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

**_____________________________________________________________________________________________**

 

**Cash Management Fund Institutional**

**Cash Reserve Fund, Inc.**

Prime Series

**Cash Reserve Fund Institutional**

**NY Tax Free Money Fund**

**Tax Free Money Fund Investment**

**DWS Capital Growth Fund**

**DWS Climate Change Fund**

**DWS Commodity Securities Fund**

**DWS Communications Fund**

**DWS Core Fixed Income Fund**

**DWS Core Plus Income Fund**

**DWS EAFE® Equity Index Fund**

**DWS Emerging Markets Equity Fund**

**DWS Emerging Markets Fixed Income Fund**

**DWS Enhanced S&P 500 Index Fund**

**DWS Equity 500 Index Fund**

**DWS Equity Income Fund**

**DWS Equity Partners Fund**

**DWS Europe Equity Fund**

**DWS Floating Rate Plus Fund**

**DWS Global Bond Fund**

**DWS Global Opportunities Fund**

**DWS Global Thematic Fund**

**DWS GNMA Fund**

**DWS Gold & Precious Metals Fund**

**DWS Growth & Income Fund**

**DWS Health Care Fund**

**DWS High Income Plus Fund**

**DWS High Yield Tax Free Fund**

**DWS Inflation Protected Plus Fund**

**DWS Intermediate Tax/AMT Free Fund**

**DWS International Fund**

**DWS International Select Equity Fund**

**DWS International Value Opportunities Fund**

**DWS Investments VIT Funds**

DWS Equity 500 Index VIP

DWS RREEF Real Estate Securities VIP

DWS Small Cap Index VIP

**DWS Japan Equity Fund**

**DWS Large Company Growth Fund**

**DWS Latin America Equity Fund**

**DWS LifeCompass 2015 Fund**

**DWS LifeCompass 2020 Fund**

**DWS LifeCompass 2030 Fund**

**DWS LifeCompass 2040 Fund**

**DWS LifeCompass Retirement Fund**

**DWS Lifecycle Long Range Fund**

**DWS Managed Municipal Bond Fund**

**DWS Massachusetts Tax-Free Fund**

**DWS Micro Cap Fund**

**DWS Mid Cap Growth Fund**

**DWS Money Market Series**

**DWS RREEF Global Real Estate Securities Fund**

**DWS RREEF Real Estate Securities Fund**

**DWS S&P 500 Index Fund**

**DWS Short Duration Fund**

**DWS Short Duration Plus Fund**

 

----

**DWS Short-Term Municipal Bond Fund**

**DWS Small Cap Core Fund**

**DWS Small Cap Growth Fund**

**DWS Small Cap Value Fund**

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

**DWS Value Builder Fund**

**DWS Variable Series I**

DWS Bond VIP

DWS Capital Growth VIP

DWS Global Opportunities VIP

DWS Growth & Income VIP

DWS Health Care VIP

DWS International VIP

 

At            present, substantially all DWS mutual funds are overseen by one of two boards of            trustees/directors (the “Boards”). Each Board, including the Board that            oversees your Fund (the “New York Board”), has determined that the            formation of a single consolidated Board overseeing substantially all DWS mutual funds            is in the best interests of the Funds and their shareholders. In this connection, each            Board has approved a plan outlining the process for implementing the consolidation of            the New York Board with the other primary DWS mutual fund board (the “Chicago            Board”). (The geographic references in the preceding sentences merely indicate            where each Board historically held most of its meetings.)

The            consolidation of the two Boards is expected to take effect on or about April 1, 2008            (the “Consolidation Date”). To accomplish the consolidation, the New York            Board will nominate and elect four individuals (John W. Ballantine, Paul K. Freeman,            William McClayton and Robert H. Wadsworth) who currently serve on the Chicago Board to            the Board of your Fund and each other fund overseen by the New York Board. Information            regarding these four individuals is set forth below. In addition, the Chicago Board has            determined to nominate and recommend that shareholders of each fund overseen by that            Board elect eight members of your Fund’s Board (Henry P. Becton, Jr., Dawn-Marie            Driscoll, Keith R. Fox, Kenneth C. Froewiss, Richard J. Herring, Rebecca W. Rimel,            William N. Searcy, Jr. and Jean Gleason Stromberg). As a result, as of the            Consolidation Date, it is expected that the four Chicago Board members and eight New            York Board members named above (each of whom will be an Independent Board Member),            together with Axel Schwarzer, CEO of DWS Scudder, will constitute the Board of each DWS            Scudder mutual fund (134 funds), including your Fund.

To            facilitate the Board consolidation, three members of the New York Board (Martin J.            Gruber, Graham E. Jones and Carl W. Vogt) have agreed to resign as of the            Consolidation Date, which is prior to their normal retirement dates. Independent Board            Members of the New York Board do not receive benefits under any pension or retirement            plan. However, the New York Board has determined that it would be appropriate to            provide those three Independent Board Members who agreed to resign prior to the            Board’s normal retirement date with a retirement agreement, the terms of which            include a one-time benefit. As DIMA, the Funds’ investment adviser, will also            benefit from the administrative efficiencies of a consolidated Board, DIMA has agreed            to reimburse the Funds for the full cost of this one-time benefit (which for each            retiring Independent Board Member will equal his annual compensation immediately            preceding the Consolidation Date multiplied by the lesser of (i) two; or (ii) the            number of years (or portion thereof) from the Consolidation Date to his normal            retirement date). As consideration for this benefit, each retiring Independent Board            Member has agreed not to serve on the board of another mutual fund without prior            consent for a specified period. In addition, pursuant to an agreement between each            retiring Independent Board Member, the New York Funds and DIMA, each retiring            Independent

 

----

Board Member has received certain assurances regarding continuation of            insurance and indemnification rights.

Following the Consolidation Date, it is expected that the consolidated            Board will implement certain changes to the Fund’s current committee structure            and other governance practices, including the appointment of new committee chairs and            members. Additional information regarding these changes will be set forth in the            Fund’s statement of additional information upon implementation.

 

----

| **Name and Year of Birth**                                                           | **Business Experience and                            Directorships****During the Past 5 Years**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | **Position with the DWS Funds and Length of Time                            Served** |
|--------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------|
| **Chicago Board Members                            to be Elected to New York Board** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                 |
| John W. Ballantine                            (1946)                                 | Retired; formerly,                            Executive Vice President and Chief Risk Management Officer, First                            Chicago NBD Corporation/The First National Bank of Chicago (1996-1998);                            Executive Vice President and Head of International Banking (1995-1996).                            Directorships: Healthways Inc. (provider of disease and care management                            services); Portland General Electric (utility company); Stockwell                            Capital Investments PLC (private equity). Former Directorships: First                            Oak Brook Bancshares, Inc. and Oak Brook Bank | Chicago Board Member                            since 1999.                          |
| Paul K. Freeman                            (1950)                                    | Consultant, World                            Bank/Inter-American Development Bank; formerly, Project Leader,                            International Institute for Applied Systems Analysis (1998-2001); Chief                            Executive Officer, The Eric Group, Inc. (environmental insurance)                            (1986-1998). Formerly, Trustee of funds managed by DIMA or its                            affiliates (1993-2002).                                                                                                                                                                                                                                       | Chicago Board Member                            since 2002, Chairperson since 2007.  |
| William McClayton                            (1944)                                  | Chief Administrative                            Officer, Diamond Management & Technology Consultants, Inc. (global                            management consulting firm) (2001-present); formerly, Senior Partner,                            Arthur Andersen LLP (accounting) (1966-2001). Directorships: Board of                            Managers, YMCA of Metropolitan Chicago; formerly, Trustee, Ravinia                            Festival.                                                                                                                                                                                                                                     | Chicago Board Member                            since 2004.                          |
| Robert H. Wadsworth                            (1940)                                | President, Robert H.                            Wadsworth & Associates, Inc. (consulting firm) (1983 to present).                            Formerly, Trustee of funds managed by DIMA or its affiliates                            (1999-2004).                                                                                                                                                                                                                                                                                                                                                                                                                                           | Chicago Board Member                            since 2004.                          |

 

 

 

 

*Please Retain This Supplement for Future Reference*

 

November 26, 2007

DMF-3119

 

 

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

 

| **Cash Management Fund Institutional**

**Cash Reserves Fund Institutional**

**Daily Assets Fund Institutional**

**DWS Alternative Asset Allocation Plus                            Fund**

**DWS Balanced Fund**

**DWS Blue Chip Fund**

**DWS California Tax-Free Income Fund**

**DWS Capital Growth Fund**

**DWS Commodity Securities Fund**

**DWS Communications Fund**

**DWS Conservative Allocation Fund**

**DWS Core Fixed Income Fund**

**DWS Core Plus Allocation Fund**

**DWS Core Plus Income Fund**

**DWS Disciplined Long/Short Growth Fund**

**DWS Disciplined Long/Short Value Fund**

**DWS Disciplined Market Neutral Fund**

**DWS Dreman Concentrated Value Fund**

**DWS Dreman High Return Equity Fund**

**DWS Dreman Mid Cap Value Fund**

**DWS Dreman Small Cap Value Fund**

**DWS EAFE® Equity Index                            Fund**

**DWS Emerging Markets Equity Fund**

**DWS Emerging Markets Fixed Income Fund**

**DWS Enhanced S&P 500 Index Fund**

**DWS Equity 500 Index Fund** | **DWS Equity Income Fund**

**DWS Equity Partners Fund**

**DWS Europe Equity Fund**

**DWS Floating Rate Plus Fund**

**DWS Global Bond Fund**

**DWS Global Opportunities Fund**

**DWS Global Thematic Fund**

**DWS GNMA Fund**

**DWS Gold & Precious Metals Fund**

**DWS Growth & Income Fund**

**DWS Growth Allocation Fund**

**DWS Growth Plus Allocation Fund**

**DWS Health Care Fund**

**DWS High Income Fund**

**DWS High Income Plus Fund**

**DWS High Yield Tax Free Fund**

**DWS Inflation Protected Plus Fund**

**DWS Intermediate Tax/AMT Free Fund**

**DWS International Fund**

**DWS International Select Equity Fund**

**DWS International Value Opportunities                            Fund**

**DWS Japan Equity Fund**

**DWS Large Cap Value Fund**

**DWS Large Company Growth Fund**

**DWS Latin America Equity Fund**

**DWS Lifecycle Long Range Fund**

**DWS Managed Municipal Bond Fund**

**DWS Massachusetts Tax-Free Fund**

  | **DWS Micro Cap Fund**

**DWS Mid Cap Growth Fund**

**DWS Moderate Allocation Fund**

**DWS Money Market Prime Series**

**DWS Money Market Series**

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

**DWS RREEF Global Real Estate Securities                            Fund**

**DWS RREEF Real Estate Securities Fund**

**DWS S&P 500 Index Fund**

**DWS Short Duration Fund**

**DWS Short Duration Plus Fund**

**DWS Short-Term Municipal Bond Fund**

**DWS Small Cap Core Fund**

**DWS Small Cap Growth Fund**

**DWS Small Cap Value Fund**

**DWS Strategic Income Fund**

**DWS Technology Fund**

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

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

**DWS Value Builder Fund**

**NY Tax Free Money Fund**

**Tax Free Money Fund Investment**

**Tax-Exempt California Money Market                            Fund**

**Treasury Money Fund**

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

 

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

 

**Revenue Sharing**

In            light of recent regulatory developments, the Advisor, the Distributor and their            affiliates have undertaken to furnish certain additional information below regarding            the level of payments made by them to selected affiliated and unaffiliated brokers,            dealers, participating insurance companies or other financial intermediaries            (“financial advisors”) in connection with the sale and/or distribution of            Fund shares or the retention and/or servicing of investors and Fund shares            (“revenue sharing”).

The            Advisor, the Distributor and/or their affiliates may pay additional compensation, out            of their own assets and not as an additional charge to the Fund, to financial advisors            in connection with the sale and/or distribution of Fund shares or the retention and/or            servicing of Fund investors and Fund shares. Such revenue sharing payments are in            addition to any distribution or service fees payable under any Rule 12b-1 or service            plan of any fund, any record keeping/sub-transfer agency/networking fees payable by the            Fund (generally through the Distributor or an affiliate) and/or the Distributor to            certain financial advisors for performing such services and any sales charges,            commissions, non-cash compensation arrangements expressly permitted under applicable            rules of the NASD or other concessions described in the fee table or elsewhere in the            Prospectuses or the SAI as payable to all financial advisors. For example, the Advisor,            the Distributor and/or their affiliates may compensate financial advisors for providing            the Fund with “shelf space” or access to a third party platform or fund            offering list, or other marketing programs including, without limitation, inclusion of            the Fund on preferred or recommended sales lists, mutual fund “supermarket”            platforms and other formal sales programs; granting the Distributor access to the            financial advisor’s

 

----

sales force; granting the Distributor access to the financial            advisor’s conferences and meetings; assistance in training and educating the            financial advisor’s personnel; and, obtaining other forms of marketing support.            The level of revenue sharing payments made to financial advisors may be a fixed fee or            based upon one or more of the following factors: gross sales, current assets and/or            number of accounts of the Fund attributable to the financial advisor, the particular            fund or fund type or other measures as agreed to by the Advisor, the Distributor and/or            their affiliates and the financial advisors or any combination thereof. The amount of            these payments is determined at the discretion of the Advisor, the Distributor and/or            their affiliates from time to time, may be substantial, and may be different for            different financial advisors based on, for example, the nature of the services provided            by the financial advisor.

The            Advisor, the Distributor and/or their affiliates currently make revenue sharing            payments from their own assets in connection with the sale and/or distribution of DWS            Fund shares, or the retention and/or servicing of investors, to financial advisors in            amounts that generally range from .01% up to .50% of assets of the Fund serviced and            maintained by the financial advisor, .10% to .25% of sales of the Fund attributable to            the financial advisor, a flat fee of $12,500 up to $500,000, or any combination            thereof. These amounts are subject to change at the discretion of the Advisor, the            Distributor and/or their affiliates. Receipt of, or the prospect of receiving, this            additional compensation, may influence your financial advisor’s recommendation of            this Fund or of any particular share class of the Fund. You should review your            financial advisor’s compensation disclosure and/or talk to your financial advisor            to obtain more information on how this compensation may have influenced your financial            advisor’s recommendation of this Fund.

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

As            of the date hereof, the Fund has been advised that the Advisor, the Distributor and            their affiliates expect that the following firms will receive revenue sharing payments            at different points during the coming year as described above:

**Channel: Broker-Dealers and Financial Advisors**

A G            Edwards & Sons Inc.

AIG            Advisors Group

Ameriprise

Cadaret, Grant & Co. Inc.

Capital            Analyst, Incorporated

Citigroup Global Markets, Inc. (dba Smith Barney)

Commonwealth Equity Services, LLP (dba Commonwealth Financial            Network)

First            Clearing/Wachovia Securities

HD Vest            Investment Securities, Inc.

ING            Group

LaSalle            Financial Services, Inc. (dba ABN Amro)

Linsco/Private Ledger Corp.

Marsh            Insurance and Investment Company

Merrill            Lynch, Pierce, Fenner & Smith Inc.

Morgan            Stanley

Oppenheimer & Co., Inc.

Pacific            Select Distributors Group

Raymond            James & Associates

Raymond            James Financial Services

RBC            Dain Rauscher, Inc

Securities America, Inc.

UBS            Financial Services

Wells            Fargo Investments, LLC

 

----

 

**Channel: Cash Product Platform**

ADP            Clearing & Outsourcing

Allegheny Investments LTD

Bank of            New York (Hare & Co.)

Bear,            Stearns Securities Corp.

Brown            Brothers Harriman

Brown            Investment Advisory & Trust Company

Cadaret            Grant & Co.

Chicago            Mercantile Exchange

Citibank NA

D.A.            Davidson & Company

Deutsche Bank Securities Inc.

Deutsche Bank Trust Company Americas

Emmett            A. Larkin Company

Fiduciary Trust Co. – International

H.C.            Denison Co.

Huntleigh Securities

Investors Bank & Trust

JPMorgan Chase

Lincoln            Investment Planning

Linsco            Private Ledger Financial Services

Mellon            Financial Markets LLC

Penson            Financial Services

Pershing Choice Platform

ProFunds Distributors, Inc.

Romano            Brothers and Company

SAMCO            Capital Markets (Fund Services, Inc.)

Smith            Moore & Company

State            Street Bank & Trust Co.

Sungard            Institutional Brokerage Inc.

US            Bancorp

UBS            Financial Services Inc.

William            Blair & Company

**Channel: Third Party Insurance Platforms**

Acacia            National Life Insurance

Allmerica Financial Life Insurance Company

Allstate Life Insurance Company of New York

Ameritas Life Insurance Group

American General Life Insurance Company

Annuity            Investors Life Insurance Company

Columbus Life Insurance Company

Commonwealth Annuity and Life Insurance Company

Companion Life Insurance Company

Connecticut General Life Insurance Company

Farmers            New World Life Insurance Company

Fidelity Security Life Insurance Company

First            Allmerica Financial Life Insurance Company

Genworth Life Insurance Company of New York

Genworth Life and Annuity Insurance Company

Great            West Life and Annuity Insurance Company

Hartford Life Insurance Company

ICMG            Registered Variable Life

Integrity Life Insurance Company

John            Hancock Life Insurance companies

 

----

Kemper            Investors Life Insurance Company

Lincoln            Benefit Life Insurance Company

Lincoln            Life & Annuity Company of New York

Lincoln            National Life Insurance Company

Massachusetts Mutual Life Insurance Group

MetLife            Group

Minnesota Life Insurance Company

Mutual            of America Life Insurance Company

National Life Insurance Company

National Integrity Life Insurance Company

Nationwide Group

New            York Life Insurance and Annuity Corporation

Phoenix            Life Insurance Company

Protective Life Insurance

Provident Mutual Life Insurance

Prudential Insurance Company of America

Sun            Life GroupSymetra Life Insurance Company

Transamerica Life Insurance Company

Union            Central Life Insurance Company

United            of Omaha Life Insurance Company

United            Investors Life Insurance Company

Western            Southern Life Assurance Company

Any            additions, modifications or deletions to the financial advisors identified above that            have occurred since the date hereof are not reflected.

The            Advisor, the Distributor or their affiliates may enter into additional revenue sharing            arrangements or change or discontinue existing arrangements with financial advisors at            any time without notice.

The            prospect of receiving, or the receipt of additional compensation or promotional            incentives described above by financial advisors may provide such financial advisors            and/or their salespersons with an incentive to favor sales of shares of the DWS Funds            or a particular DWS Fund over sales of shares of mutual funds (or non-mutual fund            investments) with respect to which the financial advisor does not receive additional            compensation or promotional incentives, or receives lower levels of additional            compensation or promotional incentives. Similarly, financial advisors may receive            different compensation or incentives that may influence their recommendation of any            particular share class of the Fund or of other funds. These payment arrangements,            however, will not change the price that an investor pays for Fund shares or the amount            that the Fund receives to invest on behalf of an investor and will not increase Fund            expenses. You may wish to take such payment arrangements into account when considering            and evaluating any recommendations relating to Fund shares and you should discuss this            matter with your financial advisor and review your financial advisor’s            disclosures.

 

 

*Please Retain This Supplement for Future Reference*

 

August            8, 2007

DMF-3911

 

 

 

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

**_____________________________________________________________________________________________**

 

**Class A and Class S**

 

**Cash            Account Trust**

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

– DWS Tax Free Money Fund Class S

**DWS            Balanced Fund**

**DWS            Blue Chip Fund**

**DWS            California Tax-Free Income Fund**

**DWS            Capital Growth Fund**

**DWS            Commodity Securities Fund**

**DWS            Communications Fund**

**DWS            Conservative Allocation Fund**

**DWS            Core Fixed Income Fund**

**DWS            Core Plus Allocation Fund**

**DWS            Core Plus Income Fund**

**DWS Disciplined Long/Short Growth Fund**

**DWS Disciplined Long/Short Value Fund**

**DWS            Disciplined Market Neutral Fund**

**DWS            Dreman Concentrated Value Fund**

**DWS            Dreman High Return Equity Fund**

**DWS            Dreman Mid Cap Value Fund**

**DWS            Dreman Small Cap Value Fund**

**DWS            Emerging Markets Equity Fund**

**DWS Emerging Markets Fixed Income Fund**

**DWS            Enhanced S&P 500 Index Fund**

**DWS            Equity 500 Index Fund**

**DWS            Equity Income Fund**

**DWS            Equity Partners Fund**

**DWS            Europe Equity Fund**

**DWS            Global Bond Fund**

**DWS            Global Opportunities Fund**

**DWS            Global Thematic Fund**

**DWS            GNMA Fund**

**DWS            Gold & Precious Metals Fund**

**DWS            Growth & Income Fund**

**DWS            Growth Allocation Fund**

**DWS            Growth Plus Allocation Fund**

**DWS            Health Care Fund**

**DWS            High Income Fund**

**DWS            High Income Plus Fund**

**DWS            High Yield Tax Free Fund**

**DWS            Inflation Protected Plus Fund**

**DWS            Intermediate Tax/AMT Free Fund**

**DWS            International Fund**

**DWS            International Equity Fund**

**DWS            International Select Equity Fund**

**DWS International Value Opportunities Fund**

**DWS            Japan Equity Fund**

**DWS            Large Cap Value Fund**

**DWS            Large Company Growth Fund**

**DWS            Latin America Equity Fund**

**DWS            Lifecycle Long Range Fund**

**DWS            Managed Municipal Bond Fund**

**DWS            Massachusetts Tax-Free Fund**

 

----

**DWS            Micro Cap Fund**

**DWS            Mid Cap Growth Fund**

**DWS            Moderate Allocation Fund**

**DWS            Money Market Prime Series**

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

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

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

**DWS RREEF Global Real Estate Securities Fund**

**DWS RREEF Real Estate Securities Fund**

**DWS            S&P 500 Index Fund**

**DWS            Short Duration Fund**

**DWS            Short Duration Plus Fund**

**DWS            Short-Term Municipal Bond Fund**

**DWS            Small Cap Core Fund**

**DWS            Small Cap Growth Fund**

**DWS            Small Cap Value Fund**

**DWS            Strategic Income Fund**

**DWS            Technology Fund**

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

**DWS            Value Builder Fund**

**Investors Cash Trust**

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

 

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

 

**Minimum Subsequent Investment Policies.**For            current shareholders there is a $50 minimum investment requirement for subsequent            investments in the fund. There is no minimum subsequent investment requirement for            investments on behalf of participants in certain fee-based and wrap programs offered            through financial intermediaries approved by the Advisor.

 

*Please retain this supplement for future reference.*

 

June            12, 2007

DMF-3908

 

 

 

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

 

| **Cash Account Trust**

Tax-Exempt Portfolio

**DWS Balanced Fund**

**DWS Blue Chip Fund**

**DWS California Tax-Free Income Fund**

**DWS Capital Growth Fund**

**DWS Commodity Securities Fund**

**DWS Conservative Allocation Fund**

**DWS Core Fixed Income Fund**

**DWS Core Plus Allocation Fund**

**DWS Core Plus Income Fund**

**DWS Disciplined Long/Short Growth Fund**

**DWS Disciplined Long/Short Value Fund**

**DWS Disciplined Market Neutral Fund**

**DWS Dreman High Return Equity Fund**

**DWS Dreman Mid Cap Value Fund**

**DWS Dreman Small Cap Value Fund**

**DWS Emerging Markets Equity Fund**

**DWS Emerging Markets Fixed Income Fund**

**DWS Enhanced S&P 500 Index Fund**

**DWS Equity 500 Index Fund**

**DWS Equity Income Fund**

**DWS Europe Equity Fund**

**DWS Global Bond Fund**

**DWS Global Opportunities Fund**

                              | **DWS Global Thematic Fund**

**DWS GNMA Fund**

**DWS Gold & Precious Metals Fund**

**DWS Growth & Income Fund**

**DWS Growth Allocation Fund**

**DWS Growth Plus Allocation Fund**

**DWS Health Care Fund**

**DWS High Income Plus Fund**

**DWS High Yield Tax Free Fund**

**DWS Inflation Protected Plus Fund**

**DWS Intermediate Tax/AMT Free Fund**

**DWS International Equity Fund**

**DWS International Fund**

**DWS International Select Equity Fund**

**DWS International Value Opportunities                            Fund**

**DWS Japan Equity Fund**

**DWS Large Cap Value Fund**

**DWS Large Company Growth Fund**

**DWS Latin America Equity Fund**

**DWS Lifecycle Long Range Fund**

**DWS Managed Municipal Bond Fund**

**DWS Massachusetts Tax-Free Fund**

**DWS Micro Cap Fund**

**DWS Mid Cap Growth Fund**

**DWS Moderate Allocation Fund**

                              | **DWS Money Market Prime Series**

DWS Cash Investment Trust Class S

**DWS Money Market Series Premium**

**DWS Money Market Series Prime Reserve**

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

**DWS Pacific Opportunities Equity Fund**

**DWS RREEF Global Real Estate Securities                            Fund**

**DWS RREEF Real Estate Securities Fund**

**DWS S&P 500 Index Fund**

**DWS Short Duration Fund**

**DWS Short Duration Plus Fund**

**DWS Short Term Bond Fund**

**DWS Short-Term Municipal Bond Fund**

**DWS Small Cap Core Fund**

**DWS Small Cap Growth Fund**

**DWS Small Cap Value Fund**

**DWS Strategic Income Fund**

**DWS Tax Free Money Fund**

**DWS Technology Fund**

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

**Investors Cash Trust**

Treasury Portfolio

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

 

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

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

 

**Eligible Class S Investors**

| A. | The following investors may purchase Class S shares of                            DWS Funds either (i) directly from DWS Scudder Distributors, Inc.                            (“DWS-SDI”), the Fund’s principal underwriter; or                            (ii) through an intermediary relationship with a financial services                            firm established with respect to the DWS Funds as of December 31,                            2004. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1. | Existing shareholders of Class S shares of any DWS Fund                            as of December 31, 2004, and household members residing at the same                            address. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | Shareholders of Class S of any DWS Fund who became Class                            S shareholders in connection with the consolidation of Class AARP and                            Class S on July 17, 2006 and household members residing at the same                            address. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | Shareholders who have owned Class S shares continuously                            since December 31, 2004 and household members residing at the same                            address may open new accounts for Class S shares of any DWS                            Fund. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4. | Any participant who has owned Class S shares of any DWS                            Fund through an employee sponsored retirement, employee stock, bonus,                            pension or profit sharing plan continuously since December 31, 2004 may                            open a new individual account for Class S shares of any DWS                            Fund. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

----

|   | 5. | Any participant who owns Class S shares of any DWS Fund                            through a retirement, employee stock, bonus, pension or profit sharing                            plan may complete a direct rollover to an IRA account that will hold                            Class S shares. This applies to individuals who begin their                            retirement plan investments with a DWS Fund at any time, including                            after December 31, 2004. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6. | Officers, Fund Trustees and Directors, and full-time                            employees and their family members, of the Advisor and its                            affiliates. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7. | Class S shares are available to any accounts managed by                            the Advisor, any advisory products offered by the Advisor or DWS-SDI                            and to DWS Allocation Series or other fund of funds managed by the                            Advisor or its affiliates. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8. | Shareholders of Class S of DWS Emerging Markets Equity                            Fund who became shareholders of the fund in connection with the                            fund’s acquisition of Scudder New Asia Fund, Inc. on April 17,                            2006. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9. | Shareholders of Class S of any DWS Fund who became Class                            S shareholders in connection with the consolidation of Class M and                            Class S on August 18, 2006 and household members residing at the same                            address. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10. | Shareholders of Class S of any DWS Fund who became Class                            S shareholders in connection with the renaming or conversion of                            Investment Class to Class S on October 23, 2006. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| B. | The following additional investors may purchase Class S                            shares of DWS Funds. |
|----|---------------------------------------------------------------------------------------------------------|

|   | 1. | Broker-dealers, banks and registered investment advisors                            (“RIAs”) may purchase Class S shares in connection with a                            comprehensive or “wrap” fee program or other fee based                            program. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | Any group retirement, employee stock, bonus, pension or                            profit-sharing plans. |
|--------|----|----------------------------------------------------------------------------------------------------------|

|   | 3. | Persons who purchase shares as part of an investment                            only placement in a 529 College Savings Plan. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------|

|   | 4. | Persons who purchase shares through a Health Savings                            Account or a Voluntary Employees’ Benefit Association                            (“VEBA”) Trust. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

 

*Please Retain This Supplement for Future Reference*

 

May 21,            2007

DMF-3906

 

 

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

 

| **Cash Account Trust**

Government & Agency Securities Portfolio

Money Market Portfolio

Tax-Exempt Portfolio

**Cash Management Fund Institutional**

**Cash Management Fund Investment**

**Cash Reserve Fund, Inc.**

Prime Series

Treasury Series

**Cash Reserves Fund Institutional**

**Daily Assets Fund Institutional**

**DWS Balanced Fund**

**DWS Blue Chip Fund**

**DWS California Tax-Free Income Fund**

**DWS Capital Growth Fund**

**DWS Commodity Securities Fund**

**DWS Communications Fund**

**DWS Conservative Allocation Fund**

**DWS Core Fixed Income Fund**

**DWS Core Plus Allocation Fund**

**DWS Core Plus Income Fund**

**DWS Disciplined Long/Short Growth Fund**

**DWS Disciplined Long/Short Value Fund**

**DWS Disciplined Market Neutral Fund**

**DWS Dreman Concentrated Value Fund**

**DWS Dreman High Return Equity Fund**

**DWS Dreman Mid Cap Value Fund**

**DWS Dreman Small Cap Value Fund**

**DWS EAFE® Equity Index                            Fund**

**DWS Emerging Markets Equity Fund**

**DWS Emerging Markets Fixed Income Fund**

**DWS Enhanced S&P 500 Index Fund**

**DWS Equity 500 Index Fund** | **DWS Equity Income Fund**

**DWS Equity Partners Fund**

**DWS Europe Equity Fund**

**DWS Global Bond Fund**

**DWS Global Opportunities Fund**

**DWS Global Thematic Fund**

**DWS GNMA Fund**

**DWS Gold & Precious Metals Fund**

**DWS Growth & Income Fund**

**DWS Growth Allocation Fund**

**DWS Growth Plus Allocation Fund**

**DWS Health Care Fund**

**DWS High Income Fund**

**DWS High Income Plus Fund**

**DWS High Yield Tax Free Fund**

**DWS Inflation Protected Plus Fund**

**DWS Intermediate Tax/AMT Free Fund**

**DWS International Equity Fund**

**DWS International Fund**

**DWS International Select Equity Fund**

**DWS International Value Opportunities                            Fund**

**DWS Japan Equity Fund**

**DWS Large Cap Value Fund**

**DWS Large Company Growth Fund**

**DWS Latin America Equity Fund**

**DWS Lifecycle Long Range Fund**

**DWS Managed Municipal Bond Fund**

**DWS Massachusetts Tax-Free Fund**

**DWS Micro Cap Fund**

**DWS Mid Cap Growth Fund**

**DWS Moderate Allocation Fund**

**DWS Money Market Prime Series**

**DWS Money Market Series**

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

**DWS Pacific Opportunities Equity Fund** | **DWS RREEF Global Real Estate Securities                            Fund**

**DWS RREEF Real Estate Securities Fund**

**DWS S&P 500 Index Fund**

**DWS Short Duration Fund**

**DWS Short Duration Plus Fund**

**DWS Short Term Bond Fund**

**DWS Short-Term Municipal Bond Fund**

**DWS Small Cap Core Fund**

**DWS Small Cap Growth Fund**

**DWS Small Cap Value Fund**

**DWS Strategic Income Fund**

**DWS Target 2008 Fund**

**DWS Target 2010 Fund**

**DWS Target 2011 Fund**

**DWS Target 2012 Fund**

**DWS Target 2013 Fund**

**DWS Target 2014 Fund**

**DWS Technology Fund**

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

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

**DWS U.S. Treasury Money Fund**

**DWS Value Builder Fund**

**Investors Cash Trust**

Treasury Portfolio

**Money Market Fund Investment**

**NY Tax Free Money Fund**

**Tax Free Money Fund Investment**

**Tax-Exempt California Money Market                            Fund**

**Treasury Money Fund**

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

 

*The            following information supplements disclosure under “Custodian, Transfer Agent and            Shareholder Service Agent” or “Transfer Agent and Shareholder Service            Agent” in the “Fund Service Providers” section of each            Fund’s/Portfolio’s Statements of Additional Information:*

 

The            Transfer Agent receives an annual service fee for each account of the Fund, based on            the type of account. For open retail accounts, the fee is a flat fee ranging from            $20.00 to $27.50 per account, for open wholesale money funds the fee is $32.50 per            account, while for certain retirement accounts serviced on the recordkeeping system of            ADP, Inc., the fee is a flat fee up to $3.46 per account (as of October 2006, indexed            to inflation) plus an asset based fee of up to 0.25% of average net assets.            1/12th of the annual service charge for each account is charged and payable            to the Transfer Agent each month. A fee is charged for any account which at any time            during the month had a share balance in the Fund. Smaller fees are also charged for            closed accounts for which information must be retained on the Transfer Agent’s            system for up to 18 months after closing for tax reporting purposes.

 

Certain            out-of-pocket expenses incurred by the Transfer Agent, including expenses of printing            and mailing routine fund disclosure documents, costs of record retention and            transaction processing costs are reimbursed by the Fund or are paid directly by the            Fund. Certain additional out-of-pocket expenses, including costs of computer hardware            and software, third party record-keeping and processing of proxy statements, may only            be reimbursed by the Fund with the prior approval of the Fund’s Board.

 

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Effective April 1, 2007, DWS Scudder Investments Service Company is the            Transfer Agent for all classes of all DWS funds.

 

 

*Please Retain This Supplement for Future Reference*

 

March            22, 2007

DMF-3905

 

 

 

**DWS Advisor Funds**

**DWS Core Fixed Income Fund**

**DWS Short Duration Fund**

**DWS High Income Plus Fund**

Class S

**STATEMENT OF ADDITIONAL INFORMATION**

**March 1, 2007**, As Revised December 31,            2007

 

This combined Statement of Additional Information is not a prospectus            and should be read in conjunction with the combined prospectuses dated March 1, 2007            for DWS Core Fixed Income, DWS Short Duration Fund and DWS High Income Plus Fund, each            a series of DWS Advisor Funds (each a “Fund” and collectively, the            “Funds”), as amended from time to time, copies of which may be obtained            without charge by contacting DWS Scudder Distributors, Inc., 222 South Riverside Plaza,            Chicago, Illinois 60606, (800) 728-3337 or from the firm from which this Statement            of Additional Information was obtained. The prospectuses are also available along with            other materials on the Securities and Exchange Commission’s Internet website            (http://www.sec.gov).

The            Annual Reports to Shareholders of each Fund, dated October 31, 2006, accompany this            Statement of Additional Information. The financial statements contained therein,            together with the accompanying notes, are incorporated by reference and are hereby            deemed to be part of this Statement of Additional Information.

This Statement of Additional Information is incorporated by reference            into the corresponding prospectus of the applicable Fund.

 

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**TABLE OF CONTENTS**

**Page**

| INVESTMENT                            RESTRICTIONS | 1 |
|----------------------------------------------------|---|

| INVESTMENT                            POLICIES AND TECHNIQUES | 2 |
|---------------------------------------------------------------|---|

|   | Investment                            Techniques | 2 |
|--------|--------------------------------------------------|---|

|   | Portfolio                            Holdings | 27 |
|--------|-----------------------------------------------|----|

| MANAGEMENT OF                            THE FUNDS | 28 |
|----------------------------------------------------|----|

|   | Investment                            Advisor | 28 |
|--------|-----------------------------------------------|----|

|   | Compensation of                            Portfolio Managers | 33 |
|--------|---------------------------------------------------------------|----|

| FUND SERVICE                            PROVIDERS | 40 |
|---------------------------------------------------|----|

|   | Administrator. | 40 |
|--------|----------------|----|

|   | Distributor. | 41 |
|--------|--------------|----|

|   | Custodian. | 41 |
|--------|------------|----|

|   | Transfer                            Agent. | 42 |
|--------|--------------------------------------------|----|

|   | Legal                            Counsel | 42 |
|--------|------------------------------------------|----|

|   | Independent                            Registered Public Accounting Firm | 42 |
|--------|--------------------------------------------------------------------------|----|

| PORTFOLIO                            TRANSACTIONS | 42 |
|---------------------------------------------------|----|

| PURCHASE AND                            REDEMPTION OF SHARES | 45 |
|--------------------------------------------------------------|----|

| DIVIDENDS | 56 |
|-----------|----|

| TAXES | 57 |
|-------|----|

| NET ASSET                            VALUE | 64 |
|--------------------------------------------|----|

| TRUSTEES AND                            OFFICERS | 65 |
|--------------------------------------------------|----|

| TRUST                            ORGANIZATION | 78 |
|-----------------------------------------------|----|

| PROXY VOTING                            GUIDELINES | 79 |
|----------------------------------------------------|----|

| FINANCIAL                            STATEMENTS | 80 |
|-------------------------------------------------|----|

| ADDITIONAL                            INFORMATION | 81 |
|---------------------------------------------------|----|

| APPENDIX | 82 |
|----------|----|

 

 

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**INVESTMENT RESTRICTIONS**

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

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

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

As            a matter of fundamental policy for each Fund may not:

|   | (1) | borrow money, except as permitted under the 1940 Act,                            and as interpreted or modified by regulatory authority having                            jurisdiction, from time to time. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | issue senior securities, except as permitted under the                            1940 Act, as amended, and as interpreted or modified by regulatory                            authority having jurisdiction, from time to time. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | concentrate its investments in a particular industry, as                            that term is used in the 1940 Act, as amended, and as interpreted or                            modified by regulatory authority having jurisdiction, from time to                            time. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | engage in the business of underwriting securities issued                            by others, except to the extent that a Fund may be deemed to be an                            underwriter in connection with the disposition of portfolio                            securities. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | purchase or sell real estate, which term does not                            include securities of companies which deal in real estate or mortgages                            or investments secured by real estate or interests therein, except that                            the Fund reserves freedom of action to hold and to sell real estate                            acquired as a result of the Fund’s ownership of                            securities. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | purchase or sell commodities, except as permitted by the                            1940 Act, as amended, and as interpreted or modified by the regulatory                            authority having jurisdiction, from time to time. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | make loans except as permitted under the 1940 Act, as                            amended, and as interpreted or modified by regulatory authority having                            jurisdiction, from time to time. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (8) | The Fund has elected to be treated as a diversified                            investment company, as that term is used in the 1940 Act, as amended,                            and as interpreted or modified by regulatory authority having                            jurisdiction, from time to time. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

A            fundamental policy may not be changed without the approval of a majority of the            outstanding voting securities of a Fund which, under the 1940 Act and the rules            thereunder and as used in this Statement of Additional Information, means the lesser of            (1) 67% or more of the voting securities present at a meeting, if the holders of            more than 50% of the outstanding voting securities of a Fund are present or represented            by proxy, or (2) more than 50% of the outstanding voting securities of a            Fund.

The            nonfundamental investment restrictions set forth below may be changed or amended by the            Trust’s Board of Trustees without shareholder approval.

As            a matter of nonfundamental Policy, DWS Short Duration Fund and DWS High Income Plus            Fund may not:

 

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| (1) | Participate on a joint-and-several basis in any                            securities trading account. The “bunching” of orders for                            the sale or purchase of marketable Fund securities with other accounts                            under the management of the Advisor to save commissions or to average                            prices among them is not deemed to result in a securities trading                            account. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Purchase securities of other US-registered investment                            companies, except as permitted by the 1940 Act and the rules,                            regulations and any applicable exemptive order issued                            thereunder. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Invest for the purpose of exercising control over or                            management of any company. |
|-----|------------------------------------------------------------------------------------------------------------|

| (4) | Purchase any security, including any repurchase                            agreement maturing in more than seven days, which is illiquid, if more                            than 15% of the net assets of the Fund, taken at market value, would be                            invested in such securities. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

“Value” for the purposes of the foregoing investment            restrictions shall mean the market value used in determining each Fund’s net            asset value.

As            a matter of nonfundamental Policy, DWS Core Fixed Income Fund may not:

| (1) | Invest in illiquid securities in an amount exceeding, in                            the aggregate, 15% of the Fund’s net assets. An illiquid security                            is a security that cannot be disposed of promptly (within seven days)                            and in the usual course of business without a loss, and includes                            repurchase agreements maturing in excess of seven days, time deposits                            with a withdrawal penalty, non-negotiable instruments and instruments                            for which no market exists. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Purchase securities of other US-registered investment                            companies except as permitted by the 1940 Act and the rules,                            regulations and any applicable exemptive order issued                            thereunder. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

**INVESTMENT POLICIES AND TECHNIQUES**

**Investment Techniques**

Descriptions in this Statement of Additional Information of a particular            investment practice or technique in which a Fund may engage are meant to describe the            spectrum of investments that Deutsche Investment Management Americas Inc. (the            “Advisor”) in its discretion might, but is not required to, use in managing            a Fund’s portfolio assets. The Advisor may in its discretion at any time employ            such practice, technique or instrument for one or more Funds but not for all funds            advised by it. Furthermore, it is possible that certain types of financial instruments            or investment techniques described herein may not be available, permissible,            economically feasible or effective for

 

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their intended purposes in all markets. Certain practices, techniques or            instruments may not be principal activities of a Fund, but, to the extent employed,            could from time to time have a material impact on a Fund’s            performance.

***Fixed Income Securities***

**General.**Each Fund may invest in fixed            income securities. In periods of declining interest rates, the yield (income from            portfolio investments over a stated period of time) of a Fund that invests in fixed            income securities may tend to be higher than prevailing market rates, and in periods of            rising interest rates, the yield of the Fund may tend to be lower. In addition, when            interest rates are falling, the inflow of net new money to such a Fund will likely be            invested in portfolio instruments producing lower yields than the balance of the            Fund’s portfolio, thereby reducing the yield of the Fund. In periods of rising            interest rates, the opposite can be true. The net asset value of a Fund investing in            fixed income securities can generally be expected to change as general levels of            interest rates fluctuate. The value of fixed income securities in a Fund’s            portfolio generally varies inversely with changes in interest rates. Prices of fixed            income securities with longer effective maturities are more sensitive to interest rate            changes than those with shorter effective maturities.

**Bank Loans.**DWS High Income Plus Fund may            also invest in bank loans, which are typically senior debt obligations of borrowers            (issuers) and, as such, are considered to hold a senior position in the capital            structure of the borrower. These may include loans which hold the most senior position,            that hold an equal ranking with other senior debt, or loans that are, in the judgment            of the Advisor, in the category of senior debt of the borrower. This capital structure            position generally gives the holders of these loans a priority claim on some or all of            the borrower’s assets in the event of a default. In most cases, these loans are            either partially or fully collateralized by the assets of a corporation, partnership,            limited liability company or other business entity, or by cash flow that the Advisor            believes has a market value at the time of acquisition that equals or exceeds the            principal amount of the loan. These loans are often issued in connection with            recapitalizations, acquisitions, leveraged buy-outs and refinancings. It is important            to note that Moody’s Investors Service, Inc. (“Moody’s”) and            the Standard & Poor’s Division of the McGraw-Hill Companies, Inc.            (“S&P”) may rate bank loans higher than high yield bonds of the same            issuer to reflect their more senior position. The Fund may invest in both fixed- and            floating-rate loans. In addition, bank loans can trade either as an            “assignment” or “participation”. When the Fund buys an            assignment, it is essentially becoming a party to the bank agreement. The vast majority            of all trades are assignments and would therefore generally represent the preponderance            of bank loans held by the Fund. In certain cases, the Fund may buy bank loans on a            participation basis, if for example, the Fund did not want to become party to the bank            agreement. However, in all cases, the Fund will not purchase bank loans where Deutsche            Bank, or an affiliate, serves as an agent bank.

Participations and assignments involve credit risk, interest rate risk,            liquidity risk, and the risk of being a lender. If the Fund purchases a participation,            it may only be able to enforce its rights through the lender, and may assume the credit            risk of both the lender and the borrower.

Investments in loans through direct assignment of a financial            institution’s interests with respect to a loan may involve additional risks. For            example, if a loan is foreclosed, the purchaser could become part owner of any            collateral, and would bear the costs and liabilities associated with owning and            disposing of the collateral. In addition, it is at least conceivable that under            emerging legal theories of lender liability, a purchaser could be held liable as a            co-lender.

In            the case of loans administered by a bank or other financial institution that acts as            agent for all holders, if assets held by the agent for the benefit of a purchaser are            determined to be subject to the claims of the agent’s general creditors, the            purchaser might incur certain costs and delays in realizing payment on the loan or loan            participation and could suffer a loss of principal or interest.

In            the case of loan participations where a bank or other lending institution serves as            financial intermediary between the Fund and the borrower, if the participation does not            shift to the Fund the direct debtor-creditor relationship with the borrower, SEC            interpretations require the Fund, in some circumstances, to treat both the lending bank            or other lending institution and the borrower as issuers for purposes of the            Fund’s investment policies. Treating a financial intermediary as an issuer of            indebtedness may restrict the Fund’s ability to invest in indebtedness related to            a single

 

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financial intermediary, or a group of intermediaries engaged in the same            industry, even if the underlying borrowers represent many different companies and            industries.

**Put Bonds.**Each of the Funds may invest in            “put” bonds, which are tax-exempt securities (including securities with            variable interest rates) that may be sold back to the issuer of the security at face            value at the option of the holder prior to their stated maturity. The Advisor intends            to purchase only those “put” bonds for which the put option is an integral            part of the security as originally issued. The option to “put” the bond            back to the issuer before the stated final maturity can cushion the price decline of            the bond in a rising interest rate environment. However, the premium paid, if any, for            an option to put will have the effect of reducing the yield otherwise payable on the            underlying security. For the purpose of determining the “maturity” of            securities purchased subject to an option to put, and for the purpose of determining            the dollar weighted average maturity of a Fund holding such securities, the Fund will            consider “maturity” to be the first date on which it has the right to            demand payment from the issuer of the put although the final maturity of the security            is later than such date.

**US Government Securities.**The Funds may            invest in obligations issued or guaranteed as to both principal and interest by the US            Government, its agencies, instrumentalities or sponsored enterprises (“US            Government securities”). The full faith and credit of the US support some US            Government securities, such as US Treasury bills, notes and bonds. Others, such as            obligations issued or guaranteed by US Government agencies or instrumentalities, are            supported either by (i) the full faith and credit of the US Government (such as            securities of the Small Business Administration), (ii) the right of the issuer to            borrow from the US Treasury (such as securities of the Federal Home Loan Banks), (iii)            the discretionary authority of the US Government to purchase the agency’s            obligations (such as securities of the Federal National Mortgage Association), or (iv)            only the credit of the issuer. No assurance can be given that the US Government will            provide financial support to US Government agencies or instrumentalities in the            future.

Each of the Funds may also invest in separately traded principal and            interest components of securities guaranteed or issued by the US Government or its            agencies, instrumentalities or sponsored enterprises if such components are traded            independently under the Separate Trading of Registered Interest and Principal of            Securities program (“STRIPS”) or any similar program sponsored by the US            Government. STRIPS are sold as zero coupon securities. See “Zero Coupon            Securities.”

**Custodial Receipts.**Custodial receipts are            interests in separately traded interest and principal component parts of US Government            securities that are issued by banks or brokerage firms and are created by depositing US            Government securities into a special account at a custodian bank. The custodian holds            the interest and principal payments for the benefit of the registered owners of the            certificates or receipts. The custodian arranges for the issuance of the certificates            or receipts evidencing ownership and maintains the register. Custodial receipts include            Treasury Receipts (“TRs”), Treasury Investment Growth Receipts            (“TIGRs”), and Certificates of Accrual on Treasury Securities            (“CATS”). TIGRs and CATS are interests in private proprietary accounts            while TRs and STRIPS (see “US Government Securities” above) are interests            in accounts sponsored by the US Treasury. Receipts are sold as zero coupon securities;            for more information, see “Zero Coupon Securities.”

Each of the Funds may acquire US Government securities and their            unmatured interest coupons that have been separated (“stripped”) by their            holder, typically a custodian bank or investment brokerage firm. Having separated the            interest coupons from the underlying principal of the US Government securities, the            holder will resell the stripped securities in custodial receipt programs with a number            of different names, including TIGRs and CATS. The stripped coupons are sold separately            from the underlying principal, which is usually sold at a deep discount because the            buyer receives only the right to receive a future fixed payment on the security and            does not receive any rights to periodic interest (cash) payments. The underlying US            Treasury bonds and notes themselves are generally held in book-entry form at a Federal            Reserve Bank. Counsel to the underwriters of these certificates or other evidences of            ownership of US Treasury securities have stated that, in their opinion, purchasers of            the stripped securities most likely will be deemed the beneficial holders of the            underlying US Government securities for federal tax and securities purposes. In the            case of CATS and TIGRs, the Internal Revenue Service (the “IRS”) has            reached this conclusion for the purpose of applying the tax diversification            requirements applicable to regulated investment companies such as the Funds. CATS and            TIGRs are not considered US Government securities by the staff of the SEC. Further, the            IRS conclusion noted above is contained only in a general counsel memorandum, which is            an

 

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internal document of no precedential value or binding effect, and a            private letter ruling, which also may not be relied upon by the Funds. The Trust is not            aware of any binding legislative, judicial or administrative authority on this            issue.

**Zero Coupon Securities.**STRIPS and            custodial receipts (TRs, TIGRs and CATS) are sold as zero coupon securities, that is,            fixed income securities that have been stripped of their unmatured interest coupons.            Zero coupon securities are sold at a (usually substantial) discount and redeemed at            face value at their maturity date without interim cash payments of interest or            principal. The amount of this discount is accreted over the life of the security, and            the accretion constitutes the income earned on the security for both accounting and tax            purposes. Because a Fund must distribute the accreted amounts in order to qualify for            favorable tax treatment, it may have to sell portfolio securities to generate cash to            satisfy the applicable distribution requirements. Because of these features, the market            prices of zero coupon securities are generally more volatile than the market prices of            securities that have similar maturity but that pay interest periodically. Zero coupon            securities are likely to respond to a greater degree to interest rate changes than are            non-zero coupon securities with similar maturity and credit qualities.

**Variable and Floating Rate Instruments.**Each of the Funds may invest in variable or floating rate instruments            and variable rate demand instruments, including variable amount master demand notes.            These instruments will normally involve industrial development or revenue bonds that            provide that the rate of interest is set as a specific percentage of a designated base            rate (such as the prime rate) at a major commercial bank. In addition, the interest            rate on these securities may be reset daily, weekly or on some other reset period and            may have a floor or ceiling on interest rate changes. A Fund holding such an instrument            can demand payment of the obligation at all times or at stipulated dates on short            notice (not to exceed 30 days) at par plus accrued interest.

Debt instruments purchased by a Fund may be structured to have variable            or floating interest rates. These instruments may include variable amount master demand            notes that permit the indebtedness to vary in addition to providing for periodic            adjustments in the interest rates. The Advisor will consider the earning power, cash            flows and other liquidity ratios of the issuers and guarantors of such instruments and,            if the instrument is subject to a demand feature, will continuously monitor their            financial ability to meet payment on demand. Where necessary to ensure that a variable            or floating rate instrument is equivalent to the quality standards applicable to a            Fund’s fixed income investments, the issuer’s obligation to pay the            principal of the instrument will be backed by an unconditional bank letter or line of            credit, guarantee or commitment to lend. Any bank providing such a bank letter, line of            credit, guarantee or loan commitment will meet the Fund’s investment quality            standards relating to investments in bank obligations. The Advisor will also            continuously monitor the creditworthiness of issuers of such instruments to determine            whether a Fund should continue to hold the investments.

The            absence of an active secondary market for certain variable and floating rate notes            could make it difficult to dispose of the instruments, and a Fund could suffer a loss            if the issuer defaults or during periods in which a Fund is not entitled to exercise            its demand rights.

Variable and floating rate instruments held by a Fund will be subject to            the Fund’s limitation on investments in illiquid securities when a reliable            trading market for the instruments does not exist and the Fund may not demand payment            of the principal amount of such instruments within seven days.

**Yields and Ratings.**The yields on certain            obligations, including the money market instruments in which each Fund may invest (such            as commercial paper and bank obligations), are dependent on a variety of factors,            including general market conditions, conditions in the particular market for the            obligation, the financial condition of the issuer, the size of the offering, the            maturity of the obligation and the ratings of the issue. The ratings of S&P,            Moody’s and other recognized rating organizations represent their respective            opinions as to the quality of the obligations they undertake to rate. Ratings, however,            are general and are not absolute standards of quality or value. Consequently,            obligations with the same rating, maturity and interest rate may have different market            prices. See Appendix A for a description of the ratings provided by S&P,            Moody’s and certain other recognized rating organizations.

Subsequent to its purchase by a Fund, a rated security may cease to be            rated or its rating may be reduced below the minimum rating required for purchase by            the Fund. The Board of Trustees or the Advisor, pursuant to guidelines

 

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established by the Board of Trustees, will consider such an event in            determining whether the Fund should continue to hold the security in accordance with            the interests of the Fund and applicable regulations of the SEC.

**Lower Quality Debt Obligations “Junk-Bonds.”**DWS High Income Plus Fund may invest in below investment grade bonds,            including securities in default (DWS Short Duration Fund and DWS Core Fixed Income Fund            may only invest up to 5% of net assets in such securities). These securities are            considered speculative and, while generally offering greater income than investments in            higher quality securities, involve greater risk of loss of principal and income,            including the possibility of default or bankruptcy of the issuers of such securities,            and have greater price volatility, especially during periods of economic uncertainty or            change. These lower quality bonds tend to be affected by economic changes and            short-term corporate and industry developments to a greater extent than higher quality            securities, which react primarily to fluctuations in the general level of interest            rates.

Below investment grade bonds (junk bonds) will also be affected by the            market’s perception of their credit quality, especially during times of adverse            publicity, and the outlook for economic growth. In the past, economic downturns or an            increase in interest rates have, under certain circumstances, caused a higher incidence            of default by the issuers of these securities and may do so in the future, especially            in the case of highly leveraged issuers. The market for these lower quality bonds is            generally less liquid than the market for investment grade bonds. Therefore, the            Advisor’s judgment may at times play a greater role in valuing these securities            than in the case of investment grade bonds, and it also may be more difficult under            certain adverse market conditions to sell these lower quality securities to meet            redemption requests, to respond to changes in the market, or to determine accurately a            Fund’s net asset value.

As            discussed above, subject to their respective investment limitations, each Fund may            invest in high yielding fixed income securities that are rated lower than Baa by            Moody’s or BBB by Standard & Poor’s and unrated securities determined            to be of comparable quality. The values of these lower quality securities generally            fluctuate more than those of higher quality securities. In addition, these securities            involve a greater possibility of an adverse change in financial condition affecting the            ability of the issuer to make payments of interest and principal. The Advisor seeks to            reduce these risks through investment analysis and attention to current developments in            interest rates and economic conditions, but there can be no assurance that the Advisor            will be successful in reducing the risks associated with investments in such            securities. To the extent a Fund invests in such lower quality securities, the            achievement of its investment objective may be more dependent on the Advisor’s            own credit analysis.

DWS            High Income Plus Fund may invest in pay-in-kind (PIK) securities, which pay interest in            either cash or additional securities, at the issuer’s option, for a specified            period. In addition, the Fund may invest in zero coupon bonds. Both of these types of            bonds may be more speculative and subject to greater fluctuations in value than            securities which pay interest periodically and in cash, due to changes in interest            rates. The Fund will accrue income on such investments for tax and accounting purposes,            as required, which is distributable to shareholders and which, because no cash is            generally received at the time of accrual, may require the liquidation of other            portfolio securities to satisfy the Fund’s distribution obligations. See            “Taxes” below.

The            market value of fixed income securities that carry no equity participation usually            reflects yields generally available on securities of similar quality and type. When            such yields decline, the market value of a portfolio already invested at higher yields            can be expected to rise if such securities are protected against early call. Similarly,            when such yields increase, the market value of a portfolio already invested at lower            yields can be expected to decline.

**Investment of Uninvested Cash Balances.**A            Fund may have cash balances that have not been invested in portfolio securities            (“Uninvested Cash”). Uninvested Cash may result from a variety of sources,            including dividends or interest received from portfolio securities, unsettled            securities transactions, reserves held for investment strategy purposes, scheduled            maturity of investments, liquidation of investment securities to meet anticipated            redemptions or dividend payments, and new cash received from investors. Uninvested Cash            may be invested directly in money market instruments or other short-term debt            obligations. Pursuant to an exemptive order issued by the SEC, a fund may use            Uninvested Cash to purchase shares of affiliated funds, including money market funds            and Cash Management QP Trust, or entities for the which the Advisor may act as            investment advisor now or in the future that operate as cash management investment            vehicles but are excluded from the definition of investment company pursuant to Section            3(c)(1) or 3(c)(7) of the 1940 Act (collectively, the “Central Funds”) in            excess of the limitations

 

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of            Section 12(d)(1) of the 1940 Act. Investment by a fund in shares of the Central Funds            will comply with Rule 2a-7 under the 1940 Act and will be in accordance with a            fund’s investment policies and restrictions.

A            Fund will invest Uninvested Cash in Central Funds only to the extent that a            fund’s aggregate investment in the Central Funds does not exceed 25% of its total            assets. Purchase and sales of shares of Central Funds are made at net asset            value.

**Impact of Large Redemptions and Purchases of Fund Shares.**From time to time, shareholders of a Fund may make relatively large            redemptions or purchases of Fund shares. These transactions may cause a Fund to have to            sell securities or invest additional cash, as the case may be. While it is impossible            to predict the overall impact of these transactions over time, there could be adverse            effects on a Fund’s performance to the extent that a Fund may be required to sell            securities or invest cash at times when it would not otherwise do so. These            transactions could also accelerate the realization of taxable income if sales of            securities resulted in gains and could also increase transaction costs, which may            impact a Fund’s expense ratio.

**Convertible And Preferred            Securities.**Subject to its investment objectives and policies,            each Fund may invest in convertible securities, which are ordinarily preferred stock or            long-term debt obligations of an issuer convertible at a stated exchange rate into            common stock of the issuer. The market value of convertible securities tends to decline            as interest rates increase and, conversely, to increase as interest rates decline.            Convertible securities generally offer lower interest or dividend yields than            non-convertible securities of similar quality. However, when the market price of the            common stock underlying a convertible security exceeds the conversion price, the price            of the convertible security tends to reflect the value of the underlying common stock.            As the market price of the underlying common stock declines, the convertible security            tends to trade increasingly on a yield basis, and thus may not depreciate to the same            extent as the underlying common stock. Convertible securities generally rank senior to            common stocks in an issuer’s capital structure, are consequently of higher            quality, and entail less risk than the issuer’s common stock. However, the extent            to which such risk is reduced depends in large measure upon the degree to which the            convertible security sells above its value as a fixed income security. The convertible            debt securities in which each Fund may invest are subject to the same rating criteria            and downgrade policy as the Fund’s investments in fixed income            securities.

Each Fund, subject to its investment objectives, may purchase preferred            stock. Preferred stock is an equity security, but possesses certain attributes of debt            securities and is generally considered a fixed income security. Holders of preferred            stock normally have the right to receive dividends at a fixed rate when and as declared            by the issuer’s board of directors, but do not participate in other amounts            available for distribution by the issuing corporation. Dividends on the preferred stock            may be cumulative, and in such cases, all cumulative dividends usually must be paid            prior to dividend payments to common stockholders. Because of this preference,            preferred stock generally entails less risk than common stocks. Upon liquidation,            preferred stock is entitled to a specified liquidation preference, which is generally            the same as the par or stated value, and is senior in right of payment to common stock.            However, preferred stock is an equity security in that it does not represent a            liability of the issuer and therefore does not offer as great a degree of protection of            capital or assurance of continued income as investments in corporate debt securities.            In addition, preferred stock is subordinated in right of payment to all debt            obligations and creditors of the issuer, and convertible preferred stocks may be            subordinated to other preferred stock of the same issuer.

**Warrants.**DWS High Income Plus Fund may            invest up to 20% of its net assets, measured at the time of purchase, in warrants.            Warrants generally entitle the holder to buy a specified number of shares of common            stock at a specified price, which is often higher than the market price at the time of            issuance, for a period of years or in perpetuity. Warrants may be issued in units with            other securities or separately, and may be freely transferable and traded on exchanges.            While the market value of a warrant tends to be more volatile than that of the            securities underlying the warrant, the market value of a warrant may not necessarily            change with that of the underlying security. A warrant ceases to have value if it is            not exercised prior to any expiration date to which the warrant is subject. The            purchase of warrants involves a risk that the Fund could lose the purchase value of a            warrant if the right to subscribe to additional shares is not exercised prior to the            warrant’s expiration. Also, the purchase of warrants involves the risk that the            effective price paid for the warrant added to the subscription price of the related            security

 

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may            exceed the value of the subscribed security’s market price, such as when there is            no movement in the level of the underlying security.

**Municipal Securities.**The Funds may, to a            limited extent, invest in municipal securities. Municipal securities consist of bonds,            notes and other instruments issued by or on behalf of states, territories and            possessions of the US (including the District of Columbia) and their political            subdivisions, agencies or instrumentalities, the interest on which is exempt from            regular federal income tax (i.e., excluded from gross income for federal income tax            purposes but not necessarily exempt from the federal alternative minimum tax or from            state and local taxes). Municipal securities may also be issued on a taxable basis            (i.e., the interest on such securities is not exempt from regular federal income            tax).

Municipal securities are often issued to obtain funds for various public            purposes, including the construction of a wide range of public facilities such as            bridges, highways, housing, hospitals, mass transportation, schools, streets and water            and sewer works. Other public purposes for which municipal securities may be issued            include refunding outstanding obligations, obtaining funds for general operating            expenses, and obtaining funds to lend to other public institutions and facilities.            Municipal securities also include “private activity” or industrial            development bonds, which are issued by or on behalf of public authorities to provide            financing aid to acquire sites or construct or equip facilities within a municipality            for privately or publicly owned corporations.

The            two principal classifications of municipal securities are “general            obligations” and “revenue obligations.” General obligations are            secured by the issuer’s pledge of its full faith and credit for the payment of            principal and interest although the characteristics and enforcement of general            obligations may vary according to the law applicable to the particular issuer. Revenue            obligations, which include, but are not limited to, private activity bonds, resource            recovery bonds, certificates of participation and certain municipal notes, are not            backed by the credit and taxing authority of the issuer and are payable solely from the            revenues derived from a particular facility or class of facilities or, in some cases,            from the proceeds of a special excise or other specific revenue source. Nevertheless,            the obligations of the issuer may also be backed by a letter of credit, guarantee or            insurance. General obligations and revenue obligations may be issued in a variety of            forms, including commercial paper, fixed, variable and floating rate securities, tender            option bonds, auction rate bonds and capital appreciation bonds.

In            addition to general obligations and revenue obligations, there is a variety of hybrid            and special types of municipal securities. There are also numerous differences in the            credit backing of municipal securities both within and between these two principal            classifications.

For            the purpose of applying a Fund’s investment restrictions, the identification of            the issuer of a municipal security which is not a general obligation is made by the            Advisor based on the characteristics of the municipal security, the most important of            which is the source of funds for the payment of principal and interest on such            securities.

One            or a small number of institutional investors such as a Fund may purchase an entire            issue of municipal securities. Thus, the issue may not be said to be publicly offered.            Unlike some securities that are not publicly offered, a secondary market exists for            many municipal securities that were not publicly offered initially and such securities            can be readily marketable.

The            obligations of an issuer to pay the principal of and interest on a municipal security            are subject to the provisions of bankruptcy, insolvency and other laws affecting the            rights and remedies of creditors, such as the Federal Bankruptcy Act, and laws, if any,            that may be enacted by Congress or state legislatures extending the time for payment of            principal or interest or imposing other constraints upon the enforcement of such            obligations. There is also the possibility that, because of litigation or other            conditions, the power or ability of the issuer to pay when due principal of or interest            on a municipal security may be materially affected.

**Municipal Leases, Certificates of Participation and other            Participation Interests.**A municipal lease is an obligation            in the form of a lease or installment purchase contract that is issued by a state or            local government to acquire equipment and facilities. Income from such obligations is            generally exempt from state and local taxes in the state of issuance (as well as            regular federal income tax). Municipal leases frequently involve special risks not            normally associated with general obligation or revenue bonds. Leases and installment            purchase or conditional sale

 

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contracts (which normally provide for title to the leased asset to pass            eventually to the governmental issuer) have evolved as a means for governmental issuers            to acquire property and equipment without meeting the constitutional and statutory            requirements for the issuance of debt. The debt issuance limitations are deemed to be            inapplicable because of the inclusion in many leases or contracts of            ‘non-appropriation’ clauses that relieve the governmental issuer of any            obligation to make future payments under the lease or contract unless money is            appropriated for such purpose by the appropriate legislative body on a yearly or other            periodic basis. Thus, a Fund’s investment in municipal leases will be subject to            the special risk that the governmental issuer may not appropriate funds for lease            payments.

In            addition, such leases or contracts may be subject to the temporary abatement of            payments in the event the issuer is prevented from maintaining occupancy of the leased            premises or utilizing the leased equipment. Although the obligations may be secured by            the leased equipment or facilities, the disposition of the property in the event of            nonappropriation or foreclosure might prove difficult, time consuming and costly, and            result in an unsatisfactory or delayed recoupment of a Fund’s original            investment.

Certificates of participation represent undivided interests in municipal            leases, installment purchase contracts or other instruments. The certificates are            typically issued by a trust or other entity that has received an assignment of the            payments to be made by the state or political subdivision under such leases or            installment purchase contracts.

Certain municipal lease obligations and certificates of participation            may be deemed illiquid for the purpose of the Funds’ respective limitations on            investments in illiquid securities. Other municipal lease obligations and certificates            of participation acquired by a Fund may be determined by the Advisor, pursuant to            guidelines adopted by the Trustees of the Trust, to be liquid securities for the            purpose of such Fund’s limitation on investments in illiquid securities. In            determining the liquidity of municipal lease obligations and certificates of            participation, the Advisor will consider a variety of factors including: (1) the            willingness of dealers to bid for the security; (2) the number of dealers willing to            purchase or sell the obligation and the number of other potential buyers; (3) the            frequency of trades or quotes for the obligation; and (4) the nature of the marketplace            trades. In addition, the Advisor will consider factors unique to particular lease            obligations and certificates of participation affecting the marketability thereof.            These include the general creditworthiness of the issuer, the importance to the issuer            of the property covered by the lease and the likelihood that the marketability of the            obligation will be maintained throughout the time the obligation is held by a Fund. No            Fund may invest more than 5% of its net assets in municipal leases.

Each of the Funds may purchase participations in municipal securities            held by a commercial bank or other financial institution. Such participations provide a            Fund with the right to a pro rata undivided interest in the underlying municipal            securities. In addition, such participations generally provide a Fund with the right to            demand payment, on not more than seven days notice, of all or any part of the            Fund’s participation interest in the underlying municipal security, plus accrued            interest.

**Municipal Notes.**Municipal securities in            the form of notes generally are used to provide for short-term capital needs, in            anticipation of an issuer’s receipt of other revenues or financing, and typically            have maturities of up to three years. Such instruments may include Tax Anticipation            Notes, Revenue Anticipation Notes, Bond Anticipation Notes, Tax and Revenue            Anticipation Notes and Construction Loan Notes. Tax Anticipation Notes are issued to            finance the working capital needs of governments. Generally, they are issued in            anticipation of various tax revenues, such as income, sales, property, use and business            taxes, and are payable from these specific future taxes. Revenue Anticipation Notes are            issued in expectation of receipt of other kinds of revenue, such as federal revenues            available under federal revenue sharing programs. Bond Anticipation Notes are issued to            provide interim financing until long-term bond financing can be arranged. In most            cases, the long-term bonds then provide the funds needed for repayment of the notes.            Tax and Revenue Anticipation Notes combine the funding sources of both Tax Anticipation            Notes and Revenue Anticipation Notes. Construction Loan Notes are sold to provide            construction financing. These notes are secured by mortgage notes insured by the            Federal Housing Authority; however, the proceeds from the insurance may be less than            the economic equivalent of the payment of principal and interest on the mortgage note            if there has been a default. The obligations of an issuer of municipal notes are            generally secured by the anticipated revenues from taxes, grants or bond financing. An            investment in such instruments, however, presents a risk that the anticipated revenues            will not be received or that such revenues will be insufficient to satisfy the            issuer’s payment obligations under the notes or that refinancing will be            otherwise unavailable.

 

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**Private Activity and Industrial Development Bonds.**Each of the Funds may invest in private activity and industrial            development bonds, which are obligations issued by or on behalf of public authorities            to raise money to finance various privately owned or operated facilities for business            and manufacturing, housing, sports and pollution control. These bonds are also used to            finance public facilities such as airports, mass transit systems, ports, parking or            sewage or solid waste disposal facilities, as well as certain other facilities or            projects. The payment of the principal and interest on such bonds is generally            dependent solely on the ability of the facility’s user to meet its financial            obligations and the pledge, if any, of real and personal property so financed as            security for such payment.

**Tax-Exempt Commercial Paper.**Issues of            tax-exempt commercial paper typically represent short-term, unsecured, negotiable            promissory notes. These obligations are issued by state and local governments and their            agencies to finance working capital needs of municipalities or to provide interim            construction financing and are paid from general revenues of municipalities or are            refinanced with long-term debt. In most cases, tax-exempt commercial paper is backed by            letters of credit, lending agreements, note repurchase agreements or other credit            facility agreements offered by banks or other institutions.

**Pre-Refunded Municipal Securities.**The            principal of and interest on municipal securities that have been pre-refunded are no            longer paid from the original revenue source for the securities. Instead, after            pre-refunding the source of such payments of the principal of and interest on these            securities are typically paid from an escrow fund consisting of obligations issued or            guaranteed by the US Government. The assets in the escrow fund are derived from the            proceeds of refunding bonds issued by the same issuer as the pre-refunded municipal            securities. Issuers of municipal securities use this advance refunding technique to            obtain more favorable terms with respect to securities that are not yet subject to call            or redemption by the issuer. For example, advance refunding enables an issuer to            refinance debt at lower market interest rates, restructure debt to improve cash flow or            eliminate restrictive covenants in the indenture or other governing instrument for the            pre-refunded municipal securities. However, except for a change in the revenue source            from which principal and interest payments are made, the pre-refunded municipal            securities remain outstanding on their original terms until they mature or are redeemed            by the issuer. Pre-refunded municipal securities are usually purchased at a price which            represents a premium over their face value.

**Tender Option Bonds.**A tender option bond            is a municipal security (generally held pursuant to a custodial arrangement) having a            relatively long maturity and bearing interest at a fixed rate substantially higher than            prevailing short-term tax-exempt rates. The bond is typically issued in conjunction            with the agreement of a third party, such as a bank, broker-dealer or other financial            institution, pursuant to which such institution grants the security holders the option,            at periodic intervals, to tender their securities to the institution and receive the            face value thereof.

As            consideration for providing the option, the financial institution receives periodic            fees equal to the difference between the bond’s fixed coupon rate and the rate,            as determined by a remarketing or similar agent at or near the commencement of such            period, that would cause the securities, coupled with the tender option, to trade at            par on the date of such determination. Thus, after payment of this fee, the security            holder effectively holds a demand obligation that bears interest at the prevailing            short-term tax-exempt rate.

However, an institution will not be obligated to accept tendered bonds            in the event of certain defaults or a significant downgrade in the credit rating            assigned to the issuer of the bond. The liquidity of a tender option bond is a function            of the credit quality of both the bond issuer and the financial institution providing            liquidity. Tender option bonds are deemed to be liquid unless, in the opinion of the            Advisor, the credit quality of the bond issuer and the financial institution is deemed,            in light of the Fund’s credit quality requirements, to be inadequate. Each Fund            intends to invest only in tender option bonds the interest on which will, in the            opinion of bond counsel, counsel for the issuer of interests therein or counsel            selected by the Advisor, be exempt from regular federal income tax. However, because            there can be no assurance that the IRS will agree with such counsel’s opinion in            any particular case, there is a risk that a Fund will not be considered the owner of            such tender option bonds and thus will not be entitled to treat such interest as exempt            from such tax. Additionally, the federal income tax treatment of certain other aspects            of these investments, including the proper tax treatment of tender option bonds and the            associated fees, in relation to various regulated investment company tax provisions is            unclear. Each Fund intends to manage its portfolio in a manner designed to eliminate or            minimize any adverse impact from the tax rules applicable to these            investments.

 

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**Auction Rate Securities.**Auction rate            securities in which the Funds may invest consist of auction rate municipal securities            and auction rate preferred securities issued by closed-end investment companies that            invest primarily in municipal securities. Provided that the auction mechanism is            successful, auction rate securities usually permit the holder to sell the securities in            an auction at par value at specified intervals. The dividend is reset by            “Dutch” auction in which bids are made by broker-dealers and other            institutions for a certain amount of securities at a specified minimum yield. The            dividend rate set by the auction is the lowest interest or dividend rate that covers            all securities offered for sale. While this process is designed to permit auction rate            securities to be traded at par value, there is the risk that an auction will fail due            to insufficient demand for the securities.

Dividends on auction rate preferred securities issued by a closed-end            fund may be designated as exempt from federal income tax to the extent they are            attributable to tax-exempt interest income earned by the fund on the securities in its            portfolio and distributed to holders of the preferred securities, provided that the            preferred securities are treated as equity securities for federal income tax purposes            and the closed-end fund complies with certain requirements under the Internal Revenue            Code of 1986, as amended (the “Code”).

A            Fund’s investments in auction rate preferred securities of closed-end funds are            subject to limitations on investments in other US registered investment companies,            which limitations are prescribed by the 1940 Act. These limitations include            prohibitions against acquiring more than 3% of the voting securities of any other such            investment company, and investing more than 5% of the Fund’s assets in securities            of any one such investment company or more than 10% of its assets in securities of all            such investment companies.

**Private Activity Bonds.**Certain types of            municipal securities, generally referred to as industrial development bonds (and            referred to under current tax law as private activity bonds), are issued by or on            behalf of public authorities to obtain funds for privately-operated housing facilities,            airport, mass transit or port facilities, sewage disposal, solid waste disposal or            hazardous waste treatment or disposal facilities and certain local facilities for water            supply, gas or electricity. Other types of industrial development bonds, the proceeds            of which are used for the construction, equipment, repair or improvement of privately            operated industrial or commercial facilities, may constitute municipal securities,            although the current federal tax laws place substantial limitations on the size of such            issues. The interest from certain private activity bonds owned by a Fund (including a            Fund’s distributions attributable to such interest) may be a preference item for            purposes of the alternative minimum tax.

**Direct Debt Instruments (DWS High Income Plus Fund only).**Direct debt instruments are interests in amounts owed by a corporate,            governmental or other borrower to lenders (direct loans), to suppliers of goods or            services (trade claims or other receivables) or to other parties. A fund may invest in            all types of direct debt investments, but among these investments a fund currently            intends to invest primarily in direct loans and trade claims. When a fund participates            in a direct loan it will be lending money directly to an issuer. Direct loans generally            do not have an underwriter or agent bank, but instead, are negotiated between a            company’s management team and a lender or group of lenders. Direct loans            typically offer better security and structural terms than other types of high yield            securities. Direct debt obligations are often the most senior obligations in an            issuer’s capital structure or are well-collateralized so that overall risk is            lessened. Trade claims are unsecured rights of payment arising from obligations other            than borrowed funds. Trade claims include vendor claims and other receivables that are            adequately documented and available for purchase from high-yield broker-dealers. Trade            claims typically may sell at a discount. In addition to the risks otherwise associated            with low-quality obligations, trade claims have other risks, including the possibility            that the amount of the claim may be disputed by the obligor. Trade claims normally            would be considered illiquid and pricing can be volatile. Direct debt instruments            involve a risk of loss in case of default or insolvency of the borrower. A fund will            rely primarily upon the creditworthiness of the borrower and/or the collateral for            payment of interest and repayment of principal. The value of a fund’s investments            may be adversely affected if scheduled interest or principal payments are not made.            Because most direct loans will be secured, there will be a smaller risk of loss with            direct loans than with an investment in unsecured high yield bonds or trade claims.            Indebtedness of borrowers whose creditworthiness is poor involves substantially greater            risks and may be highly speculative. Borrowers that are in bankruptcy or restructuring            may never pay off their indebtedness or may pay only a small fraction of the amount            owed. Investments in direct debt instruments also involve interest rate risk and            liquidity risk. However, interest rate risk is lessened by the generally short-term            nature of direct debt instruments and their interest rate structure, which typically            floats. To the extent the direct debt instruments in which a fund invests are            considered illiquid, the lack of a liquid secondary market (1) will have an adverse            impact on the value of such instruments, (2)

 

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will have an adverse impact on a fund’s ability to dispose of them            when necessary to meet a fund’s liquidity needs or in response to a specific            economic event, such as a decline in creditworthiness of the issuer, and (3) may make            it more difficult for a fund to assign a value of these instruments for purposes of            valuing a fund’s portfolio and calculating its net asset value. In order to            lessen liquidity risk, a fund anticipates investing primarily in direct debt            instruments that are quoted and traded in the high yield market and will not invest in            these instruments if it would cause more than 15% of a fund’s net assets to be            illiquid. Trade claims may also present a tax risk to a fund. A fund will not invest in            trade claims if it effects a fund’s qualification as a regulated investment            company under Subchapter M of the Internal Revenue Code.

**Restructuring Instruments. (DWS High Income Plus Fund            only).**Afund may hold distressed            securities, which are securities that are in default or in risk of being in default. In            connection with an exchange or workout of such securities, a fund may accept various            instruments if the investment adviser determines it is in the best interests of a fund            and consistent with a fund’s investment objective and policies. Such instruments            may include, but not limited to, warrants, rights, participation interests in assets            sales and contingent-interest obligations.

***Mortgage-Backed and Asset-Backed Securities***

**General.**Each Fund may invest in            mortgage-backed securities, which represent direct or indirect participations in, or            are collateralized by and payable from, mortgage loans secured by real property. Each            Fund may also invest in asset-backed securities, which represent participations in, or            are secured by and payable from, assets such as motor vehicle installment sales,            installment loan contracts, leases of various types of real and personal property and            receivables from revolving credit (credit card) agreements and other categories of            receivables. Such securities are generally issued by trusts and special purpose            corporations.

Mortgage-backed and asset-backed securities are often subject to more            rapid repayment than their stated maturity date would indicate as a result of the            pass-through of prepayments of principal on the underlying loans. During periods of            declining interest rates, prepayment of loans underlying mortgage-backed and            asset-backed securities can be expected to accelerate, and thus impair a Fund’s            ability to reinvest the returns of principal at comparable yields. Accordingly, the            market values of such securities will vary with changes in market interest rates            generally and in yield differentials among various kinds of US Government securities            and other mortgage-backed and asset-backed securities. Asset-backed securities present            certain risks that are not presented by mortgage-backed securities because asset-backed            securities generally do not have the benefit of a security interest in collateral that            is comparable to mortgage assets. In addition, there is the possibility that, in some            cases, recoveries on repossessed collateral may not be available to support payments on            these securities. Many mortgage and asset-backed securities may be considered            derivative instruments.

**Mortgage-Backed.**Each of the Funds may            invest in mortgage-backed securities, including derivative instruments. Mortgage-backed            securities represent direct or indirect participations in or obligations collateralized            by and payable from mortgage loans secured by real property. A Fund may invest in            mortgage-backed securities issued or guaranteed by US Government agencies or            instrumentalities such as the Government National Mortgage Association            (“GNMA”), the Federal National Mortgage Association (“FNMA”)            and the Federal Home Loan Mortgage Corporation (“FHLMC”). Obligations of            GNMA are backed by the full faith and credit of the US Government. Obligations of FNMA            and FHLMC are not backed by the full faith and credit of the US Government but are            considered to be of high quality since they are considered to be instrumentalities of            the US. The market value and yield of these mortgage-backed securities can vary due to            market interest rate fluctuations and early prepayments of underlying mortgages. These            securities represent ownership in a pool of Federally insured mortgage loans with a            maximum maturity of 30 years. The scheduled monthly interest and principal payments            relating to mortgages in the pool will be “passed through” to investors.            Government mortgage-backed securities differ from conventional bonds in that principal            is paid back to the certificate holders over the life of the loan rather than at            maturity. As a result, there will be monthly scheduled payments of principal and            interest.

Each Fund may invest in mortgage-backed securities issued by            non-governmental entities including collateralized mortgage obligations            (“CMOs”) and real estate mortgage investment conduits            (“REMICs”). CMOs are securities collateralized by mortgages, mortgage            pass-throughs, mortgage pay-through bonds (bonds representing an interest in a pool of            mortgages where the cash flow generated from the mortgage collateral pool is dedicated            to bond

 

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repayment), and mortgage-backed bonds (general obligations of the            issuers payable out of the issuers’ general funds and additionally secured by a            first lien on a pool of single family detached properties). Many CMOs are issued with a            number of classes or series that have different maturities and are retired in sequence.            Investors purchasing such CMOs in the shortest maturities receive or are credited with            their pro rata portion of the unscheduled prepayments of principal up to a            predetermined portion of the total CMO obligation. Until that portion of such CMO            obligation is repaid, investors in the longer maturities receive interest only.            Accordingly, the CMOs in the longer maturity series are less likely than other mortgage            pass-throughs to be prepaid prior to their stated maturity. Although some of the            mortgages underlying CMOs may be supported by various types of insurance, and some CMOs            may be backed by GNMA certificates or other mortgage pass-throughs issued or guaranteed            by US Government agencies or instrumentalities, the CMOs themselves are not generally            guaranteed.

REMICs are private entities formed for the purpose of holding a fixed            pool of mortgages secured by an interest in real property. REMICs are similar to CMOs            in that they issue multiple classes of securities, including “regular”            interests and “residual” interests. The Funds do not intend to acquire            residual interests in REMICs, due to certain disadvantages for regulated investment            companies that acquire such interests. Mortgage-backed securities are subject to            unscheduled principal payments representing prepayments on the underlying mortgages.            Although these securities may offer yields higher than those available from other types            of securities, mortgage-backed securities may be less effective than other types of            securities as a means of “locking in” attractive long-term rates because of            the prepayment feature. For instance, when interest rates decline, the value of these            securities likely will not rise as much as comparable debt securities due to the            prepayment feature. In addition, these prepayments can cause the price of a            mortgage-backed security originally purchased at a premium to decline in price to its            par value, which may result in a loss.

Due            to prepayments of the underlying mortgage instruments, mortgage-backed securities do            not have a known actual maturity. In the absence of a known maturity, market            participants generally refer to an estimated average life. The Advisor believes that            the estimated average life is the most appropriate measure of the maturity of a            mortgage-backed security. Accordingly, in order to determine whether such security is a            permissible investment, it will be deemed to have a remaining maturity of three years            or less if the average life, as estimated by the Advisor, is three years or less at the            time of purchase of the security by a Fund. An average life estimate is a function of            an assumption regarding anticipated prepayment patterns. The assumption is based upon            current interest rates, current conditions in the relevant housing markets and other            factors. The assumption is necessarily subjective, and thus different market            participants could produce somewhat different average life estimates with regard to the            same security. Although the Advisor will monitor the average life of the portfolio            securities of each Fund with a portfolio maturity policy and make needed adjustments to            comply with such Funds’ policy as to average dollar weighted portfolio maturity,            there can be no assurance that the average life of portfolio securities as estimated by            the Advisor will be the actual average life of such securities.

DWS            Core Fixed Income Fund and DWS Short Duration Fund may at times invest a significant            percentage of their assets in CMOs.

**Asset-Backed Securities.**Each Fund may            invest in asset-backed securities, which represent participations in, or are secured by            and payable from, pools of assets including company receivables, truck and auto loans,            leases and credit card receivables. The asset pools that back asset-backed securities            are securitized through the use of privately formed trusts or special purpose            corporations. Payments or distributions of principal and interest may be guaranteed up            to certain amounts and for a certain time period by a letter of credit or a pool            insurance policy issued by a financial institution unaffiliated with the trust or            corporation, or other credit enhancements may be present. Certain asset-backed            securities may be considered derivative instruments. DWS Short Duration Fund may, at            times, invest a significant percentage of its assets in asset-backed            securities.

***Securities of Foreign Issuers***

**Foreign Securities.**Subject to their            respective investment objectives and policies, each of the Funds may invest in            securities of foreign issuers and supranational entities. While the non-US investments            of DWS High Income Plus Fund may be denominated in any currency, the investments of DWS            Core Fixed Income Fund and DWS Short Duration Fund in foreign securities may be            denominated only in the US dollar. Foreign securities may offer

 

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investment opportunities not available in the US, but such investments            also involve significant risks not typically associated with investing in domestic            securities. In many foreign countries, there is less publicly available information            about foreign issuers, and there is less government regulation and supervision of            foreign stock exchanges, brokers and listed companies. Also, in many foreign countries,            companies are not subject to uniform accounting, auditing, and financial reporting            standards comparable to those applicable to domestic issuers. Security trading            practices differ and there may be difficulty in enforcing legal rights outside the US.            Settlement of transactions in some foreign markets may be delayed or may be less            frequent than in the US, which could affect the liquidity of the Funds’            portfolios. Additionally, in some foreign countries, there is the possibility of            expropriation or confiscatory taxation, limitations on the removal of securities,            property, or other Fund assets, political or social instability or diplomatic            developments which could affect investments in foreign securities.

If            the Advisor increases DWS High Income Plus Fund’s exposure to a foreign currency,            and that currency’s value subsequently falls, the Advisor’s currency            management may result in increased losses to a Fund. If the Advisor hedges a            Fund’s exposure to a foreign currency, and that currency’s value rises, the            Fund will lose the opportunity to participate in the currency’s            appreciation.

**Foreign Government Securities.**The foreign            government securities in which each of the Funds may invest generally consist of debt            obligations issued or guaranteed by national, state or provincial governments or            similar political subdivisions. Each of the Funds may invest in foreign government            securities in the form of American Depository Receipts. Foreign government securities            also include debt securities of supranational entities. Quasi-governmental and            supranational entities include international organizations designated or supported by            governmental entities to promote economic reconstruction or development and            international banking institutions and related government agencies. Examples include            the International Bank for Reconstruction and Development (the “World            Bank”), the Japanese Development Bank, the Asian Development Bank and the            InterAmerican Development Bank. Foreign government securities also include            mortgage-related securities issued or guaranteed by national, state or provincial            governmental instrumentalities, including quasi-governmental agencies.

**Investment in Emerging Markets.**DWS High            Income Plus Fund may invest to varying degrees in one or more countries with emerging            securities markets. These countries are generally located in Latin America, Europe, the            Middle East, Africa and Asia. Political and economic structures in many of these            countries may be undergoing significant evolution and rapid development, and these            countries may lack the social, political and economic stability characteristic of more            developed countries. Certain of these countries may have in the past failed to            recognize private property rights and, at times, may have nationalized, or expropriated            the assets of private companies. As a result, these risks, including the risk of            nationalization or expropriation of assets, may be heightened. In addition,            unanticipated political or social developments may affect the value of the Fund’s            investments in these countries, as well as the availability of additional investments            in these countries. The small size and inexperience of the securities markets in            certain of these countries and the limited volume of trading in securities in these            countries may make the Fund’s investments in these countries illiquid and more            volatile than investments in most Western European countries, and the Fund may be            required to establish special custodial or other arrangements before making certain            investments in some of these countries. There may be little financial or accounting            information available with respect to issuers located in certain of these countries,            and may be difficult as a result to assess the value or prospects of an investment in            those countries. The laws of some foreign countries may limit a Fund’s ability to            invest in securities of certain issuers located in those countries.

**Equity and Equity Related Securities.**The            Funds may invest in common stock and preferred stock and, in addition, DWS High Income            Plus Fund may invest in warrants, purchased call options and other rights to acquire            stock. The market value of an equity security will increase or decrease depending on            market conditions. This affects the value of the shares of a Fund, and the value of            your investment.

**Currency Management Techniques.**The            instruments involved in currency-related transactions may be considered derivative            instruments. DWS High Income Plus Fund may enter into currency-related transactions to            attempt to protect against an anticipated rise in the US dollar price of securities            that it intends to purchase. In addition, the Fund may enter into currency-related            transactions to attempt to protect against the decline in value of its foreign currency            denominated or quoted portfolio securities, or a decline in the value of anticipated            dividends or interest from such securities, due to a decline in the value of the            foreign currency against the US dollar. The forecasting of currency

 

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market movements is extremely difficult and there can be no assurance            that currency hedging strategies will be successful. If the Advisor is incorrect in its            forecast, currency hedging strategies may result in investment performance worse than            if the strategies were not attempted. In addition, forward contracts and            over-the-counter currency options may be illiquid and are subject to the risk that the            counterparty will default on its obligations.

**Forward Foreign Currency Exchange Contracts.**DWS High Income Plus Fund may exchange currencies in the normal course            of managing its investments in foreign securities and may incur costs in doing so            because a foreign exchange dealer will charge a fee for conversion. The Fund may            conduct foreign currency exchange transactions on a “spot” basis (i.e., for            prompt delivery and settlement) at the prevailing spot rate for purchasing or selling            currency in the foreign currency exchange market. The Fund also may enter into forward            foreign currency exchange contracts (“forward currency contracts”) or other            contracts to purchase and sell currencies for settlement at a future date. A foreign            exchange dealer, in that situation, will expect to realize a profit based on the            difference between the price at which a foreign currency is sold to the Fund and the            price at which the dealer will cover the purchase in the foreign currency market.            Foreign exchange transactions are entered into at prices quoted by dealers, which may            include a mark-up over the price that the dealer must pay for the currency.

A            forward currency contract involves an obligation to purchase or sell a specific            currency at a future date, which may be any fixed number of days from the date of the            contract agreed upon by the parties, at a price set at the time of the contract. These            contracts are traded in the interbank market conducted directly between currency            traders (usually large commercial banks) and their customers. A forward contract            generally has no deposit requirement, and no commissions are generally charged at any            stage for trades, but currency dealers seek to obtain a “spread” or profit            on each transaction.

At            the maturity of a forward contract, the Fund may either accept or make delivery of the            currency specified in the contract or, at or prior to maturity, enter into a closing            purchase transaction involving the purchase or sale of an offsetting contract. Closing            purchase transactions with respect to forward contracts are usually effected with the            currency trader who is a party to the original forward contract.

The            Fund may use forward currency transactions in an attempt to hedge against losses, or            where possible, to add to investment returns. For the purposes of hedging, when the            Fund enters into a contract for the purchase or sale of a security denominated in a            foreign currency, or when the Fund anticipates the receipt in a foreign currency of            dividend or interest payments on such a security which it holds, the Fund may desire to            “lock in” the US dollar price of the security or the US dollar equivalent            of such dividend or interest payment, as the case may be. By entering into a forward            contract for the purchase or sale, for a fixed amount of US dollars, of the amount of            foreign currency involved in the underlying transactions, the Fund will attempt to            protect itself against an adverse change in the relationship between the US dollar and            the subject foreign currency during the period between the date on which the security            is purchased or sold, or on which the dividend or interest payment is declared, and the            date on which such payments are made or received.

Additionally, when management of the Fund believes that the currency of            a particular foreign country may suffer a substantial decline against the US dollar, it            may cause the Fund to enter into a forward contract to sell, for a fixed amount of US            dollars, the amount of foreign currency approximating the value of some or all of the            Fund’s portfolio securities denominated in such foreign currency. The precise            matching of the forward contract amounts and the value of the securities involved will            not generally be possible because the future value of such securities in foreign            currencies will change as a consequence of market movements in the value of those            securities between the date on which the contract is entered into and the date it            matures.

Using forward currency contracts in an attempt to protect the value of            the Fund’s portfolio securities against a decline in the value of a currency does            not eliminate fluctuations in the underlying prices of the securities. It simply            establishes a rate of exchange which the Fund can achieve at some future point in time.            The precise projection of short-term currency market movements is not possible, and            short-term hedging provides a means of fixing the dollar value of only a portion of the            Fund’s foreign assets.

The            Fund or the Fund’s custodian will place cash or liquid securities into a            segregated account of the Fund in an amount equal to the value of the Fund’s            total assets committed to the consummation of forward currency contracts

 

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requiring the Fund to purchase foreign currencies. If the value of the            securities placed in the segregated account declines, additional cash or liquid            securities will be placed in the account on a daily basis so that the value of the            account will equal the amount of the Fund’s commitments with respect to such            contracts. The segregated account will be marked-to-market on a daily basis. Although            forward currency contracts are not presently regulated by the Commodity Futures Trading            Commission (the “CFTC”), the CFTC may in the future assert authority to            regulate these contracts. In such event, the Fund’s ability to utilize forward            currency contracts may be restricted. In addition, a particular forward currency            contract and assets used to cover such contract may be illiquid.

The            Fund generally will not enter into a forward currency contract with a term of greater            than one year. The forecasting of short-term currency market movements is extremely            difficult and there can be no assurance that short-term hedging strategies will be            successful.

While the Fund will enter into forward currency contracts to reduce            currency exchange rate risks, transactions in such contracts involve certain other            risks. Thus, while the Fund may benefit from currency transactions, unanticipated            changes in currency prices may result in a poorer overall performance for the Fund than            if it had not engaged in any such transactions. Moreover, there may be an imperfect            correlation between the Fund’s portfolio holdings of securities denominated in a            particular currency and forward contracts entered into by the Fund. Such imperfect            correlation may cause a Fund to sustain losses which will prevent the Fund from            achieving a complete hedge or expose the Fund to risk of foreign currency exchange            loss. Forward currency contracts may be considered derivative instruments.

***Options on Securities, Securities Indices and Foreign            Currencies***

**General.**DWS High Income Plus Fund may            write covered put and call options and purchase put and call options. Such options may            relate to particular securities, to various stock indices, or to currencies. The Fund            may write call and put options which are issued by the Options Clearing Corporation            (the “OCC”) or which are traded on US and non-US exchanges and            over-the-counter. These instruments may be considered derivative            instruments.

**Written Options.**DWS High Income Plus Fund            may write (sell) covered put and call options on securities and enter into related            closing transactions. The Fund may receive fees (referred to as “premiums”)            for granting the rights evidenced by the options. However, in return for the premium            for a written call option, the Fund assumes certain risks. For example, in the case of            a written call option, the Fund forfeits the right to any appreciation in the            underlying security while the option is outstanding. A put option gives to its            purchaser the right to compel the Fund to purchase an underlying security from the            option holder at the specified price at any time during the option period. In contrast,            a call option written by the Fund gives to its purchaser the right to compel the Fund            to sell an underlying security to the option holder at a specified price at any time            during the option period. Upon the exercise of a put option written by the Fund, the            Fund may suffer a loss equal to the difference between the price at which the Fund is            required to purchase the underlying security and its market value at the time of the            option exercise, less the premium received for writing the option. All options written            by the Fund are covered. In the case of a call option, this means that the Fund will            own the securities subject to the option or an offsetting call option as long as the            written option is outstanding, or will have the absolute and immediate right to acquire            other securities that are the same as those subject to the written option. In the case            of a put option, this means that the Fund will deposit cash or liquid securities in a            segregated account with the custodian with a value at least equal to the exercise price            of the put option.

**Purchased Options.**DWS High Income Plus            Fund may also purchase put and call options on securities. A put option entitles the            Fund to sell, and a call option entitles the Fund to buy, a specified security at a            specified price during the term of the option. The advantage to the purchaser of a call            option is that it may hedge against an increase in the price of securities it            ultimately wishes to buy. The advantage to the purchaser of a put option is that it may            hedge against a decrease in the price of portfolio securities it ultimately wishes to            sell.

The            Fund may enter into closing transactions in order to offset an open option position            prior to exercise or expiration by selling an option it has purchased or by entering            into an offsetting option. If the Fund cannot effect closing transactions, it may have            to retain a security in its portfolio it would otherwise sell, or deliver a security it            would otherwise retain.

 

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The            Fund may purchase and sell options traded on US exchanges and, to the extent permitted            by law, options traded over-the-counter. A Fund may also purchase and sell options            traded on recognized foreign exchanges. There can be no assurance that a liquid            secondary market will exist for any particular option. Over-the-counter options also            involve the risk that a counterparty will fail to meet its obligation under the            option.

**Other Considerations.**The Fund will engage            in over-the-counter (“OTC”) options only with broker-dealers deemed            creditworthy by the Advisor. Closing transactions in certain options are usually            effected directly with the same broker-dealer that effected the original option            transaction. The Fund bears the risk that the broker-dealer may fail to meet its            obligations. There is no assurance that the Fund will be able to close an unlisted            option position. Furthermore, unlisted options are not subject to the protections            afforded purchasers of listed options by the OCC, which performs the obligations of its            members who fail to do so in connection with the purchase or sale of            options.

When the Fund purchases a put option, the premium paid by it is recorded            as an asset of the Fund. When the Fund writes an option, an amount equal to the net            premium (the premium less the commission paid by the Fund) received by the Fund is            included in the liability section of the Fund’s statement of assets and            liabilities as a deferred credit. The amount of this asset or deferred credit will be            marked-to-market on an ongoing basis to reflect the current value of the option            purchased or written. The current value of a traded option is the last sale price or,            in the absence of a sale, the average of the closing bid and asked prices. If an option            purchased by the Fund expires unexercised, the Fund realizes a loss equal to the            premium paid. If the Fund enters into a closing sale transaction on an option purchased            by it, the Fund will realize a gain if the premium received by the Fund on the closing            transaction is more than the premium paid to purchase the option, or a loss if it is            less. If an option written by the Fund expires on the stipulated expiration date or if            the Fund enters into a closing purchase transaction, it will realize a gain (or loss if            the cost of a closing purchase transaction exceeds the net premium received when the            option is sold) and the deferred credit related to such option will be eliminated. If            an option written by the Fund is exercised, the proceeds to the Fund from the exercise            will be increased by the net premium originally received, and the Fund will realize a            gain or loss.

There are several risks associated with transactions in options on            securities, securities indices and currencies. For example, there are significant            differences between the securities markets, currency markets and the corresponding            options markets that could result in imperfect correlations, causing a given option            transaction not to achieve its objectives. In addition, a liquid secondary market for            particular options, whether traded OTC or on a US or non-US securities exchange, may be            absent for reasons which include the following: there may be insufficient trading            interest in certain options; restrictions may be imposed by an exchange on opening            transactions or closing transactions or both; trading halts, suspensions or other            restrictions may be imposed with respect to particular classes or series of options or            underlying securities; unusual or unforeseen circumstances may interrupt normal            operations on an exchange; the facilities of an exchange or the OCC may not at all            times be adequate to handle current trading volume; or one or more exchanges could, for            economic or other reasons, decide or be compelled at some future date to discontinue            the trading of options (or a particular class or series of options), in which event the            secondary market on that exchange (or in that class or series of options) would cease            to exist, although outstanding options that had been issued by the OCC as a result of            trades on that exchange would continue to be exercisable in accordance with their            terms.

The            hours of trading for options may not conform to the hours during which the underlying            securities and currencies are traded. To the extent that the options markets close            before the markets for the underlying securities and currencies, significant price and            rate movements can take place in the underlying markets that cannot be reflected in the            options markets. The purchase of options is a highly specialized activity which            involves investment techniques and risks different from those associated with ordinary            portfolio securities transactions.

The            risks described above also apply to options on futures, which are discussed            below.

***Futures Contracts and Related Options***

**General.**When deemed advisable by the            Advisor, the Funds may enter into futures contracts and purchase and write options on            futures contracts to hedge against changes in interest rates, securities prices or            currency exchange rates or for certain non-hedging purposes. The Funds may purchase and            sell financial futures contracts, including

 

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stock index futures, and purchase and write related options. The Funds            may engage in futures and related options transactions for hedging and non-hedging            purposes as defined in regulations of the Commodity Futures Trading Commission.            Transactions in futures contracts and options on futures involve brokerage costs,            require margin deposits and, in the case of contracts and options obligating a Fund to            purchase securities, require a Fund to segregate cash or liquid securities with a value            equal to the amount of a Fund’s obligations.

**Futures Contracts**. A futures contract may            generally be described as an agreement between two parties to buy and sell a particular            financial instrument for an agreed price during a designated month (or to deliver the            final cash settlement price, in the case of a contract relating to an index or            otherwise not calling for physical delivery at the end of trading in the contract).            Futures contracts obligate the long or short holder to take or make delivery of a            specified quantity of a commodity or financial instrument, such as a security or the            cash value of a securities index, during a specified future period at a specified            price.

When interest rates are rising or securities prices are falling, a Fund            can seek to offset a decline in the value of its current portfolio securities through            the sale of futures contracts. When interest rates are falling or securities prices are            rising, a Fund, through the purchase of futures contracts, can attempt to secure better            rates or prices than might later be available in the market when it effects anticipated            purchases.

Positions taken in the futures markets are not normally held to maturity            but are instead liquidated through offsetting transactions which may result in a profit            or a loss. While futures contracts on securities will usually be liquidated in this            manner, a Fund may instead make, or take, delivery of the underlying securities            whenever it appears economically advantageous to do so. A clearing corporation            associated with the exchange on which futures on securities are traded guarantees that,            if still open, the sale or purchase will be performed on the settlement            date.

**Hedging Strategies**. Hedging, by use of            futures contracts, seeks to establish with more certainty the effective price and rate            of return on portfolio securities and securities that a Fund proposes to acquire. A            Fund may, for example, take a “short” position in the futures market by            selling futures contracts in order to hedge against an anticipated rise in interest            rates or a decline in market prices that would adversely affect the value of a            Fund’s portfolio securities. Such futures contracts may include contracts for the            future delivery of securities held by a Fund or securities with characteristics similar            to those of a Fund’s portfolio securities. If, in the opinion of the Advisor,            there is a sufficient degree of correlation between price trends for a Fund’s            portfolio securities and futures contracts based on other financial instruments,            securities indices or other indices, a Fund may also enter into such futures contracts            as part of its hedging strategy. Although under some circumstances prices of securities            in a Fund’s portfolio may be more or less volatile than prices of such futures            contracts, the Advisor will attempt to estimate the extent of this volatility            difference based on historical patterns and compensate for any such differential by            having a Fund enter into a greater or lesser number of futures contracts or by            attempting to achieve only a partial hedge against price changes affecting a            Fund’s securities portfolio. When hedging of this character is successful, any            depreciation in the value of portfolio securities will be substantially offset by            appreciation in the value of the futures position. On the other hand, any unanticipated            appreciation in the value of a Fund’s portfolio securities would be substantially            offset by a decline in the value of the futures position.

On            other occasions, a Fund may take a “long” position by purchasing futures            contracts. This would be done, for example, when a Fund anticipates the subsequent            purchase of particular cash securities, but expects the prices then available in the            applicable market to be less favorable than prices that are currently            available.

**Options on Futures Contracts**. The            acquisition of put and call options on futures contracts will give the Fund the right            (but not the obligation) for a specified price to sell or to purchase, respectively,            the underlying futures contract at any time during the option period. As the purchaser            of an option on a futures contract, the Fund obtains the benefit of the futures            position if prices move in a favorable direction but limits its risk of loss in the            event of an unfavorable price movement to the loss of the premium and transaction            costs.

The            writing of a call option on a futures contract generates a premium which may partially            offset a decline in the value of the Fund’s assets. By writing a call option, the            Fund becomes obligated, in exchange for the premium, to sell a futures contract (if the            option is exercised), which may have a value higher than the exercise price.            Conversely, the writing of a put option on a futures contract generates a premium which            may partially offset an

 

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increase in the price of securities that the Fund intends to purchase.            However, the Fund becomes obligated to purchase a futures contract (if the option is            exercised) which may have a value lower than the exercise price. Thus, the loss            incurred by the Fund in writing options on futures is potentially unlimited and may            exceed the amount of the premium received. The Fund will incur transaction costs in            connection with the writing of options on futures.

The            holder or writer of an option on a futures contract may terminate its position by            selling or purchasing an offsetting option on the same series. There is no guarantee            that such closing transactions can be effected. The Fund’s ability to establish            and close out positions on such options will be subject to the development and            maintenance of a liquid market.

The            Fund may use options on futures contracts solely for bona fide hedging or other            non-hedging purposes as described below.

**Swaps, Caps, Floors and Collars.**Among the            Strategic Transactions into which the Funds may enter are currency, and other types of            swaps and the purchase or sale of related caps, floors and collars. The Funds expect to            enter into these transactions primarily to preserve a return or spread on a particular            investment or portion of its portfolio, to protect against currency fluctuations, as a            duration management technique or to protect against any increase in the price of            securities the Funds anticipate purchasing at a later date. A Fund will not sell            interest rate caps or floors where they do not own securities or other instruments            providing the income stream the Funds may be obligated to pay. Interest rate swaps            involve the exchange by a Fund with another party of their respective commitments to            pay or receive interest, e.g., an exchange of floating rate payments for fixed rate            payments with respect to a notional amount of principal. A currency swap is an            agreement to exchange cash flows on a notional amount of two or more currencies based            on the relative value differential among them and an index swap is an agreement to swap            cash flows on a notional amount based on changes in the values of the reference            indices. The purchase of a cap entitles the purchaser to receive payments on a notional            principal amount from the party selling such cap to the extent that a specified index            exceeds a predetermined interest rate or amount. The purchase of a floor entitles the            purchaser to receive payments on a notional principal amount from the party selling            such floor to the extent that a specified index falls below a predetermined interest            rate or amount. A collar is a combination of a cap and a floor that preserves a certain            return within a predetermined range of interest rates or values.

A            Fund will usually enter into swaps on a net basis, i.e., the two payment streams are            netted out in a cash settlement on the payment date or dates specified in the            instrument, with the Fund receiving or paying, as the case may be, only the net amount            of the two payments. Inasmuch as a Fund will segregate assets (or enter into offsetting            positions) to cover its obligations under swaps, the Advisor and the Fund believe such            obligations do not constitute senior securities under the 1940 Act and, accordingly,            will not treat them as being subject to its borrowing restrictions. A Fund will not            enter into any swap, cap, floor or collar transaction unless, at the time of entering            into such transaction, the unsecured long-term debt of the Counterparty, combined with            any credit enhancements, is rated at least A by S&P or Moody’s or has an            equivalent rating from a NRSRO or is determined to be of equivalent credit quality by            the Advisor. If there is a default by the Counterparty, a Fund may have contractual            remedies pursuant to the agreements related to the transaction. The swap market has            grown substantially in recent years with a large number of banks and investment banking            firms acting both as principals and as agents utilizing standardized swap            documentation. As a result, the swap market has become relatively liquid. Caps, floors            and collars are more recent innovations for which standardized documentation has not            yet been fully developed and, accordingly, they are less liquid than swaps.

The            Funds may invest up to 15% of their total assets in credit default swaps for both            hedging and non-hedging purposes. A credit default swap is a contract between a buyer            and a seller of protection against a pre-defined credit event. The buyer of protection            pays the seller a fixed regular fee provided that no event of default on an underlying            reference obligation has occurred. If an event of default occurs, the seller must pay            the buyer the full notional value, or “par value”, of the reference            obligation in exchange for the reference obligation. Credit default swaps are used as a            means of “buying” credit protection, i.e., attempting to mitigate the risk            of default or credit quality deterioration in some portion of the Fund’s            holdings, or “selling” credit protection, i.e., attempting to gain exposure            to an underlying issuer’s credit quality characteristics without directly            investing in that issuer. No more than 5% of the Fund’s assets may be invested in            credit default swaps for purposes of buying credit protection if the Fund does not own            the underlying security or securities at the time of investment. Where the Fund is a            seller of credit protection, it

 

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effectively adds leverage to its portfolio because, in addition to its            total net assets, the Fund would be subject to investment exposure on the notional            amount of the swap. The Fund will only sell credit protection with respect to            securities in which it would be authorized to invest directly. The Fund currently            considers credit default swaps to be illiquid and treats the market value of the            contract as illiquid for purposes of determining compliance with the Fund’s            restrictions on investing in illiquid securities.

If            the Fund is a buyer of a credit default swap and no event of default occurs, the Fund            will lose its investment and recover nothing. However, if the Fund is a buyer and an            event of default occurs, the Fund will receive the full notional value of the reference            obligation that may have little or no value. As a seller, the Fund receives a fixed            rate of income through the term of the contract (typically between six months and three            years), provided that there is no default event. If an event of default occurs, the            seller must pay the buyer the full notional value of the reference obligation. Credit            default swaps involve greater risks than if the Fund had invested in the reference            obligation directly.

The            Fund may use credit default swaps to gain exposure to particular issuers or particular            markets through investments in portfolios of credit default swaps, such as Dow Jones            CDX.NA.HY certificates. By investing in certificates representing interests in a basket            of credit default swaps, the Fund is taking credit risk with respect to an entity or            group of entities and providing credit protection to the swap counterparties. For            example, the CDX EM is a tradable basket of 19 credit default swaps on country credits            which seeks to replicate the returns on the indices of a broad group of emerging            markets countries. The credits are a subset of the countries represented by the            JPMorgan Emerging Markets Bond Index Global Diversified. By purchasing interests in CDX            EM, the Fund is gaining emerging markets exposure through a single investment. Unlike            other types of credit default swaps which are generally considered illiquid, credit            default swap certificates generally can be sold within seven days and are not subject            to the Fund’s restrictions on investing in illiquid securities.

**Other Considerations.**DWS High Income Plus            Fund will engage in futures and related options transactions only for bona fide hedging            or non-hedging purposes as permitted by CFTC regulations which permit principals of an            investment company registered under the 1940 Act to engage in such transactions without            registering as commodity pool operators. The Fund will determine that the price            fluctuations in the futures contracts and options on futures used by it for hedging            purposes are substantially related to price fluctuations in securities or instruments            held by the Fund or securities or instruments which it expects to purchase. Except as            stated below, the Fund’s futures transactions will be entered into for            traditional hedging purposes — i.e., futures contracts will be sold to protect            against a decline in the price of securities (or the currency in which they are            denominated) that the Fund owns or futures contracts will be purchased to protect the            Fund against an increase in the price of securities (or the currency in which they are            denominated) that the Fund intends to purchase. As evidence of this hedging intent, the            Fund expects that, on 75% or more of the occasions on which it takes a long futures or            option position (involving the purchase of futures contracts), the Fund will have            purchased, or will be in the process of purchasing, equivalent amounts of related            securities (or assets denominated in the related currency) in the cash market at the            time when the futures or option position is closed out. However, in particular cases,            when it is economically advantageous for the Fund to do so, a long futures position may            be terminated or an option may expire without the corresponding purchase of securities            or other assets.

As            an alternative to compliance with the bona fide hedging definition, a CFTC regulation            now permits the Fund to elect to comply with a different test under which the aggregate            initial margin and premiums required to establish non-hedging positions in futures            contracts and options on futures will not exceed 5% of the net asset value of the            Fund’s portfolio, after taking into account unrealized profits and losses on any            such positions and excluding the amount by which such options were in-the-money at the            time of purchase. The Fund will engage in transactions in futures contracts and related            options only to the extent such transactions are consistent with the requirements of            the Code for maintaining its qualification as a regulated investment company. See            “Taxes.”

The            Fund will be required, in connection with transactions in futures contracts and the            writing of options on futures contracts, to make margin deposits, which will be held by            its custodian for the benefit of the futures commission merchant through whom the Fund            engages in such futures and option transactions. These transactions involve brokerage            costs, require margin deposits and, in the case of futures contracts and options            obligating the Fund to

 

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purchase securities, require the Fund to segregate cash or liquid            securities in an account maintained with its custodian to cover such contracts and            options.

While transactions in futures contracts and options on futures may            reduce certain risks, such transactions themselves entail certain other risks. Thus,            unanticipated changes in interest rates or securities prices may result in a poorer            overall performance for the Fund than if it had not entered into any futures contracts            or options transactions. The other risks associated with the use of futures contracts            and options thereon are (i) imperfect correlation between the change in market value of            the securities held by the Fund and the prices of the futures and options and (ii) the            possible absence of a liquid secondary market for a futures contract or option and the            resulting inability to close a futures position prior to its maturity date.

In            the event of an imperfect correlation between a futures position and portfolio position            which is intended to be protected, the desired protection may not be obtained and the            Fund may be exposed to risk of loss. The risk of imperfect correlation may be minimized            by investing in contracts whose price behavior is expected to resemble that of the            Fund’s underlying securities. The Fund will attempt to minimize the risk that it            will be unable to close out futures positions by entering into such transactions on a            national exchange with an active and liquid secondary market.

***Limitations and Risks Associated with Transactions in Options,            Futures Contracts and Options on Futures Contracts***

Options and futures transactions involve (1) liquidity risk that            contractual positions cannot be easily closed out in the event of market changes or            generally in the absence of a liquid secondary market, (2) correlation risk that            changes in the value of hedging positions may not match the securities market            fluctuations intended to be hedged, and (3) market risk that an incorrect            prediction of securities prices by the Advisor may cause the Fund to perform worse than            if such positions had not been taken. The ability to terminate over-the-counter options            is more limited than with exchange traded options and may involve the risk that the            counterparty to the option will not fulfill its obligations. In accordance with a            position taken by the Commission, each Fund will limit its investments in illiquid            securities to 15% of the Fund’s net assets.

Options and futures transactions are highly specialized activities which            involve investment techniques and risks that are different from those associated with            ordinary portfolio transactions. Gains and losses on investments in options and futures            depend on the Advisor’s ability to predict the direction of stock prices and            other economic factors. The loss that may be incurred by a Fund in entering into            futures contracts and written options thereon is potentially unlimited. There is no            assurance that higher than anticipated trading activity or other unforeseen events            might not, at times, render certain facilities of an options clearing entity or other            entity performing the regulatory and liquidity functions of an options clearing entity            inadequate, and thereby result in the institution by an exchange of special procedures            which may interfere with the timely execution of customers’ orders. Most futures            exchanges limit the amount of fluctuation permitted in a futures contract’s            prices during a single trading day. Once the limit has been reached no further trades            may be made that day at a price beyond the limit. The price limit will not limit            potential losses, and may in fact prevent the prompt liquidation of futures positions,            ultimately resulting in further losses.

Except as set forth above under “Futures Contracts and Options on            Futures Contracts”, there is no limit on the percentage of the assets of DWS High            Income Plus Fund that may be at risk with respect to futures contracts and related            options. The Fund may not invest more than 25% of its total assets in purchased            protective put options. The Fund’s transactions in options, futures contracts and            options on futures contracts may be limited by the requirements for qualification of            the Fund as a regulated investment company for tax purposes. See “Taxes”            below. Options, futures contracts and options on futures contracts are derivative            instruments.

**Repurchase Agreements.**Each Fund may enter            into repurchase agreements. In a repurchase agreement, a Fund buys a security subject            to the right and obligation to sell it back to the other party at the same price plus            accrued interest. The Fund’s custodian will hold the security as collateral for            the repurchase agreement. Collateral must be maintained at a value at least equal to            102% of the repurchase price, but repurchase agreements involve some credit risk to a            Fund if the other party defaults on its obligation and the Fund is delayed in or            prevented from liquidating the collateral. A Fund will enter into repurchase agreements            only with financial institutions deemed to present

 

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minimal risk of bankruptcy during the term of the agreement based on            guidelines established and periodically reviewed by the Trust’s Board of            Trustees.

For            purposes of the 1940 Act and, generally, for tax purposes, a repurchase agreement is            considered to be a loan from the Fund to the seller of the obligation. For other            purposes, it is not clear whether a court would consider such an obligation as being            owned by the Fund or as being collateral for a loan by the Fund to the seller. In the            event of the commencement of bankruptcy or insolvency proceedings with respect to the            seller of the obligation before its repurchase, under the repurchase agreement, the            Fund may encounter delay and incur costs before being able to sell the security. Such            delays may result in a loss of interest or decline in price of the            obligation.

If            the court characterizes the transaction as a loan and the Fund has not perfected a            security interest in the obligation, the Fund may be treated as an unsecured creditor            of the seller and required to return the obligation to the seller’s estate. As an            unsecured creditor, the Fund would be at risk of losing some or all of the principal            and income involved in the transaction. As with any unsecured debt instrument purchased            for the Funds, the Advisor seeks to minimize the risk of loss from repurchase            agreements by analyzing the creditworthiness of the obligor, in this case, the seller            of the obligation. In addition to the risk of bankruptcy or insolvency proceedings,            there is the risk that the seller may fail to repurchase the security. However, if the            market value of the obligation falls below an amount equal to 102% of the repurchase            price (including accrued interest), the seller of the obligation will be required to            deliver additional securities so that the market value of all securities subject to the            repurchase agreement equals or exceeds the repurchase price.

**"When-Issued” Purchases and Forward Commitments (Delayed            Delivery).**Each Fund may purchase securities on a            when-issued, delayed delivery or forward commitment basis. When these transactions are            negotiated, the price of the securities is fixed at the time of the commitment, but            delivery and payment may take place up to 90 days after the date of the commitment to            purchase for equity securities, and up to 45 days after such date for fixed income            securities. When-issued securities or forward commitments involve a risk of loss if the            value of the security to be purchased declines prior to the settlement date.

These transactions, which involve a commitment by a Fund to purchase or            sell particular securities with payment and delivery taking place at a future date            (perhaps one or two months later), permit the Fund to lock in a price or yield on a            security, regardless of future changes in interest rates. A Fund will purchase            securities on a “when-issued” or forward commitment basis only with the            intention of completing the transaction and actually purchasing the securities. If            deemed appropriate by the Advisor, however, a Fund may dispose of or renegotiate a            commitment after it is entered into, and may sell securities it has committed to            purchase before those securities are delivered to the Fund on the settlement date. In            these cases the Fund may realize a gain or loss, and distributions attributable to any            such gain would be taxable to shareholders.

When a Fund agrees to purchase securities on a “when-issued”            or forward commitment basis, the Fund’s custodian will set aside cash or liquid            securities equal to the amount of the commitment in a separate account. Normally, the            custodian will set aside portfolio securities to satisfy a purchase commitment, and in            such a case the Fund may be required subsequently to place additional assets in the            separate account in order to ensure that the value of the account remains equal to the            amount of the Fund’s commitments. The market value of a Fund’s net assets            will generally fluctuate to a greater degree when it sets aside portfolio securities to            cover such purchase commitments than when it sets aside cash. Because a Fund’s            liquidity and ability to manage its portfolio might be affected when it sets aside cash            or portfolio securities to cover such purchase commitments, each Fund expects that its            commitments to purchase when-issued securities and forward commitments will not exceed            33% of the value of its total assets. When a Fund engages in “when-issued”            and forward commitment transactions, it relies on the other party to the transaction to            consummate the trade. Failure of such party to do so may result in the Fund incurring a            loss or missing an opportunity to obtain a price considered to be            advantageous.

The            market value of the securities underlying a “when-issued” purchase or a            forward commitment to purchase securities, and any subsequent fluctuations in their            market value, are taken into account when determining the market value of a Fund            starting on the day the Fund agrees to purchase the securities. The Fund does not earn            interest or dividends on the securities it has committed to purchase until the            settlement date.

 

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**Borrowing.**Each Fund may borrow for            temporary or emergency purposes. This borrowing may be unsecured. Among the forms of            borrowing in which each Fund may engage is entering into reverse repurchase agreements.            The 1940 Act requires a Fund to maintain continuous asset coverage (that is, total            assets including borrowings, less liabilities exclusive of borrowings) of 300% of the            amount borrowed. If the asset coverage should decline below 300% as a result of market            fluctuations or for other reasons, a Fund is required to sell some of its portfolio            securities within three days to reduce its borrowings and restore the 300% asset            coverage, even though it may be disadvantageous from an investment standpoint to sell            securities at that time. To the extent a Fund borrows money, positive or negative            performance by the Fund’s investments may be magnified. Any gain in the value, or            income earned on the holding, of securities purchased with borrowed money that exceeds            the interest paid on the amount borrowed would cause the net asset value of the            Fund’s shares to increase more rapidly than otherwise would be the case.            Conversely, any decline in the value of securities purchased, or cost in excess of            income earned, would cause the net asset value of the Fund’s shares to decrease            more rapidly than otherwise would be the case. Borrowed money thus creates an            opportunity for greater capital gain but at the same time increases exposure to capital            risk. Money borrowed will be subject to interest costs which may or may not be            recovered by appreciation of the securities purchased or from income received as a            holder of those securities. The Fund also may be required to maintain minimum average            balances in connection with such borrowing or to pay a commitment or other fee to            maintain a line of credit; either of these requirements would increase the cost of            borrowing over the stated interest rate. See “Investment            Restrictions.”

**Lending Portfolio Securities.**Each fund,            other than DWS Core Fixed Income Fund may lend portfolio securities to brokers, dealers            and other financial organizations. These loans, if and when made by a Fund, may not            exceed 33 1/3% of the value of the Fund’s total assets. A Fund’s loans            of securities will be collateralized by cash, cash equivalents or US Government            securities. The cash or instruments collateralizing the Fund’s loans of            securities will be maintained at all times in a segregated account with the            Fund’s custodian, in an amount at least equal to the current market value of the            loaned securities. From time to time, a Fund may pay a part of the interest earned from            the investment of collateral received for securities loaned to the borrower and/or a            third party that is unaffiliated with the Fund and is acting as a “placing            broker.” No fee will be paid to affiliated persons of the Fund. The Board of            Trustees will make a determination that the fee paid to the placing broker is            reasonable.

By            lending portfolio securities, a Fund can increase its income by continuing to receive            amounts equal to the interest or dividends on the loaned securities as well as by            either investing the cash collateral in short-term instruments or obtaining yield in            the form of interest paid by the borrower when US Government securities are used as            collateral. A Fund will comply with the following conditions whenever it loans            securities: (i) the Fund must receive at least 100% cash collateral or equivalent            securities from the borrower; (ii) the borrower must increase the collateral whenever            the market value of the securities loaned rises above the level of the collateral;            (iii) the Fund must be able to terminate the loan at any time; (iv) the Fund must            receive reasonable interest on the loan, as well as amounts equal to the dividends,            interest or other distributions on the loaned securities, and any increase in market            value; (v) the Fund may pay only reasonable custodian fees in connection with the loan;            and (vi) voting rights on the loaned securities may pass to the borrower except that,            if a material event will occur affecting the investment in the loaned securities, the            Fund must terminate the loan in time to vote the securities on such event.

**Diversification.**Each Fund is            “diversified” under the 1940 Act and is also subject to issuer            diversification requirements imposed on regulated investment companies by Subchapter M            of the Code. See “Investment Restrictions” above and “Taxes”            below.

**Concentration of Investments.**As a matter            of fundamental policy, no Fund may invest 25% or more of its total assets in the            securities of one or more issuers conducting their principal business activities in the            same industry (except US Government securities).

**Mortgage Dollar Rolls.**Each of the Funds            may enter into mortgage “dollar rolls” in which a Fund sells securities for            delivery in the current month and simultaneously contracts to repurchase substantially            similar (same type, coupon and maturity) securities on a specified future date. During            the roll period, a Fund forgoes principal and interest paid on the securities. A Fund            is compensated by the difference between the current sales price and the lower forward            price for the future purchase (often referred to as the “drop”) or fee            income and by the interest earned on the cash proceeds of the initial sale. A            “covered roll” is a specific type of dollar roll for which there is            an

 

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offsetting cash position or a cash equivalent security position which            matures on or before the forward settlement date of the dollar roll transaction. The            Funds may enter into both covered and uncovered rolls.

**Restricted Securities.**Each of the Funds            may invest to a limited extent in restricted securities. Restricted securities are            securities that may not be sold freely to the public without prior registration under            federal securities laws or an exemption from registration. Restricted securities will            be considered illiquid unless they are restricted securities offered and sold to            “qualified institutional buyers” under Rule 144A under the Securities Act            of 1933. Although Rule 144A Securities have not been registered under the Securities            Act, they may be traded between certain qualified institutional investors, including            investment companies. The presence or absence of a secondary market may affect the            value of the Rule 144A Securities. The Fund’s Board of Trustees has established            guidelines and procedures for the Advisor to utilize to determine the liquidity of such            securities. Rule 144A Securities may become illiquid if qualified institutional buyers            are not interested in acquiring the securities. Securities may become illiquid if            qualified institutional buyers are not interested in acquiring the            securities.

**Other Investment Companies.**Each Fund may            invest in the aggregate no more than 10% of its total assets, calculated at the time of            purchase, in the securities of other US-registered investment companies. In addition, a            Fund may not invest more than 5% of its total assets in the securities of any one such            investment company or acquire more than 3% of the voting securities of any other such            investment company. A Fund will indirectly bear its proportionate share of any            management or other fees paid by investment companies in which it invests, in addition            to its own fees.

**Temporary Defensive Investments.**For            temporary defensive purposes during periods when the Advisor determines that conditions            warrant, each of the Funds may invest up to 100% of its assets in cash and money market            instruments, including securities issued or guaranteed by the US Government, its            agencies or instrumentalities; certificates of deposit, time deposits, and            bankers’ acceptances issued by banks or savings and loans associations having net            assets of at least $500 million as of the end of their most recent fiscal year;            commercial paper rated at the time of purchase at least A-1 by Standard &            Poor’s or P-1 by Moody’s, or unrated commercial paper determined by the            Advisor to be of comparable quality; repurchase agreements involving any of the            foregoing; and, to the extent permitted by applicable law, shares of other investment            companies investing solely in money market instruments.

**Commercial Paper.**Commercial paper is a            short-term, unsecured negotiable promissory note of a US or non-US issuer. Each of the            Funds may purchase commercial paper. Each Fund may also invest in variable rate master            demand notes which typically are issued by large corporate borrowers and which provide            for variable amounts of principal indebtedness and periodic adjustments in the interest            rate. Demand notes are direct lending arrangements between a Fund and an issuer, and            are not normally traded in a secondary market. A Fund, however, may demand payment of            principal and accrued interest at any time. In addition, while demand notes generally            are not rated, their issuers must satisfy the same criteria as those that apply to            issuers of commercial paper. The Advisor will consider the earning power, cash flow and            other liquidity ratios of issuers of demand notes and continually will monitor their            financial ability to meet payment on demand. See also “Fixed Income Securities            — Variable and Floating Rate Instruments.”

**Bank Obligations.**Each Fund’s            investments in money market instruments may include certificates of deposit, time            deposits and bankers’ acceptances. Certificates of Deposit (“CDs”)            are short-term negotiable obligations of commercial banks. Time Deposits            (“TDs”) are non-negotiable deposits maintained in banking institutions for            specified periods of time at stated interest rates. Bankers’ acceptances are time            drafts drawn on commercial banks by borrowers usually in connection with international            transactions.

US            commercial banks organized under federal law are supervised and examined by the            Comptroller of the Currency and are required to be members of the Federal Reserve            System and to be insured by the Federal Deposit Insurance Corporation (the            “FDIC”). US banks organized under state law are supervised and examined by            state banking authorities but are members of the Federal Reserve System only if they            elect to join. Most state banks are insured by the FDIC (although such insurance may            not be of material benefit to a Fund, depending upon the principal amount of CDs of            each bank held by the Fund) and are subject to federal examination and to a substantial            body of federal law and regulation. As a result of governmental regulations, US            branches of US banks, among other things, generally are required to maintain specified            levels of reserves, and are subject to other supervision and regulation

 

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designed to promote financial soundness. US savings and loan            associations, the CDs of which may be purchased by the Funds, are supervised and            subject to examination by the Office of Thrift Supervision. US savings and loan            associations are insured by the Savings Association Insurance Fund which is            administered by the FDIC and backed by the full faith and credit of the US            Government.

***Summary of Investment Practices***

The            following is a chart of the various types of securities and investment strategies            employed by the Funds. Unless otherwise indicated, the Funds are not obligated to            pursue any of the following strategies and do not represent that these techniques are            available now or will be available at any time in the future. If a Fund’s            investment in a particular type of security is limited to a certain percentage of the            Fund’s assets, that percentage limitation is listed in the chart. Following the            chart, there is a description of how each type of security and investment strategy may            be used by the Funds. As a matter of nonfundamental operating policy, the Funds may be            subject to additional restrictions. See the section entitled “Investment            Restrictions.”

 

| **INVESTMENT                            PRACTICE**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | **DWS Core Fixed Income Fund** | **DWS Short Duration Fund** | **DWS****High Income Plus Fund** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|-----------------------------|----------------------------------|
| **KEY TO TABLE**:

+            Permitted                            without limit

o            Permitted                            without limit, but not expected to be used to a significant                            extent

**X**           Not                            permitted

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

Roman                            type (e.g. 20%) represents an investment limitation as a percentage                            of**total**fund                            assets; does not indicate actual use |
| Common Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | **X**                          | **X**                       | *20%*                            |
| Preferred Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | +                              | o                           | +                                |
| Warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | **X**                          | **X**                       | *20%*                            |
| Convertible                            Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | +                              | o                           | +                                |
| **FIXED INCOME                            SECURITIES & MONEY MARKET INSTRUMENTS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Short-Term                            Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | o                              | +                           | o                                |
| Obligations of Banks and                            Other Financial Institutions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | o                              | +                           | o                                |
| Certificates of Deposit                            and Banker’s Acceptances                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | o                              | +                           | o                                |
| Commercial                            Paper                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | o                              | +                           | o                                |
| Variable Rate Master                            Demand Notes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | o                              | +                           | o                                |
| US Government                            Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | o                              | +                           | o                                |
| Custodial                            Receipts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | o                              | o                           | o                                |
| Zero Coupon Securities and                            Deferred Interest Bonds                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | +                              | +                           | +                                |
| Variable Rate                            Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | +                              | +                           | +                                |
| Inverse Floating Rate                            Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | o                              | o                           | o                                |
| Lower-Rated Debt                            Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | *5%*                           | *5%*                        | +                                |
| Put Bonds                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | o                              | o                           | o                                |
| Bank Loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | **X**                          | **X**                       | +                                |
| **MUNICIPAL                            SECURITIES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Municipal Notes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | o                              | o                           | o                                |
| Tax Anticipation                            Notes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | o                              | o                           | o                                |

 

 

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| Revenue Anticipation                            Notes                                                                                   | o     | o     | o    |
|-----------------------------------------------------------------------------------------------------------------------------------------|-------|-------|------|
| Bond Anticipation                            Notes                                                                                      | o     | o     | o    |
| Tax and Revenue                            Anticipation Notes                                                                           | o     | o     | o    |
| Construction Loan                            Notes                                                                                      | o     | o     | o    |
| Miscellaneous, Temporary                            and Anticipatory Instruments                                                        | o     | o     | o    |
| Tax-Exempt Commercial                            Paper                                                                                  | o     | o     | o    |
| Municipal                            Securities                                                                                         | o     | o     | o    |
| General Obligation                            Bonds                                                                                     | o     | o     | o    |
| Revenue Bonds                                                                                                                           | o     | o     | o    |
| Private Activity                            Bonds                                                                                       | o     | o     | o    |
| Tender Option                            Bonds                                                                                          | o     | o     | o    |
| Municipal Leases,                            Certificates of Participation and Other Participation                            Interests | *5%*  | *5%*  | *5%* |
| Pre-Refunded                            Securities                                                                                      | o     | o     | o    |
| Auction Rate                            Securities                                                                                      | o     | o     | o    |
| Pay-in-Kind                            Securities                                                                                       | **X** | **X** | o    |
| **DERIVATIVE SECURITIES                            (OPTIONS)**                                                                          |
| Options on                            Securities                                                                                        | **X** | **X** | +    |
| Options on Securities                            Indices                                                                                | **X** | **X** | +    |
| Options on Non-US                            Securities Indices                                                                         | **X** | **X** | +    |
| Futures                            Contracts                                                                                            | 15%   | 15%   | +    |
| Futures Contracts on                            Securities Indices                                                                      | 15%   | 15%   | +    |
| Options on Futures                            Contracts (including Contracts on Securities Indices)                                     | 15%   | 15%   | +    |
| **DERIVATIVE                            SECURITIES***                                                                                   |
| Swap Agreements                                                                                                                         | o     | o     | +    |
| Credit Default                            Swaps                                                                                         | 15%   | 15%   | 15%  |
| **DERIVATIVE                            SECURITIES**                                                                                    |
| Hedging                            Strategies                                                                                           | o     | o     | +    |
| **MORTGAGE-BACKED AND                            ASSET-BACKED SECURITIES**                                                              |
| Government Guaranteed                            Mortgage-Backed Securities                                                             | +     | +     | +    |
| Ginnie Mae                            Certificates                                                                                      | +     | +     | +    |
| Fannie Mae                            Certificates                                                                                      | +     | +     | +    |
| Freddie Mac                            Certificates                                                                                     | +     | +     | +    |
| Multi-Class                            Mortgage-Backed Securities (CMOs and REMICs)                                                     | +     | +     | +    |
| Private Issued Mortgage                            -Backed Securities                                                                   | +     | +     | +    |
| Asset-Backed                            Securities                                                                                      | +     | 40%   | +    |
| **SECURITIES OF NON-US                            ISSUERS**                                                                             |
| Foreign Securities &                            Depository Receipts (ADRs, EDRs, GDRs and IDRs)                                     | 25%1  | 25%1  | +2   |
| Foreign Corporate Debt                            Securities                                                                            | 25%1  | 25%1  | +2   |
| Foreign Government Debt                            Securities                                                                           | 25%1  | 25%1  | +2   |
| Investments in Emerging                            Markets                                                                              | **X** | **X** | +    |

 

 

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| **CURRENCY                            MANAGEMENT**                             |
|--------------------------------------------------------------------------------|
| Currency Exchange                            Transactions                      | **X** | **X** | + |
| Currency Hedging                            Transactions                       | **X** | **X** | + |
| Forward Currency Exchange                            Contracts                 | **X** | **X** | + |
| Options on Foreign                            Currencies                       | **X** | **X** | + |
| **OTHER INVESTMENTS AND                            INVESTMENT PRACTICES**      |
| Illiquid                            Securities                                 | *15%* | *15%* | *15%* |
| When-Issued and Delayed                            Delivery Securities         | + | + | + |
| Repurchase                            Agreements                               | + | + | + |
| Mortgage Dollar                            Rolls                               | + | + | + |
| Lending of Portfolio                            Securities                     | **X** | 33 1/3% | 33 1/3% |
| Borrowing (including                            reverse repurchase agreements) | 10% | 33 1/3% | 33 1/3% |
| Short Sales                                                                    | **X** | o | o |
| Other Investment                            Companies                          | 10% | 10% | 10% |
| Temporary Defensive                            Investments                     | *100%* | *100%* | *100%* |

             

| 1 | US dollar-denominated securities only. |
|---|----------------------------------------|

| 2 | May be denominated in any currency. |
|---|-------------------------------------|

| * | DWS Core Fixed Income Fund and DWS Short Duration Fund                            each have a 15% of total assets, combined limit on Futures and interest                            rate swaps |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Portfolio Holdings**

In            addition to the public disclosure of the Funds’ portfolio holdings through            required Securities and Exchange Commission ("SEC") quarterly filings, the Funds may            make their portfolio holdings information publicly available on the DWS Funds Web site            as described in each Fund’s prospectus. The Funds do not disseminate non-public            information about portfolio holdings except in accordance with policies and procedures            adopted by each Fund.

Each Fund’s procedures permit non-public portfolio holdings            information to be shared with Deutsche Asset Management, Inc. and its affiliates            (collectively “DeAM”), subadvisors, if any, custodians, independent            registered public accounting firms, attorneys, officers and trustees/directors and each            of their respective affiliates and advisers who require access to this information to            fulfill their duties to a Fund and are subject to the duties of confidentiality,            including the duty not to trade on non-public information, imposed by law or contract,            or by a Fund’s procedures. This non-public information may also be disclosed,            subject to the requirements described below, to securities lending agents, financial            printers, proxy voting firms, mutual fund analysts and rating and tracking agencies, or            to shareholders in connection with in-kind redemptions (collectively, “Authorized            Third Parties”).

Prior to any disclosure of a Fund’s non-public portfolio holdings            information to Authorized Third Parties, a person authorized by a Fund’s Trustees            must make a good faith determination in light of the facts then known that a Fund has a            legitimate business purpose for providing the information, that the disclosure is in            the best interest of a Fund, and that the recipient assents or otherwise has a duty to            keep the information confidential and to not trade based on the information            receivedwhile the information remains non-public. No compensation            is received by a Fund or DeAM for disclosing non-public holdings information. Periodic            reports regarding these procedures will be provided to a Fund’s            Trustees.

 

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Portfolio holdings information distributed by the trading desks of the            Advisor or its affiliates or a subadvisor for the purpose of facilitating efficient            trading of such securities and receipt of relevant research is not subject to the            foregoing requirements.

Non-public portfolio holding information does not include portfolio            characteristics (other than holdings or subsets of holdings) about the Funds and            information derived therefrom, including, but not limited to, how the Funds’            investments are divided among various sectors, industries, countries, value and growth            stocks, bonds, currencies and cash, types of bonds, bond maturities, duration, bond            coupons and bond credit quality ratings so long as the Funds’ holdings could not            be derived from such information.

Registered investment companies that are subadvised by the Advisor or            its affiliates may be subject to different portfolio holdings disclosure policies, and            neither the Advisor or its affiliated nor Trustees exercise control over such policies.            In addition, separate account clients of the Advisor or its affiliates have access to            their portfolio holdings and are not subject to the Funds’ portfolio holdings            disclosure policy. The portfolio holdings of some of the funds subadvised by the            Advisor and its affiliates and some of the separate accounts managed by the Advisor or            its affiliates may substantially overlap with the portfolio holdings of the            Funds.

The            Advisor or its affiliates also manages certain unregistered commingled trusts and            creates model portfolios, the portfolio holdings of which may substantially overlap            with the portfolio holdings of the Funds. To the extent that investors in these            commingled trusts or recipients of model portfolio holdings information may receive            portfolio holdings information of their trust or of a model portfolio on a different            basis from that on which the Funds’ portfolio holdings information is made            public, the Advisor and its affiliates have implemented procedures reasonably designed            to encourage such investors and recipients to keep such information confidential, and            to prevent those investors from trading on the basis of non-public holdings            information.

There is no assurance that the Funds’ policies and procedures with            respect to the disclosure of portfolio holdings information will protect the Funds from            the potential misuse of portfolio holdings information by those in possession of that            information.

**MANAGEMENT OF THE FUNDS**

**Investment Advisor**

Deutsche Investment Management Americas Inc. (“DIMA” or the            “Advisor”), which is part of Deutsche Asset Management, is the investment            advisor for the Funds. Under the supervision of the Board of Trustees of each Fund,            with headquarters at 345 Park Avenue, New York, New York 10154, DIMA makes the            Funds’ investment decisions, buys and sells securities for the Funds and conducts            research that leads to these purchase and sale decisions. The Advisor manages each            Fund’s daily investment and business affairs subject to the policies established            by the Board of Trustees. DIMA and its predecessors have more than 80 years of            experience managing mutual funds. DIMA provides a full range of investment advisory            services to institutional and retail clients. The Funds’ investment            advisoris also responsible for selecting brokers and dealers and            for negotiating brokerage commissions and dealer charges. On December 31, 2006,            Deutsche Asset Management, Inc. (“DAMI’’) merged into DIMA. Prior to            December 31, 2006 DAMI was the investment advisor to the Funds. As a result of the            merger, DIMA is now the investment advisor to the Funds.

DeAM is the marketing name in the US for the asset management activities            of Deutsche Bank AG, DIMA, Deutsche Bank Trust Company Americas and DWS Trust Company.            DeAM is a global asset management organization that offers a wide range of investing            expertise and resources, including hundreds of portfolio managers and analysts and an            office network that reaches the world’s major investment centers. This            well-resourced global investment platform brings together a wide variety of experience            and investment insight, across industries, regions, asset classes and investing styles.            DIMA is an indirect, wholly-owned subsidiary of Deutsche Bank AG. Deutsche Bank AG is a            major global banking institution that is engaged in a wide range of financial services,            including investment management, mutual fund, retail, private and commercial banking,            investment banking and insurance. The term “DWS Scudder” is the designation            given to the products and services provided by DIMA and its affiliates to the DWS            Mutual Funds.

 

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The            Advisor provides investment counsel for many individuals and institutions, including            insurance companies, industrial corporations, and financial and banking organizations,            as well as providing investment advice to open- and closed-end SEC registered            funds.

Each Fund is managed by a team of investment professionals, each of whom            plays an important role in a Fund’s management process. Team members work            together to develop investment strategies and select securities for a Fund’s            portfolio. This team works for the Advisor or its affiliates and is supported by a            large staff of economists, research analysts, traders and other investment specialists.            The Advisor or its affiliates believe(s) its team approach benefits fund investors by            bringing together many disciplines and leveraging its extensive resources. Team members            with primary responsibility for management of a Fund, as well as team members who have            other ongoing management responsibilities for each Fund, are identified in each            Fund’s prospectus, as of the date of a Fund’s prospectus. Composition of            the team may change over time, and fund shareholders and investors will be notified of            changes affecting individuals with primary fund management responsibility.

**Investment Management Agreement**

The            Board and the shareholders of each Fund approved an amended and restated investment            management agreement (the “Investment Management Agreement”) for the Funds.            In addition, the Board and the shareholders also approved an amended and restated            Investment Management Agreement (the “DIMA Agreement”) between the Funds            and DIMA. The fees charged and the services provided by DIMA under the DIMA Agreement            are identical to the fees and services that were provided by DAMI under the Investment            Management Agreement. The DIMA Agreement became effective on December 31, 2006.            Pursuant to the DIMA Agreement, the Advisor provides continuing investment management            of the assets of the Funds. In addition to the investment management of the assets of            the Funds, the Advisor determines the investments to be made for the Funds, including            what portion of its assets remain uninvested in cash or cash equivalents, and with whom            the orders for investments are placed, consistent with the Funds’ policies as            stated in its Prospectuses and SAIs, or as adopted by the Fund’s Board. The            Advisor will also monitor, to the extent not monitored by a Funds’ administrator            or other agent, the Funds’ compliance with its investment and tax guidelines and            other compliance policies.

Prior to June 1, 2006, Core Fixed Income Fund paid DeAM, Inc.            0.40% of the Fund’s average daily net assets. Prior to July 1, 2006, Short            Duration Fund paid DeAM, Inc. 0.40% of the Fund’s average daily net assets and            High Income Plus Fund paid DeAM, Inc. 0.31% of the Fund’s average daily net            assets. Effective June 1, 2006, for all services provided under the Investment            Management Agreement, DWS High Income Plus Fund pays DIMA a fee of 0.50% on the first            $1 billion in average daily net assets, which declines to a fee of 0.49% on average            daily net assets in excess of $1 billion up to $2.5 billion, to 0.48% on average daily            net assets in excess of $2.5 billion up to $5 billion, to 0.47% on average daily net            assets in excess of $5 billion up to $10 billion, and to 0.46% on average daily net            assets in excess of $10 billion. Effective July 1, 2006, for all services provided            under the Investment Management Agreement, DWS Short Duration Fund pays DIMA a fee of            0.40% on the first $500 million in average daily net assets, which declines to a fee of            0.385% on average daily net assets in excess $500 million up to $1 billion, to 0.370%            on average daily net assets in excess of $1 billion up to $2 billion and to 0.355% on            average daily nets assets in excess of $2 billion. Effective June 1, 2006, for all            services provided under the Investment Management Agreement, DWS Core Fixed Income Fund            pays DIMA a fee of 0.40% on the first $1.5 billion in average daily net assets, which            declines to a fee of 0.385% on average daily net assets in excess of $1.5 billion up to            $3.25 billion, to 0.37% on average daily net assets in excess of $3.25 billion up to $5            billion, and to 0.355% on average daily net assets in excess of $5 billion.

DIMA provides assistance to the Board in valuing the securities and            other instruments held by the Funds, to the extent reasonably required by valuation            policies and procedures that may be adopted by the Funds. Pursuant to the Investment            Management Agreement (unless otherwise provided in the agreement or as determined by            the Board and to the extent permitted by applicable law), DIMA pays the compensation            and expenses of all the Trustees, officers, and executive employees of the Funds,            including the Funds’ share of payroll taxes, who are affiliated persons of            DIMA.

The            DIMA Agreement provides that the Funds are generally responsible for expenses that            include: fees payable to the Advisor; outside legal, accounting or auditing expenses            including with respect to expenses related to negotiation,

 

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acquisition or distribution of portfolio investments; maintenance of            books and records that are maintained by the Funds, the Funds’ custodian, or            other agents of the Funds; taxes and governmental fees; fees and expenses of the            Funds’ accounting agent, custodian, sub-custodians, depositories, transfer            agents, dividend reimbursing agents and registrars; payments for portfolio pricing or            valuation services to pricing agents, accountants, bankers and other specialists, if            any; brokerage commissions or other costs of acquiring or disposing of any Funds’            security or other instruments of the Funds; and litigation expenses and other            extraordinary expenses not incurred in the ordinary course of the Funds’            business.

The            DIMA Agreement allows the Advisor to delegate any of its duties under the Agreement to            a sub-advisor, subject to a majority vote of the Board of Trustees, including a            majority of the Board of Trustees who are not interested persons of the Trust, and, if            required by applicable law, subject to a majority vote of each Fund’s            shareholders.

In            addition, the Board and shareholders approved a subadvisor approval policy for each            Fund (the “Sub-advisor Approval Policy”). The Sub-advisor Approval Policy            permits the Advisor, subject to the approval of the Board, including a majority of its            independent board members, to appoint and replace sub-advisors and to amend            sub-advisory contracts without obtaining shareholder approval. Under the Sub-advisor            Approval Policy, the Board, including its independent board members, will continue to            evaluate and approve all new sub-advisory contracts between the Advisor and any            subadvisor, as well as all changes to any existing sub-advisory contract. Each Fund            cannot implement the Sub-advisor Approval Policy without the SEC either adopting            revisions to current rules (as it proposed to do in October 2003) or granting the Fund            exemptive relief from existing rules. The Fund and the Advisor would be subject to            certain conditions imposed by the SEC (and certain conditions that may be imposed in            the future within either exemptive relief or a rule) to ensure that the interests of            the Fund and its shareholders are adequately protected whenever the Advisor acts under            the Sub-advisor Approval Policy, including any shareholder notice            requirements.

The            DIMA Agreement provides that the Advisor shall not be liable for any error of judgment            or mistake of law or for any loss suffered by the Funds in connection with matters to            which the Agreement relates, except a loss resulting from willful malfeasance, bad            faith or gross negligence on the part of the Advisor in the performance of its duties            or from reckless disregard by the Advisor of its obligations and duties under the            agreement. The DIMA Agreements may be terminated at any time, without payment of            penalty, by either party or by vote of a majority of the outstanding voting securities            of the Funds on 60 days’ written notice.

The            Funds’ prospectuses contains disclosure as to the amount of the Advisor’s            investment advisory and the Administrator’s administration and services fees,            including waivers thereof. The Advisor and the Administrator may not recoup any of            their waived investment advisory or administration and services fees.

***DWS Core Fixed Income Fund***

Through September 30, 2007, the Advisor has contractually agreed to            waive all or a portion of its management fee and reimburse or pay operating expenses of            the fund to the extent necessary to maintain the Fund’s total operating expenses            at 0.74% for Class S shares, excluding certain expenses such as extraordinary expenses,            taxes, brokerage, interest proxy and organizational and offering expenses. Although            there can be no assurances that the current waiver/expense reimbursement arrangement            will be maintained beyond September 30, 2007, the Advisor has committed to review the            continuance of the waiver/expense reimbursement arrangements by September 30,            2007.

Effective October 1, 2006, the advisor has contractually agreed to waive            all or a portion of its management fee and reimburse or pay operating expenses of the            fund to the extent necessary to maintain the fund’s total operating expenses at            0.55% for Class S shares, excluding certain expenses such as extraordinary expenses,            taxes, brokerage, interest, proxy and organizational and offering expenses.

***DWS Short Duration Fund***

Through February 29, 2008, the advisor has contractually agreed to waive            all or a portion of its management fee and reimburse or pay operating expenses of the            fund to the extent necessary to maintain the fund’s total operating

 

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expenses at a ratio no higher than 0.72% for Class S shares, excluding            certain expenses such as extraordinary expenses, taxes, brokerage, interest, proxy and            organizational and offering expenses.

Effective October 1, 2006, the Advisor has contractually agreed to waive            all or a portion of its management fee and reimburse or pay operating expenses of the            fund to the extent necessary to maintain the Fund’s total operating expenses at            0.72% for Class S shares, excluding certain expenses such as extraordinary expenses,            taxes, brokerage, interest proxy and organizational and offering expenses. Although            there can be no assurances that the current waiver/expense reimbursement arrangement            will be maintained beyond September 30, 2007, the Advisor has committed to review the            continuance of the waiver/expense reimbursement arrangements by September 30,            2007.

***DWS High Income Plus Fund***

Through May 15, 2008, the Advisor has contractually agreed to waive all            or a portion of its management fee and reimburse or pay operating expenses of the fund            to the extent necessary to maintain the Fund’s total operating expenses at 0.80%            for Class S shares, excluding certain expenses such as extraordinary expenses, taxes,            brokerage, interest proxy and organizational and offering expenses.

For            the period from November 10, 2004 to May 15, 2005, the Advisor agreed to a voluntary            fee waiver of 0.25% of average daily net assets. For the period from May 16, 2005 to            October 31, 2005, the Advisor agreed to a voluntary fee waiver of 0.17% of average            daily net assets.

These contractual fee waivers may only be changed by a Fund’s            Board of Trustees.

The            following table sets forth the net advisory fees that each Fund paid (and amount            waived, if applicable) the Advisor during the periods indicated:

 

|                                                  | **For the Fiscal Year Ended October                            31,** |       |       |
|-------------------------------------------------------|----------------------------------------------------------------------|------------|------------|
|                                                  | **2006***                                                            | **2005***  | **2004***  | **Amount Waived****(2006)** | **Actual Fee Rate Paid****(2006)** |
|                                                  |                                                                 |       |       |   |   |
| DWS Core Fixed Income                            Fund | $5,181,980                                                           | $4,582,151 | $4,253,088 | $37,874 | 0.40% |
| DWS Short Duration                            Fund    | $382,572                                                             | $578,269   | $806,575   | $206,674 | 0.26% |
| DWS High Income Plus                            Fund  | $1,303,892                                                           | $781,097   | $1,581,094 | $671,702 | 0.33% |

             

| * | Prior to June 1, 2006 for DWS Core Fixed                            Income Fund and July 1, 2006 for DWS Short Duration Fund and DWS High                            Income Plus Fund, these fees included an administrative service                            fee. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Subadvisor for DWS Core Fixed Income Fund and DWS Short Duration            Fund**

Aberdeen Asset Management PLC (“Aberdeen PLC”) acquired from            Deutsche Bank AG, the parent company of DIMA, parts of its asset management business            and related assets based in London and Philadelphia). As of December 2, 2005, and            pursuant to a written contract (“Sub-Advisory Agreement”), Aberdeen Asset            Management Inc. (“AAMI”), a direct wholly owned subsidiary of Aberdeen PLC,            and a registered investment advisor under the Investment Advisers Act of 1940, as            amended, became the subadvisor to the DWS Core Fixed Income Fund and DWS Short Duration            Fund.

As            the subadvisor, AAMI, under the supervision of the Board of Trustees and the Advisor,            makes each Fund’s investment decisions, buys and sells securities for each Fund            and conducts the research that leads to these purchase and sale decisions. AAMI is also            responsible for selecting brokers and dealers and for negotiating brokerage commissions            and dealer charges.

Under the terms of the Sub-Advisory Agreement, AAMI agrees, subject to            the supervision and control of the Advisor and the Board of Trustees, to manage the            securities and assets of the Funds entrusted to it by the Advisor, in accordance with            such Fund’s investment objective(s), policies and restrictions. As compensation            for its services

 

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under the Sub-Advisory Agreement, AAMI will be paid an annual fee            of0.29% of average daily net assets of DWS            Core Fixed Income Fund and 0.22% of average daily net assets of DWS Short Duration            Fund,computed daily and paid monthly. AAMI is paid for            its services by the Advisor, and not the Funds, from its fee as investment advisor to            the Funds.

The            Sub-Advisory Agreement will have an initial term of two years (unless sooner            terminated) and will remain in effect from year to year thereafter if approved annually            (i) by the Board or by the vote of a “majority of the outstanding voting            securities” of the Funds, and (ii) by a majority of the Independent Board Members            who are not parties to the agreement, cast in person at a meeting called for such            purpose.

AAMI is obligated to pay all expenses (excluding brokerage costs,            custodian fees, fees of independent registered public accounting firms or other            expenses of the Funds to be borne by the Funds) in connection with the performance of            its services. The Funds bear certain other expenses incurred in their operation. The            services of AAMI are not deemed to be exclusive and nothing in the Sub-Advisory            Agreement prevents AAMI or its affiliates from providing similar services to other            investment companies and other clients (whether or not their investment objective and            policies are similar to those of the Funds) or from engaging in other            activities.

Under the Sub-Advisory Agreement, AAMI will be liable (i) if it causes a            Fund to be in violation of any applicable federal or state law, rule or regulation or            any investment policy or restriction set forth in the Prospectus or any written            guidelines, policies or instructions provided in writing by the Board or the Advisor,            and (ii) for its willful misfeasance, bad faith or gross negligence in the performance            of its duties or its reckless disregard of its obligations and duties under the            Sub-Advisory Agreement.

The            Advisor may enter into arrangements with affiliates and third party service providers            to perform various administrative, back-office and other services relating to client            accounts. Such service providers may be located in the US or in non-US            jurisdictions.

**Compensation of Portfolio Managers**

**DWS High Income Plus Fund.**The Fund has            been advised that the Advisor seeks to offer its investment professionals competitive            short-term and long-term compensation. Portfolio managers and research professionals            are paid (i) fixed base salaries, which are linked to job function, responsibilities            and financial services industry peer comparison and (ii) variable compensation, which            is linked to investment performance, individual contributions to the team and DWS            Scudder’s and Deutsche Bank’s financial results. Variable compensation may            include a cash bonus incentive and participation in a variety of long-term equity            programs (usually in the form of Deutsche Bank equity).

Bonus and long-term incentives comprise a greater proportion of total            compensation as an investment professional’s seniority and compensation levels            increase. Top performing investment professionals earn a total compensation package            that is highly competitive, including a bonus that is a multiple of their base salary.            The amount of equity awarded under the long-term equity programs is generally based on            the individual’s total compensation package and may comprise from 0%-40% of the            total compensation award. As incentive compensation increases, the percentage of            compensation awarded in Deutsche Bank equity also increases. Certain senior investment            professionals may be subject to a mandatory diverting of a portion of their equity            compensation into proprietary mutual funds that they manage.

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

| **•** | DWS Scudder performance and the performance of Deutsche                            Asset Management, quantitative measures which include 1, 3 and 5 year                            pre-tax returns versus benchmark (such as the benchmark used in                            the |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

             

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prospectus) and appropriate peer group, taking into consideration risk            targets. Additionally, the portfolio manager’s retail/institutional asset mix is            weighted, as appropriate for evaluation purposes.

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

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

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

***Fund Ownership of Portfolio Managers***

The            following table shows the dollar range of shares owned beneficially and of record by            each member of each Fund’s portfolio management team in each Fund as well as in            all DWS Funds as a group (i.e. those funds advised by Deutsche Asset Management or its            affiliates), including investments by their immediate family members sharing the same            household and amounts invested through retirement and deferred compensation plans. This            information is provided as of each Fund’s most recent fiscal year end.

 

| **Name of Fund**               | **Name of**

**Portfolio Manager** | **Dollar Range of**

**Fund Shares Owned** | **Dollar Range of All DWS**

**Fund Shares Owned** |
|--------------------------------|------------------------------------|--------------------------------------------|----------------------------------------------------|
|                           |                               |                                       |                                               |
| **DWS High Income Plus Fund**  | Gary Sullivan                      | $0                                         | $10,001 - $50,000                                  |
|                           |                               |                                       |                                               |
| **DWS Core Fixed Income Fund** | Gary W. Bartlett                   | $0                                         | N/A                                                |
|                           | Warren S. Davis, III               | $0                                         | N/A                                                |
|                           | Thomas J. Flaherty                 | $0                                         | N/A                                                |
|                           | J. Christopher Gagnier             | $0                                         | N/A                                                |
|                           | Daniel R. Taylor                   | $0                                         | N/A                                                |
|                           | Timothy C. Vile                    | $0                                         | N/A                                                |
|                           | William T. Lissenden               | $0                                         | N/A                                                |
|                           |                               |                                       |                                               |
| **DWS Short Duration Fund**    | Gary W. Bartlett                   | $0                                         | N/A                                                |
|                           | Warren S. Davis, III               | $0                                         | N/A                                                |
|                           | Thomas J. Flaherty                 | $0                                         | N/A                                                |
|                           | J. Christopher Gagnier             | $0                                         | N/A                                                |
|                           | Daniel R. Taylor                   | $0                                         | N/A                                                |
|                           | Timothy C. Vile                    | $0                                         | N/A                                                |
|                           | William T. Lissenden               | $0                                         | N/A                                                |

 

***Conflicts of Interest***

In            addition to managing the assets of each Fund, each Fund’s portfolio managers may            have responsibility for managing other client accounts of the Advisor or its            affiliates. The tables below show, for eachportfolio manager, the            number and asset size of (1) SEC registered investment companies (or series thereof)            other than the Fund, (2) pooled investment vehicles that are not registered investment            companies and (3) other accounts (e.g., accounts managed for individuals or            organizations) managed by each portfolio manager. The tables also show the number of            performance based fee accounts, as well as the total assets of the accounts for which            the advisory fee is based on the performance of the account. This information is            provided as of each Fund’s most recent fiscal year end.

 

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***Other SEC Registered Investment Companies            Managed:***

 

| **Name of Fund**               | **Name of Portfolio****Manager** | **Number of Registered Investment****Companies** | **Total Assets of Registered Investment****Companies** | **Number of Investment Company Accounts with                            Performance-****Based Fee** | **Total Assets of Performance- Based Fee****Accounts** |
|--------------------------------|----------------------------------|--------------------------------------------------|--------------------------------------------------------|-----------------------------------------------------------------------------------------------------|--------------------------------------------------------|
|                           |                             |                                             |                                                   |                                                                                                |                                                   |
| **DWS High Income Plus Fund**  | Gary Sullivan                    | 10                                               | $6,993,860,303                                         | 0                                                                                                   | $0                                                     |
|                           |                             |                                             |                                                   |                                                                                                |                                                   |
| **DWS Core Fixed Income Fund** | Gary W. Bartlett                 | 8                                                | $2,749,957,348                                         | 0                                                                                                   | $0                                                     |
|                           | Warren S. Davis, III             | 8                                                | $2,749,957,348                                         | 0                                                                                                   | $0                                                     |
|                           | Thomas J. Flaherty               | 8                                                | $2,749,957,348                                         | 0                                                                                                   | $0                                                     |
|                           | J. Christopher Gagnier           | 8                                                | $2,749,957,348                                         | 0                                                                                                   | $0                                                     |
|                           | Daniel R. Taylor                 | 8                                                | $2,749,957,348                                         | 0                                                                                                   | $0                                                     |
|                           | Timothy C. Vile                  | 8                                                | $2,749,957,348                                         | 0                                                                                                   | $0                                                     |
|                           | William T. Lissenden             | 8                                                | $2,749,957,348                                         | 0                                                                                                   | $0                                                     |
|                           |                             |                                             |                                                   |                                                                                                |                                                   |
| **DWS Short Duration Fund**    | Gary W. Bartlett                 | 8                                                | $4,057,240,481                                         | 0                                                                                                   | $0                                                     |
|                           | Warren S. Davis, III             | 8                                                | $4,057,240,481                                         | 0                                                                                                   | $0                                                     |
|                           | Thomas J. Flaherty               | 8                                                | $4,057,240,481                                         | 0                                                                                                   | $0                                                     |
|                           | J. Christopher Gagnier           | 8                                                | $4,057,240,481                                         | 0                                                                                                   | $0                                                     |
|                           | Daniel R. Taylor                 | 8                                                | $4,057,240,481                                         | 0                                                                                                   | $0                                                     |
|                           | Timothy C. Vile                  | 8                                                | $4,057,240,481                                         | 0                                                                                                   | $0                                                     |
|                           | William T. Lissenden             | 8                                                | $4,057,240,481                                         | 0                                                                                                   | $0                                                     |

 

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

 

| **Name of Fund**               | **Name of Portfolio****Manager** | **Number of Pooled Investment****Vehicles** | **Total Assets of Pooled Investment****Vehicles** | **Number of Pooled Investment Vehicle Accounts with                            Performance-****Based Fee** | **Total Assets of Performance-****Based Fee****Accounts** |
|--------------------------------|----------------------------------|---------------------------------------------|---------------------------------------------------|------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------|
|                           |                             |                                        |                                              |                                                                                                       |                                                      |
| **DWS High Income Plus Fund**  | Gary Sullivan                    | 0                                           | $0                                                | 0                                                                                                          | $0                                                        |
|                           |                             |                                        |                                              |                                                                                                       |                                                      |
| **DWS Core Fixed Income Fund** | Gary W. Bartlett                 | 12                                          | $3,489,416,226                                    | 0                                                                                                          | $0                                                        |
|                           | Warren S. Davis, III             | 12                                          | $3,489,416,226                                    | 0                                                                                                          | $0                                                        |
|                           | Thomas J. Flaherty               | 12                                          | $3,489,416,226                                    | 0                                                                                                          | $0                                                        |
|                           | J. Christopher Gagnier           | 12                                          | $3,489,416,226                                    | 0                                                                                                          | $0                                                        |
|                           | Daniel R. Taylor                 | 12                                          | $3,489,416,226                                    | 0                                                                                                          | $0                                                        |
|                           | Timothy C. Vile                  | 12                                          | $3,489,416,226                                    | 0                                                                                                          | $0                                                        |
|                           | William T. Lissenden             | 12                                          | $3,489,416,226                                    | 0                                                                                                          | $0                                                        |

 

 

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|                        |                   |   |           |   |   |
|-----------------------------|------------------------|--------|----------------|--------|--------|
| **DWS Short Duration Fund** | Gary W. Bartlett       | 12     | $3,489,416,226 | 0      | $0     |
|                        | Warren S. Davis, III   | 12     | $3,489,416,226 | 0      | $0     |
|                        | Thomas J. Flaherty     | 12     | $3,489,416,226 | 0      | $0     |
|                        | J. Christopher Gagnier | 12     | $3,489,416,226 | 0      | $0     |
|                        | Daniel R. Taylor       | 12     | $3,489,416,226 | 0      | $0     |
|                        | Timothy C. Vile        | 12     | $3,489,416,226 | 0      | $0     |
|                        | William T. Lissenden   | 12     | $3,489,416,226 | 0      | $0     |

 

***Other Accounts Managed:***

 

| **Name of Fund**               | **Name of                            Portfolio** 

**Manager** | **Number of Other****Accounts** | **Total Assets of****Other                            Accounts** | **Number of Other Accounts with                            Performance-****Based Fee** | **Total Assets of Performance-****Based Fee****Accounts** |
|--------------------------------|---------------------------------------------------------------------|---------------------------------|------------------------------------------------------------------|----------------------------------------------------------------------------------------|-----------------------------------------------------------|
|                           |                                                                |                            |                                                             |                                                                                   |                                                      |
| **DWS High Income Plus Fund**  | Gary Sullivan                                                       | 0                               | $0                                                               | 0                                                                                      | $0                                                        |
|                           |                                                                |                            |                                                             |                                                                                   |                                                      |
| **DWS Core Fixed Income Fund** | Gary W. Bartlett                                                    | 155                             | $19,043,904,953                                                  | 1                                                                                      | $107,418,131                                              |
|                           | Warren S. Davis, III                                                | 155                             | $19,043,904,953                                                  | 1                                                                                      | $107,418,131                                              |
|                           | Thomas J. Flaherty                                                  | 155                             | $19,043,904,953                                                  | 1                                                                                      | $107,418,131                                              |
|                           | J. Christopher Gagnier                                              | 155                             | $19,043,904,953                                                  | 1                                                                                      | $107,418,131                                              |
|                           | Daniel R. Taylor                                                    | 155                             | $19,043,904,953                                                  | 1                                                                                      | $107,418,131                                              |
|                           | Timothy C. Vile                                                     | 155                             | $19,043,904,953                                                  | 1                                                                                      | $107,418,131                                              |
|                           | William T. Lissenden                                                | 155                             | $19,043,904,953                                                  | 1                                                                                      | $107,418,131                                              |
|                           |                                                                |                            |                                                             |                                                                                   |                                                      |
| **DWS Short Duration Fund**    | Gary W. Bartlett                                                    | 155                             | $19,043,904,953                                                  | 1                                                                                      | $107,418,131                                              |
|                           | Warren S. Davis, III                                                | 155                             | $19,043,904,953                                                  | 1                                                                                      | $107,418,131                                              |
|                           | Thomas J. Flaherty                                                  | 155                             | $19,043,904,953                                                  | 1                                                                                      | $107,418,131                                              |
|                           | J. Christopher Gagnier                                              | 155                             | $19,043,904,953                                                  | 1                                                                                      | $107,418,131                                              |
|                           | Daniel R. Taylor                                                    | 155                             | $19,043,904,953                                                  | 1                                                                                      | $107,418,131                                              |
|                           | Timothy C. Vile                                                     | 155                             | $19,043,904,953                                                  | 1                                                                                      | $107,418,131                                              |
|                           | William T. Lissenden                                                | 155                             | $19,043,904,953                                                  | 1                                                                                      | $107,418,131                                              |

 

***Conflicts of Interest – DWS High Income Plus            Fund***

In            addition to the accounts above, an investment professional may manage accounts in a            personal capacity that may include holdings that are similar to, or the same as, those            of the Funds. The Advisor has in place a Code of Ethics that is designed to address            conflicts of interest and that, among other things, imposes restrictions on the ability            of portfolio managers and other “access persons” to invest in securities            that may be recommended or traded in the Funds and other client accounts.

Real, potential or apparent conflicts of interest may arise when a            portfolio manager has day-to-day portfolio management responsibilities with respect to            more than one fund or account, including the following:

| **•** | Certain investments may be appropriate for each Fund and                            also for other clients advised by the Advisor, including other client                            accounts managed by each Fund’s portfolio management team.                            Investment decisions for each Fund and other clients are made with a                            view to achieving their respective investment objectives and after                            consideration of such factors as their current holdings, availability                            of cash for investment and the size of their investments generally. A                            particular security may be bought or sold for only one client or in                            different amounts and at different times for more than one but less                            than all clients. Likewise, because clients of the Advisor may have                            differing investment strategies, a particular security may be bought                            for one or more clients when one or more other clients are selling the                            security. The investment results achieved for each Fund may differ from                            the results achieved for other clients of the Advisor. In addition,                            purchases or sales of the same security may be made for two or more                            clients on the same day. In such event, such transactions will be                            allocated among the clients in a manner believed by the Advisor to be                            most equitable to |
|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

             

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each client, generally utilizing a pro rata allocation methodology. In            some cases, the allocation procedure could potentially have an adverse effect or            positive effect on the price or amount of the securities purchased or sold by each            Fund. Purchase and sale orders for each Fund may be combined with those of other            clients of the Advisor in the interest of achieving the most favorable net results to            each Fund and the other clients.

| **•** | To the extent that a portfolio manager has                            responsibilities for managing multiple client accounts, a portfolio                            manager will need to divide time and attention among relevant accounts.                            The Advisor attempts to minimize these conflicts by aligning its                            portfolio management teams by investment strategy and by employing                            similar investment models across multiple client accounts. |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **•** | In some cases, an apparent conflict may arise where the                            Advisor has an incentive, such as a performance-based fee, in managing                            one account and not with respect to other accounts it manages. The                            Advisor will not determine allocations based on whether it receives a                            performance-based fee from the client. Additionally, the Advisor has in                            place supervisory oversight processes to periodically monitor                            performance deviations for accounts with like strategies. |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **•** | The Advisor and its affiliates and the investment team                            of the Funds may manage other mutual funds and separate accounts on a                            long-short basis. The simultaneous management of long and short                            portfolios creates potential conflicts of interest including the risk                            that short sale activity could adversely affect the market value of the                            long positions(and vice versa), the risk arising from sequential orders                            in long and short positions, and the risks associated with receiving                            opposing orders at the same time. The Advisor has adopted procedures                            that it believes are reasonably designed to mitigate these potential                            conflicts of interest. Included in these procedures are specific                            guidelines developed to ensure fair and equitable treatment for all                            clients whose accounts are managed by each Fund’s portfolio                            management team. The Advisor and the portfolio management team have                            established monitoring procedures, a protocol for supervisory reviews,                            as well as compliance oversight to ensure that potential conflicts of                            interest relating to this type of activity are properly                            addressed. |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

The            Advisor is owned by Deutsche Bank AG, a multi-national financial services company.            Therefore, the Advisor is affiliated with a variety of entities that provide, and/or            engage in commercial banking, insurance, brokerage, investment banking, financial            advisory, broker-dealer activities (including sales and trading), hedge funds, real            estate and private equity investing, in addition to the provision of investment            management services to institutional and individual investors. Since Deutsche Bank AG,            its affiliates, directors, officers and employees (the “Firm”) are engaged            in businesses and have interests other than managing asset management accounts, such            other activities involve real, potential or apparent conflicts of interest. These            interests and activities include potential advisory, transactional and financial            activities and other interests in securities and companies that may be directly or            indirectly purchased or sold by the Firm for its clients’ advisory accounts.            These are considerations of which advisory clients should be aware and which may cause            conflicts that could be to the disadvantage of the Advisor’s advisory clients.            The Advisor has instituted business and compliance policies, procedures and disclosures            that are designed to identify, monitor and mitigate conflicts of interest and, as            appropriate, to report them to the Fund’s Board.

**Compensation of Portfolio Managers of Sub-Advised Portion of the            Funds**

**Remuneration of Personnel**

Aberdeen’s remuneration policy (“Policy”) is designed            to reflect the importance of recruiting, retaining and motivating senior executives and            portfolio managers of the caliber necessary to maintain and improve Aberdeen’s            position in the asset management industry. The Policy seeks to reward performance in a            manner which aligns the interests of clients, shareholders and executives. The elements            of the Policy as it relates to the Fund’s portfolio managers are as            follows:

**Basic salary.**The salaries of all employees            are reviewed annually and are determined by reference to external market research.            Aberdeen’s Policy is to pay salaries which, when taken together with other            benefits, will provide a remuneration package that is reasonable and competitive in the            asset management industry. Aberdeen participates in

 

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compensation surveys which provide salary comparisons for a range of            employees across Aberdeen. Aberdeen also considers information included in other            publicly available research and survey results. Staff performance is reviewed formally            once a year with mid-term reviews.

The            review process looks at all of the ways in which an individual has contributed to the            organization, and specifically, in the case of portfolio managers, to the investment            team.

**Annual bonus.**The Policy is to recognize            corporate and individual achievements each year through an appropriate annual bonus            plan. The aggregate amount of a cash bonus available in any year is dependent on            Aberdeen’s overall performance and profitability. Consideration will also be            given to the levels of bonuses paid in the marketplace. Individual awards, payable to            all members of staff, are determined by a rigorous assessment of achievement against            defined objectives, and are reviewed and approved by Aberdeen’s Remuneration            Committee.

Portfolio managers’ bonuses are based on a combination of the            investment team’s overall performance, the individual’s performance and the            overall performance of Aberdeen. In calculating a portfolio manager’s bonus,            Aberdeen takes into consideration the performance of funds managed by the team as well            as more subjective issues that benefit Aberdeen. Portfolio manager performance on            investment matters is judged over all funds to which the fund manager contributes.            Performance is measured against appropriate market indices as well as peer universes            over various time periods.

**Deferred bonus.**A deferred bonus plan            exists and is designed to encourage the retention of certain key employees identified            as critical to Aberdeen’s achievement of its long-term goals. Deferred bonuses            may be in the form of deferred equity in Aberdeen PLC.

Retention and incentives for former Deutsche Asset Management employees.            In addition to the Policy, appropriate retention and incentive arrangements have been            put into place for certain employees of the former Deutsche Asset Management            businesses, including in some cases participation in the Long Term Incentive Plan. The            costs of these arrangements are being borne by both Deutsche Asset Management and            Aberdeen.

**Conflicts of Interest of Sub-Advised Portion of the            Funds**

In            addition to the accounts above, an investment professional may manage accounts in a            personal capacity that may include holdings that are similar to, or the same as, those            of the funds. AAMI have in place a Code of Ethics that is designed to address conflicts            of interest and that, among other things, imposes restrictions on the ability of            portfolio managers and other “access persons” to invest in securities that            may be recommended or traded in the funds and other client accounts.

Real, potential or apparent conflicts of interest may arise when a            portfolio manager has day-to-day portfolio management responsibilities with respect to            more than one fund or account, including the following:

| **•** | Certain investments may be appropriate for a Fund and                            also for other clients advised by AAMI, including other client accounts                            managed by the Fund’s portfolio management team. Investment                            decisions for a Fund and other clients are made with a view to                            achieving their respective investment objectives and after                            consideration of such factors as their current holdings, availability                            of cash for investment and the size of their investments generally. A                            particular security may be bought or sold for only one client or in                            different amounts and at different times for more than one but less                            than all clients. Likewise, because clients of AAMI may have differing                            investment strategies, a particular security may be bought for one or                            more clients when one or more other clients are selling the security.                            The investment results achieved for a Fund may differ from the results                            achieved for other clients of AAMI. In addition, purchases or sales of                            the same security may be made for two or more clients on the same day.                            In such event, such transactions will be allocated among the clients in                            a manner believed by AAMI to be most equitable to each client,                            generally utilizing a pro rata allocation methodology. In some cases,                            the allocation procedure could potentially have an adverse effect or                            positive effect on the price or amount of the securities purchased or                            sold by a Fund. Purchase and sale orders for a Fund may be combined                            with those of other clients of AAMI in the interest of achieving the                            most favorable net results to the Fund and the other                            clients. |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

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| **•** | To the extent that a portfolio manager has                            responsibilities for managing multiple client accounts, a portfolio                            manager will need to divide time and attention among relevant accounts.                            The Advisor attempts to minimize these conflicts by aligning its                            portfolio management teams by investment strategy and by employing                            similar investment models across multiple client accounts. |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **•** | In some cases, an apparent conflict may arise where AAMI                            have an incentive, such as a performance-based fee, in managing one                            account and not with respect to other accounts it manages. The Advisor                            will not determine allocations based on whether it receives a                            performance-based fee from the client. Additionally, AAMI have in place                            supervisory oversight processes to periodically monitor performance                            deviations for accounts with like strategies. |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **•** | The Advisor and its affiliates and the investment team                            of the Funds may manage other mutual funds and separate accounts on a                            long-short basis. The simultaneous management of long and short                            portfolios creates potential conflicts of interest including the risk                            that short sale activity could adversely affect the market value of the                            long positions(and vice versa), the risk arising from sequential orders                            in long and short positions, and the risks associated with receiving                            opposing orders at the same time. The Advisor has adopted procedures                            that it believes are reasonably designed to mitigate these potential                            conflicts of interest. Included in these procedures are specific                            guidelines developed to ensure fair and equitable treatment for all                            clients whose accounts are managed by each Fund’s portfolio                            management team. The Advisor and the portfolio management team have                            established monitoring procedures, a protocol for supervisory reviews,                            as well as compliance oversight to ensure that potential conflicts of                            interest relating to this type of activity are properly                            addressed. |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Codes of Ethics***

The            Board of Trustees of the Trust has adopted a Code of Ethics pursuant to Rule 17j-1            under the 1940 Act. The Trust’s Code of Ethics permits access persons of the            Funds to invest in securities for their own accounts, but requires compliance with the            Code’s pre-clearance requirements, subject to certain exceptions. In addition,            the Trust’s Code of Ethics provides for trading blackout periods that prohibit            trading by personnel within periods of trading by the Funds in the same security. The            Trust’s Code of Ethics prohibits short term trading profits, prohibits personal            investment in initial public offerings and requires prior approval with respect to            purchases of securities in private placements.

The            Funds’ advisor and its affiliates (including each Fund’s Distributor,            DWS-SDI) have each adopted a Code of Ethics pursuant to Rule 17j-1 under the 1940 Act            (“Consolidated Code”). The Consolidated Code permits access persons to            trade in securities that may be purchased or held by the Funds for their own accounts,            subject to compliance with the Consolidated Code’s pre-clearance and other            requirements. Among other things, the Consolidated Code provides for trading            “blackout periods” that prohibit trading by personnel within periods of            trading by the Funds in the same security. The Consolidated Code also prohibits            short-term trading profits and personal investment in initial public offerings and            requires prior approval with respect to purchases of securities in private            placements.

***Regulatory Matters***

On            September 28, 2006, the SEC and the National Association of Securities Dealers            (“NASD”) announced final agreements in which the Advisor, Deutsche Asset            Management, Inc. (“DAMI”) and Scudder Distributors, Inc.            (“DWS-SDI”) (now known as DWS Scudder Distributors, Inc.) settled            administrative proceedings regarding disclosure of brokerage allocation practices in            connection with sales of the Scudder Funds’ (now known as the DWS Scudder Funds)            shares during 2001-2003. The agreements with the SEC and NASD are reflected in orders            which state, among other things, that DIMA and DAMI failed to disclose potential            conflicts of interest to the funds’ Boards and to shareholders relating to            DWS-SDI’s use of certain funds’ brokerage commissions to reduce revenue            sharing costs to broker-dealer firms with whom it had arrangements to market and            distribute Scudder Fund shares. These directed brokerage practices were discontinued in            October 2003.

 

----

Under the terms of the settlements, in which DIMA, DAMI and DWS-SDI            neither admitted nor denied any of the regulators’ findings, DIMA, DAMI, Inc. and            DWS-SDI agreed to pay disgorgement, prejudgment interest and civil penalties in the            total amount of $19.3 million. The portion of the settlements distributed to the funds            was approximately $17.8 million and was paid to the funds as prescribed by the            settlement orders based upon the amount of brokerage commissions from each fund used to            satisfy revenue sharing agreements with broker-dealers who sold fund shares.

As            part of the settlements, DIMA, DAMI and DWS-SDI also agreed to implement certain            measures and undertakings relating to revenue sharing payments including making            additional disclosures in the funds’ Prospectuses or Statements of Additional            Information, adopting or modifying relevant policies and procedures and providing            regular reporting to the fund Boards.

Additional information announced by DeAM regarding the terms of the            expected settlements will be made available at            www.dws-scudder.com/regulatory_settlements, which will also disclose the terms of any            final settlement agreements once they are announced.

For            discussion of other regulatory matters see each Fund’s prospectuses.

**FUND SERVICE PROVIDERS**

 

**Administrator.**DIMA,            located at 345 Park Avenue, New York, New York 10154, serves as the Trust’s            administrator. The Funds recently entered into a new administrative services agreement            with DIMA (the “Administrative Services Agreement”), pursuant to which DIMA            provides most administrative services to the Funds including, among others, providing            the Funds with personnel, preparing and making required filings on behalf of the Funds,            maintaining books and records for the Funds, and monitoring the valuation of Fund            securities. For all services provided under the Administrative Services Agreement, each            Fund pays DIMA a fee of 0.100% of the Fund’s average daily net assets.

Under the Administrative Services Agreements, DIMA is obligated on a            continuous basis to provide such administrative services as the Board of Trustees of            the Funds reasonably deems necessary for the proper administration of the Funds. DIMA            generally provides the Funds with personnel; arranges for the preparation and filing of            the Funds’ tax returns; prepares and submits reports and meeting materials to the            Board and the shareholders; prepares and files updates to the Funds’ prospectus            and statement of additional information as well as other reports required to be filed            by the SEC; maintains the Funds’ records; provides the Funds with office space,            equipment and services; supervises, negotiates the contracts of and monitors the            performance of third parties contractors; oversees the tabulation of proxies; monitors            the valuation of portfolio securities and monitors compliance with Board-approved            valuation procedures; assists in establishing the accounting and tax policies of the            Funds; assists in the resolution of accounting issues that may arise with respect to            the Funds; establishes and monitors the Funds’ operating expense budgets; reviews            and processes the Funds’ bills; assists in determining the amount of dividends            and distributions available to be paid by the Funds; prepares and arranges dividend            notifications and provides information to agents to effect payments thereof; provides            to the Board periodic and special reports; provides assistance with investor and public            relations matters; and monitors the registration of shares under applicable federal and            state law. The Advisor also performs certain fund accounting services under the            Administrative Services Agreement. The Administrative Services Agreement provides that            the Advisor will not be liable under the Administrative Services Agreement except for            willful misfeasance, bad faith or negligence in the performance of its duties or from            the reckless disregard by it of its duties and obligations thereunder.

The            fees paid by a Fund to the Advisor pursuant to the Administrative Services Agreement            are reduced by the amount of any credits received from a Fund’s custodian for            cash balances.

Pursuant to an agreement between the Administrator and SSB, the            Administrator has delegated certain administrative functions to SSB. The costs and            expenses of such delegations are borne by the Administrator, not by a Fund.

 

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

Prior to June 1, 2006, Deutsche Asset Management, Inc. (DAMI) served as            administrator to each of the Funds. The following table sets forth the net            administration fees that each Fund paid DAMI during the periods indicated:

 

|                                                    | **For the Fiscal Year Ended** |
|---------------------------------------------------------|-------------------------------|
|                                                    | **2005**                      | **2004** |
|                                                    |                          |   |
| DWS Core Fixed Income                            Fund*  | $1,376,226                    | $1,275,908 |
| DWS Short Duration                            Fund**    | $197,859                      | $241,972 |
| DWS High Income Plus                            Fund*** | $358,710                      | $327,306 |

             

| * | For the period November 1, 2005 through May 31, 2006 the                            administrator service fee was $886,445. For the period June 1, 2006                            through October 31, 2006, the Advisor received and administration fee                            of $568,624, of which $119,280 is unpaid. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ** | For the period November 1, 2005 to June 30, 2006, the                            administrative service fee was $120,253. For the period July 1, 2006                            through October 31, 2006, the Advisor received and administration fee                            of $47,519, of which $11,536 is unpaid. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *** | For the period from November 1, 2005 through May 31,                            2006, the administrative service fee was $354,027. For the period June                            1, 2006 through October 31, 2006, the Advisor received and                            administration fee of $168,694, of which $35,360 is unpaid. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Distributor.**DWS-SDI            serves as the distributor of the Funds’ shares pursuant to the Distribution            Agreement. The terms and conditions of the Distribution Agreement are exactly the same            as the Distribution Agreement with ICC Distributors, Inc., the former distributor of            the Funds. DWS-SDI enters into a Selling Group Agreement with certain broker-dealers            (each a “Participating Dealer”). If a Participating Dealer previously had            agreements in place with DWS-SDI and ICC Distributors, Inc., the DWS-SDI Agreement            controls. If the Participating Dealer did not have an agreement with DWS-SDI, then the            terms of the assigned ICC Distributors, Inc. agreement remain in effect. These Selling            Group Agreements may be terminated by their terms or by the terms of the Distribution            Agreement, as applicable. DWS-SDI is a wholly owned subsidiary of Deutsche Bank AG. The            address for DWS-SDI is 222 South Riverside Plaza, Chicago, IL 60606.

The            Trust, on behalf of each Fund, has entered into a distribution agreement (the            “Distribution Agreement”) pursuant to which DWS-SDI, as agent, serves as            principal underwriter for the continuous offering of shares of each Fund. The            Distributor has agreed to use its best efforts to solicit orders for the purchase of            shares of each Fund, although it is not obligated to sell any particular amount of            shares. Certain classes of each Fund are not subject to sales loads or distribution            fees. The Advisor, and not the Trust, is responsible for payment of any expenses or            fees incurred in the marketing and distribution of shares of these particular classes            of each Fund.

The            Distribution Agreement will remain in effect for one year from its effective date and            will continue in effect thereafter only if such continuance is specifically approved            annually by the Trustees, including a majority of the Trustees who are not parties to            the Distribution Agreement or “interested persons” of such parties. The            Distribution Agreement was most recently approved on September 22, 2006 by a            vote of the Trust’s Board of Trustees, including a majority of those Trustees who            were not parties to the Distribution Agreement or “interested persons” of            any such parties. The Distribution Agreement is terminable, as to a Fund, by vote of            the Board of Trustees, or by the holders of a majority of the outstanding shares of the            Fund, at any time without penalty on 60 days’ written notice to the Distributor.            The Distributor may terminate the Distribution Agreement at any time without penalty on            60 days’ written notice to the Trust.

**Custodian.**State Street            Bank and Trust Company (“SSB” or the “Custodian”), 225 Franklin            Street, Boston, Massachusetts 02110, serves as the Trust’s custodian pursuant to            a Custodian Agreement. Under its custody

 

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agreement with the Trust, the Custodian (i) maintains separate            accounts in the name of a Fund, (ii) holds and transfers portfolio securities on            account of a Fund, (iii) accepts receipts and makes disbursements of money on            behalf of a Fund, (iv) collects and receives all income and other payments and            distributions on account of a Fund’s portfolio securities and (v) makes            periodic reports to the Trust’s Board of Trustees concerning a Fund’s            operations. The Custodian is authorized to select one or more foreign or domestic banks            or companies to serve as subcustodian on behalf of a Fund.

SSB            has entered into agreements with foreign subcustodians approved by the Trustees            pursuant to Rule 17f-5 under the 1940 Act. SSB uses Deutsche Bank AG, an affiliate of            the Advisor, as subcustodian (“DB Subcustodian”) in certain countries. To            the extent a Fund holds any securities in the countries in which SSB uses DB            Subcustodian as a subcustodian, those securities will be held by DB Subcustodian as            part of a larger omnibus account in the name of SSB (the “Omnibus            Account”). For its services, DB Subcustodian receives (1) an annual fee based on            a percentage of the average daily net assets of the Omnibus Account and (2) transaction            charges with respect to transactions that occur within the Omnibus Account.

**Transfer Agent.**DWS            Scudder Investments Service Company (the “Transfer Agent” or            “DWS-SISC”), an affiliate of the Advisor and Administrator, is each            Fund’s transfer and dividend disbursing agent pursuant to a transfer agency            agreement (the “Transfer Agency Agreement”), under which the Transfer Agent            (i) maintains record shareholder accounts, and (ii) makes periodic reports to            the Trust’s Board of Trustees concerning the operations of each Fund. Prior to            July 1, 2006, the Administrator paid transfer agency fees out of the administration            fee.

For            fiscal year ended October 31, 2006*, the amount charged by DWS-SISC to DWS Core Fixed            Income Fund aggregated $4,672 (of which $4,672 was waived) for Class S            shares.

For            fiscal year ended October 31, 2006*, the amount charged by DWS-SISC to DWS Short            Duration Fund aggregated $368 (of which $201 was waived) for Class S shares.

For            fiscal year ended October 31, 2006*, the amount charged by DWS-SISC to DWS High Income            Plus Fund aggregated $68,016 (of which $37,337 was waived) for Class S            shares.

|   | **•** | For the period July 1, 2006 through October 31,                            2006. |
|--------|------------|----------------------------------------------------------------------------------|

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

Pursuant to an agreement between the Administrator, the Administrator            has delegated certain administrative functions to SSB. The costs and expenses of such            delegation are borne by the Administrator, not by the Funds.

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

**Legal Counsel**

Willkie Farr & Gallagher, LLP 787 7th Avenue, New York, New York            10019, serves as counsel to the Trust and the Fund. Ropes & Gray LLP, One            International Place, Boston, Massachusetts 02110-2624, serves as counsel to the            Independent Trustees to the Trust.

**Independent Registered Public Accounting            Firm**

PricewaterhouseCoopers LLP have been selected as the Independent            Registered Public Accounting Firm for the Trust and the Fund.

 

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**PORTFOLIO TRANSACTIONS**

The            Advisor is generally responsible for placing the orders for the purchase and sale of            portfolio securities, including the allocation of brokerage. With respect to those            funds for which a sub-investment advisor manages the fund’s investments,            references in this section to the “Advisor” should be read to mean the            Sub-Advisor, except as noted below.

The            policy of the Advisor in placing orders for the purchase and sale of securities for the            Funds is to seek best execution, taking into account such factors, among others, as            price; commission (where applicable); the broker-dealer’s ability to ensure that            securities will be delivered on settlement date; the willingness of the broker-dealer            to commit its capital and purchase a thinly traded security for its own inventory;            whether the broker-dealer specializes in block orders or large program trades; the            broker-dealer’s knowledge of the market and the security; the            broker-dealer’s ability to maintain confidentiality; the financial condition of            the broker-dealer; and whether the broker-dealer has the infrastructure and operational            capabilities to execute and settle the trade. The Advisor seeks to evaluate the overall            reasonableness of brokerage commissions with commissions charged on comparable            transactions and compares the brokerage commissions (if any) paid by the Funds to            reported commissions paid by others. The Advisor routinely reviews commission rates,            execution and settlement services performed and makes internal and external            comparisons.

Commission rates on transactions in equity securities on U.S. securities            exchanges are subject to negotiation. Commission rates on transactions in equity            securities on foreign securities exchanges are generally fixed. Purchases and sales of            fixed-income securities and certain over-the-counter securities are effected on a net            basis, without the payment of brokerage commissions. Transactions in fixed income and            certain over-the-counter securities are generally placed by the Advisor with the            principal market makers for these securities unless the Advisor reasonably believes            more favorable results are available elsewhere. Transactions with dealers serving as            market makers reflect the spread between the bid and asked prices. Purchases of            underwritten issues will include an underwriting fee paid to the underwriter. Money            market instruments are normally purchased in principal transactions directly from the            issuer or from an underwriter or market maker.

It            is likely that the broker-dealers selected based on the considerations described in            this section will include firms that also sell shares of the Funds to their customers.            However, the Advisor does not consider sales of shares of the Funds as a factor in the            selection of broker-dealers to execute portfolio transactions for the Funds and,            accordingly, has implemented policies and procedures reasonably designed to prevent its            traders from considering sales of shares of the Funds as a factor in the selection of            broker-dealers to execute portfolio transactions for the Funds.

The            Advisor is permitted by Section 28(e) of the Securities Exchange Act of 1934, as            amended (“1934 Act”), when placing portfolio transactions for a Fund, to            cause the Fund to pay brokerage commissions in excess of that which another            broker-dealer might charge for executing the same transaction in order to obtain            research and brokerage services if the Advisor determines that such commissions are            reasonable in relation to the overall services provided. The Advisor may from time to            time, in reliance on Section 28(e) of the 1934 Act, execute portfolio transactions with            broker-dealers that provide research and brokerage services to the Advisor. Consistent            with the Advisor’s policy regarding best execution, where more than one broker is            believed to be capable of providing best execution for a particular trade, the Advisor            may take into consideration the receipt of research and brokerage services in selecting            the broker-dealer to execute the trade. Although certain research and brokerage            services from broker-dealers may be useful to a Fund and to the Advisor, it is the            opinion of the Advisor that such information only supplements its own research effort            since the information must still be analyzed, weighed and reviewed by the            Advisor’s staff. Research and brokerage services received from a broker-dealer            may be useful to the Advisor in providing services to clients other than the Fund            making the trade, and not all such information is used by the Advisor in connection            with such Fund. Conversely, such information provided to the Advisor by broker-dealers            through which other clients of the Advisor effect securities transactions may be useful            to the Advisor in providing services to a Fund.

Research and brokerage services provided by broker-dealers may include,            but are not limited to, information on the economy, industries, groups of securities,            individual companies, statistical information, accounting and tax law interpretations,            political developments, legal developments affecting portfolio securities, technical            market action, pricing and appraisal services, credit analysis, risk measurement            analysis, performance analysis and measurement

 

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and            analysis of corporate responsibility issues. Research and brokerage services are            typically received in the form of written reports, access to specialized financial            publications, telephone contacts and personal meetings with security analysts, but may            also be provided in the form of access to various computer software and associated            hardware, and meetings arranged with corporate and industry representatives.

The            Advisor may also select broker-dealers and obtain from them research and brokerage            services that are used in connection with executing trades provided that such services            are consistent with interpretations under Section 28(e) of the 1934 Act. Typically,            these services take the form of computer software and/or hardware used by the Advisor            to facilitate trading activity with those broker-dealers.

Research and brokerage services may include products obtained from third            parties if the Advisor determines that such product or service constitutes brokerage            and research as defined in Section 28(e) and interpretations thereunder. Currently, it            is the Advisor’s policy that Sub-Advisors may not execute portfolio transactions            on behalf of the Funds to obtain third party research and brokerage services. The            Advisor may, in the future, change this policy. Regardless, certain Sub-Advisors may,            as matter of internal policy, limit or preclude third party research and brokerage            services.

DIMA will monitor regulatory developments and market practice in the use            of client commissions to obtain research and brokerage services and may adjust its            portfolio transactions policies in response thereto.

Investment decisions for each Fund and for other investment accounts            managed by the Advisor are made independently of each other in light of differing            conditions. However, the same investment decision may be made for two or more of such            accounts. In such cases, simultaneous transactions are inevitable. To the extent            permitted by law, the Advisor may aggregate the securities to be sold or purchased for            a Fund with those to be sold or purchased for other accounts in executing transactions.            Purchases or sales are then averaged as to price and commission and allocated as to            amount in a manner deemed equitable to each account. While in some cases this practice            could have a detrimental effect on the price paid or received by, or on the size of the            position obtained or disposed of for, the Fund, in other cases it is believed that the            ability to engage in volume transactions will be beneficial to the Fund.

DIMA and its affiliates and the Funds’ management team manage            other mutual funds and separate accounts, some of which use short sales of securities            as a part of its investment strategy. The simultaneous management of long and short            portfolios creates potential conflicts of interest including the risk that short sale            activity could adversely affect the market value of the long positions (and vice            versa), the risk arising from sequential orders in long and short positions, and the            risks associated with receiving opposing orders at the same time.

DIMA has adopted procedures that it believes are reasonably designed to            mitigate these potential conflicts of interest. Incorporated in the procedures are            specific guidelines developed to ensure fair and equitable treatment for all clients.            DIMA and the investment team have established monitoring procedures and a protocol for            supervisory reviews, as well as compliance oversight to ensure that potential conflicts            of interest relating to this type of activity are properly addressed.

Deutsche Bank AG or one of its affiliates (or in the case of a            Sub-Advisor, the Sub-Advisor or one of its affiliates) may act as a broker for the            Funds and receive brokerage commissions or other transaction-related compensation from            the Funds in the purchase and sale of securities, options or futures contracts when, in            the judgment of the Advisor, and in accordance with procedures approved by the            Funds’ Boards, the affiliated broker will be able to obtain a price and execution            at least as favorable as those obtained from other qualified brokers and if, in the            transaction, the affiliated broker charges the Funds a rate consistent with that            charged to comparable unaffiliated customers in similar transactions.

For            the fiscal years October 31, 2004 and October 31, 2005, the Trust, which includes the            Funds, paid $3,069,000 and $4,158,000. For the fiscal year ended October 31, 2006, the            Trust, which includes the Funds, paid $0, $0 and $1,933 for DWS Core Fixed Income Fund,            DWS Short Duration Fund and DWS High Income Plus Fund, respectively, in brokerage            commissions.

 

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Each Fund did not pay any affiliated brokerage commissions for its most            recent fiscal year end.

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

***Portfolio Turnover***

A            Fund’s portfolio turnover rate is calculated by dividing the lesser of the dollar            amount of sales or purchases of portfolio securities by the average monthly value of            the Fund’s portfolio securities, excluding securities having a maturity at the            date of purchase of one year or less. A Fund may sell securities held for a short time            in order to take advantage of what the Advisor believes to be temporary disparities in            normal yield relationships between securities. A high rate of portfolio turnover (i.e.,            100% or higher) will result in correspondingly higher transaction costs to a Fund. A            high rate of portfolio turnover will also increase the likelihood of net short-term            capital gains (distributions of which are taxable to shareholders as ordinary            income).

The            following table sets forth the portfolio turnover rates for each Fund during the            periods indicated:

 

|                                                  | **For the Fiscal Year Ended** |
|-------------------------------------------------------|-------------------------------|
|                                                  | **2006**                      | **2005** |
|                                                  |                          |   |
| DWS Core Fixed Income                            Fund | 166%                          | 162% |
|                                                  |                          |   |
| DWS Short Duration                            Fund    | 198%                          | 161% |
|                                                  |                          |   |
| DWS High Income Plus                            Fund  | 100%                          | 109% |

**** 

**PURCHASE AND REDEMPTION OF SHARES**

***General Information***

Policies and procedures affecting transactions in fund shares can be            changed at any time without notice, subject to applicable law. Transactions may be            contingent upon proper completion of application forms and other documents by            shareholders and their receipt by the fund’s agents. Transaction delays in            processing (and changing account features) due to circumstances within or beyond the            control of the fund and its agents may occur. Shareholders (or their financial service            firms) are responsible for all losses and fees resulting from bad checks, cancelled            orders or the failure to consummate transactions effected pursuant to instructions            reasonably believed to genuine.

A            distribution will be reinvested in shares of the same fund and class if the            distribution check is returned as undeliverable.

Orders will be confirmed at a price based on the net asset value of the            fund next determined after receipt in good order by DWS-SDI of the order accompanied by            payment. However, orders received by dealers or other financial services firms prior to            the determination of net asset value and received in good order by DWS-SDI prior to the            close of its business day will be confirmed at a price based on the net asset value            effective on that day (“trade date”).

**Certificates.**Share certificates will not            be issued. Share certificates now in a shareholder’s possession may be sent to            the transfer agent for cancellation and book-entry credit to such shareholder’s            account. Certain telephone and other procedures require book-entry holdings.            Shareholders with outstanding certificates bear the risk of loss.

**Additional Minimum Balance Policies.**For            fiduciary accounts such as IRAs, and custodial accounts such as Uniform Gifts to Minor            Act and Uniform Transfers to Minor Act accounts, the minimum balances are $1,000 for            Class S. A shareholder may open an account with at least $1,000 ($500 for            fiduciary/custodial accounts), if an

 

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automatic investment plan (AIP) of $50/month is established. Scudder            group retirement plans and certain other accounts have similar or lower minimum share            balance requirements.

Reductions in value that result solely from market activity will not            trigger involuntary redemption. Shareholders with a combined household account balance            in any of the DWS Funds of $100,000 or more, as well as group retirement and certain            other accounts will not be subject to automatic redemption.

Fiduciary (e.g., IRA or Roth IRA) and custodial accounts (e.g., UGMA or            UTMA) with balances below $100 are subject to automatic redemption following 60            days’ written notice to applicable shareholders.

**Use of Financial Services Firms.**Investment            dealers and other firms provide varying arrangements for their clients to purchase and            redeem the Fund’s shares, including higher minimum investments, and may assess            transaction or other fees. Firms may arrange with their clients for other investment or            administrative services. Such firms may independently establish and charge additional            amounts to their clients for such services. Firms also may hold a Fund’s shares            in nominee or street name as agent for and on behalf of their customers. In such            instances, a Fund’s transfer agent, DWS-SISC will have no information with            respect to or control over the accounts of specific shareholders. Such shareholders may            obtain access to their accounts and information about their accounts only from their            firm. Certain of these firms may receive compensation from a Fund through the            Shareholder Service Agent for record-keeping and other expenses relating to these            nominee accounts. In addition, certain privileges with respect to the purchase and            redemption of shares or the reinvestment of dividends may not be available through such            firms. Some firms may participate in a program allowing them access to their            clients’ accounts for servicing including, without limitation, transfers of            registration and dividend payee changes; and may perform functions such as generation            of confirmation statements and disbursement of cash dividends. Such firms, including            affiliates of DWS-SDI, may receive compensation from a Fund through the Shareholder            Service Agent for these services.

**Telephone and Electronic Transaction Procedures.**Shareholders have various telephone, Internet, wire and other electronic            privileges available. A Fund or its agents may be liable for any losses, expenses or            costs arising out of fraudulent or unauthorized instructions pursuant to these            privileges unless the Fund or its agents reasonably believe, based upon reasonable            verification procedures, that the instructions were genuine. Verification procedures            include recording instructions, requiring certain identifying information before acting            upon instructions and sending written confirmations. During periods when it is            difficult to contact the Shareholder Service Agent, it may be difficult to use            telephone, wire and other privileges.

**QuickBuy and QuickSell.**QuickBuy and            QuickSell permits the transfer of money via the Automated Clearing House System            (minimum $50 and maximum $250,000) from or to a shareholder’s bank, savings and            loan, or credit union account in connection with the purchase or redemption of Fund            shares. Shares purchased by check or through QuickBuy and QuickSell or Direct Deposit            may not be redeemed under this privilege until such Shares have been owned for at least            10 days. QuickBuy and QuickSell cannot be used with passbook savings accounts or for            certain tax-deferred plans such as IRAs.

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

| **•** | *Traditional, Roth and Education IRAs.*This includes Savings Incentive Match Plan for Employees                            of Small Employers (“SIMPLE”), Simplified Employee Pension                            Plan (“SEP”) IRA accounts and prototype                            documents. |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **•** | *403(b)(7) Custodial Accounts.*This type of plan is available to employees of most                            non-profit organizations. |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------|

| **•** | Prototype money purchase pension and profit-sharing                            plans may be adopted by employers. |
|------------|-------------------------------------------------------------------------------------------------------------------|

Brochures describing these plans as well as model defined benefit plans,            target benefit plans, 457 plans, 401(k) plans, simple 401(k) plans and materials for            establishing them are available from the Shareholder Service Agent

 

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upon request. Additional fees and transaction policies and procedures            may apply to such plans. Investors should consult with their own tax advisors before            establishing a retirement plan.

**Share Pricing.**Purchases will be filled at            the net asset value per share next computed after receipt of the application in good            order. The net asset value of shares of each Fund is calculated at 4:00 p.m. Eastern            time or the close of business on each day the New York Stock Exchange (the            “Exchange”) is open for trading. Orders received after the close of regular            trading on the Exchange will be executed at the next business day’s net asset            value. If the order has been placed by a member of the NASD, other than the            Distributor, it is the responsibility of the member broker, rather than the fund, to            forward the purchase order to (the “transfer agent”) in Kansas City by the            close of regular trading on the Exchange.

**Dividend Payment Option.**Investors may have            dividends and distributions automatically deposited to their predesignated bank account            through a DWS Dividend Payment Option request form. Shareholders who predesignated            checking account of record is with a member bank of Automated Clearing House Network            (ACH) can have income and capital gain distributions automatically deposited to their            personal bank account usually within three business days after a Fund pays its            distribution. A Dividend Payment Option request form can be obtained by visiting our            Web site atwww.dws-scudder.comor calling 1-800-728-3337. Confirmation Statements will be mailed to            shareholders as notification that distributions have been deposited.

***Purchases***

Each Fund reserves the right to withdraw all or any part of the offering            made by its prospectus and to reject purchase orders for any reason. Also, from time to            time, a Fund may temporarily suspend the offering of any class of its shares to new            investors. During the period of such suspension, persons who are already shareholders            of such class of such Fund may be permitted to continue to purchase additional shares            of such class and to have dividends reinvested.

To            help the government fight the funding of terrorism and money laundering activities,            federal law requires all financial institutions to obtain, verify and record            information that identifies each person who opens an account. For more information,            please see “Policies You Should Know About” in a Fund’s            Prospectus.

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

**Automatic Investment Plan.**A shareholder            may purchase shares of a Fund through an automatic investment program. With the Direct            Deposit Purchase Plan (“Direct Deposit”), investments are made            automatically (minimum $50 and maximum $250,000 for both initial and subsequent            investments) from the shareholder’s account at a bank, savings and loan or credit            union into the shareholder’s Fund account. Termination by a shareholder will            become effective within thirty days after the Shareholder Service Agent has received            the request. A Fund may immediately terminate a shareholder’s Plan in the event            that any item is unpaid by the shareholder’s financial institution.

**Payroll Investment Plans.**A shareholder may            purchase shares through Payroll Direct Deposit or Government Direct Deposit. Under            these programs, all or a portion of a shareholder’s net pay or government check            is invested each payment period. A shareholder may terminate participation in these            programs by giving written notice to the shareholder’s employer or government            agency, as appropriate. (A reasonable time to act is required.) A Fund is not            responsible for the efficiency of the employer or government agency making the payment            or any financial institutions transmitting payments.

**Expedited Purchase Procedures for Existing Shareholders.**Shareholders of other DWS funds who have submitted an account            application and have certified a tax identification number, clients having a regular            investment counsel account with the Advisor or its affiliates and members of their            immediate families, officers and employees of the Advisor or of any affiliated            organization and their immediate families, members of the NASD, and banks may open an            account by wire by calling 1-800-728-3337 for instructions. The investor must send a            duly completed and signed application to the fund promptly. A subsequent purchase order            for $10,000 or more that is not greater than four times an account value may be placed            by telephone, fax, etc. by established shareholders (except by DWS

 

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Scudder Individual Retirement Account (IRA), DWS Scudder Horizon Plan,            DWS Scudder Profit Sharing and Money Purchase Pension Plans, DWS Scudder 401(k) and DWS            Scudder 403(b) Plan holders), members of the NASD, and banks.

***Eligible Class S Investors.***

| A. | The following investors may purchase Class S shares of                            DWS Funds either (i) directly from DWS-SDI, the Fund’s principal                            underwriter; or (ii) through an intermediary relationship with a                            financial services firm established with respect to the DWS Funds as of                            December 31, 2004. Investors may not otherwise purchase Class S shares                            through a broker-dealer, registered investment advisor or other                            financial services firm. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1. | Existing shareholders of Class S shares of any DWS Fund                            as of December 31, 2004, and household members residing at the same                            address. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | Shareholders who own Class S shares continuously since                            December 31, 2004 and household members residing at the same address                            may open new accounts for Class S shares of any DWS Fund. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | Any participant who owns Class S shares of any DWS Fund                            through an employee sponsored retirement, employee stock, bonus,                            pension or profit sharing plan continuously since December 31, 2004 may                            open a new individual account for Class S shares of any DWS                            Fund. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4. | Any participant who owns Class S shares of any DWS Fund                            through a retirement, employee stock, bonus, pension or profit sharing                            plan may complete a direct rollover to an IRA account that will hold                            Class S shares. This applies to individuals who begin their                            retirement plan investments with a DWS Fund at any time, including                            after December 31, 2004. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | 6. | Officers, Fund Trustees and Directors, and full-time                            employees and their family members, of the Advisor and its                            affiliates. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7. | Class S shares are available to any accounts managed by                            the Advisor, any advisory products offered by the Advisor or DWS-SDI                            and to the Portfolios of DWS Allocation Series or other fund of funds                            managed by the Advisor or its affiliates. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8. | Shareholders of Class S of Emerging Markets Equity Fund                            who became shareholders of the fund in connection with the fund’s                            acquisition of Scudder New Asia Fund, Inc. on April 17,                            2006. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9. | Existing shareholders of Class M of any DWS Fund as of                            August 18, 2006, and household members residing at the same                            address. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10. | Shareholders of Investment Class of any DWS Fund who                            became shareholders of Class S shares of the Fund with the renaming or                            conversion of Investment Class to Class S on October 23,                            2006. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| B. | The following additional investors may purchase Class S                            shares of DWS Funds. |
|----|---------------------------------------------------------------------------------------------------------|

|   | 1. | Broker-dealers and registered investment advisors                            (“RIAs”) may purchase Class S shares in connection with a                            comprehensive or “wrap” fee program or other fee based                            program. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | Any group retirement, employee stock, bonus, pension or                            profit-sharing plans. |
|--------|----|----------------------------------------------------------------------------------------------------------|

 

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

Clients having a regular investment counsel account with the Advisor or            its affiliates and members of their immediate families, officers and employees of the            Advisor or of any affiliated organization and members of their immediate families,            members of the NASD and banks may, if they prefer, subscribe initially for at least            $2,500 for Class S` through DIMA Investor Services, Inc. by letter, fax, or            telephone.

**Revenue Sharing.**In light of recent            regulatory developments, the investment advisor (the “Advisor”), DWS            Scudder Distributors, Inc. (the “Distributor”) and their affiliates have            undertaken to furnish certain additional information below regarding the level of            payments made by them to selected affiliated and unaffiliated brokers, dealers,            participating insurance companies or other financial intermediaries (“financial            advisors”) in connection with the sale and/or distribution of Fund shares or the            retention and/or servicing of investors and Fund shares (“revenue            sharing”).

The            Advisor, the Distributor and/or their affiliates may pay additional compensation, out            of their own assets and not as an additional charge to the Fund, to financial advisors            in connection with the sale and/or distribution of Fund shares or the retention and/or            servicing of Fund investors and Fund shares. Such revenue sharing payments are in            addition to any distribution or service fees payable under any Rule 12b-1 or service            plan of any fund, any record keeping/sub-transfer agency fees payable by the Fund            (generally by reimbursement to the Distributor or an affiliate) to certain financial            advisors for performing such services and any sales charges, commissions, non-cash            compensation arrangements expressly permitted under applicable rules of the NASD or            other concessions described in the fee table or elsewhere in the prospectus or the SAI            as payable to all financial advisors. For example, the Advisor, the Distributor and/or            their affiliates may compensate financial advisors for administrative, sub-accounting            or shareholder processing services and/or for providing a fund with “shelf            space” or access to a third party platform or fund offering list, or other            marketing programs including, without limitation, inclusion of the Fund on preferred or            recommended sales lists, mutual fund “supermarket” platforms and other            formal sales programs; granting the Distributor access to the financial advisor’s            sales force; granting the Distributor access to the financial advisor’s            conferences and meetings; assistance in training and educating the financial            advisor’s personnel; and, obtaining other forms of marketing support. The level            of revenue sharing payments made to financial advisors may be a fixed fee or based upon            one or more of the following factors: gross sales, current assets and/or number of            accounts of the Fund attributable to the financial advisor, the particular fund or fund            type or other measures as agreed to by the Advisor, the Distributor and/or their            affiliates and the financial advisors or any combination thereof. The amount of these            payments is determined at the discretion of the Advisor, the Distributor and/or their            affiliates from time to time, may be substantial, and may be different for different            financial advisors based on, for example, the nature of the services provided by the            financial advisor.

The            Advisor, the Distributor and/or their affiliates currently make revenue sharing            payments from their own assets in connection with the sale and/or distribution of DWS            Fund shares, or the retention and/or servicing of investors and DWS Fund shares to            financial advisors in amounts that generally range from .01% up to .50% of assets of            the Fund serviced and maintained by the financial advisor, .05% to .40% of sales of the            Fund attributable to the financial advisor, a flat fee of $12,500 up to $500,000, or            any combination thereof. These amounts are subject to change at the discretion of the            Advisor, the Distributor and/or their affiliates. Receipt of, or the prospect of            receiving, this additional compensation, may influence your financial advisor’s            recommendation of this Fund or of any particular share class of the Fund. You should            review your financial advisor’s compensation disclosure and/or talk to your            financial advisor to obtain more information on how this compensation may have            influenced your financial advisor’s recommendation of this Fund.

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

 

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As            of the date hereof, the Funds have been advised that the Advisor, the Distributor and            their affiliates have advised each Fund that they expect that the following firms will            receive revenue sharing payments at different points during the coming year as            described above:

**Channel: Broker-Dealers and Financial Advisors**

 

A G            Edwards & Sons Inc.

AIG            Advisors Group

Cadaret, Grant & Co. Inc.

Brown            Brothers Harriman

Capital            Analyst, Incorporated

Citicorp Investment Services

Citigroup Global Markets, Inc. (dba Smith Barney)

Commonwealth Equity Services, LLP (dba Commonwealth Financial            Network)

HD Vest            Investment Securities, Inc.

ING            Group

LaSalle            Financial Services, Inc.

Linsco/Private Ledger Corp.

McDonald Investments Inc.

Merrill            Lynch, Pierce, Fenner & Smith Inc.

Morgan            Stanley

Oppenheimer & Co., Inc.

Pacific            Select Distributors Group

The            Principal Financial Group

Prudential Investments

Raymond            James & Associates

Raymond            James Financial Services

RBC            Dain Rauscher, Inc

Securities America, Inc.

UBS            Financial Services

Wachovia Securities

Wells            Fargo Investments, LLC

**Channel: Fund Supermarket Platforms**

 

ADP            Clearing

Charles            Schwab & Co., Inc.

E*Trade

Fidelity Investments

First            Trust

National Financial

National Investor Services Corporation

Pershing LLC

USAA            Investment Management

**Channel: Defined Contribution Investment Only            Platforms**

 

401K            Investment Services

ACS /            Buck Consultants

ADP,            Inc.

Alliance Benefit Group Financial Services Corp.

American Express Financial Advisors, Inc.

AMG            Service Corp. / Lincoln Retirement Services Company, LLC

AST            Trust Company

Benefit            Administration

 

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BISYS

Ceridian Retirement Plan Services

Charles            Schwab & Co., Inc.

Charles            Schwab Trust Company

City            National Bank

Citistreet

C.N.A.            Trust

Compusys/ERISA Group Inc.

Copeland Companies

CPI            Qualified Plans Daily Access.Com Inc.

Digital            Retirement Solutions

Edgewood Services

Expert            Plan Inc.

Federated Securities Corp.

Fidelity Institutional Retirement Services Company

Fisserv

Franklin Templeton Defined Contribution

GoldK

Great            West Life and Annuity / BenefitsCorp Equities Inc.

Hand            Securities

Hartford Life Insurance Company

Hewitt            Assoc. LLC

INGAetna Trust Company

Invesmart

JPMorgan Retirement Plan Services LLC

John            Hancock

Lincoln            National Life

Marsh            Insurance & Investment Company

Marshall & Ilsley Trust Company

Maryland Supplemental Retirement Plan

Matrix            Settlement & Clearance

Mercer            HR Services

Merrill            Lynch, Pierce, Fenner & Smith Inc.

Met            Life

MFS

Mid            Atlantic Capital Corporation

Nationwide Trust Company

Nationwide Financial

Neuberger Berman

New            York Life Investment Management Service Company

Nyhart/Alliance Benefit Group Indiana

PFPC,            Inc.

Plan            Administrators, Inc.

PNC            Bank N.A.

Principal Life Insurance Company

Prudential Investments

Reliance Trust Company

Resource Trust (IMS)

Retirement Financial Services

State            Street Bank and Trust Company

SunGard            Investment Products Inc.

The            Princeton Retirement Group, Inc.

T. Rowe            Price

Union            Bank of California

UMB            Bank

 

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Valic/Virsco Retirement Services Co

Vanguard Group

Wachovia Bank (First Union National Bank)

Wells            Fargo

Wilmington Trust

**Channel: Cash Product Platform**

 

ADP            Clearing & Outsourcing

Allegheny Investments LTD

Bank of            New York (Hare & Co.)

Bear            Stearns

Brown            Investment Advisory & Trust Company

Brown            Brothers Harriman

Cadaret            Grant & Co.

Chase            Manhattan Bank

Chicago            Mercantile Exchange

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

D.A.            Davidson & Company

DB Alex            Brown/Pershing

DB            Securities

Deutsche Bank Trust Company Americas

Emmett            A. Larkin Company

Fiduciary Trust Co. – International

Huntleigh Securities

Lincoln            Investment Planning

Linsco            Private Ledger Financial Services

Mellon            Bank

Nesbitt            Burns Corp.

Penson            Financial Services

Pershing Choice Platform

Profunds Distributors, Inc.

SAMCO            Capital Markets (Fund Services, Inc.)

Saturn            & Co. (Investors Bank & Trust Company)

Smith            Moore & Company

Sungard            Financial

Turtle            & Co. (State Street)

UBS

US            Bank

William            Blair & Company

**Channel: Third Party Insurance Platforms**

 

Allmerica Financial Life Insurance Company

Allstate Life Insurance Company of New York

Ameritas Life Insurance Group

American General Life Insurance Company

Annuity            Investors Life Insurance Company

Columbus Life Insurance Company

Companion Life Insurance Company

Connecticut General Life Insurance Company

Farmers            New World Life Insurance Company

Fidelity Security Life Insurance Company

First            Allmerica Financial Life Insurance Company

First            Great-West Life and Annuity Insurance Company

 

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First            MetLife Investors Insurance Company

Genworth Life Insurance Company of New York

Genworth Life and Annuity Insurance Company

Great            West Life and Annuity Insurance Company

Hartford Life Insurance Company

Hartford Life and Annuity Insurance Company

ICMG            Registered Variable Life

John            Hancock Life Insurance Company of New York

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

Kemper            Investors Life Insurance Company

Lincoln            Benefit Life Insurance Company

Lincoln            Life & Annuity Company of New York

Lincoln            National Life Insurance Company

Massachusetts Mutual Life Insurance Company

MetLife            Group

Minnesota Life Insurance Company

Mutual            of America Life Insurance Company

National Life Insurance Company

Nationwide Financial Services Inc.

Nationwide Life and Annuity Company of America

Nationwide Life Insurance Company of America

New            York Life Insurance and Annuity Corporation

Phoenix            Life Insurance Company

Protective Life Insurance

Prudential Insurance Company of America

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

Sun            Life Assurance and Annuity Company of New York

Symetra            Life Insurance Company

Transamerica Life Insurance Company

Union            Central Life Insurance Company

United            of Omaha Life Insurance Company

United            Investors Life Insurance Company

Western            Southern Life Assurance Company

Any            additions, modifications or deletions to the financial advisors identified above that            have occurred since the date hereof are not reflected.

The            Advisor, the Distributor or their affiliates may enter into additional revenue sharing            arrangements or change or discontinue existing arrangements with financial advisors at            any time without notice.

The            prospect of receiving, or the receipt of additional compensation or promotional            incentives described above by financial advisors may provide such financial advisors            and/or their salespersons with an incentive to favor sales of shares of the DWS Funds            or a particular DWS Fund over sales of shares of mutual funds (or non-mutual fund            investments) with respect to which the financial advisor does not receive additional            compensation or promotional incentives, or receives lower levels of additional            compensation or promotional incentives. Similarly, financial advisors may receive            different compensation or incentives that may influence their recommendation of any            particular share class of the Fund or of other funds. These payment arrangements,            however, will not change the price that an investor pays for Fund shares or the amount            that a Fund receives to invest on behalf of an investor and will not increase Fund            expenses. You may wish to take such payment arrangements into account when considering            and evaluating any recommendations relating to Fund shares and you should discuss this            matter with your financial advisor and review your financial advisor’s            disclosures.

It            is likely that broker-dealers that execute portfolio transactions for the Fund will            include firms that also sell shares of the DWS funds to their customers. However, the            Advisor will not consider sales of DWS fund shares as a factor in the selection of            broker-dealers to execute portfolio transactions for the DWS funds. Accordingly, the            Advisor has

 

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implemented policies and procedures reasonably designed to prevent its            traders from considering sales of DWS fund shares as a factor in the selection of            broker-dealers to execute portfolio transactions for the Funds. 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.

***Redemptions***

**Redemption fee*****.***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            (30 days in the case of DWS High Income Plus Fund) of buying them (either by purchase            or exchange). The redemption fee is paid directly to the Fund, and is designed to            encourage long-term investment and to offset transaction and other costs associated            with short-term or excessive trading. For purposes of determining whether the            redemption fee applies, shares held the longest time will be treated as being redeemed            first and shares held the shortest time will be treated as being redeemed last. The            redemption fee is applicable to Fund shares purchased either directly or through a            financial intermediary, such as a broker-dealer. Transactions through financial            intermediaries typically are placed with the Fund on an omnibus basis and include both            purchase and sale transactions placed on behalf of multiple investors. These purchase            and sale transactions are generally netted against one another and placed on an            aggregate basis; consequently the identities of the individuals on whose behalf the            transactions are placed generally are not known to the Fund. For this reason, the Fund            has undertaken to notify financial intermediaries of their obligation to assess the            redemption fee on customer accounts and to collect and remit the proceeds to the Fund.            However, due to operational requirements, the intermediaries’ methods for            tracking and calculating the fee may be inadequate or differ in some respects from the            Fund’s.

**General**

Policies and procedures affecting transactions in Fund shares can be            changed at any time without notice, subject to applicable law. Transactions may be            contingent upon proper completion of application forms and other documents by            shareholders and their receipt by a Fund’s agents. Transaction delays in            processing (and changing account features) due to circumstances within or beyond the            control of a Fund and its agents may occur. Shareholders (or their financial service            firms) are responsible for all losses and fees resulting from bad checks, cancelled            orders or the failure to consummate transactions effected pursuant to instructions            reasonably believed to be genuine.

In            addition, 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.

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

Redemption requests must be unconditional. Redemption requests (and a            stock power for certificated shares) must be duly endorsed by the account holder. As            specified in the Prospectus, signatures may need to be guaranteed by a commercial bank,            trust company, savings and loan association, federal savings bank, member firm of a            national securities exchange or other financial institution permitted by SEC rule.            Additional documentation may be required, particularly from institutional and fiduciary            account holders, such as corporations, custodians (e.g., under the Uniform Transfers to            Minors Act), executors, administrators, trustees or guardians.

If            the proceeds of the redemption (prior to the imposition of any contingent deferred            sales charge) are $100,000 or less and the proceeds are payable to the shareholder of            record at the address of record, normally a telephone request or a written request by            any one account holder without a signature guarantee is sufficient for redemptions by            individual or joint account holders, and trust, executor and guardian account holders,            provided the trustee, executor or guardian is named in the account registration. Other            institutional account holders may exercise this special

 

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privilege of redeeming shares by telephone request or written request            without signature guarantee subject to the same conditions as individual account            holders, provided that this privilege has been pre-authorized by the institutional            account holder by written instruction to the Shareholder Service Agent with signatures            guaranteed. This privilege may not be used to redeem shares held in certificated form            and may not be used if the shareholder’s account has had an address change within            15 days of the redemption request.

**Wires.**Delivery of the proceeds of a wire            redemption of $250,000 or more may be delayed by a fund for up to seven days if the            Fund or the Shareholder Service Agent deems it appropriate under then-current market            conditions. The ability to send wires is limited by the business hours and holidays of            the firms involved. A Fund is not responsible for the efficiency of the federal wire            system or the account holder’s financial services firm or bank. The account            holder is responsible for any charges imposed by the account holder’s firm or            bank. To change the designated account to receive wire redemption proceeds, send a            written request to a Fund Shareholder Service Agent with signatures guaranteed as            described above or contact the firm through which Fund shares were            purchased.

**Automatic Withdrawal Plan.**An owner of            $5,000 or more of a class of a Fund’s shares at the offering price may provide            for the payment from the owner’s account of any requested dollar amount to be            paid to the owner or a designated payee monthly, quarterly, semiannually or annually.            The $5,000 minimum account size is not applicable to IRAs. The minimum periodic payment            is $50. Shares are redeemed so that the payee should receive payment approximately on            the first of the month. Investors using this Plan must reinvest fund            distributions.

Non-retirement plan shareholders may establish an Automatic Withdrawal            Plan (the “Plan”) to receive monthly, quarterly or periodic redemptions            from his or her account for any designated amount of $50 or more. Shareholders may            designate which day they want the automatic withdrawal to be processed. The check            amounts may be based on the redemption of a fixed dollar amount, fixed share amount,            percent of account value or declining balance. The Plan provides for income dividends            and capital gains distributions, if any, to be reinvested in additional shares. Shares            are then liquidated as necessary to provide for withdrawal payments. Since the            withdrawals are in amounts selected by the investor and have no relationship to yield            or income, payments received cannot be considered as yield or income on the investment            and the resulting liquidations may deplete or possibly extinguish the initial            investment and any reinvested dividends and capital gains distributions. Any such            requests must be received by the Fund’s transfer agent ten days prior to the date            of the first automatic withdrawal. An Automatic Withdrawal Plan may be terminated at            any time by the shareholder, the Trust or its agent on written notice, and will be            terminated when all shares of the Fund under the Plan have been liquidated or upon            receipt by the Trust of notice of death of the shareholder.

**In-kind Redemptions.**Each Fund reserves the            right to honor any request for redemption or repurchase by making payment in whole or            in part in securities. These securities will be chosen by the fund and valued as they            are for purposes of computing a Fund’s net asset value. A redeeming shareholder            who receives such securities will be subject to federal income tax in the same manner            as if a cash distribution had been received. A shareholder may incur transaction            expenses in converting these securities to cash.

***Exchanges***

Shareholders may request a taxable exchange of their shares for shares            of the corresponding class of other DWS Funds, subject to the provisions            below.

Shares of money market funds that were acquired by purchase (not            including shares acquired by dividend reinvestment) are subject to the applicable sales            charge on exchange. Certain series of DWS Target Fund are available on exchange only            during the offering period for such series as described in the applicable prospectus.            Tax Free Money Fund — Investment Class, NY Tax-Free Money Fund —Investment            Class, Treasury Money Fund —Investment Class, Money Market Fund —            Investment Class, Cash Management Fund Institutional, Cash Reserves Fund Institutional,            Treasury Money Fund — Institutional Class, Cash Reserve Fund, Inc. Prime Series,            Cash Reserve Fund, Inc. Treasury Series, Tax-Exempt California Money Market Fund, Cash            Account Trust and Investors Cash Trust are available on exchange but only through a            financial services firm having a services agreement with DWS-SDI. All exchanges among            money funds must meet applicable investor eligibility and investment

 

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requirements. Exchanges may only be made for funds that are available            for sale in the shareholder’s state of residence. Currently, Tax-Exempt            California Money Market Fund is available for sale only in California.

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

**Automatic Exchange Plan.**The owner of            $1,000 or more of any class of shares of a DWS fund may authorize the automatic            exchange of a specified amount ($50 minimum) of such shares for shares of the same            class of another such DWS fund. Exchanges will be made automatically until the            shareholder or the fund terminates the privilege. Exchanges are subject to the terms            and conditions described above.

**Purchases In-Kind**

Each Fund may, at its own option, accept securities in payment for            shares. The securities delivered in payment for shares are valued by the method            described under “Net Asset Value” as of the day a Fund receives the            securities. This may be a taxable transaction to the shareholder. (Consult your tax            advisor for tax guidance.) Securities may be accepted in payment for shares only if            they are, in the judgment of the Advisor, appropriate investments for a Fund. In            addition, securities accepted in payment for shares must: (1) meet the investment            objective and policies of the acquiring Fund; (ii) be acquired by the Fund for            investment and not for resale; (iii) be liquid securities which are not restricted as            to transfer either by law or liquidity of the market; and (iv) if stock, have a value            which is readily ascertainable as evidenced by a listing on a stock exchange or            over-the-counter market or by readily available market quotations from a dealer in such            securities. Each Fund reserves the right to accept or reject at its own option any and            all securities offered in payment for its shares.

Each Fund reserves the right to redeem all of its shares, if the            Fund’s Board of Trustees votes to liquidate and terminate the Fund.

**DIVIDENDS**

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

Each Fund intends to distribute dividends from its net investment            income, excluding short-term capital gains annually in December. Distributions of net            capital gains realized during each fiscal year will be made annually before the end of            a Fund’s fiscal year on October. Additional distributions, including            distributions of net short-term capital gains in excess of net long-term capital            losses, may be made, if necessary. Each Fund intends to distribute net realized capital            gains after utilization of capital loss carryforwards, if any, in December to prevent            application of a federal excise tax, although an additional distribution may be made,            if necessary.

Any            dividends or capital gains distributions declared in October, November or December with            a record date in such a month and paid during the following January will be treated by            shareholders for federal income tax purposes as if received on December 31 of the            calendar year declared.

Dividends paid by a Fund with respect to each class of its shares will            be calculated in the same manner, at the same time and on the same day.

Income and capital gain dividends, if any, of a Fund will be credited to            shareholder accounts in full and fractional shares of the same class of the Fund at net            asset value on the reinvestment date, except that, upon written request to the            Shareholder Service Agent, a shareholder may select one of the following            options:

 

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| 1. | To receive income and short-term capital gain dividends                            in cash and long-term capital gain dividends in shares of the same                            class at net asset value; or |
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| 2. | To receive income and capital gain dividends in                            cash. |
|----|----------------------------------------------------------------------------------|

Dividends will be reinvested in shares of the same class of a Fund            unless shareholders indicate in writing that they wish to receive them in cash or in            shares of other DWS Funds with multiple classes of shares or DWS funds as provided in            the prospectus. To use this privilege of investing dividends of a Fund in shares of            another DWS fund, shareholders must maintain a minimum account value of $1,000 in the            Fund distributing the dividends. Each Fund will reinvest dividend checks (and future            dividends) in shares of that same Fund and class if checks are returned as            undeliverable. Dividends and other distributions of the Fund in the aggregate amount of            $10 or less are automatically reinvested in shares of the same Fund and class unless            the shareholder requests in writing that a check be issued for that particular            distribution.

If            an investment is in the form of a retirement plan, all dividends and capital gains            distributions must be reinvested into the shareholder’s account.

If            a shareholder has elected to reinvest any dividends and/or other distributions, such            distributions will be made in shares of that Fund and confirmations will be mailed to            each shareholder. If a shareholder has chosen to receive cash, a check will be sent.            Distributions of investment company taxable income and net realized capital gains are            taxable, whether made in shares or cash.

Each distribution is accompanied by a brief explanation of the form and            character of the distribution. The characterization of distributions on such            correspondence may differ from the characterization for federal tax purposes. In            January of each year each Fund issues to each shareholder a statement of the federal            income tax status of all distributions in the prior calendar year.

Each            Fund may at any time vary its foregoing dividend practices and, therefore, reserves the            right from time to time to either distribute or retain for reinvestment such of its net            investment income and its net short-term and long-term capital gains as its Board            determines appropriate under the then current circumstances. In particular, and without            limiting the foregoing, a Fund may make additional distributions of net investment            income or capital gain net income in order to satisfy the minimum distribution            requirements contained in the Code.

**TAXES**

The            following is a summary of certain material US federal income tax considerations            regarding the purchase, ownership and disposition of shares in the Funds. It is not            intended as a complete discussion of all of the potential federal income tax            consequences that may be applicable to the Funds or to all categories of investors,            some of which may be subject to special tax rules. Each prospective shareholder is            urged to consult his own tax advisor with respect to the specific federal, state, local            and foreign tax consequences of investing in a Fund. The summary is based on the laws            in effect on the date of this SAI, which are subject to change, possibly with            retroactive effect.

***Taxation of the Funds and Their Investments***

Each Fund will be treated as a separate taxpayer for US federal income            tax purposes. Each Fund intends to continue to qualify to be treated as a regulated            investment company under the Code each taxable year. To so qualify, each Fund must meet            certain requirements regarding the source of its income, the diversification of its            assets and the distribution of its income. For example, each Fund must derive at least            90% of its gross income in each taxable year from dividends, interest, payments with            respect to securities loans and gains from the sale or other disposition of stock or            securities, foreign currencies or other income (including, but not limited to, gains            from options, futures or forward contracts) derived with respect to its business of            investing in such stock, securities or currencies and net income derived from interests            in “qualified publicly traded partnerships”            (*i*.*e*            ., partnerships that are traded on an established securities market or tradable on a            secondary market, other than partnerships that derives 90% of their income from            interest, dividends, capital gains, and other traditional permitted mutual fund            income). Each Fund must also diversify its holdings so that, at the end of each quarter            of the Fund’s taxable year, (i) at least 50% of the

 

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market value of the Fund’s assets is represented by cash,            securities of other regulated investment companies, US government securities and other            securities, with such other securities limited, in respect of any one issuer, to an            amount not greater than 5% of the Fund’s assets and not greater than 10% of the            outstanding voting securities of such issuer and (ii) not more than 25% of the value of            its assets is invested in the securities (other than US government securities or            securities of other regulated investment companies) of any one issuer, any two or more            issuers that the Fund controls and that are determined to be engaged in the same or            similar trades or businesses or related trades or businesses or in the securities of            one or more qualified publicly traded partnerships. Under the minimum distribution            requirement, each Fund must distribute to its shareholders at least the sum of (i) 90%            of its “investment company taxable income”            (*i.e.*, income other than its net            realized long-term capital gain over its net realized short-term capital loss), plus or            minus certain adjustments, and (ii) 90% of its net tax-exempt income for the taxable            year.

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

As            a regulated investment company, each Fund will not be subject to US federal income tax            on its investment company taxable income and net capital gains (the excess of net            long-term capital gains over net short-term capital losses), if any, that it            distributes to shareholders. A Fund will be subject to income tax at regular corporate            rates on any taxable income or gain that it doe not distribute. The Funds intend to            distribute to their shareholders, at least annually, substantially all of their            investment company taxable income and net capital gains, and therefore do not            anticipate incurring federal income tax liability.

The            Code imposes a 4% nondeductible excise tax on a Fund to the extent it does not            distribute by the end of any calendar year at least the sum of (i) 98% of its            ordinary income for that year and (ii) 98% of its capital gain net income (both            long-term and short-term) for the one-year period ending, as a general rule, on October            31 of that year. For this purpose, however, any ordinary income or capital gain net            income retained by the Fund that is subject to corporate income tax will be considered            to have been distributed by year-end. In addition, the minimum amounts that must be            distributed in any year to avoid the excise tax will be increased or decreased to            reflect any under distribution or overdistribution, as the case may be, from the            previous year. The Trust anticipates that the Funds will pay such dividends and will            make such distributions as are necessary in order to avoid the application of this            excise tax.

If            for any taxable year a Fund does not qualify as a regulated investment company, all of            its taxable income will be subject to federal income tax at regular corporate rates            (without any deduction for distributions to its shareholders). In such event, a            Fund’s distributions, to the extent derived from the Fund’s current or            accumulated earnings and profits, would constitute dividends that are taxable to            shareholders as dividend income, even though those distributions might otherwise (at            least in part) have been treated in the shareholders’ hands as long-term capital            gains. However, such dividends will be eligible (i) to be treated as qualified dividend            income in the case of shareholders taxed as individuals and (ii) for the dividends            received deduction in the case of corporate shareholders. Moreover, if a Fund fails to            qualify as a regulated investment company in any year, it must pay out its earnings and            profits accumulated in that year in order to qualify again as a regulated investment            company. If a Fund failed to qualify as a regulated investment company for a period            greater than two taxable years, the Fund may be required to recognize any net built-in            gains with respect to certain of its assets (*i.e.,*the excess of the aggregate gains, including items of income, over            aggregate losses that would have been realized with respect to such assets if the Fund            had been liquidated) in order to qualify as a regulated investment company in a            subsequent year.

A            Fund’s investment in so-called “OID bonds” and “market discount            bonds” will be subject to special tax rules. An OID bond is a security that is            issued at a discount from its face value (*e.g.,*zero coupon securities). A market discount bond is a security acquired            in the secondary market at a price below its redemption value (or its adjusted issue            price if it also an OID bond). If a Fund invests in an OID bond it will be required to            accrue in income each year for federal income tax purpose a portion of the difference            between the issue price and the face value of the OID bond (the “original issue            discount” or “OID”), even though the Fund will not receive            corresponding cash interest payments with respect to such OID bond. This original issue            discount is imputed income that will comprise a part of the Fund’s investment            company taxable income, which must be distributed to shareholders in order to maintain            the qualification of the Fund as a regulated investment company and to avoid federal            income tax at the Fund level. If a

 

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Fund invests in a market discount bond, it will be required to treat any            gain recognized on the disposition of such market discount bond as ordinary income            (instead of capital gain) to the extent of the accrued market discount unless the Fund            elects to include the market discount in income as it accrues.

A            Fund’s transactions in foreign currencies, forward contracts, options and futures            contracts (including options and futures contracts on foreign currencies) will be            subject to special provisions of the Code (including provisions relating to            “hedging transactions” and “straddles”) that, among other            things, may affect the character of gains and losses realized by the Fund            (*i.e*., may affect whether gains or            losses are ordinary or capital), accelerate recognition of income to the Fund and defer            Fund losses. These rules could therefore affect the character, amount and timing of            distributions to shareholders. These provisions also (a) will require the Fund to            mark-to-market certain types of the positions in its portfolio            (*i.e*., treat them as if they were            closed out at the end of each year) and (b) may cause the Fund to recognize income            without receiving cash with which to pay dividends or make distributions in amounts            necessary to satisfy the distribution requirements for avoiding income and excise            taxes. Each Fund will monitor its transactions, will make the appropriate tax elections            and will make the appropriate entries in its books and records when it acquires any            foreign currency, forward contract, option, futures contract or hedged investment in            order to mitigate the effect of these rules and prevent disqualification of the Fund as            a regulated investment company.

A            Fund’s investment in so called “section 1256 contracts,” such as            regulated futures contracts, most forward currency contracts traded in the interbank            market and options on most stock indices, are subject to special tax rules. All section            1256 contracts held by a Fund at the end of its taxable year are required to be marked            to their market value, and any unrealized gain or loss on those positions will be            included in the Fund’s income as if each position had been sold for its fair            market value at the end of the taxable year. The resulting gain or loss will be            combined with any gain or loss realized by the Fund from positions in section 1256            contracts closed during the taxable year. Provided such positions were held as capital            assets and were not part of a “hedging transaction” nor part of a            “straddle,” 60% of the resulting net gain or loss will be treated as            long-term capital gain or loss, and 40% of such net gain or loss will be treated as            short-term capital gain or loss, regardless of the period of time the positions were            actually held by the Fund.

Every shareholder of a Fund will receive, if appropriate, various            written notices after the close of the Fund’s prior taxable year as to the            federal income status of his or her dividends and distributions which were received            from the Fund during the Fund’s prior taxable year. Shareholders should consult            their tax advisors as to any state and local taxes that may apply to these dividends            and distributions.

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

In            general, gain or loss on a short sale is recognized when a Fund closes the sale by            delivering the borrowed property to the lender, not when the borrowed property is sold.            Gain or loss from a short sale is generally considered as capital gain or loss to the            extent that the property used to close the short sale constitutes a capital asset in            the Fund’s hands. Except with respect to certain situations where the property            used by the Fund to close a short sale has a long-term holding period on the date of            the short sale, special rules would generally treat the gains on short sales as            short-term capital gains. These rules may also terminate the running of the holding            period of “substantially identical property” held by the Fund. Moreover, a            loss on a short sale will be treated as a long-term capital loss if, on the date of the            short sale, “substantially identical property” has been held by the Fund            for more than a year. In general, the Fund will not be permitted to deduct payments            made to reimburse the lender of securities for dividends paid on borrowed stock if the            short sale is closed on or before the 45th day after the short sale is            entered into.

**Foreign Investments**. Income (including, in            some cases, capital gains) from investments in foreign stocks or securities may be            subject to foreign taxes, including withholding and other taxes imposed by foreign            jurisdictions. Tax conventions between certain countries and the US may reduce or            eliminate such taxes. It is impossible to

 

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determine the effective rate of foreign tax in advance since the amount            of each Fund’s assets to be invested in various countries will vary.

If            a Fund is liable for foreign taxes, and if more than 50% of the value of the            Fund’s total assets at the close of its taxable year consists of stocks or            securities of foreign corporations (including foreign governments), such Fund may make            an election pursuant to which certain foreign taxes paid by the Fund would be treated            as having been paid directly by shareholders of the Fund. Pursuant to such election,            the amount of foreign taxes paid will be included in the income of each Fund’s            shareholders, and such Fund’s shareholders (except tax-exempt shareholders) may,            subject to certain limitations, claim either a credit or deduction for the taxes. Each            such Fund’s shareholder will be notified after the close of each Fund’s            taxable year whether the foreign taxes paid will “pass through” for that            year and, if so, such notification will designate (a) the shareholder’s portion            of the foreign taxes paid to each such country and (b) the amount which represents            income derived from sources within each such country.

The            amount of foreign taxes that a shareholder may claim as a credit in any year will            generally be subject to a separate limitation for “passive income,” which            includes, among other items of income, dividends, interest and certain foreign currency            gains. Because capital gains realized by a Fund on the sale of foreign securities will            be treated as US source income, the available credit of foreign taxes paid with respect            to such gains may be restricted by this limitation.

Under Section 988 of the Code, gains or losses attributable to            fluctuations in exchange rates between the time a Fund accrues income or receivables or            expenses or other liabilities denominated in a foreign currency and the time the Fund            actually collects such income or pays such liabilities are generally treated as            ordinary income or ordinary loss. Similarly, gains or losses on foreign currency,            foreign currency forward contracts, certain foreign currency options or futures            contracts and the disposition of debt securities denominated in foreign currency, to            the extent attributable to fluctuations in exchange rates between the acquisition and            disposition dates, are also treated as ordinary income or loss unless the Fund were to            elect otherwise.

**Investment in Passive Foreign Investment            Companies*****.***If a Fund            purchases shares in certain foreign investment entities, called “passive foreign            investment companies” (“PFICs”), it may be subject to US federal            income tax on a portion of any “excess distribution” or gain from the            disposition of such shares even if such income is distributed as a taxable dividend by            the Fund to its shareholders. Additional charges in the nature of interest may be            imposed on the Fund in respect of deferred taxes arising from such distributions or            gains.

If            a Fund were to invest in a PFIC and elect to treat the PFIC as a “qualified            electing fund” under the Code, in lieu of the foregoing requirements, the Fund            might be required to include in income each year a portion of the ordinary earnings and            net capital gains of the qualified electing fund, even if not distributed to the Fund,            and such amounts would be subject to the 90% and excise tax distribution requirements            described above. In order to make this election, the Fund would be required to obtain            certain annual information from the PFICs in which it invests, which may be difficult            or impossible to obtain.

Alternatively, a Fund may make a mark-to-market election that will            result in the Fund being treated as if it had sold and repurchased its PFIC stock at            the end of each year. In such case, the Fund would report any such gains as ordinary            income and would deduct any such losses as ordinary losses to the extent of previously            recognized gains. The election must be made separately for each PFIC owned by a Fund            and, once made, would be effective for all subsequent taxable years, unless revoked            with the consent of the IRS. By making the election, a Fund could potentially            ameliorate the adverse tax consequences with respect to its ownership of shares in a            PFIC, but in any particular year may be required to recognize income in excess of the            distributions it receives from PFICs and its proceeds from dispositions of PFIC stock.            The Fund may have to distribute this “phantom” income and gain to satisfy            the 90% distribution requirement and to avoid imposition of the 4% excise            tax.

Each Fund will make the appropriate tax elections, if possible, and take            any additional steps that are necessary to mitigate the effect of these            rules.

 

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***Taxation of US Shareholders***

**Dividends and Distributions**

Each Fund intends to distribute substantially all of its net income and            capital gains, if any, to shareholders each year. Unless a shareholder instructs the            Trust to pay such dividends and distributions in cash, they will be automatically            reinvested in additional shares of the Fund. Dividends and distributions received by a            retirement plan qualifying for tax-exempt treatment under the Code will not be subject            to US federal income tax. Each Fund’s dividends and capital gain distributions            are taxable when they are paid, whether you take them in cash or reinvest them in            additional shares. Distributions declared to shareholders of record in October,            November or December and paid in January are taxable on December 31.

If            a Fund retains for investment an amount equal to all or a portion of its net long-term            capital gains in excess of its net short-term capital losses (including any capital            loss carryovers), it will be subject to a corporate tax (currently at a rate of 35%) on            the amount retained. In that event, the Fund will designate such retained amounts as            undistributed capital gains in a notice to its shareholders who (a) will be            required to include in income for US federal income tax purposes, as long-term capital            gains, their proportionate shares of the undistributed amount, (b) will be            entitled to credit their proportionate shares of the 35% tax paid by the Fund on the            undistributed amount against their US federal income tax liabilities, if any, and to            claim refunds to the extent their credits exceed their liabilities, if any, and            (c) will be entitled to increase their tax basis, for US federal income tax            purposes, in their shares by an amount equal to 65% of the amount of undistributed            capital gains included in the shareholder’s income. Organizations or persons not            subject to federal income tax on such capital gains will be entitled to a refund of            their pro rata share of such taxes paid by the Fund upon filing appropriate returns or            claims for refund with the IRS.

Distributions of net realized long-term capital gains, if any, that the            Funds designate as capital gains dividends are taxable as long-term capital gains,            whether paid in cash or in shares and regardless of how long a shareholder has held            shares of the Funds. All other dividends of the Funds (including dividends from            short-term capital gains) from current and accumulated earnings and profits            (“regular dividends”) are generally subject to tax as ordinary            income.

Special rules apply to regular dividends paid to individuals. Such a            dividend, with respect to taxable years beginning on or before December 31, 2008, may            be subject to tax at the rates generally applicable to long-term capital gains for            individuals (currently at a maximum rate of 15%), provided that the individual            receiving the dividend satisfies certain holding period and other requirements.            Dividends subject to these special rules are not actually treated as capital gains,            however, and thus are not included in the computation of an individual’s net            capital gain and generally cannot be used to offset capital losses. The long-term            capital gains rates will apply to: (i) 100% of the regular dividends paid by a            Fund to an individual in a particular taxable year if 95% or more of the Fund’s            gross income (ignoring gains attributable to the sale of stocks and securities except            to the extent net short-term capital gain from such sales exceeds net long-term capital            loss from such sales) in that taxable year is attributable to qualified dividend income            received by the fund; or (ii) the portion of the regular dividends paid by the            Fund to an individual in a particular taxable year that is attributable to qualified            dividend income received by the Fund in that taxable year if such qualified dividend            income accounts for less than 95% of the Fund’s gross income (ignoring gains            attributable to the sale of stocks and securities except to the extent net short-term            capital gain from such sales exceeds net long-term capital loss from such sales) for            that taxable year. For this purpose, “qualified dividend income” generally            means income from dividends received by a Fund from US corporations and qualifying            foreign corporations, provided that the fund satisfies certain holding period            requirements in respect of the stock of such corporations and has not hedged its            position in the stock in certain ways. However, qualified dividend income does not            include any dividends received from tax-exempt corporations. Also, dividends received            by the Fund from a real estate investment trust or another regulated investment company            generally are qualified dividend income only to the extent the dividend distributions            are made out of qualified dividend income received by such real estate investment trust            or other regulated investment company. In the case of securities lending transactions,            payments in lieu of dividends are not qualified dividend income.

The            Funds do not expect that a significant portion of their respective dividends will be            eligible for treatment as qualified dividend income.

 

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We            will send you information after the end of each year setting forth the amount of            dividends paid by us that are eligible for the reduced rates.

If            an individual receives a dividend qualifying for the long-term capital gains rates and            such dividend constitutes an “extraordinary dividend,” and the individual            subsequently recognizes a loss on the sale or exchange of stock in respect of which the            “extraordinary dividend” was paid, then the loss will be long-term capital            loss to the extent of such “extraordinary dividend.” An            “extraordinary dividend” on common stock for this purpose is generally a            dividend (i) in an amount greater than or equal to 10% of the taxpayer’s tax            basis (or trading value) in a share of stock, aggregating dividends with ex-dividend            dates within an 85-day period or (ii) in an amount greater than or equal to 20% of            the taxpayer’s tax basis (or trading value) in a share of stock, aggregating            dividends with ex-dividend dates within a 365-day period.

Distributions in excess of a Fund’s current and accumulated            earnings and profits will, as to each shareholder, be treated as a tax-free return of            capital to the extent of a shareholder’s basis in his shares of the Fund, and as            a capital gain thereafter (if the shareholder holds his shares of the Fund as capital            assets). Shareholders receiving dividends or distributions in the form of additional            shares should be treated for US federal income tax purposes as receiving a distribution            in an amount equal to the amount of money that the shareholders receiving cash            dividends or distributions will receive, and should have a cost basis in the shares            received equal to such amount. Dividends paid by a Fund that are attributable to            dividends received by the Fund from domestic corporations may qualify for the federal            dividends-received deduction for corporations.

Investors considering buying shares just prior to a dividend or capital            gain distribution should be aware that, although the price of shares just purchased at            that time may reflect the amount of the forthcoming distribution, such dividend or            distribution may nevertheless be taxable to them. If a Fund is the holder of record of            any stock on the record date for any dividends payable with respect to such stock, such            dividends will be included in the Fund’s gross income not as of the date received            but as of the later of (a) the date such stock became ex-dividend with respect to such            dividends (i.e., the date on which a buyer of the stock would not be entitled to            receive the declared, but unpaid, dividends) or (b) the date the Fund acquired such            stock. Accordingly, in order to satisfy its income distribution requirements, a Fund            may be required to pay dividends based on anticipated earnings. and shareholders may            receive dividends in an earlier year than would otherwise be the case.

**Sale of Shares**

Upon the sale or exchange of his shares, a shareholder will realize a            taxable gain or loss equal to the difference between the amount realized and his basis            in his shares. A redemption of shares by a Fund will be treated as a sale for this            purpose. Such gain or loss will be treated as capital gain or loss if the shares are            capital assets in the shareholder’s hands, and will be long-term capital gain or            loss if the shares are held for more than one year and short-term capital gain or loss            if the shares are held for one year or less. Any loss realized on a sale or exchange            will be disallowed to the extent the shares disposed of are replaced (including shares            acquired pursuant to a dividend reinvestment plan) within a period of 61 days beginning            30 days before and ending 30 days after disposition of the shares. In such a case, the            basis of the shares acquired will be adjusted to reflect the disallowed loss. Any loss            realized by a shareholder on a disposition of Fund shares held by the shareholder for            six months or less will be treated as a long-term capital loss to the extent of any            distributions of net capital gains received by the shareholder with respect to such            shares.

The            sale or other disposition of shares of a Fund by a retirement plan qualifying for            tax-exempt treatment under the Code will not be subject to US federal income            tax.

Because the tax treatment also depends on your purchase price and your            personal tax position, you should keep your regular account statements to use in            determining your tax.

***Backup Withholding***

A            Fund may be required to withhold US federal income tax on taxable distributions and            redemption proceeds payable to shareholders who fail to provide each Fund with their            correct taxpayer identification number or to make

 

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required certifications, or who have been notified by the IRS that they            are subject to backup withholding. Corporate shareholders and certain other            shareholders specified in the Code generally are exempt from such backup withholding.            Backup withholding is not an additional tax. Any amounts withheld may be credited            against the shareholder’s US federal income tax liability.

***Other Taxation***

The            Trust is organized as a Massachusetts business trust and, under current law, neither            the Trust nor any of the Funds is liable for any income or franchise tax in the            Commonwealth of Massachusetts, provided that each Fund continues to qualify as a            regulated investment company under Subchapter M of the Code.

Each Fund’s shareholders may be subject to state and local taxes            on their Fund distributions. Shareholders are advised to consult their own tax advisors            with respect to the particular tax consequences to them of an investment in a            Fund.

Dividends, distributions and redemption proceeds may also be subject to            additional state, local and foreign taxes depending on each shareholder’s            particular situation.

If            a shareholder recognizes a loss with respect to a Fund’s shares of $2 million or            more for an individual shareholder or $10 million or more for a corporate shareholder,            the shareholder must file with the IRS a disclosure statement on Form 8886. Direct            shareholders of portfolio securities are in many cases exempted from this reporting            requirement, but under current guidance, shareholders of a regulated investment company            are not exempted. The fact that a loss is reportable under these regulations does not            affect the legal determination of whether the taxpayer’s treatment of the loss is            proper. Shareholders should consult their tax advisors to determine the applicability            of these regulations in light of their individual circumstances.

***Taxation of Non-US Shareholders***

Dividends paid by a Fund to non-US shareholders are generally subject to            withholding tax at a 30% rate or a reduced rate specified by an applicable income tax            treaty to the extent derived from investment income and short-term capital gains. In            order to obtain a reduced rate of withholding, a non-US shareholder will be required to            provide an IRS Form W-8BEN certifying its entitlement to benefits under a treaty. The            withholding tax does not apply to regular dividends paid to a non-US shareholder who            provides a Form W-8ECI, certifying that the dividends are effectively connected with            the non-US shareholder’s conduct of a trade or business within the United States.            Instead, the effectively connected dividends will be subject to regular US income tax            as if the non-US shareholder were a US shareholder. A non-US corporation receiving            effectively connected dividends may also be subject to additional “branch profits            tax” imposed at a rate of 30% (or lower treaty rate). A non-US shareholder who            fails to provide an IRS Form W-8BEN or other applicable form may be subject to backup            withholding at the appropriate rate.

In            general, United States federal withholding tax will not apply to any gain or income            realized by a non-US shareholder in respect of any distributions of net long-term            capital gains over net short-term capital losses, exempt-interest dividends, or upon            the sale or other disposition of shares of a Fund.

For            taxable years beginning before January 1, 2008, properly-designated dividends are            generally exempt from United States federal withholding tax where they (i) are paid in            respect of a Fund’s “qualified net interest income” (generally, the            Fund’s US source interest income, other than certain contingent interest and            interest from obligations of a corporation or partnership in which the Fund is at least            a 10% shareholder, reduced by expenses that are allocable to such income) or (ii) are            paid in respect of a Fund’s “qualified short-term capital gains”            (generally, the excess of the Fund’s net short-term capital gain over the            Fund’s long-term capital loss for such taxable year). However, depending on its            circumstances, a Fund may designate all, some or none of its potentially eligible            dividends as such qualified net interest income or as qualified short-term capital            gains, and/or treat such dividends, in whole or in part, as ineligible for this            exemption from withholding. In order to qualify for this exemption from withholding, a            non-US shareholder will need to comply with applicable certification requirements            relating to its non-US status (including, in general, furnishing an IRS Form W-8BEN or            substitute Form). In the case of shares

 

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held through an intermediary, the intermediary may withhold even if a            Fund designates the payment as qualified net interest income or qualified short-term            capital gain. Non-US shareholders should contact their intermediaries with respect to            the application of these rules to their accounts.

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

The            foregoing is only a summary of certain material US federal income tax consequences            affecting the Funds and their shareholders. Current and prospective shareholders are            advised to consult their own tax advisors with respect to the particular tax            consequences to them of an investment in a Fund.

**NET ASSET VALUE**

The            net asset value of shares of each Fund is computed as of the close of regular trading            on the New York Stock Exchange (the “Exchange”) on each day the Exchange is            open for trading (the “Value Time”). The Exchange is scheduled to be closed            on the following holidays: New Year’s Day, Dr. Martin Luther King, Jr. Day,            Presidents’ Day, Good Friday, Memorial Day, Independence Day, Labor Day,            Thanksgiving and Christmas, and on the preceding Friday or subsequent Monday when one            of these holidays falls on a Saturday or Sunday, respectively. Net asset value per            share is determined separately for each class of shares by dividing the value of the            total assets of the Fund attributable to the shares of that class, less all liabilities            attributable to that class, by the total number of shares of that class outstanding.            The per share net asset value may be lower for certain classes of the Fund because of            higher expenses borne by these classes.

An            equity security is valued at its most recent sale price on the security’s primary            exchange or OTC market as of the Value Time. Lacking any sales, the security is valued            at the calculated mean between the most recent bid quotation and the most recent asked            quotation (the “Calculated Mean”) on such exchange or OTC market as of the            Value Time. If it is not possible to determine the Calculated Mean, the security is            valued at the most recent bid quotation on such exchange or OTC market as of the Value            Time. In the case of certain foreign exchanges or OTC markets, the closing price            reported by the exchange or OTC market (which may sometimes be referred to as the            “official close” or the “official closing price” or other            similar term) will be considered the most recent sale price.

Debt securities are valued as follows. Money market instruments            purchased with an original or remaining maturity of 60 days or less, maturing at par,            are valued at amortized cost. Other money market instruments are valued based on            information obtained from an approved pricing agent or, if such information is not            readily available, by using matrix pricing techniques (formula driven calculations            based primarily on current market yields). Bank loans are valued at prices supplied by            an approved pricing agent (which are intended to reflect the mean between the bid and            asked prices), if available, and otherwise at the mean of the most recent bid and asked            quotations or evaluated prices, as applicable, based on quotations or evaluated prices            obtained from one or more broker-dealers. Privately placed debt securities, other than            Rule 144A debt securities, initially are valued at cost and thereafter based on all            relevant factors including type of security, size of holding and restrictions on            disposition. Municipal debt securities are valued at prices supplied by an approved            pricing agent (which are intended to reflect the mean between the bid and asked            prices), if available, and otherwise at the average of the mean of the most recent bid            and asked quotations or evaluated price obtained from a broker-dealer. Other debt            securities are valued at prices supplied by an approved pricing agent, if available,            and otherwise at the most recent bid quotation or evaluated price, as applicable,            obtained from one or more broker-dealers. If it is not possible to value a particular            debt security pursuant to the above methods, the security is valued on the basis of            factors including (but not limited to) maturity, coupon, creditworthiness, currency            denomination, and the movement of the market in which the security is normally            traded.

An            exchange-traded option contract on securities, currencies and other financial            instruments is valued at its most recent sale price on the relevant exchange. Lacking            any sales, the option contract is valued at the Calculated Mean.

 

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If            it is not possible to determine the Calculated Mean, the option contract is valued at            the most recent bid quotation in the case of a purchased option contract or the most            recent asked quotation in the case of a written option contract, in each case as of the            Value Time. An option contract on securities, currencies and other financial            instruments traded in the OTC market is valued on the Value Date at the evaluated price            provided by the broker-dealer with which it was traded. Futures contracts (and options            thereon) are valued at the most recent settlement price, if available on the exchange            on which they are traded most extensively. With the exception of stock index futures            contracts which trade on the Chicago Mercantile Exchange, closing settlement times are            prior to the close of trading on the New York Stock Exchange. For stock index futures            contracts which trade on the Chicago Mercantile Exchange, closing settlement prices are            normally available at approximately 4:20 Eastern time. If no settlement price is            available, the last traded price on such exchange will be used.

If            market quotations for Fund assets are not readily available or the value of a Fund            asset as determined in accordance with Board approved procedures does not represent the            fair market value of the Fund asset, the value of the Fund asset is taken to be an            amount which, in the opinion of the Fund’s Pricing Committee (or, in some cases,            the Board’s Valuation Committee), represents fair market value. The value of            other portfolio holdings owned by the Fund is determined in a manner which is intended            to fairly reflect the fair market value of the asset on the valuation date, based on            valuation procedures adopted by the Fund’s Board and overseen primarily by the            Fund’s Pricing Committee.

**TRUSTEES AND OFFICERS**

The            following table presents certain information regarding the Board Members of the Trust.            Each Board Member’s year of birth is set forth in parentheses after his or her            name. Unless otherwise noted, (i) each Board Member has engaged in the principal            occupation(s) noted in the table for at least the most recent five years, although not            necessarily in the same capacity, and (ii) the address of each Board Member that is not            an “interested persons” (as defined in the 1940 Act) of the Trust or the            Advisor (each, an “Independent Board Member”), is c/o Dawn-Marie Driscoll,            PO Box 100176, Cape Coral, FL 33904. The term of office for each Board Member is until            the election and qualification of a successor, or until such Board Member sooner dies,            resigns, is removed or as otherwise provided in the governing documents of the Trust.            Because the Fund does not hold an annual meeting of shareholders, each Board Member            will hold office for an indeterminate period. The Board Members may also serve in            similar capacities with other funds in the DWS fund complex.

***Independent Board Members***

 

| **Name, Year of                            Birth, Position with the Trust and Length of Time Served** | **Business                            Experience and****Directorships During the Past 5 Years**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | **Number of                            Funds in DWS Fund Complex Overseen** |
|-------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------|
| Dawn-Marie Driscoll (1946)Chairperson since 2004

Board Member since2006                         | President, Driscoll Associates (consulting firm);                            Executive Fellow, Center for Business Ethics, Bentley College;                            formerly, Partner, Palmer & Dodge (1988-1990); Vice President of                            Corporate Affairs and General Counsel, Filene’s (1978-1988).                            Directorships: Advisory Board, Center for Business Ethics, Bentley                            College; Trustee, Southwest Florida Community Foundation (charitable                            organization); Former Directorships: Investment Company Institute                            (audit, executive, nominating committees) and Independent Directors                            Council (governance, executive committees) | 87                                                                          |

 

 

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| Henry P. Becton, Jr. (1943)Board Member since2006 | President, WGBH Educational Foundation. Directorships:                            Association of Public Television Stations; Becton Dickinson and                            Company(1) (medical technology company); Belo                            Corporation(1) (media company); Boston Museum of Science;                            Public Radio International. Former Directorships: American Public                            Television; Concord Academy; New England Aquarium; Mass. Corporation                            for Educational Telecommunications; Committee for Economic Development;                            Public Broadcasting Service                                                                                                                                                   | 85 |
|---------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----|
| Keith R. Fox (1954)Board Member since2006         | Managing General Partner, Exeter Capital Partners (a                            series of private equity funds). Directorships: Progressive Holding                            Corporation (kitchen goods importer and distributor); Natural History,                            Inc. (magazine publisher); Box Top Media Inc. (advertising). Former                            Directorships: The Kennel Shop (retailer)                                                                                                                                                                                                                                                                                                                                                                                                | 87 |
| Kenneth C. Froewiss(1945)Board Member since2006   | Clinical Professor of Finance, NYU Stern School of                            Business (1997-present); Member, Finance Committee, Association for                            Asian Studies (2002-present); Director, Mitsui Sumitomo Insurance Group                            (US) (2004-present); prior thereto, Managing Director, J.P. Morgan                            (investment banking firm) (until 1996)                                                                                                                                                                                                                                                                                                                                                                                                     | 87 |
| Martin J. Gruber(1937)Board Member since1999      | Nomura Professor of Finance, Leonard N. Stern School of                            Business, New York University (since September 1965); Director, Japan                            Equity Fund, Inc. (since January 1992), Thai Capital Fund, Inc. (since                            January 2000), Singapore Fund, Inc. (since January 2000), National                            Bureau of Economic Research (since January 2006). Formerly, Trustee,                            TIAA (pension funds) (January 1996-January 2000); Trustee, CREF and                            CREF Mutual Funds (January 2000-March 2005); Chairman, CREF and CREF                            Mutual Funds (February 2004-March 2005); and Director, S.G. Cowen                            Mutual Funds (January 1985-January 2001) | 87 |
| Richard J. Herring(1946)Board Member since1999    | Jacob Safra Professor of International Banking and                            Professor, Finance Department, The Wharton School, University of                            Pennsylvania (since July 1972); Co-Director, Wharton Financial                            Institutions Center (since July 2000). Formerly, Vice Dean and                            Director, Wharton Undergraduate Division (July 1995-June 2000);                            Director, Lauder Institute of International Management Studies (July                            2000-June 2006)                                                                                                                                                                                                                                                 | 87 |
| Graham E. Jones(1933)Board Member since2002       | Senior Vice President, BGK Realty, Inc. (commercial real                            estate) (since 1995). Formerly, Trustee of various investment companies                            managed by Sun Capital Advisors, Inc. (1998-2005), Morgan Stanley Asset                            Management (1985-2001) and Weiss, Peck and Greer (1985-2005)                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 87 |
| Rebecca W. Rimel(1951)Board Member since2002      | President and Chief Executive Officer, The Pew                            Charitable Trusts (charitable foundation) (1994 to present); Trustee,                            Thomas Jefferson Foundation (charitable organization) (1994 to                            present); Trustee, Executive Committee, Philadelphia Chamber of                            Commerce (2001 to present); Director, Viasys Health Care(1)                            (since January 2007). Formerly, Executive Vice President, The Glenmede                            Trust Company (investment trust and wealth management) (1983 to 2004);                            Board Member, Investor Education (charitable organization)                            (2004-2005)                                                             | 87 |
| Philip Saunders, Jr.(1935)Board Member since1986  | Principal, Philip Saunders Associates (economic and                            financial consulting) (since November 1988). Formerly, Director,                            Financial Industry Consulting, Wolf & Company (consulting)                            (1987-1988); President, John Hancock Home Mortgage Corporation                            (1984-1986); Senior Vice President of Treasury and Financial Services,                            John Hancock Mutual Life Insurance Company, Inc. (1982-1986)                                                                                                                                                                                                                                                                                            | 87 |

 

 

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| William N. Searcy, Jr.(1946)Board Member since2002 | Private investor since October 2003; Trustee of 8                            open-end mutual funds managed by Sun Capital Advisers, Inc. (since                            October 1998). Formerly, Pension & Savings Trust Officer, Sprint                            Corporation(1) (telecommunications) (November 1989-September                            2003)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 87 |
|------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----|
| Jean Gleason Stromberg(1943)Board Member since2006                     | Retired. Formerly, Consultant (1997-2001); Director, US                            Government Accountability Office (1996-1997); Partner, Fulbright &                            Jaworski, L.L.P. (law firm) (1978-1996). Directorships: The William and                            Flora Hewlett Foundation; Service Source, Inc. Former Directorships:                            Mutual Fund Directors Forum (2002-2004), American Bar Retirement                            Association (funding vehicle for retirement plans) (1987-1990 and                            1994-1996)                                                                                                                                                                                                                                                                                                                                                                                        | 87 |
| Carl W. Vogt(1936)Board Member since2006                               | Retired Senior Partner, Fulbright & Jaworski, L.L.P.                            (law firm); formerly, President (interim) of Williams College                            (1999-2000); formerly, President of certain funds in the Deutsche Asset                            Management family of funds (formerly, Flag Investors family of funds)                            (registered investment companies) (1999-2000). Directorships: Yellow                            Corporation (trucking); American Science & Engineering (x-ray                            detection equipment). Former Directorships: ISI Family of Funds                            (registered investment companies, 4 funds overseen); National Railroad                            Passenger Corporation (Amtrak) Waste Management, Inc. (solid waste                            disposal); formerly, Chairman and Member, National Transportation                            Safety Board | 85 |

 

***Interested Board Member***

 

| **Name, Year of                            Birth, Position with the Trust and Length of Time Served** | **Business                            Experience and****Directorships During the Past 5 Years**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | **Number of                            Funds in DWS Fund Complex Overseen** |
|-------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------|
| Axel Schwarzer(2)(1958)Board Member since2006                                                         | Managing Director(4), Deutsche Asset                            Management; Head of Deutsche Asset Management Americas; CEO of DWS                            Scudder; formerly board member of DWS Investments, Germany (1999-2005);                            formerly, Head of Sales and Product Management for the Retail and                            Private Banking Division of Deutsche Bank in Germany (1997-1999);                            formerly, various strategic and operational positions for Deutsche Bank                            Germany Retail and Private Banking Division in the field of investment                            funds, tax driven instruments and asset management for corporates                            (1989-1996) | 86                                                                          |

 

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

 

| **Name, Year of                            Birth, Position with the Trust and Length of Time Served** | **Business                            Experience and****Directorships During the Past 5 Years**                                                                                                                                                                                                                                                                                                                                                                  |
|-------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Michael G. Clark(5) (1965)President, 2006-present                                                     | Managing Director(4), Deutsche Asset                            Management (2006-present); President of DWS family of funds; formerly,                            Director of Fund Board Relations (2004-2006) and Director of Product                            Development (2000-2004), Merrill Lynch Investment Managers; Senior Vice                            President Operations, Merrill Lynch Asset Management                            (1999-2000) |
| John                            Millette(6) (1962)Vice President and Secretary, 2003-present          | Director(4), Deutsche Asset                            Management                                                                                                                                                                                                                                                                                                                                                                                                |

 

 

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

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

             

| (1) | A publicly held company with securities registered                            pursuant to Section 12 of the Securities Exchange Act of                            1934. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | The mailing address of Axel Schwarzer is c/o Deutsche                            Investment Management Americas Inc., 345 Park Avenue, New York, New                            York 10154. Mr. Schwarzer is an interested Board Member by virtue of                            his positions with Deutsche Asset Management. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | As a result of their respective positions held with the                            Advisor, these individuals are considered “interested                            persons” of the Advisor within the meaning of the 1940 Act.                            Interested persons receive no compensation from the Funds. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Executive title, not a board directorship. |
|-----|--------------------------------------------|

| (5) | Address: 345 Park Avenue, New York, New York                            10154. |
|-----|--------------------------------------------------------------------------------|

 

----

| (6) | Address: Two International Place, Boston, Massachusetts                            02110. |
|-----|-------------------------------------------------------------------------------------------|

Each Officer also holds similar positions for other investment companies            for which DIMA or an affiliate serves as the advisor.

**Officer’s Role with Principal Underwriter: DWS Scudder            Distributors, Inc.**

 

| Paul H. Schubert: | Vice President |
|-------------------|----------------|
| Caroline Pearson: | Secretary      |

 

***Information Concerning Committees and Meetings of Board            Members***

The            Board of the Trust met ten (10) times during the calendar year ended December 31,            2006 and each Board Member attended at least 80% of the meetings of the Board and            meetings of the committees of the Board on which such Board Member served.

**Board Committees.**Ms. Driscoll has            served as Chair of the Board of the Funds since May.

The            Board has established the following standing committees: Audit Committee,            Nominating/Corporate Governance Committee, Valuation Committee, Equity Oversight            Committee, Fixed Income Oversight Committee, Marketing/Distribution/Shareholder Service            Committee, Legal/Regulatory/Compliance Committee and Expense/Operations            Committee.

**The Audit Committee**assists the Board in            fulfilling its responsibility for oversight of the quality and integrity of the            accounting, auditing and financial reporting practices of the applicable Fund. It also            makes recommendations regarding the selection of an independent registered public            accounting firm for a Fund, reviews the independence of such firm, reviews the scope of            audit and internal controls, considers and reports to the Board on matters relating to            a Fund’s accounting and financial reporting practices, and performs such other            tasks as the full Board deems necessary or appropriate. The Audit Committee receives            annual representations from the independent registered public accounting firm as to its            independence. The members of the Audit Committee are Keith R. Fox (Chair and Audit            Committee Financial Expert), Kenneth C. Froewiss, Richard J. Herring, Graham E. Jones,            Philip Saunders, Jr., William N. Searcy, Jr. and Jean Gleason Stromberg. The Audit            Committee held eight (8) meetings during the calendar year 2006.

**The Nominating/Corporate Governance Committee**(i) recommends to the Board candidates to serve as Board Members            and (ii) oversees and, as appropriate, makes recommendations to the Board            regarding other fund governance-related matters, including but not limited to Board            compensation practices, retirement policies, self-evaluations of effectiveness, review            of possible conflicts of interest and independence issues involving Board Members,            allocations of assignments and functions of committees of the Board, and share            ownership policies. The members of the Nominating/Corporate Governance Committee are            Henry P. Becton, Jr. (Chair), Graham E. Jones, Rebecca W. Rimel and Jean Gleason            Stromberg. The Nominating/Corporate Governance Committee (previously known as the            Committee on Independent Directors) held three (3) meetings during the calendar year            2006.

**The Valuation Committee**oversees Fund            valuation matters, reviews valuation procedures adopted by the Board, determines the            fair value of the Fund’s securities as needed in accordance with the valuation            procedures when actual market values are unavailable and performs such other tasks as            the full Board deems necessary or appropriate. The members of the Valuation Committee            are Keith R. Fox, Kenneth C. Froewiss, Martin J. Gruber, Richard J. Herring and Philip            Saunders, Jr. (Chair). The Valuation Committee held six (6) meetings during the            calendar year 2006.

The            Board has established two**Investment Oversight            Committees**, one focusing on Funds primarily investing in            equity securities (the “Equity Oversight Committee”) and one focusing on            Funds primarily investing in fixed income securities (the “Fixed Income Oversight            Committee”). These Committees meet regularly with Fund portfolio managers and            other investment personnel to review the relevant Funds’ investment strategies            and investment performance. The members of the**Equity            Oversight Committee**are Henry P. Becton, Jr., Martin J.            Gruber (Chair), Richard J. Herring, Rebecca W. Rimel, Philip Saunders, Jr. and Carl W.            Vogt. The members of the**Fixed Income**

 

----

**Oversight Committee**are Dawn-Marie            Driscoll, Keith R. Fox, Kenneth C. Froewiss, Graham E. Jones, William N. Searcy, Jr.            (Chair) and Jean Gleason Stromberg. Each Investment Oversight Committee held six (6)            meetings during the calendar year 2006.

**The Marketing/Distribution/Shareholder Service Committee**oversees (i) the quality, costs and types of shareholder services            provided to the Funds and their shareholders, and (ii) the distribution-related            services provided to the Funds and their shareholders. The members of the            Marketing/Distribution/Shareholder Service Committee are Martin J. Gruber, Richard J.            Herring (Chair), Rebecca W. Rimel, Jean Gleason Stromberg and Carl W. Vogt. The            Marketing/Distribution/Shareholder Service Committee held six (6) meetings during the            calendar year 2006.

**The Legal/Regulatory/Compliance Committee**oversees (i) the significant legal affairs of the Funds, including            the handling of pending or threatened litigation or regulatory action involving the            Funds, (ii) general compliance matters relating to the Funds and (iii) proxy            voting. The members of the Legal/Regulatory/Compliance Committee are Henry P. Becton,            Jr., Dawn-Marie Driscoll, Rebecca W. Rimel, William N. Searcy, Jr., Jean Gleason            Stromberg and Carl W. Vogt (Chair). The Legal/Regulatory/Compliance Committee held            six (6) meetings during the calendar year 2006.

**The Expense/Operations Committee**(i) monitors the Fund’s total operating expense levels,            (ii) oversees the provision of administrative services to the Fund, including the            Fund's custody, fund accounting and insurance arrangements, and (iii) reviews the            Fund's investment advisers’ brokerage practices, including the implementation of            related policies. The members of the Expense/Operations Committee are Henry P. Becton,            Jr., Dawn-Marie Driscoll, Keith R. Fox, Kenneth C. Froewiss, Graham E. Jones (Chair),            Philip Saunders, Jr. and William N. Searcy, Jr. This committee held seven            (7) meetings during the calendar year 2006.

**Ad Hoc Committees.**In addition to the            standing committees described above, from time to time the Board also forms ad hoc            committees to consider specific issues. In 2006, various ad hoc committees of the Board            held an additional seven (7) meetings.

**Remuneration.**Each Independent Board Member            receives compensation from the Fund for his or her services, which includes an annual            retainer and an attendance fee for each meeting attended. No additional compensation is            paid to any Independent Board Member for travel time to meetings, attendance at            directors' educational seminars or conferences, service on industry or association            committees, participation as speakers at directors' conferences or service on special            fund industry director task forces or subcommittees. Independent Board Members do not            receive any employee benefits such as pension or retirement benefits or health            insurance from the Fund or any fund in the DWS fund complex.

Members of the Board who are officers, directors, employees or            stockholders of Deutsche Asset Management or its affiliates receive no direct            compensation from a Fund, although they are compensated as employees of Deutsche Asset            Management, or its affiliates, and as a result may be deemed to participate in fees            paid by the Funds. The following tables show compensation from the Fund and aggregate            compensation from all of the funds in the DWS fund complex received by each Board            Member during the calendar year 2006. Mr. Schwarzer became a member of the Board            on May 5, 2006, is an interested person of the Funds and received no compensation from            the Funds or any fund in the DWS fund complex during the relevant periods.

 

| **Name of Board Member**        | **Aggregate Compensation****DWS Core Fixed****Income                            Fund** | **Aggregate Compensation from DWS High                            Income****Plus Fund** | **Aggregate Compensation from DWS Short****Duration Fund** | **Total** **Compensation** **from Fund** **and** **DWS Fund****Complex(1)** |
|---------------------------------|----------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------|------------------------------------------------------------|-------------------------------------------------------------------------------------------------|
|                            |                                                                                   |                                                                                    |                                                       |                                                                                            |
| Henry P. Becton, Jr.(3)(5)      | $1,606                                                                                 | $472                                                                                    | $200                                                       | $189,000                                                                                        |
| Dawn-Marie Driscoll(2)(3)(4)(5) | $2,294                                                                                 | $704                                                                                    | $263                                                       | $251,000                                                                                        |
| Keith R. Fox(3)(4)(5)           | $1,759                                                                                 | $540                                                                                    | $202                                                       | $195,000                                                                                        |
| Kenneth C. Froewiss(3)(4)(5)    | $1,944                                                                                 | $596                                                                                    | $223                                                       | $234,988                                                                                        |
| Martin J. Gruber(3(5)           | $4,766                                                                                 | $1,482                                                                                  | $542                                                       | $188,000                                                                                        |
| Richard J. Herring(3)(4)(5)     | $4,696                                                                                 | $1,461                                                                                  | $535                                                       | $184,000                                                                                        |

 

 

----

 

| Graham E. Jones(3)(4)(5)        | $5,207 | $1,619       | $594 | $206,000 |
|---------------------------------|--------|--------------|------|----------|
| Rebecca W. Rimel(3)(5)          | $4,709 | $1,464       | $537 | $185,000 |
| Philip Saunders, Jr.(3)(4)(5)   | $5,245 | $1,631       | $599 | $207,000 |
| William N. Searcy, Jr.(3)(4)(5) | $5,207 | $1,619       | $594 | $206,000 |
| Jean Gleason Stromberg(3)(4)(5) | $1,890 |  

$580 | $217 | $202,000 |
| Carl W. Vogt(3)(5)              | $1,606 | $472         | $200 | $189,000 |

             

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

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

| (3) | For each Board Member, except Mr. Becton, Mr.                            Froewiss and Mr. Vogt, total compensation includes compensation for                            service on the boards of 34 trusts/corporations comprised of 87                            funds/portfolios. For Messrs. Becton and Vogt total compensation                            includes compensation for service on the boards of 32                            trusts/corporations comprised of 85 funds/portfolios. For Mr. Froewiss                            total compensation includes compensation for services on the boards of                            37 trusts/corporations comprised of 90 funds/portfolios. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Aggregate compensation includes amounts paid to the                            Board Members for special meetings of ad hoc committees of the board in                            connection with the possible consolidation of the various DWS Fund                            boards and funds, meetings for considering fund expense simplification                            initiatives, and consideration of issues specific to the Funds’                            direct shareholders (i.e., those shareholders who did not purchase                            shares through financial intermediaries). Such amounts totaled $16,000                            for Ms. Driscoll, $1,000 for Mr. Fox, $17,000 for Mr.                            Froewiss, $1,000 for Dr. Herring, $16,000 for Mr. Jones,                            $17,000 for Dr. Saunders, $16,000 for Mr. Searcy and $16,000                            for Ms. Stromberg. These meeting fees were borne by the applicable                            DWS Funds. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

The            following table shows the dollar range of equity securities beneficially owned by each            Board Member in the Funds and DWS Fund Complex as of December 31, 2006.

 

| **Board                            Member**              | **Dollar Range of Beneficial Ownership****in DWS Core Fixed****Income Fund** | **Dollar Range of Beneficial Ownership in DWS                            High****Income Plus                            Fund** | **Dollar Range of Beneficial Ownership in DWS                            Short****Duration Fund** |
|----------------------------------------------------------|------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------|
|                                                     |                                                                         |                                                                                                                           |                                                                                              |
| **Independent Board                            Member:** |                                                                         |                                                                                                                           |                                                                                              |
|                                                     |                                                                         |                                                                                                                           |                                                                                              |
| Henry P. Becton, Jr.                                     | None                                                                         | $1-$10,000                                                                                                                     | None                                                                                              |
| Dawn-Marie Driscoll                                      | None                                                                         | $1-$10,000                                                                                                                     | None                                                                                              |
| Keith R. Fox                                             | None                                                                         | None                                                                                                                           | None                                                                                              |
| Kenneth C. Froewiss                                      | $10,001-$50,000                                                              | $10,001-$50,000                                                                                                                | None                                                                                              |
| Martin J. Gruber                                         | None                                                                         | None                                                                                                                           | None                                                                                              |
| Richard J. Herring                                       | None                                                                         | None                                                                                                                           | None                                                                                              |
| Graham E. Jones                                          | None                                                                         | None                                                                                                                           | $10,001-$50,000                                                                                   |
| Rebecca W. Rimel                                         | None                                                                         | None                                                                                                                           | None                                                                                              |
| Philip Saunders, Jr.                                     | None                                                                         | None                                                                                                                           | None                                                                                              |
| William N. Searcy, Jr.                                   | $10,001-$50,000                                                              | $10,001-$50,000                                                                                                                | Over $100,000                                                                                     |
| Jean Gleason Stromberg                                   | None                                                                         | $10,001-$50,000                                                                                                                | None                                                                                              |

 

 

----

 

| Carl W. Vogt                 | $10,001-$50,000 | None   | None   |
|------------------------------|-----------------|--------|--------|
|                         |            |   |   |
| **Interested Board Member:** |            |   |   |
|                         |            |   |   |
| Axel Schwarzer               | None            | None   | None   |

             

|  

**Independent Board Member:** | **Aggregate Dollar Range of****Ownership in all Funds Overseen by****Board Member****in the DWS Fund                            Complex(2)** |
|---------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------|
|                                  |                                                                                                                                         |
| Henry P. Becton, Jr.                  | Over $100,000                                                                                                                                |
| Dawn-Marie Driscoll                   | Over $100,000                                                                                                                                |
| Keith R. Fox                          | Over $100,000                                                                                                                                |
| Kenneth C. Froewiss                   | Over $100,000                                                                                                                                |
| Martin J. Gruber                      | Over $100,000                                                                                                                                |
| Richard J. Herring                    | Over $100,000                                                                                                                                |
| Graham E. Jones                       | Over $100,000                                                                                                                                |
| Rebecca W. Rimel                      | Over $100,000                                                                                                                                |
| Philip Saunders, Jr.                  | Over $100,000                                                                                                                                |
| William N. Searcy, Jr.                | Over $100,000                                                                                                                                |
| Jean Gleason Stromberg                | Over $100,000                                                                                                                                |
| Carl W. Vogt                          | Over $100,000                                                                                                                                |
|                                  |                                                                                                                                         |
| **Interested Board Member:**          |                                                                                                                                         |
|                                  |                                                                                                                                         |
| Axel Schwarzer                        | Over $100,000                                                                                                                                |

             

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

| (2) | Securities beneficially owned as defined under the 1934                            Act include direct and/or indirect ownership of securities where the                            Board Member’s economic interest is tied to the securities,                            employment ownership and securities when the Board Member can exert                            voting power and when the Board Member has authority to sell the                            securities. The dollar ranges are: None, $1-$10,000, $10,001-$50,000,                            $50,001-$100,000, over $100,000. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Ownership in Securities of the Advisor and Related            Companies***

As            reported to the Fund, the information in the following table reflects ownership by the            Independent Board Members and their immediate family members of certain securities as            of December 31, 2006. An immediate family member can be a spouse, children residing in            the same household including step and adoptive children and any dependents. The            securities represent ownership in an investment advisor or principal underwriter of the            Fund and any persons (other than a registered investment company) directly or            indirectly controlling, controlled by, or under common control with an investment            advisor or principal underwriter of the Fund (including Deutsche Bank AG).

             

 

----

 

| **Independent****Board Member**                   | **Owner and Relationship to****Board Member** | **Company** | **Title of****Class** | **Value of Securities on an Aggregate****Basis** | **Percent of Class on an Aggregate****Basis** |
|---------------------------------------------------|-----------------------------------------------|-------------|-----------------------|--------------------------------------------------|-----------------------------------------------|
|                                              |                                          |        |                  |                                             |                                          |
| Henry P. Becton, Jr.                              |                                          | None        |                  |                                             |                                          |
| Dawn-Marie Driscoll                               |                                          | None        |                  |                                             |                                          |
| Keith R. Fox                                      |                                          | None        |                  |                                             |                                          |
| Kenneth C. Froewiss                               |                                          | None        |                  |                                             |                                          |
| Martin J. Gruber                                  |                                          | None        |                  |                                             |                                          |
| Richard J. Herring                                |                                          | None        |                  |                                             |                                          |
| Graham E. Jones                                   |                                          | None        |                  |                                             |                                          |
| Rebecca W. Rimel                                  |                                          | None        |                  |                                             |                                          |
| Philip Saunders, Jr.                              |                                          | None        |                  |                                             |                                          |
| William N. Searcy, Jr.                            |                                          | None        |                  |                                             |                                          |
| Jean                            Gleason Stromberg |                                          | None        |                  |                                             |                                          |
| Carl                            W. Vogt           |                                          | None        |                  |                                             |                                          |

 

***Securities Beneficially Owned***

As            of February 6, 2007, the Board Members and officers of the Trust owned, as a group,            less than 1% of the outstanding shares of the Fund.

To            the best of the Fund’s knowledge, as of February 6, 2007, no person owned of            record or beneficially 5% or more of any class of the Fund’s outstanding shares,            except as noted below.

**DWS Core Fixed Income Fund**

 

| **Name and Address of Investor                            Ownership**                                       | **Shares**   | **% of Total Shares**         |
|-------------------------------------------------------------------------------------------------------------|--------------|-------------------------------|
|                                                                                                        |         |                          |
| MORGAN STANLEY DW

ATTN MUTUAL FUND OPERATIONS

JERSEY CITY NJ 07311-3907                                   | 8,077,554.67 | 13.42% of Class A             |
|                                                                                                        |         |                          |
| STATE STREET BANK & TRUST CO

CUST FBO SCUDDER PATHWAY SERIES

BALANCED PORTFOLIO

QUINCY MA 02171-2105 | 7,620,445.88 | 14.05% of Institutional Class |
|                                                                                                        |         |                          |
| DWS TRUST COMPANY TTEE

FBO DB MATCHED SAVINGS PLAN

ATTN ASSET RECON DEPT # 063115

SALEM NH 03079-1143    | 5,323,942.54 | 9.82% of Institutional Class  |
|                                                                                                        |         |                          |
| STATE STREET BANK & TRUST CO

CUST FBO SCUDDER PATHWAY SERIES

GROWTH PORTFOLIO

QUINCY MA 02171-2105   | 4,968,803.01 | 9.16% of Institutional Class  |
|                                                                                                        |         |                          |
| CHARLES SCHWAB & CO INC

SPECIAL CUSTODY ACCOUNT

MUTUAL FUNDS DEPARTMENT

SAN FRANCISCO CA 94104-4151  | 4,921,139.53 | 9.07% of Institutional Class  |

 

 

----

 

|                                                                                                               |         |                         |
|--------------------------------------------------------------------------------------------------------------------|--------------|------------------------------|
| STATE STREET BANK & TRUST CO

CUST FBO SCUDDER PATHWAY SERIES

CONSERVATIVE PORTFOLIO

QUINCY MA 02171-2105    | 3,540,538.21 | 6.53% of Institutional Class |
|                                                                                                               |         |                         |
| NATIONAL FINANCIAL SERVICES CORP

FOR THE EXCLUSIVE BENEFIT OF OUR

NEW YORK NY 10281-1003                         | 3,132,015.43 | 5.77% of Institutional Class |
|                                                                                                               |         |                         |
| CITIGROUP GLOBAL MARKETS INC

XXXXXXXXXX

ATTN PETER BOOTH 7TH FL

NEW YORK NY 10001-2402                          | 307,112.16   | 9.60% of Class B             |
|                                                                                                               |         |                         |
| MORGAN STANLEY DW

ATTN MUTUAL FUND OPERATIONS

JERSEY CITY NJ 07311-3907                                          | 238,708.77   | 7.46% of Class B             |
|                                                                                                               |         |                         |
| DWS TRUST COMPANY

FBO HAMPSHIRE OB-GYN ASSOC INC

ATTN ASSET RECON DEPT# 063674

SALEM NH 03079-1143              | 56,027.47    | 11.70% of Class R            |
|                                                                                                               |         |                         |
| NFS LLC FEBO

FIRST INTERSTATE BANK

FIRST INTERSTATE BANK TTEE

U/A 07/01/83

BILLINGS MT 59101-1200              | 54,357.11    | 11.35% of Class R            |
| COMMUNITY BANK N A CUST

FBO BANCOOP SAVINGS & INVESTMENT

PLAN

UTICA NY 13502-6374                           | 45,615.17    | 9.53% of Class R             |
|                                                                                                               |         |                         |
| COMMUNITY BANK NA CUST

FBO CARLOS M BENITEZ 1165(E) PLAN

UTICA NY 13502-6374                                     | 33,955.39    | 7.09% of Class R             |
|                                                                                                               |         |                         |
| COMMUNITY BANK NA CUST

FBO CARIBBEAN PROJECT MGMT PC

401K SAVINGS & INVESTMENT PLAN

UTICA NY 13502-6374     | 29,639.23    | 6.19% of Class R             |
|                                                                                                               |         |                         |
| COMMUNITY BANK NA CUST

FBO INTERNATIONAL SHIPPING AGENCY

SALARY DEFERRAL & SAVINGS PLAN

UTICA NY 13502-6374 | 29,566.08    | 6.17% of Class R             |
|                                                                                                               |         |                         |
| CHARLES SCHWAB & CO INC

REINVEST ACCOUNT

SAN FRANCISCO CA 94104-4151                                         | 1,987,896.71 | 18.65% of Class S            |

 

 

----

 

|                                                                 |       |             |
|----------------------------------------------------------------------|------------|------------------|
| NATIONAL INVESTOR SERVICES FBO

XXX-XXXXX-XX

NEW YORK NY 10041-3299 | 638,330.66 | 5.99% of Class S |

 

**DWS High Income Plus Fund**

 

| **Name and Address of Investor                            Ownership**                                           | **Shares**    | **% of Total Shares**         |
|-----------------------------------------------------------------------------------------------------------------|---------------|-------------------------------|
|                                                                                                            |          |                          |
| FELICIAN SERVICES INC

CHICAGO IL 60659-3116                                                                    | 1,518,358.75  | 22.75% of Institutional Class |
|                                                                                                            |          |                          |
| DEUTSCHE BANK SECURITIES INC.

FBO 906-20821-11

ATTN: MUTUAL FUND DEPT 26TH FL

NEW YORK NY 10020-1104         | 1,505,359.45  | 22.56% of Institutional Class |
|                                                                                                            |          |                          |
| STATE STREET BANK & TRUST CO

CUST FBO SCUDDER PATHWAY SERIES

BALANCED PORTFOLIO

QUINCY MA 02171-2105     | 706,227.12    | 10.58% of Institutional Class |
|                                                                                                            |          |                          |
| NATIONAL FINANCIAL SERVICES CORP

FOR THE EXCLUSIVE BENEFIT OF OUR

NEW YORK NY 10281-1003                      | 518,330.26    | 7.77% of Institutional Class  |
|                                                                                                            |          |                          |
| STATE STREET BANK & TRUST CO

CUST FBO SCUDDER PATHWAY SERIES

CONSERVATIVE PORTFOLIO

QUINCY MA 02171-2105 | 504,551.17    | 7.56% of Institutional Class  |
|                                                                                                            |          |                          |
| MLPF&S FOR THE SOLE BENEFIT OF

ITS CUSTOMERS

ATTN FUND ADMINISTRATION #97S00

JACKSONVILLE FL 32246-6484  | 155,038.28    | 10.28% of Class C             |
|                                                                                                            |          |                          |
| JENNIFER FERRARI TTEE

STATE STREET BANK AND TRUST

FBO ADP 401K DAILY VALUATION PROD A

ROSELAND NJ 07068-1739 | 10,564,373.60 | 25.14% of Class S             |
|                                                                                                            |          |                          |
| CHARLES SCHWAB & CO INC

REINVEST ACCOUNT

ATTN MUTUAL FUND DEPT

SAN FRANCISCO CA 94104-4151               | 2,259,119.78  | 5.38% of Class S              |

 

**DWS Short Duration Fund**

 

| **Name and Address of Investor                            Ownership**     | **Shares**   | **% of Total Shares** |
|---------------------------------------------------------------------------|--------------|-----------------------|
|                                                                      |         |                  |
| MORGAN STANLEY DW

ATTN MUTUAL FUND OPERATIONS

JERSEY CITY NJ 07311-3907 | 3,221,780.00 | 50.35% of Class A     |

 

 

----

 

|                                                                                                           |       |                          |
|----------------------------------------------------------------------------------------------------------------|------------|-------------------------------|
| MLPF&S FOR THE SOLE BENEFIT OF

ITS CUSTOMERS

ATTN FUND ADM (97HB3)

JACKSONVILLE FL 32246-6484           | 450,989.63 | 7.05% of Class A              |
|                                                                                                           |       |                          |
| NATIONAL FINANCIAL SERVICES CORP

FOR THE EXCLUSIVE BENEFIT OF OUR

NEW YORK NY 10281-1003                     | 475,113.58 | 25.31% of Institutional Class |
|                                                                                                           |       |                          |
| NATIONAL INVESTOR SERVICES FBO

097-50000-19

NEW YORK NY 10041-3299                                           | 178,028.38 | 9.49% of Institutional Class  |
|                                                                                                           |       |                          |
| MLPF&S FOR THE SOLE BENEFIT OF

ITS CUSTOMERS

ATTN FUND ADM (97HB3)

JACKSONVILLE FL 32246-6484           | 131,854.26 | 7.03% of Institutional Class  |
|                                                                                                           |       |                          |
| KNOTFLOAT & CO

C/O STATE STREET BANK

BOSTON MA 02206-5496                                                | 99,638.78  | 5.31% of Institutional Class  |
|                                                                                                           |       |                          |
| RICHARD S REYNOLDS FOUNDATION

RICHMOND VA 23238-4474                                                          | 99,480.08  | 5.30% of Institutional Class  |
|                                                                                                           |       |                          |
| MLPF&S FOR THE SOLE BENEFIT OF

ITS CUSTOMERS

ATTN FUND ADM (97HB6)

JACKSONVILLE FL 32246-6484           | 51,552.83  | 6.84% of Class B              |
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| MLPF&S FOR THE SOLE BENEFIT OF

ITS CUSTOMERS

ATTN FUND ADMINISTRATION

SEC #97JS4

JACKSONVILLE FL 32246 | 606,773.56 | 25.59% of Class C             |
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| JOANNE W BLANKSTEIN

CHICAGO IL 60614-4302                                                                     | 19,371.11  | 32.64% of Class S             |
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| DAVID D FLEMING

MARY H FLEMING JT TEN

MONMOUTH IL 61462-1454                                                 | 5,679.92   | 9.57% of Class S              |
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| DWS TRUST COMPANY CUST

FOR THE IRA OF

TIMOTHY LLOYD RICE

TOWER MN 55790-8310                                | 4,325.02   | 7.29% of Class S              |
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| DWS TRUST COMPANY CUST

FOR THE CONVERSION ROTH IRA OF

JOHN H LAYNO

FALLS CHURCH VA 22041-3540               | 3,667.57   | 6.18% of Class S              |

 

 

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| DWS TRUST COMPANY

CUST FOR THE IRA OF

ELAINE G HOLMES

PALM BCH GDNS FL 33410-4636 | 3,443.23 | 5.80% of Class S |
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| DWS TRUST COMPANY

CUST FOR THE IRA OF

MARY LOU P MENEZ

HOUSTON TX 77002-1734      | 3,287.82 | 5.54% of Class S |

 

**Certain Indemnification Arrangements**

In            addition to customary indemnification rights provided by the governing instruments of            the Trust, Trustees may be eligible to seek indemnification from the investment adviser            in connection with certain matters as follows. In connection with litigation or            regulatory action related to possible improper market timing or other improper trading            activity or possible improper marketing and sales activity in the Funds, each            Fund’s investment adviser has agreed, subject to applicable law and regulation,            to indemnify and hold harmless the Funds against any and all loss, damage, liability            and expense, arising from market timing or marketing and sales matters alleged in any            enforcement actions brought by governmental authorities involving or potentially            affecting the Funds or the investment adviser (“Enforcement Actions”) or            that are the basis for private actions brought by shareholders of the Funds against the            Funds, their Board Members and officers, the investment adviser and/or certain other            parties (“Private Litigation”), or any proceedings or actions that may be            threatened or commenced in the future by any person (including governmental            authorities), arising from or similar to the matters alleged in the Enforcement Actions            or Private Litigation. In recognition of its undertaking to indemnify the Funds and in            light of the rebuttable presumption generally afforded to Independent Board Members of            investment companies that they have not engaged in disabling conduct, each Fund’s            investment adviser has also agreed, subject to applicable law and regulation, to            indemnify the Funds’ Independent Board Members against certain liabilities the            Independent Board Members may incur from the matters alleged in any Enforcement Actions            or Private Litigation or arising from or similar to the matters alleged in the            Enforcement Actions or Private Litigation, and advance expenses that may be incurred by            the Independent Board Members in connection with any Enforcement Actions or Private            Litigation. Each Fund’s investment adviser is not, however, required to provide            indemnification and advancement of expenses: (1) in connection with any proceeding or            action with respect to which the Fund’s Board determines that the Independent            Board Member ultimately would not be entitled to indemnification or (2) for any            liability of the Independent Board Member to the Fund or its shareholders to which the            Independent Board Member would otherwise be subject by reason of willful misfeasance,            bad faith, gross negligence or reckless disregard of the Independent Board            Members’ duties as a director or trustee of the Fund as determined in a final            adjudication in such action or proceeding. The estimated amount of any expenses that            may be advanced to the Independent Board Members or indemnity that may be payable under            the indemnity agreements is currently unknown. These agreements by the investment            adviser will survive the termination of the investment management agreements between            the applicable Deutsche Asset Management entity and the Fund.

**TRUST ORGANIZATION**

 

**General.**The Funds are series of DWS            Advisor Funds (the “Trust”). The Trust was organized on July 21, 1986 under            the laws of The Commonwealth of Massachusetts. The Trust was organized under the name            BT Tax-Free Investment Trust and assumed its former name of BT Investment Funds on May            16, 1988. The Trust’s name was changed to Scudder Advisor Funds effective May 16,            2003 and to DWS Advisor Funds effective February 6, 2006. On or about July 10, 2006,            each Predecessor Fund will transfer all its assets and liabilities from DWS Investments            Trust, a Delaware statutory trust, into a new series of the Trust, under the same fund            name.

The            Trust is a Massachusetts business trust organized under the laws of Massachusetts and            is governed by an Amended and Restated Declaration of Trust dated June 27, 2006, as may            be further amended from time to time (the

 

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“Declaration of Trust”). All shares issued and outstanding            are fully paid and non-assessable, transferable, have no pre-emptive or conversion            rights (except as may be determined by the Board of Trustees) and are redeemable as            described in the SAI and a Fund’s prospectus. Each share has equal rights with            each other share of the same class of the Fund as to voting, dividends, exchanges,            conversion features and liquidation. Shareholders are entitled to one vote for each            full share held and fractional votes for fractional shares held.

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

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

The            Declaration of Trust provides that the Board of Trustees may, in its discretion,            establish minimum investment amounts for shareholder accounts, impose fees on accounts            that do not exceed a minimum investment amount and involuntarily redeem shares in any            such account in payment of such fees. The Board of Trustees, in its sole discretion,            also may cause the Trust to redeem all of the shares of the Trust or one or more series            or classes held by any shareholder for any reason, to the extent permissible by the            1940 Act, including (a) if the shareholder owns shares having an aggregate net asset            value of less than a specified minimum amount, (b) if a particular shareholder’s            ownership of shares would disqualify a series from being a regulated investment            company, (c) upon a shareholder’s failure to provide sufficient identification to            permit the Trust to verify the shareholder’s identity, (d) upon a            shareholder’s failure to pay for shares or meet or maintain the qualifications            for ownership of a particular class or series of shares, (e) if the Board of Trustees            determines (or pursuant to policies established by the Board it is determined) that            share ownership by a particular shareholder is not in the best interests of remaining            shareholders, (f) when a Fund is requested or compelled to do so by governmental            authority or applicable law and (g) upon a shareholder’s failure to comply with a            request for information with respect to the direct or indirect ownership of shares of            the Trust. The Declaration of Trust also authorizes the Board of Trustees to terminate            a Fund or any class without shareholder approval, and the Trust may suspend the right            of shareholders to require the Trust to redeem shares to the extent permissible under            the 1940 Act.

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

**PROXY VOTING GUIDELINES**

Each Fund has delegated proxy voting responsibilities to its investment            advisor, subject to each Board’s general oversight. Each Fund has delegated proxy            voting to the Advisor with the direction that proxies should be voted

 

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consistent with each Fund’s best economic interests. The Advisor            has adopted its own Proxy Voting Policies and Procedures (“Policies”), and            Proxy Voting Guidelines (“Guidelines”) for this purpose. The Policies            address, among other things, conflicts of interest that may arise between the interests            of each Fund, and the interests of the Advisor and its affiliates, including each            Fund’s principal underwriter. The Guidelines set forth the Advisor’s            general position on various proposals, such as:

| **•** | Shareholder Rights—                            The Advisor generally votes against proposals that restrict shareholder                            rights. |
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| **•** | Corporate Governance— The Advisor generally votes for confidential and                            cumulative voting and against supermajority voting requirements for                            charter and bylaw amendments. The Advisor generally votes for proposals                            to restrict a chief executive officer from serving on more than three                            outside boards of directors. The Advisor generally votes against                            proposals that require a company to appoint a Chairman who is an                            independent director. |
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| **•** | Anti-Takeover Matters— The Advisor generally votes for proposals that                            require shareholder ratification of poison pills or that request boards                            to redeem poison pills, and votes against the adoption of poison pills                            if they are submitted for shareholder ratification. The Advisor                            generally votes for fair price proposals. |
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| **•** | Compensation Matters— The Advisor generally votes for executive cash                            compensation proposals, unless they are unreasonably excessive. The                            Advisor generally votes against stock option plans that do not meet the                            Advisor’s criteria. |
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| **•** | Routine Matters— The                            Advisor generally votes for the ratification of auditors, procedural                            matters related to the annual meeting and changes in company name, and                            against bundled proposals and adjournment. |
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The            general provisions described above do not apply to investment companies. The Advisor            generally votes proxies solicited by investment companies in accordance with the            recommendations of an independent third party, except for proxies solicited by or with            respect to investment companies for which the Advisor or an affiliate serves as            investment advisor or principal underwriter (“affiliated investment            companies”). The Advisor votes affiliated investment company proxies in the same            proportion as the vote of the investment company’s other shareholders (sometimes            called “mirror” or “echo” voting). Master fund proxies            solicited from feeder funds are voted in accordance with applicable requirements of the            1940 Act.

Although the Guidelines set forth the Advisor’s general voting            positions on various proposals, the Advisor may, consistent with each Fund’s best            interests, determine under some circumstances to vote contrary to those            positions*.*

The            Guidelines on a particular issue may or may not reflect the view of individual members            of each Board or of a majority of each Board. In addition, the Guidelines may reflect a            voting position that differs from the actual practices of the public companies within            the Deutsche Bank organization or of the investment companies for which the Advisor or            an affiliate serves as investment advisor or sponsor.

The            Advisor may consider the views of a portfolio company’s management in deciding            how to vote a proxy or in establishing general voting positions for the Guidelines, but            management’s views are not determinative.

As            mentioned above, the Policies describe the way in which the Advisor resolves conflicts            of interest. To resolve conflicts, the advisor, under normal circumstances, votes            proxies in accordance with its Guidelines. If the Advisor departs from the Guidelines            with respect to a particular proxy or if the Guidelines do not specifically address a            certain proxy proposal, a proxy voting committee established by the advisor will vote            the proxy. Before voting any such proxy, however, the Advisor’s conflicts review            committee will conduct an investigation to determine whether any potential conflicts of            interest exist in connection with the particular proxy proposal. If the conflicts            review committee determines that the Advisor has a material conflict of interest, or            certain individuals on the proxy voting committee should be recused from participating            in a particular proxy vote, it will inform the proxy voting committee. If notified that            the Advisor has a material conflict, or fewer than three voting members are eligible            to

 

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participate in the proxy vote, typically the Advisor will engage an            independent third party to vote the proxy or follow the proxy voting recommendations of            an independent third party.

Under certain circumstances, the Advisor may not be able to vote proxies            or the Advisor may find that the expected economic costs from voting outweigh the            benefits associated with voting. For example, the Advisor may not vote proxies on            certain foreign securities due to local restrictions or customs. The Advisor generally            does not vote proxies on securities subject to share blocking restrictions.

You            may obtain information about how a fund voted proxies related to its portfolio            securities during the 12-month period ended June 30 by visiting the Securities and            Exchange Commission’s Web site at www.sec.gov or by visiting our Web site at:            www.dws-scudder.com (type “proxy voting” in the search field).

Shareholders of a Fund receive an annual report containing audited            financial statements and an unaudited semi-annual report. All transactions in shares of            a Fund and dividends and distributions paid by the Fund are reflected in confirmations            issued by the Transfer Agent at the time of the transaction and/or in monthly            statements issued by the Transfer Agent. A year-to-date statement will be provided by            the Transfer Agent.

 

***Registration Statement***

The            Trust has filed with the Commission, 100 F Street, N.E., Washington, D.C. 20549-2001, a            Registration Statement under the 1933 Act with respect to the securities of each Fund            and certain other series of the Trust. If further information is desired with respect            to the Trust, a Fund or such other series, reference is made to the Registration            Statement and the exhibits filed as a part thereof.

**FINANCIAL STATEMENTS**

The            audited financial statements for the portfolio of investments for each Fund, together            with the Report of Independent Registered Public Accounting Firm, the Financial            Highlights and notes to financial statements in the Annual Report to Shareholders of            the Funds dated October 31, 2006 are incorporated herein by reference and are deemed to            be a part of this Statement of Additional Information.

 

**ADDITIONAL INFORMATION**

The            CUSIP number for Class S of DWS Core Fixed Income Fund : 23339E541

DWS            Core Fixed Income Fund has a fiscal year ending October 31.

The            CUSIP number for Class S of DWS Short Duration Fund is: 23339E780

DWS            Short Duration Fund has a fiscal year ending October 31.

The            CUSIP number for Class S of DWS High Income Plus Fund is: 23339E665

DWS            High Income Plus Fund has a fiscal year ending October 31.

 

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

 

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Each Fund’s prospectuses and this Statement of Additional            Information omit certain information contained in the Registration Statement and its            amendments which each Fund has filed with the SEC under the Securities Act of 1933 and            reference is hereby made to the Registration Statement for further information with            respect to a Fund and the securities offered hereby. The Registration Statement and its            amendments are available for inspection by the public at the offices of the SEC in            Washington, D.C.

 

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**APPENDIX**

***Bond and Commercial Paper Ratings***

Set            forth below are descriptions of ratings which represent opinions as to the quality of            the securities. It should be emphasized, however, that ratings are relative and            subjective and are not absolute standards of quality.

***Moody’s Investors Service, Inc.’s Corporate Bond            Ratings***

**Aaa:**Bonds which are rated Aaa are judged            to be of the best quality. They carry the smallest degree of investment risk and are            generally referred to as “gilt-edged.” Interest payments are protected by a            large or by an exceptionally stable margin and principal is secure. While the various            protective elements are likely to change, such changes as can be visualized are most            unlikely to impair the fundamentally strong position of such issues.

**Aa:**Bonds which are rated Aa are judged to            be of high quality by all standards. Together with the Aaa group they comprise what are            generally known as high-grade bonds. They are rated lower than the best bonds because            margins of protection may not be as large as in Aaa securities or fluctuations of            protective elements may be of greater amplitude or there may be other elements present            which make the long-term risk appear somewhat larger than in Aaa securities.

**A:**Bonds which are rated A possess many            favorable investment attributes and are to be considered as upper medium grade            obligations. Factors giving security to principal and interest are considered adequate,            but elements may be present which suggest a susceptibility to impairment sometime in            the future.

**Baa:**Bonds which are rated Baa are            considered as medium grade obligations,            (i.e., they are neither highly            protected nor poorly secured). Interest payments and principal security appear adequate            for the present, but certain protective elements may be lacking or may be            characteristically unreliable over any great length of time. Such bonds lack            outstanding investment characteristics and in fact have speculative characteristics as            well.

**Ba:**Bonds which are rated Ba are judged to            have speculative elements; their future cannot be considered as well assured. Often the            protection of interest and principal payments may be very moderate and thereby not well            safeguarded during both good and bad times over the future. Uncertainty of position            characterizes bonds in this class.

**B:**Bonds which are rated B generally lack            characteristics of the desirable investment. Assurance of interest and principal            payments or of maintenance of other terms of the contract over any long period of time            may be small.

**Caa:**Bonds which are rated Caa are of poor            standing. Such issues may be in default or there may be present elements of danger with            respect to principal or interest.

**Ca:**Bonds which are rated Ca represent            obligations which are speculative in a high degree. Such issues are often in default or            have other marked shortcomings.

**C:**Bonds which are rated C are the lowest            rated class of bonds and issues so rated can be regarded as having extremely poor            prospects of ever attaining any real investment standing.

**Note:**Moody’s applies numerical            modifiers, 1, 2 and 3 in each generic rating classification from Aa through B in its            corporate bond rating system. The modifier 1 indicates that the security ranks in the            higher end of its generic rating category; the modifier 2 indicates a mid range            ranking; and the modifier 3 indicates that the issue ranks in the lower end of its            generic rating category.

 

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***Moody’s Investors Service, Inc.’s Short-Term Debt            Ratings***

Moody’s short-term debt ratings are opinions of the ability of            issuers to repay punctually promissory obligations not having an original maturity in            excess of one year.

Issuers rated**Prime-1**or**P-1**(or supporting            institutions) have a superior ability for repayment of senior short-term debt            obligations. Prime-1 or P-1 repayment ability will often be evidenced by many of the            following characteristics:

Leading market positions in well-established industries.

High rates of return on funds employed.

Conservative capitalization structure with moderate reliance on debt and            ample asset protection.

Broad margins in earnings coverage of fixed financial charges and high            internal cash generation.

Well-established access to a range of financial markets and assured            sources of alternate liquidity.

Issuers rated**Prime-2**or**P-2**(or supporting            institutions) have a strong ability for repayment of senior short-term debt            obligations. This will normally be evidenced by many of the characteristics cited above            but to a lesser degree. Earnings trends and coverage ratios, while sound, may be more            subject to variation. Capitalization characteristics, while still appropriate, may be            more affected by external conditions. Ample alternate liquidity is            maintained.

***Standard & Poor’s Ratings Group’s Corporate Bond            Ratings***

**Investment Grade**

**AAA:**Debt rated AAA has the highest rating            assigned by S&P’s to a debt obligation. Capacity to pay interest and repay            principal is extremely strong.

**AA:**Debt rated AA has a very strong            capacity to pay interest and repay principal and differs from the higher rated issues            only in small degree.

**A:**Debt rated A has a strong capacity to            pay interest and repay principal although it is somewhat more susceptible to the            adverse effects of changes in circumstances and economic conditions than bonds in            higher rated categories.

**BBB:**Debt rated BBB is regarded as having            an adequate capacity to pay interest and repay principal. Whereas it normally exhibits            adequate protection parameters, adverse economic conditions or changing circumstances            are more likely to lead to a weakened capacity to pay interest and repay principal for            debt in this category than in higher rated categories.

**Speculative Grade**

Debt rated BB, B, CCC, CC, and C is regarded as having predominantly            speculative characteristics with respect to capacity to pay interest and repay            principal. BB indicates the least degree of speculation and C the highest. While such            debt will likely have some quality and protective characteristics, these are outweighed            by large uncertainties or major exposures to adverse conditions.

**BB:**Debt rated BB has less near-term            vulnerability to default than other speculative issues. However, it faces major ongoing            uncertainties or exposure to adverse business, financial, or economic conditions which            could lead to inadequate capacity to meet timely interest and principal payments. The            BB rating category is also used for debt subordinated to senior debt that is assigned            an actual or implied BBB- rating.

 

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**B:**Debt rated B has a greater vulnerability            to default but currently has the capacity to meet interest payments and principal            repayments. Adverse business, financial, or economic conditions will likely impair            capacity or willingness to pay interest and repay principal.

The            B rating category is also used for debt subordinated to senior debt that is assigned an            actual or implied BB or BB- rating.

**CCC:**Debt rated CCC has a currently            identifiable vulnerability to default, and is dependent upon favorable business,            financial, and economic conditions to meet timely payment of interest and repayment of            principal. In the event of adverse business, financial, or economic conditions, it is            not likely to have the capacity to pay interest and repay principal.

The            CCC rating category is also used for debt subordinated to senior debt that is assigned            an actual or implied B or B- rating.

**CC:**The rating CC is typically applied to            debt subordinated to senior debt which is assigned an actual or implied CCC debt            rating.

**C:**The rating C is typically applied to            debt subordinated to senior debt which is assigned an actual or implied CCC- debt            rating. The C rating may be used to cover a situation where a bankruptcy petition has            been filed, but debt service payments are continued.

**C1:**The Rating C1 is reserved for income            bonds on which no interest is being paid.

**D:**Debt rated D is in payment default. The            D rating category is used when interest payments or principal payments are not made on            the date due even if the applicable grace period has not expired, unless Standard &            Poor’s believes that such payments will be made during such grace period. The D            rating also will be used upon the filing of a bankruptcy petition if debt service            payments are jeopardized.

**Plus (+) or Minus (-):**The ratings from AA            to CCC may be modified by the addition of a plus or minus sign to show relative            standing within the major rating categories.

**NY:**Bonds may lack a S&P’s rating            because no public rating has been requested, because there is insufficient information            on which to base a rating, or because S&P’s does not rate a particular type            of obligation as a matter of policy.

***Standard & Poor’s Ratings Group’s Commercial Paper            Ratings***

**A:**S&P’s commercial paper rating            is a current assessment of the likelihood of timely payment of debt considered            short-term in the relevant market.

**A-1:**This highest category indicates that            the degree of safety regarding timely payment is strong. Those issues determined to            possess extremely strong safety characteristics are denoted with a plus (+) sign            designation.

**A-2:**Capacity for timely payment on issues            with this designation is satisfactory. However, the relative degree of safety is not as            high as for issues designated “A-1.”

**A-3:**Issues carrying this designation have            adequate capacity for timely payment. They are, however, more vulnerable to the adverse            effects of changes in circumstances than obligations carrying the higher            designations.

 

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***Fitch Investors Service, Inc. Bond Ratings***

**Investment Grade**

**AAA:**Bonds considered to be investment            grade and of the highest credit quality. The obligor has an exceptionally strong            ability to pay interest and repay principal, which is unlikely to be affected by            reasonably foreseeable events.

**AA:**Bonds considered to be investment grade            and of very high credit quality. The obligor’s ability to pay interest and repay            principal is very strong, although not quite as strong as bonds rated            “AAA.” Because bonds rated in the “AAA” and “AA”            categories are not significantly vulnerable to foreseeable future developments,            short-term debt of these issuers is generally rated “F-1+.”

**A:**Bonds considered to be investment grade            and of high credit quality. The obligor’s ability to pay interest and repay            principal is considered to be strong, but may be more vulnerable to adverse changes in            economic conditions and circumstances than bonds with higher ratings.

**BBB:**Bonds considered to be investment            grade and of satisfactory credit quality. The obligor’s ability to pay interest            and repay principal is considered to be adequate. Adverse changes in economic            conditions and circumstances, however, are more likely to have adverse impact on these            bonds, and therefore, impair timely payment. The likelihood that the ratings of these            bonds will fall below investment grade is higher than for bonds with higher            ratings.

**High Yield Grade**

**BB:**Bonds are considered speculative. The            obligor’s ability to pay interest and repay principal may be affected over time            by adverse economic changes. However, business and financial alternatives can be            identified which could assist the obligor in satisfying its debt service            requirements.

**B:**Bonds are considered highly speculative.            While bonds in this class are currently meeting debt service requirements, the            probability of continued timely payment of principal and interest reflects the            obligor’s limited margin of safety and the need for reasonable business and            economic activity throughout the life of the issue.

**CCC:**Bonds have certain identifiable            characteristics which, if not remedied, may lead to default. The ability to meet            obligations requires an advantageous business and economic environment.

**CC:**Bonds are minimally protected. Default            in payment of interest and/or principal seems probable over time.

**C:**Bonds are in imminent default in payment            of interest or principal.

**DDD, DD, and D:**Bonds are in default of            interest and/or principal payments. Such bonds are extremely speculative and should be            valued on the basis of their ultimate recovery value in liquidation or reorganization            of the obligor. “DDD” represents the highest potential for recovery on            these bonds, and “D” represents the lowest potential for            recovery.

**Plus (+) or Minus (-):**The ratings from AA            to C may be modified by the addition of a plus or minus sign to indicate the relative            position of a credit within the rating category.

**NR:**Indicates that Fitch does not rate the            specific issue.

**Conditional:**A conditional rating is            premised on the successful completion of a project or the occurrence of a specific            event.

 

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***Fitch Investors Service, Inc.***

**Short-Term Ratings**

Fitch’s short-term ratings apply to debt obligations that are            payable on demand or have original maturities of generally up to three years, including            commercial paper, certificates of deposit, medium-term notes, and municipal and            investment notes.

**F-1+:**Exceptionally Strong Credit Quality.            Issues assigned this rating are regarded as having the strongest degree of assurance            for timely payment.

**F-1:**Very Strong Credit Quality. Issues            assigned this rating reflect an assurance of timely payment only slightly less in            degree than issues rated “F-1+.”

**F-2:**Good Credit Quality. Issues assigned            this rating have a satisfactory degree of assurance for timely payment, but the margin            of safety is not as great as the “F-1+” and “F-1”            categories.

**F-3:**Fair Credit Quality. Issues assigned            this rating have characteristics suggesting that the degree of assurance for timely            payment is adequate, however, near-term adverse changes could cause these securities to            be rated below investment grade.

***Duff & Phelps Bond Ratings***

**Investment Grade**

**AAA**: Highest credit quality. The risk            factors are negligible, being only slightly more than for risk-free US Treasury            debt.

**AA+, AA, and AA-:**High credit quality.            Protection factors are strong. Risk is modest but may vary slightly from time to time            because of economic conditions.

**A+, A, and A-:**Protection factors are            average but adequate. However, risk factors are more variable and greater in periods of            economic stress.

**BBB+, BBB, and BBB-:**Below average            protection factors but still considered sufficient for prudent investment. Considerable            variability in risk during economic cycles.

**High Yield Grade**

**BB+, BB, and BB-:**Below investment grade            but deemed likely to meet obligations when due. Present or prospective financial            protection factors fluctuate according to industry conditions or company fortunes.            Overall quality may move up or down frequently within this category.

**B+, B, and B-:**Below investment grade and            possessing risk that obligations will not be met when due. Financial protection factors            will fluctuate widely according to economic cycles, industry conditions and/or company            fortunes. Potential exists for frequent changes in the rating within this category or            into a higher or lower rating grade.

**CCC:**Well below investment grade            securities. Considerable uncertainty exists as to timely payment of principal interest            or preferred dividends. Protection factors are narrow and risk can be substantial with            unfavorable economic/industry conditions, and/or with unfavorable company            developments.

Preferred stocks are rated on the same scale as bonds but the preferred            rating gives weight to its more junior position in the capital structure. Structured            financings are also rated on this scale.

 

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***Duff & Phelps Paper/Certificates of Deposit            Ratings***

**Category 1: Top Grade**

**Duff 1 plus:**Highest certainty of timely            payment. Short-term liquidity including internal operating factors and/or ready access            to alternative sources of funds, is outstanding, and safety is just below risk-free US            Treasury short-term obligations.

**Duff 1:**Very high certainty of timely            payment. Liquidity factors are excellent and supported by good Fundamental protection            factors. Risk factors are minor.

**Duff 1 minus:**High certainty of timely            payment. Liquidity factors are strong and supported by good Fundamental protection            factors. Risk factors are very small.

**Category 2: Good Grade**

**Duff 2:**Good certainty of timely payment.            Liquidity factors and company Fundamentals are sound. Although ongoing Funding needs            may enlarge total financing requirements, access to capital markets is good. Risk            factors are small.

**Category 3: Satisfactory Grade**

**Duff 3:**Satisfactory liquidity and other            protection factors qualify issue as to investment grade. Risk factors are larger and            subject to more variation. Nevertheless timely payment is expected.

No            ratings are issued for companies whose paper is not deemed to be of investment            grade.

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Bonds which are unrated expose the investor to risks with respect to            capacity to pay interest or repay principal which are similar to the risks of            lower-rated bonds. A Fund is dependent on the investment advisor’s or investment            sub-advisor’s judgment, analysis and experience in the evaluation of such            bonds.

Investors should note that the assignment of a rating to a bond by a            rating service may not reflect the effect of recent developments on the issuer’s            ability to make interest and principal payments.

**Note:**

1          The ratings            indicated herein are believed to be the most recent ratings available at the date of            this SAI for the securities listed. Ratings are generally given to securities at the            time of issuance. While the rating agencies may from time to time revise such ratings,            they undertake no obligation to do so, and the ratings indicated do not necessarily            represent ratings which would be given to these securities on the date of a            Fund’s fiscal year end.

 

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**STATEMENT OF ADDITIONAL INFORMATION**

**March** **1,** **2007, as            Revised December 31, 2007**

 

**INVESTMENT ADVISOR**

Deutsche Investment Management Americas Inc.

345            Park Avenue

New            York, NY 10154

**ADMINISTRATOR**

Deutsche Investment Management Americas Inc.

345            Park Avenue

New            York, NY 10154

**DISTRIBUTOR**

DWS            Scudder Distributors, Inc.

222            South Riverside Plaza

Chicago, IL 60606

 

**CUSTODIAN**

State            Street Bank and Trust Company

225            Franklin Street,

Boston,            Massachusetts 02110

 

**TRANSFER AGENT**

DWS            Scudder Investment Service Company

222            South Riverside Plaza

Chicago, IL 60606

 

**INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

PricewaterhouseCoopers LLP

125            High Street

Boston,            MA 02110

 

**LEGAL COUNSEL**

Willkie            Farr & Gallagher LLP

787            Seventh Avenue

New            York, NY 10019

 

**SERVICE INFORMATION**

Existing accounts, new accounts, prospectuses, Statements of Additional            Information,

applications, service forms, telephone exchanges, share price and            performance.

 

1-800-728-3337 (Class S).