIC insured I May lose value 2

Agenda

Definitions of inflation and deflation 1

5 Questions to ask and steps to help protect your plan

Floating-rate loans

4 Investment options: a focus on inflation portfolio strategies

3 Implications of inflation on retirement investing

2 Understanding the Consumer Price Index (CPI)

Commodities and alternatives

4.1

4.2


Risk informationDWS Floating Rate Fund: Loan investments are subject to interest-rate and credit risks. Floating rate loans tend to be rated below investment grade and may be more vulnerable to economic or business changes than issuers with investment-grade credit. Adjustable-rate loans are more sensitive to interest-rate changes. The fund may use derivatives, including as part of its Global Tactical Asset Allocation (GTAA) strategy. Investing in derivatives entails special risks relating to liquidity, leverage and credit that may reduce returns and/or increase volatility. In certain situations, it may be difficult or impossible to sell an investment at an acceptable price. This fund is non-diversified and can take larger positions in fewer issues, increasing its potential risk. See the prospectus for details.

DWS Enhanced Commodity Strategy Fund: The fund invests in commodity-linked derivatives, which may subject the fund to special risks. Market price movements or regulatory and economic changes will have a significant impact on the fund’s performance. Any fund that concentrates in a particular segment of the market will generally be more volatile than a fund that invests more broadly. A counterparty with whom the fund does business may decline in financial health and become unable to honor its commitments, which could cause losses for the fund. Bond investments are subject to interest-rate and credit risks. When interest rates rise, bond prices generally fall. Credit risk refers to the ability of an issuer to make timely payments of principal and interest. Investing in derivatives entails special risks relating to liquidity, leverage and credit that may reduce returns and/or increase volatility. Investing in foreign securities, particularly those of emerging markets, presents certain risks, such as currency fluctuations, political and economic changes, and market risks. This fund is non-diversified and can take larger positions in fewer issues, increasing its potential risk. See the prospectus for details.

DWS Alternative Asset Allocation Fund: Although allocation among different asset categories generally limits risk, portfolio management may favor an asset category that underperforms other assets or markets as a whole. The fund expects to invest in underlying funds that emphasize alternatives or non-traditional asset categories or investment strategies, and as a result, it is subject to the risk factors of those underlying funds. Some of those risks include stock market risk, credit and interest rate risk, volatility in commodity prices and high-yield debt securities, short sales risk and the political, general economic, liquidity and currency risks of foreign investments, which may be particularly significant for emerging markets. The fund may use derivatives, including as part of its global tactical asset allocation (GTAA) strategy. The fund expects to have direct and indirect exposure to derivatives, which may be more volatile and less liquid than traditional securities. The fund could suffer losses on its derivative positions. See the prospectus for additional risks and specific details regarding the fund's risk profile.

For performance information about these funds, please visit www.dws-investments.com.

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Index and term definitionsThe Barclays Capital 1–3 Year U.S. Aggregate Index tracks the performance of domestic, taxable investment-grade bonds with average maturities of one to three years. The Barclays Capital 7-10 Year U.S. Aggregate Index tracks the performance of domestic, taxable investment-grade bonds with average maturities of seven to 10 years. The Barclays Capital 10-Plus Year Aggregate Index tracks the performance of domestic, taxable investment-grade bonds with average maturities of greater than 10 years. The Barclays Capital Corporate 1-Year Duration Index tracks the performance of the short term U.S. corporate bond market. The Barclays Capital Emerging Markets Bond Index tracks the performance of external-currency-denominated debt instruments of the emerging markets. The Barclays Capital TIPS Index tracks the performance of U.S. Treasury inflation-linked securities. The Barclays Capital U.S. Aggregate Index tracks the performance of the broad U.S. investment-grade, fixed-rate bond market, including both government and corporate bonds. The Barclays Capital U.S. Treasury Index tracks the performance of U.S. Treasury obligations with a remaining maturity of one year or more. The Credit Suisse High Yield Index tracks the performance of the global high-yield debt market. The Credit Suisse Leveraged Loan Index tracks the balance and current spread over LIBOR for fully funded term loans. The Dow Jones UBS Commodities Index is composed of futures contracts on physical commodities. The FTSE EPRA/NAREIT Developed Index tracks the performance of developed-market REITs. The FTSE NAREIT All Equity REITs Index includes all tax-qualified REITs listed on the NYSE, AMEX, and NASDAQ National Market. The HFRI Equity Market Neutral Index tracks the performance of equity market neutral strategies. The JPMorgan Emerging Markets Bond Index tracks the performance of Brady bonds in the emerging markets. The Morningstar/Ibottson SBBI U.S. Inflation Index measures U.S. inflation. The Morningstar/Ibbotson SBBI U.S. 1-Year Treasury Constant Maturity Index tracks the performance of U.S. Treasuries with maturities of one year. The Morningstar/Ibbotson SBBI U.S. Intermediate-Term Government Bond Index tracks the performance of intermediate-term government bonds. The Morningstar/Ibottson SBBI U.S. Long-Term Government Index tracks the performance of a one-bond portfolio with a maturity near 20 years. The MSCI Emerging Markets Equity Index tracks the performance of stocks in select emerging markets. The MSCI World Energy Index tracks the performance of energy stocks in developed world markets. The MSCI World Infrastructure Index tracks the performance of infrastructure stocks. The MSCI World Materials Index tracks the performance of materials stocks in developed world markets. The S&P 500 Index tracks the performance of 500 leading U.S. stocks and is widely considered representative of the U.S. equity market. The S&P Goldman Sachs Commodity Index (GSCI) is a composite index of commodity sector returns representing an unleveraged, long-term investment in commodity futures. The S&P/Citigroup Global Gold Index tracks the performance of gold. The S&P/LSTA Leveraged Loan Index tracks outstanding balance and current spread over LIBOR for fully funded loan terms.

Duration is a measure of a fund's sensitivity to interest-rate changes (the longer a fund's duration, the more sensitive it is to changes in interest rates). LIBOR, or the London Interbank Offered Rate, is the most widely used benchmark or reference rate for short-term interest rates. LIBOR is the rate of interest at which banks borrow funds from other banks, in large volume, in the international market. “Overweighting or underweighting” means having a higher or lower weighting, respectively, in a given sector or security than a benchmark. Shorting is borrowing, then selling, a security with the expectation that the security will fall in value. The security can then be purchased and repaid at a lower price. “Spread” refers to the excess yield a bond sector provides over another sector or index (such as U.S. Treasuries with similar maturities or LIBOR). A yield curve is a graphical representation of how yields on bonds of different maturities compare. Normally, yield curves slant up, as bonds with longer maturities typically offer higher yields than short-term bonds.

4Equity index returns assume reinvestment of all distributions. Index returns do not reflect fees or expenses, and it is not possible to invest directly in an index.


Asset class representationOn slide 29, asset classes are represented as follows: alternatives, 20% FTSE EPRA/NAREIT Developed Index, 20% HFRI Equity Market Neutral Index, 20% Barclays Capital TIPS Index, 15% commodities blend (see below), 10% MSCI Emerging Markets Equity Index, 10% JPMorgan Emerging Markets Bond Index, 5% S&P/Citigroup Global Gold Index; commodities, 50% S&P Goldman Sachs Commodity Index, 25% MSCI World Energy Index and 25% MSCI World Materials Index; emerging-market (EM) equity, MSCI Emerging Markets Equity Index; emerging-market (EM) income, JPMorgan Emerging Markets Bond Index; infrastructure, MSCI World Infrastructure Index; global real estate, FTSE EPRA/NAREIT Developed Index; gold, S&P/Citigroup Global Gold Index; floating-rate, S&P/LSTA Leveraged Loan Index; market neutral, HFRI Equity Market Neutral Index; TIPS, Barclays Capital TIPS Index; U.S. stocks, S&P 500 Index.

5

Equity index returns assume reinvestment of all distributions. Index returns do not reflect fees or expenses, and it is not possible to invest directly in an index. See Slide 3 for index definitions.


Inflation or deflation?Definitions of inflation and deflation


Definitions of inflation and deflation

7

Economic environment Recent occurrence

Deflation – A decrease in the money supply often accompanied by a decrease in prices

United States in the Great Depression

Disinflation – Prices are still increasing, but at a slower rate than before United States in the 1990s

Inflation – An increase in the money supply often accompanied by an increase in prices

Most normal periods

Stagflation – High inflation and high unemployment rate accompanied by stagnant economic growth

United States in the 1970s

Hyperinflation – Prices increase rapidly (out of control) as a currency loses its valueOften ends in extreme political turmoil

Germany post-World War IZimbabwe in the 2000s

The sources, opinions and forecasts expressed are those of DWS, are as of 3/31/12 and any forward-looking statements may not actually come to pass. This information is subject to change at any time based on market and other conditions and should not be construed as investment advice.


Understanding how inflation and deflation work

8

Deflationary spiral Inflationary spiral

As prices fall, companies earn less money

In turn, they cut costs to remain profitable, which leads to layoffs and pay cuts

Consumers who earn less, spend less

Borrowing dries up and spending is depressed

This cycle can lock the economy into a period of decline from which it is hard to escape

High cost of living prompts demands for higher wages

Higher wages push production costs up forcing firms to increases prices

In turn, increased costs triggers calls for fresh wage increases

This cycle can lock the economy into a period of rapid price increases from which it is hard to escape

The sources, opinions and forecasts expressed are those of DWS, are as of 3/31/12 and any forward-looking statements may not actually come to pass. This information is subject to change at any time based on market and other conditions and should not be construed as investment advice.


What signs of inflation or deflation are we seeing today?

9

Deflation ChecklistDo we

see it today?

Falling U.S. Treasury yields

Falling home prices

Rising dollar

Falling commodity prices

Falling consumer prices

Falling stock market

Rising savings rate

Cash hoarding by banks

Shrinking consumer credit

Capacity utilization slack

Inflation checklistDo we

see it today?

Growing economy

Rising consumer prices

Growing government stimulus

Excess reserves at banks(dry powder)

Rising prices across the globe

Lower interest rates – U.S. Federal Reserve “easy money”

Higher commodity prices

Rising price of gold

Falling dollar

The sources, opinions and forecasts expressed are those of DWS, are as of 3/31/12 and any forward-looking statements may not actually come to pass. This information is subject to change at any time based on market and other conditions and should not be construed as investment advice. These tables are for informational purposes only and are not intended to be investment advice. All opinions and estimates reflect our judgement on the date of this report and are subject to change without notice. Such opinions and estimates, including forecast returns, involve a number of assumptions that may not prove valid.

12

Possibly present in today’s marketPresent in today’s market


Inflation or deflation?Understanding the Consumer Price Index (CPI)


Consumer Price Index (CPI) basics

11

ANNUAL CHANGE IN CPI (1913–2011)

CPI category Weight

Housing 42%

Transportation 17%

Food and beverage 15%

Medical care 7%

Recreation 6%

Education and communication 6%

Apparel 4%

Other goods and services 3%

Average CPI 3.4%

One-year CPI (as of 3/31/12)

2.7%

The CPI samples more than 80,000 items per month

Source for chart: myinflationrate.com and U.S. Bureau of Labor Statistics as of 3/31/12. This chart shows annual changes in the value of the CPI since its inception in 1913 through 2011. The average change for the year measures the change in the average CPI value between the current year and the previous year. Source for table: U.S. Bureau of Labor Statistics as of 12/31/11.


The impact of changes to inflation calculation

12

CHANGES TO CPI OVER THE YEARS

1917–1919

CPI calculation started

1983

Switched from housing prices to

owners’ equivalent rent

1998

Broadened useof product quality enhancements

1999

Began product substitution(e.g., assumes if the price of beef tenderloin rises, a consumer may buy flank

steak instead)

Sources for chart: U.S. Bureau of Labor Statistics for current CPI and Shadowstats.com for pre-1983 and pre-1990 estimates as of 3/31/12.


The impact of changes to headline inflation

13

OWNERS’ EQUIVALENT RENT MITIGATES HOUSING PRICE SWINGS (2001–2011)

Is the housing market decline understating deflation?

The CPI understated inflation during the

housing market bubble

In 1983, the CPI stopped using housing prices, switching instead to owners’ equivalent rent, which is the amount of rent that could be paid to substitute a currently owned house for an equivalent rental property, and is now the largest part of CPI. Historically, owners’ equivalent rent has increased at a significantly lower pace than housing prices, which means the change may have led the CPI to significantly understate inflation.

Sources: U.S. Bureau of Labor Statistics and S&P as of 12/31/11. Performance is historical and does not guarantee future results.


Quality enhancements, including “hedonics”Hedonics used on more than one third of CPI items

14Source: U.S. Bureau of Labor Statistics as of 12/31/11.

ORIGINAL PRICE ADJUSTED PRICE

How is price adjusted?TV A is no longer available and has been replaced by TV B. Rather than use the 400% price difference between the two TVs to measure inflation, the U.S. Bureau of Labor Statistic uses a complex formula to determine TV A’s “quality-adjusted” price. When this formula is applied, TV A costs not $250, but $1,345.

Implied inflation-7.25%

Implied inflation

400%


Quality enhancements, including “hedonics”Hedonics are used on more than one third of CPI items

15Source: U.S. Bureau of Labor Statistics as of 3/31/12.

Most items in the CPI are adjusted for quality changes

Some items use a technique known as hedonic quality adjustment

Hedonic quality adjustment is a method of adjusting prices whenever the characteristics of the products included in the CPI change due to innovation or the introduction of completely new products

The word “hedonics” stems from the word’s Greek origin, meaning “of or related to pleasure”

Examples of items in the CPI getting a quality adjustment through hedonics

Men’s suits, sport coats and outerwear

Men’s pants and shorts

Women's dresses

Women’s footwear

Educational books and supplies

Major appliances

Televisions

Other video equipment

College textbooks receive a quality

adjustment if they have fewer pages than the previous

version


What’s going up and down in price?

16Source: myinflationrate.com as of February 2012.

Needs(basic items) have seen the greatest price increases

10 largest 12-month item (category) increases Inflation

Lamb and mutton (food) +39.28%

Fuel oil (housing) +38.43%

Gasoline (transportation) +34.28%

Peanut butter (food) +33.96%

Lamb and organ meats (food) +27.82%

Bacon and related products (food) +26.23%

Roasted coffee (food) +22.55%

Uncooked other beef and veal (food) +21.18%

Uncooked ground beef (food) +20.74%

Video tape rental (recreation) +20.69%

Needs!7 food items

2 energy-related related items 1 recreation item

Wants(luxury items) have seen the greatest price decreases

10 largest 12-month item (category) decreases Inflation

Televisions (recreation) –29.97%

Other video equipment (recreation) –22.61%

PCs and equipment (education and comm.) –17.03%

Utility (piped) gas service (housing) –15.17%

Photographic equipment (recreation) –14.60%

Software and accessories (education and comm.) –14.12%

Video cassettes and discs (recreation) –11.99%

Clock, lamps and decorate items (housing) –11.66%

Dishes and flatware (housing) –11.41%

Audio equipment (recreation) –10.16%

Wants! 3 housing-related luxury item

5 recreation items2 education and communication items


Inflation or deflation?Implications for retirement investing


ASSET-CLASS PERFORMANCE DURING YEARS WITH THE HIGHEST INFLATION (SINCE 1921)

Understanding the impact of inflation

Source: Morningstar as of 12/30/11. Performance is historical and does not guarantee future results. Inflation is represented by the consumer price index. Stocks are represented by the S&P 500 Index. Bonds are represented by the Morningstar/Ibbotson SBBI U.S. Intermediate-Term Government Bond Index. The values of equity investments are more volatile than those of other securities. Bond investments are subject to interest-rate risk, and their values will decline as interest rates rise. Equity index returns include reinvestment of all distributions. Index returns do not reflect fees or expenses, and it is not possible to invest directly in an index. See slide 4 for index definitions. The chart above is for illustrative purposes only and does not represent any DWS fund.

Source: Morningstar as of 12/30/11. Performance is historical and does not guarantee future results. Inflation is represented by the consumer price index. Stocks are represented by the S&P 500 Index. Bonds are represented by the Morningstar/Ibbotson SBBI U.S. Intermediate-Term Government Bond Index. The values of equity investments are more volatile than those of other securities. Bond investments are subject to interest-rate risk, and their values will decline as interest rates rise. Equity index returns include reinvestment of all distributions. Index returns do not reflect fees or expenses, and it is not possible to invest directly in an index. See slide 4 for index definitions. The chart above is for illustrative purposes only and does not represent any DWS fund.

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Inflation averaged only 2.79% a year from 1921 through 2011, according to myinflationrate.com – but even that relatively low rate may decrease the returns of traditional investments. Below we show returns for stocks and bonds during years with significant inflation as well as the inflation-adjusted return for the same years.


The inflation problem

Investors face different challenges depending on their ages. According to E*Trade, investors in their 20s and 30s are starting a career and building a family; investors in their 40s and 50s are climbing the career ladder and planning for retirement; and investors in their 60s and 70s are living in retirement. We asked how inflation affects each of those 20-year market segments.

Source: myinflationrate.com as of February 2012.Source: myinflationrate.com as of February 2012.

Younger workers Mid-lifers Pre-retirees and retirees Individuals in their 20s and

30s will see inflation cut into their purchasing power. The cost of many basic items, such as food and fuel, has risen in the double digits over the past year, according to myinflationrate.com. Fuel oil – up 38%. Gasoline – up 34%. Coffee – up 23%. And more money spent on necessities means less money saved for retirement

Surveys of investors in their 40s and 50s have revealed that most want to maintain their pre-retirement lifestyle after retirement, but many haven’t accounted for the effects of inflation. As a result, they may not have saved enough money – and with fewer years left until retirement, they may not be able to ride out the ups and downs of the stock market

The average life expectancy at age 65 is 82.3 for a man and 84.9 for a woman, according to the Centers for Disease Control as of 2007 – much higher than it was just 10 years ago. This increase in life expectancy means that many older investors simply haven’t saved enough. Add inflation to the mix, and you’ve aggravated the problem

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A traditional portfolio may not be a resilient and stable retirement portfolio?

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Cash and stable value investments offer no defense against inflation

The traditional portfolio diversifiers (stocks and bonds) increasingly move up or down together – offer less diversification – and they are not adequate inflation-fighters

Source: Morningstar as of 12/31/2011. All categories are that of Morningstar. Correlation refers to how securities or asset classes perform in relation to each another and/or the market. A 1.0 correlation indicates that two security types move in exactly the same direction. A –1.0 correlation indicates movement in exactly opposite directions. A zero correlation implies no relation in the movements. Correlation is historical and does not guarantee future results.

Source: Morningstar as of 12/31/2011. All categories are that of Morningstar. Correlation refers to how securities or asset classes perform in relation to each another and/or the market. A 1.0 correlation indicates that two security types move in exactly the same direction. A –1.0 correlation indicates movement in exactly opposite directions. A zero correlation implies no relation in the movements. Correlation is historical and does not guarantee future results.

Morningstar categories

Large Value1.00

Large Blend1.00

Large Growth

0.98

Short-Term Bond0.53

Target Date 2021-2025

0.98

Mid-Cap Value0.98

Mid-Cap Blend0.97

Mid-Cap Growth

0.96

Multisector Bond0.77

Moderate Allocation

0.98

Small Value0.95

SmallBlend0.95

SmallGrowth

0.95

High Yield Bond0.78

ForeignLarge Blend

0.93

Diversified Emer. Markets

0.86

The closer the correlation is to 1.00, the weaker the asset class's effect on portfolio diversification relative to the S&P 500.


ASSET ALLOCATION BY INFLATION-FIGHTING POTENTIAL BASED ON MORNINGSTAR CATEGORIES

Investors are underweight potential inflation-fighters

Assets by inflation/deflation profile

■Neither inflation- nor deflation-fighting categories (evidence mixed): Includes U.S. equity fund categories, all allocation and target-date categories, all intermediate-, short- and high-yield muni categories, Multisector Bond and World Bond

■Deflation fighters: Includes intermediate and long-term bond categories, all government bond categories, money markets (tax-Free and taxable) and Market Neutral

■Inflation fighters: Includes Bank Loans, all commodity categories, all emerging-market-related categories, all international stock categories, High Yield Bond, Inflation-Protected Bond, real estate categories, Short-Term Bond and Ultrashort Bond

Source: Strategic Insight, as of 12/31/11. Deflation includes the Morningstar Intermediate Government, Intermediate-Term Bond, Long Government, Long-Term Bond, Money Market Tax-Free, Money Market Taxable and Short Government categories. Inflation includes the Morningstar Bank Loan, Commodities Agriculture, Commodities Broad Basket, Commodities Energy, Commodities Industrial Metal, Commodities Miscellaneous, Commodities Precious Metals, Diversified Emerging Markets, Diversified Pac/Asia, Emerging Markets Bond, Equity Energy, Equity Precious Metals, Europe Stock, Foreign Large Blend, Foreign Large Growth, Foreign Large Value, Foreign Small/Mid Growth, Foreign Small/Mid Value, Global Real Estate, High Yield Bond, Inflation-Protected Bond, Japan Stock, Latin America Stock, Multialternative, Natural Resources, Pac/Asia ex-Japan Stock and Real Estate categories. Neither includes the Morningstar Bear Market, Communications, Conservative Allocation, Consumer Discretionary, Consumer Staples, Convertibles, Currency, Financial, Health, High Yield Muni, Industrials, Large Blend, Large Growth, Large Value, Long-Short, Mid Blend, Mid Growth, Mid Value, Miscellaneous Sector, Moderate Allocation, Multisector Bond, Muni CA Intermediate Muni CA Long, Muni MA, Muni MN, Muni National Intermediate, Muni National Long, Muni National Short, Muni NJ, Muni NY Intermediate Muni NY Long, Muni OH, Muni PA, Muni Single State Intermediate, Muni Single State Long, Retirement Income, Short-Term Bond, Small Blend, Small Growth, Small Value, Target Date 2000-2010, Target Date 2011-2015, Target Date 2016-2020, Target Date 2021-2025, Target Date 2026-2030, Target Date 2031-2035, Target Date 2036-2040, Target Date 2041-2045, Target Date 2050+, Technology, Ultrashort Bond, Utilities, World Allocation, World Bond and World Stock categories.

Source: Strategic Insight, as of 12/31/11. Deflation includes the Morningstar Intermediate Government, Intermediate-Term Bond, Long Government, Long-Term Bond, Money Market Tax-Free, Money Market Taxable and Short Government categories. Inflation includes the Morningstar Bank Loan, Commodities Agriculture, Commodities Broad Basket, Commodities Energy, Commodities Industrial Metal, Commodities Miscellaneous, Commodities Precious Metals, Diversified Emerging Markets, Diversified Pac/Asia, Emerging Markets Bond, Equity Energy, Equity Precious Metals, Europe Stock, Foreign Large Blend, Foreign Large Growth, Foreign Large Value, Foreign Small/Mid Growth, Foreign Small/Mid Value, Global Real Estate, High Yield Bond, Inflation-Protected Bond, Japan Stock, Latin America Stock, Multialternative, Natural Resources, Pac/Asia ex-Japan Stock and Real Estate categories. Neither includes the Morningstar Bear Market, Communications, Conservative Allocation, Consumer Discretionary, Consumer Staples, Convertibles, Currency, Financial, Health, High Yield Muni, Industrials, Large Blend, Large Growth, Large Value, Long-Short, Mid Blend, Mid Growth, Mid Value, Miscellaneous Sector, Moderate Allocation, Multisector Bond, Muni CA Intermediate Muni CA Long, Muni MA, Muni MN, Muni National Intermediate, Muni National Long, Muni National Short, Muni NJ, Muni NY Intermediate Muni NY Long, Muni OH, Muni PA, Muni Single State Intermediate, Muni Single State Long, Retirement Income, Short-Term Bond, Small Blend, Small Growth, Small Value, Target Date 2000-2010, Target Date 2011-2015, Target Date 2016-2020, Target Date 2021-2025, Target Date 2026-2030, Target Date 2031-2035, Target Date 2036-2040, Target Date 2041-2045, Target Date 2050+, Technology, Ultrashort Bond, Utilities, World Allocation, World Bond and World Stock categories.

Stocks not an inflation fighter?

■While stocks long-term have been the best way to outpace inflation, the near-term performance is mixed during inflationary periods

■The five worst years for inflation have been 1941, 1946, 1974, 1979 and 1980. Three of these five years were difficult years for the stock market (1941, 1946 and 1974)

Less than 1% of assets are in floating-rate funds and only 1.2% of assets in commodity-related funds (including equities)

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Investment options for inflation and deflation


Asset-class performance and inflation/deflation

DEFLATION

YearU.S.

inflation

Real returns: stocks

Real returns: bonds

1930 -6.03% -18.87% +12.75%

1931 -9.52% -33.82% +7.20%

1932 -10.30% +2.11% +19.11%

INFLATION

YearU.S.

inflation

Real returns: stocks

Real returns: bonds

1946 +18.16% -26.23% -17.16%

1979 +13.31% +5.13% -9.22%

1980 +12.40% +20.02% -8.49%

Source: Morningstar as of 12/31/11. Performance is historical and does not guarantee future results. The chart above is for illustrative purposes only and does not represent any DWS fund. Stocks are represented by the S&P 500 Index. Bonds are represented by the Barclays Capital U.S. Aggregate Index. The values of equity investments are more volatile than those of other securities. Bond investments are subject to interest-rate risk, and their value will decline as interest rates rise. Equity index returns include reinvestment of all distributions. Index returns do not reflect fees or expenses, and it is not possible to invest directly in an index. See slide 4 for index definitions.

Source: Morningstar as of 12/31/11. Performance is historical and does not guarantee future results. The chart above is for illustrative purposes only and does not represent any DWS fund. Stocks are represented by the S&P 500 Index. Bonds are represented by the Barclays Capital U.S. Aggregate Index. The values of equity investments are more volatile than those of other securities. Bond investments are subject to interest-rate risk, and their value will decline as interest rates rise. Equity index returns include reinvestment of all distributions. Index returns do not reflect fees or expenses, and it is not possible to invest directly in an index. See slide 4 for index definitions.

Asset-class performanceduring years with the highest levels of U.S. inflation and deflation (since 1926)

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Real return is the total return for the asset class minus inflation


What has the potential to work during inflation/deflation?

Summary of what potentially works

Deflation: Cash, U.S. Treasuries, agency mortgages, high-grade corporate bonds and some alternatives (such as market neutral) may work

Inflation: International stocks and bonds (as the dollar declines), high-yield bonds and floating-rate loans, hard assets and alternative asset classes may work

U.S. stocksInternational

stocks

Treasury, agency andhigh-grade corporate

bonds

High-yield bonds and

floating-rate loans

Internationalbonds

Hard assets and

commodities Alternatives Cash

Deflation

Inflation

Often works Sometimes works Rarely works

The values of equity investments are more volatile than those of other securities. Fixed-income investments are subject to interest-rate risk, and their value will decline as interest rates rise. Commodities are long-term investments and should be considered part of a diversified portfolio; market-price movements, regulatory changes, economic changes and adverse political or financial factors could have a significant impact on performance. Alternative investments can be less liquid and more volatile than traditional investments, and often lack longer-term track records. The sources, opinions and forecasts expressed are those of DWS, are as of 3/31/12 and any forward-looking statements may not actually come to pass. This information is subject to change at any time based on market and other conditions and should not be construed as investment advice. This table is for informational purposes only and is not intended to be investment advice. All opinions and estimates reflect our judgement on the date of this report and are subject to change without notice. Such opinions and estimates, including forecast returns, involve a number of assumptions that may not prove valid.

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Morningstar Bank Loan and Ultrashort Bond categories have offered high correlation to inflation

Source: Morningstar as of 3/31/12. Inflation is represented by the Morningstar/Ibbotson SBBI U.S. Inflation Index, which tracks U.S. inflation. Correlation is historical and does not guarantee future results. The chart above is for illustrative purposes only and does not represent any DWS fund. Correlation is a measure of how closely two variables move together over time. A 1.0 equals perfect correlation. A –1.0 equals total negative correlation. Asset classes are represented by Morningstar categories. All asset classes are Morningstar categories, except commodities, which are represented by the Dow Jones UBS Commodities Index. See slide 4 for index definitions.

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Inflation-protected securities (TIPs)

correlation = just 0.09


AVERAGE ANNUAL RETURNS OF FLOATING-RATE LOANS AND ULTRA-SHORT-TERM BONDS(12/31/90–12/31/11)

The direction, not the level, of inflation is what matters

Source: Morningstar as of 12/31/11. Performance is historical and does not guarantee future results. This information is for illustrative purposes and does not represent any DWS fund. Floating-rate loans are represented by the Morningstar Bank Loan category. Ultra-short-term bonds are represented by the Morningstar Ultrashort category. Compared to other fixed-income asset classes, floating-rate loans are typically more vulnerable to and are more sensitive to credit and default risks. Floating-rate loans are debt instruments with a variable rate that generally resets every 30 to 90 days. Because of their shorter maturities, short-term bonds are typically less vulnerable to rising interest rates than longer-term bonds.

Floating-rate loans

Floating-rate loans

Ultra-short-term bonds Ultra-short-

term bonds

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POTENTIAL BENEFITS OF MINIMIZING DURATION EXPOSURE DURING RISING-RATE ENVIRONMENTS (2/1/60–9/30/81)

The potential benefits of minimizing duration exposure

Source: Morningstar as of 3/31/12. Performance is historical and does not guarantee future results. Asset class representation is as follows: ultra-short duration bonds, Morningstar/Ibbotson SBBI U.S. 1-Year Treasury Constant Maturity Index; longer-duration bonds, Morningstar/Ibbotson SBBI U.S. Long-Term Government Index. Data is for illustrative purposes and does not represent any DWS fund. Performance for other time periods may not be as favorable. Index returns do not reflect fees or expenses, and it is not possible to invest directly in an index. See slide 4 for index definitions. Fixed-income investments are subject to interest-rate risk, and their value will decline as interest rates rise. Because of their shorter maturities, short-term bonds are typically less vulnerable to rising interest rates than longer-term bonds.

During the last secular rising-rate environment, an investment with low duration exposure outperformed bonds with longer duration exposure in 88% of rolling five-year periods, according to Morningstar as of 3/31/12.

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TOTAL RETURN OF ASSET CLASSES (10/8/10–2/8/11, THE LAST INTEREST-RATE SPIKE)

Floating-rate loans offered a measure of protection from recent rising market rates

Source: Morningstar as of 3/31/12. Past performance is historical and does not guarantee future results. Asset class representation: floating-rate loans, Credit Suisse Leveraged Loan Index; high-yield bonds, Credit Suisse High Yield Index; ultra-short bonds, Barclays Capital Corporate 1-Year Duration Index; short-term bonds, Barclays Capital 1–3 Year U.S. Aggregate Index; TIPS, Barclays Capital TIPS Index; intermediate-term bonds, Barclays Capital 7-10 Year U.S. Aggregate Index; longer-term bonds, Barclays Capital 10-Plus Year Aggregate Index. This data is for illustrative purposes and does not represent any DWS fund. Index returns do not reflect fees or expenses. See slide 4 for index definitions. It is not possible to invest directly in an index. Performance for other time periods may not be as favorable. Fixed-income investments are subject to interest-rate risk, and their value will decline as interest rates rise. Because of their shorter maturities, short-term bonds are typically less vulnerable to rising interest rates than longer-term bonds. Floating-rate loans are typically more vulnerable to and are more sensitive to credit and default risks. Floating-rate loans are debt instruments with a variable rate that generally resets every 30 to 90 days.

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From 10/8/10 to 2/8/11, the 10-year U.S. Treasury yield increased by 134 basis points, from 2.38% to 3.72%.

During this period, floating-rate loans were the best-performing fixed-income asset class, outperforming intermediate-term bonds by 10.82%.


Over the long term, floating-rate loans also offered protection from rising market rates

Source: Morningstar as of 3/31/12. Performance is historical and does not guarantee future results. Asset class representation is as follows: floating-rate loans, Credit Suisse Leveraged Loan Index; emerging-market bonds, Barclays Capital Emerging Markets Bond Index; high-yield bonds, Credit Suisse High Yield Index; multi-sector bonds, Morningstar Multi-Sector Category; short-term bonds, Barclays Capital 1-3 Year U.S. Aggregate Index; global bonds, Barclays Capital Global Aggregate Index; intermediate-term bonds, Barclays Capital 7-10 Year U.S. Aggregate Index; TIPS, Barclays Capital U.S. Treasury Index. This information is for illustrative purposes and does not represent any DWS fund. Index returns do not reflect fees or expenses. It is not possible to invest directly in an index. See slide 4 for index definitions. Performance for other time periods may not be as favorable. Fixed income investments are subject to interest rate risk and their value will decline as interest rates rise. Compared to other fixed-income asset classes, floating-rate loans are typically more vulnerable to and are more sensitive to credit and default risks. Floating-rate loans are debt instruments with a variable rate that generally resets every 30 to 90 days. Because of their shorter maturities, short-term bonds are typically less vulnerable to rising interest rates than longer-term bonds.

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Returns during all one-year periods when interest rates have risen by 1% or more (2/92–12/10)

Asset class Return

Floating-rate loans 11.70%

Emerging-market bonds 9.07%

High-yield bonds 8.34%

Multi-sector bonds 3.26%

Short-term bonds 2.38%

Global bonds 0.96%

Intermediate-term bonds -1.11%

TIPS -1.75%


COMMODITIES HAVE PERFORMED WELL WHEN INFLATION HAS RISEN(AVERAGE ANNUAL TOTAL RETURN, 12/31/76 – 12/31/11)

Commodities have performed well when inflation has risen

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Average inflation is represented by the average US Consumer Price Index (CPI) inflation growth rate from 12/31/76 through 12/31/11, which was 4.4%. Inflation was considered rising when it was higher than it was one year prior.

Source: Morningstar, Bloomberg, FactSet as of 12/31/11. Performance is historical and does not guarantee future results. This information is for illustrative purposes and does not represent any DWS fund. Commodities, bonds and stocks are represented by the S&P Goldman Sachs Commodity Index, Barclays Capital U.S. Aggregate Index and S&P 500 Index, respectively. Fixed-income investments are subject to interest-rate risk, and their value will decline as interest rates rise. The values of equity investments are more volatile than those of other securities. Commodities are long-term investments and should be considered part of a diversified portfolio; market-price movements, regulatory changes, economic changes and adverse political or financial factors could have a significant impact on performance. Equity index returns assume reinvestment of all distributions. Index returns do not reflect fees or expenses, and it is not possible to invest directly in an index. See slide 4 for index definitions.


CALENDAR-YEAR RETURNS

Alternatives are potentially well positioned relative to traditional asset classes for rising inflation

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Source: Morningstar as of 12/31/11. Performance is historical and does not guarantee future results. See Slide 3 for asset class representation. Please see Slides 32 and 33 for asset class risks. Equity index returns assume reinvestment of all distributions. Index returns do not reflect fees or expenses, and it is not possible to invest directly in an index. See slide 4 for index definitions. Returns during certain time periods were negative. Excess return calculation is the mathematical difference between the alternative blend (orange) and U.S. stocks (light blue

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Gold52.61%

EM equity55.82%

Gbl. real est.37.96%

EM equity34.00%


EM equity39.39%

TIPS–2.35%

EM equity78.51%

Gold 35.06%

TIPS13.56%

TIPs16.57%

Gold45.58%

EM equity25.55%

Gold28.35%

EM equity32.17%

Commodities32.45%

Market neutral–5.92%

Floating rate51.62%


EM income9.20%

EM income14.24%


Infrastructure21.31%

Commodities25.54%


Infrastructure 19.58%

EM income–9.70%


EM equity18.88%

Infrastructure5.54%

Commodities12.81%

Commodities29.08%

Commodities 20.82%


Gold20.13%

Gold18.62%

Gold–23.10%

Gold 35.74%

Alternatives13.03%

Floating rate1.52%

Alternatives 9.65%

EM income 28.83%

Alternatives16.63%

Alternatives14.91%

Alternatives15.30%

Alternatives12.04%

Alternatives–26.52%

Commodities28.03%

Commodities12.55%

Market neutral0.73%

Gbl. real est.2.82%

Alternatives24.70%

EM income11.77%

EM income11.86%

EM income10.49%

TIPS11.64%

Floating rate–29.10%

Alternatives26.67%

EM income11.83%

Alternatives–1.02%

Floating rate1.91%


TIPS8.46%

Market neutral6.22%

Market neutral7.32%

EM income6.45%

Infrastructure–32.66%

EM income25.95%

Floating rate10.13%

Commodities–5.48%

Market neutral0.98%

Floating rate9.97%

Floating rate5.17%

Floating rate5.06%

Floating rate6.74%

Market neutral5.29%

Commodities–44.76%


Infrastructure6.60%

Gbl. real est.–5.82%

EM equity–6.17%

TIPS8.40%

Market neutral4.15%

Infrastructure4.97%

Commodities2.77%

Floating rate2.08%


TIPS11.41%

TIPS6.31%

Gold–17.23%

Infrastructure–17.95%

Market neutral2.44%

Gold–5.54%

TIPS2.84%

TIPS0.41%


EM equity–53.33%

Market neutral1.17%

Market neutral3.79%

EM equity–20.41%

U.S. stocks

–22.10% 28.68% 10.88% 4.91% 15.79% 5.49% –37.00% 26.46% 15.06% 2.11%

Excess out performance or underperformance of alternatives vs. stocks

31.75% –3.98% 5.75% 10.00% –0.49% 6.55% 10.48% 0.21% –2.03% –3.13%


Alternative-asset-class diversification Alternatives are potentially well positioned relative to traditional asset classes for rising inflation

Category Rising inflation

Stocks Earnings often deteriorate, real rates of return decrease

Bonds Interest rates often rise, real rates of return decrease

Alternatives potentially perform well when inflation rises

Commodities Historically an inflation hedge

Market neutral No correlation to inflation

Global real estate Property value and rents can rise with inflation

TIPs Yields rise with inflation and interest rates

Infrastructure Property value and rents can rise with inflation

Floating-rate loans Yields rise with inflation and interest rates

Gold Historically an inflation hedge

Emerging-market equity and income Commodity-based economies potentially benefit

The sources, opinions and forecasts expressed are those of DWS Investments Product management, are as of 3/31/12 and any forward-looking statements may not actually come to pass. This information is subject to change at any time based on market and other conditions and should not be construed as investment advice.

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Asset class risks

33

Gold/commodities: Market price movements or regulatory and economic changes will have a significant impact on commodity performance. Commodity-linked derivatives may subject a fund to special risks. International equity/emerging market income/emerging market equity: Investing in foreign securities, particularly those of emerging markets, presents certain risks, such as currency fluctuations, political and economic changes, and market risks. Stocks may decline in value. Floating-rate loans: Loan investments are subject to interest-rate and credit risks. Floating-rate loans tend to be rated below investment grade and may be more vulnerable to economic or business changes than issuers with investment-grade credit. Adjustable-rate loans are more sensitive to interest rate changes. In certain situations, it may be difficult or impossible to sell an investment at an acceptable price. Infrastructure: Various stages of an infrastructure project involve specific risks, such as development, construction and operating risks. Other potential risks include demand, financial, market and political risks. Global real estate: Any investment concentrated in a particular segment of the market will generally be more volatile than one that invests more broadly. There are special risks associated with an investment in real estate, including REITS. These risks include credit risk, interest rate fluctuations and the impact of varied economic conditions. TIPS: Although inflation-indexed bonds are expected to be protected from long-term inflationary trends, short-term increases in inflation may lead to a decline in value. U.S. stocks/U.S. fixed income: The values of equity investments are more volatile than those of other securities. Fixed-income investments are subject to interest-rate risk and their value will decline as interest rates rise. Alternatives: Alternative investments can be less liquid and more volatile than traditional investments and often lack longer-term track records. Market neutral: While market neutral funds may outperform the market during periods of sever downturn, they may underperform the market during periods of market rallies.


Asset class risks

34

Stocks: The values of equity investments are more volatile than those of other securities. Bonds: Fixed-income investments are subject to interest-rate risk, and their value will decline as interest rates rise. Commodities: Market price movements or regulatory and economic changes will have a significant impact on commodity performance; commodity-linked derivatives may subject a fund to special risks. Market neutral: While market neutral funds may outperform the market during periods of severe downturn, they may also underperform the market during periods of market rallies. Global real estate: Any investment concentrated in a particular segment of the market will generally be more volatile than one that invests more broadly. There are special risks associated with an investment in real estate, including REITS. These risks include credit risk, interest rate fluctuations and the impact of varied economic conditions. Investing in foreign securities, particularly those of emerging markets, presents certain risks, such as currency fluctuations, political and economic changes, and market risks. TIPS: Although inflation-indexed bonds are expected to be protected from long-term inflationary trends, short-term increases in inflation may lead to a decline in value. Infrastructure: Various stages of an infrastructure project involve specific risks. Development risk includes the initial very high-risk phase where only equity capital can be used for financing. Construction risk includes cost and time spillovers may distort future revenue generation and profitability. Operating risk emerges due to underestimation of operating costs and occasionally, an overestimation of the output from the proposed infrastructure facility. Other potential risks include demand risk, relating to the demand and "willingness to pay" for the proposed infrastructure facility; financial risk, such as foreign exchange and interest rate risks; market risk, which occurs when consumers can choose alternative services; and political risk, which relates to government policies and selection procedures. Floating-rate loans: Loan investments are subject to interest-rate and credit risks. Floating-rate loans tend to be rated below investment grade and may be more vulnerable to economic or business changes than issuers with investment-grade credit. Adjustable-rate loans are more sensitive to interest rate changes. In certain situations, it may be difficult or impossible to sell an investment at an acceptable price. Gold: Assets concentrated in the gold industry can be significantly affected by international economic, monetary and political developments. Emerging market equity and income: Investing in foreign securities, particularly those of emerging markets, presents certain risks, such as currency fluctuations, political and economic changes, and market risks. Stocks may decline in value.


Actions for Plan Sponsors


Three questions every plan sponsor should ask

36

Does your plan’s current lineup of investment options offer inflation-fighting power?

At what ages will participants benefit most from inflation-aware investing?

What kind of options should you consider adding in your lineup?


Most plans do not offer inflation-fighting alternative investments1

If your investment menu consists solely of equities, fixed-income and stable-value investments (stocks, bonds and cash), the answer is probably NO

A brokerage option may offer complex options for inflation protection, but they will be strictly do-it-yourself investing – unlike a fund dedicated to nontraditional assets

Some target-date funds may have inflation-fighting asset classes (such as commodities) built into their glide paths – to be certain, check the fund prospectuses

371. “Alternatives absent from company retirement plans,” Jeff Benjamin, Investment News, May 1, 2011.1. “Alternatives absent from company retirement plans,” Jeff Benjamin, Investment News, May 1, 2011.

Does your plan’s current lineup of investment options offer inflation-fighting power?

Strategy: Offer a more progressive more diverse retirement line-up


Inflation-aware investing can benefit every age group: Younger employees will probably see the greatest effects of inflation because their retirements are furthest away – and current inflation in the prices of necessities now (food, fuel) hurts their ability to save for retirement

Mid-career employees are facing the catch-up years: saving more to support their lifestyle in retirement, but few have calculated inflation’s impairment of their ability to pay for it

Employees approaching retirement are faced not only with the prospect of making their savings last for decades, but also with the possibility that inflation will rob them of buying power for necessities like food and healthcare

381. “Alternatives absent from company retirement plans,” Jeff Benjamin, Investment News, May 1, 2011.1. “Alternatives absent from company retirement plans,” Jeff Benjamin, Investment News, May 1, 2011.

At what ages will participants benefit most from inflation-aware investing?

Strategy: Offer age-segmented education across your plan


These asset classes can help portfolios protect against inflation

Look for funds that include inflation-fighting asset classes:

Commodities

Global real estate

TIPs

Floating-rate loans

Emerging-market equity and income

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What kind of investment options should you consider adding in your lineup?


What plan sponsors can do

1. Ask your Investment Committee (and financial advisor) to evaluate your current lineup of investment options for ability to combat inflation

2. Consider the age demographics of your participants

3. Select additional or replacement investment options that offer inflation-fighting potential

4. Change and document your Investment Policy Statement accordingly

5. Communicate new options, the importance of fighting inflation, and new inflation-fighting model portfolios to participants

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Summary

Definitions of inflation and deflation

Understanding the Consumer Price Index (CPI)− Changes to index over the years have created some controversy− Within the inflation index, basic needs items are where we are seeing inflation

Investments options: a focus on inflation strategies− Floating-rate loans – have the highest correlation to inflation and have been the best-

performing fixed-income category when interest rates have risen− Commodities and alternatives – have historically performed well in higher-inflation

environments

Participants may be underweight inflation-fighting asset classes!

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Important information

DWS Investments Distributors, Inc.222 South Riverside Plaza Chicago, IL 60606-5808www.dws-investments.com [email protected] (800) 522-1441

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

OBTAIN A PROSPECTUSTo obtain a summary prospectus, if available, or prospectus, download one from www.dws-investments.com, talk to your financial representative or call (800) 522-1441. We advise you to carefully consider the product’s objectives, risks, charges and expenses before investing. The summary prospectus and prospectus contain this and other important information about the investment product. Please read the prospectus carefully before you invest. All investments involve risk, including potential loss of principal.

Investment products offered through DWS Investments Distributors, Inc. Advisory services offered through Deutsche Investment Management Americas, Inc.

© 2012 DWS Investments Distributors, Inc. All rights reserved. (6/12) R-27815-1

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Investment products: No bank guarantee I Not FDIC insured I May lose value Inflation Understanding one of the greatest risks to retirement savings PRESENTER.

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