Filed electronically with the Securities and Exchange Commission
                                on April 28, 2008

                                                                File No. 2-13627
                                                                 File No. 811-42

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM N-1A

             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933


                        Post-Effective Amendment No. 101
                                                     ---
                                       and

         REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

                                Amendment No. 102
                                              ---

                               DWS PORTFOLIO TRUST
                               -------------------
               (Exact Name of Registrant as Specified in Charter)

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

       Registrant's Telephone Number, including Area Code: (617) 295-1000
                                                           --------------
                   John Millette, Vice President and Secretary
                               DWS Portfolio Trust
                 Two International Place, Boston, MA 02110-4103
                 ----------------------------------------------
                     (Name and Address of Agent for Service)

It is proposed that this filing will become effective:

/_/   Immediately upon filing pursuant to paragraph (b)
/_/   60 days after filing pursuant to paragraph (a)(1)
/_/   75 days after filing pursuant to paragraph (a)(2)
/X/   On May 1, 2008 pursuant to paragraph (b)
/_/   On _____________ pursuant to paragraph (a)(1)
/_/   On _____________ pursuant to paragraph (a)(2) of Rule 485

      If appropriate, check the following box:
/_/   This post-effective amendment designates a new effective date for a
      previously filed post-effective amendment.


<PAGE>


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

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

o        DWS Core Plus Income Fund


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



                                       1
<PAGE>




                                  MAY 1, 2008








                                   PROSPECTUS
                              ------------------
                               CLASSES A, B AND C

                           DWS CORE PLUS INCOME FUND

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

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



<PAGE>

CONTENTS





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


</TABLE>
<TABLE>
<S>      <C>
HOW TO INVEST IN THE FUND
 27      Choosing a Share Class
 33      How to Buy Class A, B and C
         Shares
 34      How to Exchange or Sell
         Class A, B and C Shares
 37      Policies You Should Know
         About
 49      Understanding Distributions
         and Taxes
 53      Appendix
</TABLE>


<PAGE>

HOW THE FUND WORKS

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


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

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

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

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


<TABLE>
<S>                            <C>        <C>        <C>
                                Class A    Class B    Class C
  ticker symbol                 SZIAX      SZIBX      SZICX
    fund number                 463        663        763

    DWS CORE PLUS INCOME FUND


</TABLE>

            THE FUND'S MAIN INVESTMENT STRATEGY

            The fund seeks to maximize total return consistent with
            preservation of capital and prudent investment management, by
            investing for both current income and capital appreciation.

            The fund primarily invests in US dollar-denominated investment
            grade fixed income securities, including corporate bonds, US
            government and agency bonds and mortgage- and asset-backed
            securities. A significant portion of the fund's assets may also be
            allocated among foreign investment grade fixed income securities,
            high yield bonds of US and foreign issuers (including high yield
            bonds of issuers in countries with new or emerging securities
            markets), or, to maintain liquidity, in cash or money market
            instruments.

            The fund normally invests at least 65% of total assets in high
            grade US bonds (those considered to be in the top three grades of
            credit quality). The fund may invest up to 25% of its total assets
            in foreign investment grade bonds (those considered to be in the
            top four grades of credit quality).

            In addition, the fund may also invest up to 20% of total assets in
            securities of US and foreign issuers that are below investment
            grade (rated as low as the sixth credit grade, i.e., grade B,
            otherwise known as junk bonds), including investment in US dollar
            or foreign currency denominated bonds of issuers located in
            countries with new or emerging securities markets. The fund
            considers an emerging securities market to be one where the
            sovereign debt issued by the government in local currency terms is
            rated below investment grade. Compared to investment-grade bonds,
            junk bonds may pay higher yields, have higher volatility and may
            have higher risk of default on payments of interest or principal.

            The fund may have exposure of up to 10% of total assets in foreign
            currencies. Currency forward contracts are permitted for both
            non-hedging and hedging purposes.


4 | DWS Core Plus Income Fund
<PAGE>

            The subadvisor employs a team approach to allocate the fund's
            assets among the various asset classes.

            The asset allocation team meets formally on a monthly basis to
            determine relative value across asset classes, drawing on input
            from sector and market specialists. Once allocation targets for
            each broad fixed income sector are set, sector specialists consider
            the relative attractiveness of purchase candidates in light of the
            distinct characteristics of that particular asset class. Company
            research and fundamental analysis are used to select the best
            securities within each asset class. The techniques used by the
            sector specialists in evaluating each asset class include those
            described below:

            US INVESTMENT GRADE SECURITIES. In selecting these securities for
            investment, the subadvisor typically:

            -  assigns a relative value to each bond, based on
               creditworthiness, cash flow and price;

            -  determines the value of each issue by examining the issuer's
               credit quality, debt structure, option value and liquidity
               risks. The portfolio managers look to take advantage of any
               inefficiencies between this value and market trading price;

            -  uses credit analysis to determine the issuer's ability to
               fulfill its contracts; and

            -  uses a bottom-up approach which subordinates sector weightings
               to individual bonds that the advisor believes may add
               above-market value.

            The subadvisor generally sells these securities when they reach
            their target price or when there is a negative change in their
            outlook relative to the other securities held by the fund. Bonds
            may also be sold to facilitate the purchase of an issue with more
            attractive risk/return characteristics.

            FOREIGN INVESTMENT GRADE SECURITIES AND EMERGING MARKETS HIGH YIELD
            SECURITIES. In selecting these securities for investment, the
            subadvisor follows a bottom-up, relative value strategy. The
            subadvisor looks to purchase foreign securities that offer
            incremental value over US Treasuries. The subadvisor invests in a
            focused fashion, so that it is not simply investing in a basket of
            all non-US fixed income markets, but instead only those markets
            that its relative value process has identified as being the most
            attractive. The subadvisor sells


                                                  DWS Core Plus Income Fund  | 5
<PAGE>

            securities or exchanges currencies when they meet their target
            price objectives or when the subadvisor revises price objectives
            downward. In selecting emerging market securities, the subadvisor
            also considers short-term factors such as market sentiment, capital
            flows, and new issue programs.

            HIGH YIELD SECURITIES (EXCLUDING EMERGING MARKET SOVEREIGN DEBT).
            In selecting these securities for investment, the subadvisor:

            -  analyzes economic conditions for improving or undervalued
               sectors and industries;

            -  uses independent credit research and on-site management visits
               to evaluate individual issuer's debt service, growth rate, and
               both downgrade and upgrade potential;

            -  assesses new issues versus secondary market opportunities; and

            -  seeks issues within attractive industry sectors and with strong
               long-term fundamentals and improving credits.

            Factors that influence the portfolio managers' decision to sell a
            security could include the realization of anticipated gains/target
            yield, deterioration in a company's fundamentals (i.e., a repeated
            shortfall in revenues or cash flow), or some unexpected development
            that, in the portfolio managers' opinion, will diminish the
            company's competitive position or ability to generate adequate cash
            flow.


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


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


6 | DWS Core Plus Income Fund
<PAGE>

            THE MAIN RISKS OF INVESTING IN THE FUND

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


            INTEREST RATE RISK. Generally, fixed income securities will
            decrease in value when interest rates rise. The longer the
            effective maturity of the fund's securities, the more sensitive the
            fund will be to interest rate changes. (As a general rule, a 1%
            rise in interest rates means a 1% fall in value for every year of
            duration.) As interest rates decline, the issuers of securities
            held by the fund may prepay principal earlier than scheduled,
            forcing the fund to reinvest in lower-yielding securities.
            Prepayment may reduce the fund's income. As interest rates
            increase, slower than expected principal payments may extend the
            average life of fixed income securities. This will have the effect
            of locking in a below-market interest rate, increasing the fund's
            duration and reducing the value of such a security. Because the
            fund may invest in mortgage-related securities, it is more
            vulnerable to both of these risks.

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

            MARKET RISK. Deteriorating market conditions might cause a general
            weakness in the market that reduces the prices of securities in
            that market. Developments in a particular class of bonds or the
            stock market could also adversely affect the fund by reducing the
            relative attractiveness of bonds as an investment. Also, to the
            extent that the fund emphasizes bonds from any given industry, it
            could be hurt if that industry does not do well.


THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

This fund is designed for individuals who are seeking a relatively high level of
income and who can accept a moderate level of risk to their investment.



                                                  DWS Core Plus Income Fund  | 7
<PAGE>

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


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

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

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


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


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

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


8 | DWS Core Plus Income Fund
<PAGE>

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

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


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

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

            PRICING RISK. At times, market conditions may make it difficult to
            value some investments, and the fund may use certain valuation
            methodologies for some of its investments, such as fair value
            pricing. Given the subjective nature of such valuation



                                                  DWS Core Plus Income Fund  | 9
<PAGE>


            methodologies, it is possible that the value determined for an
            investment may be different than the value realized upon such
            investment's sale. If the fund has valued its securities too
            highly, you may pay too much for fund shares when you buy into the
            fund. If the fund has underestimated the price of its securities,
            you may not receive the full market value when you sell your fund
            shares.


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

            Another factor that could affect performance is:

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


10 | DWS Core Plus Income Fund
<PAGE>

THE FUND'S PERFORMANCE HISTORY

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


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


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

The inception date for Class A, B and C shares is June 25, 2001. In the bar
chart, the performance figures for Class A before that date are based on the
historical performance of the fund's original share class (Class S), adjusted
to reflect the higher gross total annual operating expenses of Class A.


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


DWS Core Plus Income Fund


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

[GRAPHIC APPEARS HERE]






<TABLE>
<S>       <C>        <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
 5.84      -1.73      9.52      5.61      7.37      4.74      5.07      2.33      4.34     3.88
1998      1999       2000      2001      2002      2003      2004      2005      2006      2007
</TABLE>







<TABLE>
<CAPTION>
2008 TOTAL RETURN AS OF MARCH 31: -1.15%
<S>                                        <C>
For the periods included in the bar chart:
BEST QUARTER: 3.88%, Q3 2002               WORST QUARTER: -2.43%, Q2 2004
</TABLE>




                                                 DWS Core Plus Income Fund  | 11
<PAGE>


AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2007 (Fund returns include the
effects of maximum sales load.)




<TABLE>
<CAPTION>
                                               1 YEAR       5 YEARS      10 YEARS
<S>                                          <C>           <C>          <C>
 CLASS A
   Return before Taxes                          -0.79         3.11         4.18
   Return after Taxes on Distributions          -2.40         1.35         2.02
   Return after Taxes on Distributions
   and Sale of Fund Shares                      -2.11*        1.41*        2.11*
 CLASS B (Return before Taxes)                  0.14          3.05         3.84
 CLASS C (Return before Taxes)                  3.13          3.27         3.91
 LEHMAN BROTHERS U.S. AGGREGATE
 INDEX (reflects no deductions for fees,
 expenses or taxes)                             6.97          4.42         5.97
</TABLE>



 In both the chart and the table, total returns would have been lower if
 operating expenses
     hadn't been reduced and if fund losses hadn't been reimbursed.


 *   Return after Taxes on Distributions and Sale of Fund Shares is higher than
     Return after Taxes on Distributions for the same period due to capital
     losses occurring upon redemption resulting in an assumed tax deduction for
     shareholders.

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



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

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



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

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


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



12 | DWS Core Plus Income Fund
<PAGE>

HOW MUCH INVESTORS PAY


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




<TABLE>
<CAPTION>
FEE TABLE                                         CLASS A         CLASS B       CLASS C
<S>                                          <C>                 <C>          <C>
 SHAREHOLDER FEES, paid directly from your investment
____________________________________________________________________________________________
 Maximum Sales Charge (Load) Imposed
 on Purchases (as % of offering price)1             4.50%          None          None
 Maximum Contingent Deferred Sales
 Charge (Load) (as % of redemption
 proceeds)                                        None2             4.00%         1.00%
 Redemption/Exchange fee on shares
 owned less than 15 days (as % of
 redemption proceeds)3                              2.00            2.00          2.00

 ANNUAL OPERATING EXPENSES, deducted from fund assets
____________________________________________________________________________________________
 Management Fee                                     0.45%           0.45%         0.45%
 Distribution/Service (12b-1) Fee                   0.24            0.99          1.00
 Other Expenses4                                    0.33            0.44          0.36
 TOTAL ANNUAL OPERATING EXPENSES                    1.02            1.88          1.81
 Less Fee Waiver/Expense
 Reimbursement5                                     0.01            0.12          0.05
 NET ANNUAL OPERATING EXPENSES5                     1.01            1.76          1.76
</TABLE>



1   Because of rounding in the calculation of the offering price, the actual
   maximum front-end sales charge paid by an investor may be higher than the
   percentage noted.


2   The redemption of shares purchased at net asset value under the Large Order
   NAV Purchase Privilege (see "Choosing a Share Class - Class A shares") may
   be subject to a contingent deferred sales charge of 0.85% if redeemed
   within 12 months of purchase and 0.50% if redeemed within the following six
   months.


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


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



5   Through April 30, 2009, the Advisor has contractually agreed to waive all
   or a portion of its management fee and reimburse or pay certain operating
   expenses of the fund so that the fund's total operating expenses will not
   exceed 1.01% for Class A shares and 1.76% for Class B and Class C shares,
   respectively, excluding certain expenses such as extraordinary expenses,
   taxes, brokerage and interest.



                                                 DWS Core Plus Income Fund  | 13
<PAGE>


Based on the costs above (including one year of capped expenses in each
period), this example helps you compare the expenses of the fund's Class A, B
and C shares to those of other mutual funds. This example assumes operating
expenses remain the same. It also assumes that you invested $10,000, earned 5%
annual returns and reinvested all dividends and distributions. This is only an
example; actual expenses will be different.




<TABLE>
<CAPTION>
EXAMPLE                1 YEAR      3 YEARS      5 YEARS      10 YEARS
<S>                   <C>         <C>          <C>          <C>
 EXPENSES, assuming you sold your shares at the end of each period.
_________________________________________________________________________
 Class A shares         $548         $759       $  987       $1,641
 Class B shares*         579          879        1,205        1,760
 Class C shares          279          565          975        2,123

 EXPENSES, assuming you kept your shares.
_________________________________________________________________________
 Class A shares         $548         $759       $  987       $1,641
 Class B shares*         179          579        1,005        1,760
 Class C shares          179          565          975        2,123
</TABLE>




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


14 | DWS Core Plus Income Fund
<PAGE>

OTHER POLICIES AND RISKS

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


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

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



           -  The fund may trade actively. This could raise transaction costs
              (thus lowering return) and could mean distributions at higher tax
              rates.

           -  Portfolio management measures credit quality at the time it buys
              securities, using independent rating agencies or, for unrated
              securities, its own judgment. All securities must meet the credit
              quality standards applied by portfolio management at the time
              they are purchased. If a security's credit quality changes,
              portfolio management will decide what to do with the security,
              based on its assessment of what would most benefit the fund.



           For more information

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

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


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

           A complete list of the fund's portfolio holdings as of the month-end
           is posted on www.dws-scudder.com (the Web site does not form a part
           of this prospectus) on or after the last day of the following month.
           This posted information generally remains accessible at least until
           the date on which the fund files its



                                                  Other Policies and Risks  | 15
<PAGE>

           Form N-CSR or N-Q with the Securities and Exchange Commission for
           the period that includes the date as of which the posted information
           is current. The fund's Statement of Additional Information includes
           a description of the fund's policies and procedures with respect to
           the disclosure of the fund's portfolio holdings.


WHO MANAGES AND OVERSEES THE FUND


           The investment advisor


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


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

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

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


16 | Who Manages and Oversees the Fund
<PAGE>


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




<TABLE>
<CAPTION>
FUND NAME                                  FEE PAID
<S>                                       <C>
  DWS Core Plus Income Fund                  0.45%
</TABLE>




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


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


           Subadvisor for DWS Core Plus Income Fund


           Pursuant to an investment subadvisory agreement between the Advisor
           and Aberdeen Asset Management Inc. ("AAMI"), an investment adviser
           registered under the Investment Advisers Act of 1940, as amended,
           AAMI acts as subadvisor. As the subadvisor, AAMI, under the
           supervision of the Board and the Advisor, makes investment
           decisions, buys and sells securities and conducts the research that
           leads to these purchase and sale decisions. AAMI provides a full
           range of international investment advisory services to institutional
           and retail clients.


           AAMI is a direct, wholly owned subsidiary of Aberdeen Asset
           Management PLC, the parent company of an asset management group
           formed in 1983. AAMI is located at 1735 Market Street, Philadelphia,
           PA 19103.


           Sub-subadvisor for DWS Core Plus Income Fund


           Pursuant to an investment sub-subadvisory agreement between AAMI and
           Aberdeen Asset Management Investment Services Limited ("AAMISL"), an
           investment adviser registered under the Investment Advisers Act of
           1940, as amended, AAMISL acts as the sub-subadvisor for the fund. As
           the sub-subadvisor, AAMISL, under the supervision of the Board of
           Trustees, DIMA and AAMI, manages the fund's investments in foreign
           securities, foreign currencies and related investments and



                                         Who Manages and Oversees the Fund  | 17
<PAGE>

           conducts the research that leads to these investments. AAMISL
           provides a full range of international investment advisory services
           to institutional and retail clients. AAMI continues to manage the
           core bond and active fixed income strategies of the fund.

           AAMISL will be paid for its sub-subadvisory services by AAMI, the
           fund's subadvisor, from AAMI's subadvisory fee paid by DIMA to AAMI.



18 | Who Manages and Oversees the Fund
<PAGE>

Portfolio management

DWS Core Plus Income Fund's subadvisor is Aberdeen Asset Management, Inc. A
team approach is utilized with respect to the day-to-day management of the
fund's portfolio. Portfolio decisions are made jointly by the senior members of
the management team. The following members of the management team handle the
day-to-day operations of the core bond, active fixed income and high-yield
portions of the fund:

DWS CORE PLUS INCOME FUND

Gary W. Bartlett, CFA
Head of US Fixed Income and senior portfolio manager specializing in taxable
municipal, utility and government fixed income investments: Philadelphia.
-  Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2002.
-  Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1992 after nine years of experience as an analyst and
   fixed income portfolio manager at PNC Financial and credit analyst at First
   Pennsylvania Bank.
-  BA from Bucknell University; MBA from Drexel University.

Warren S. Davis, III
Senior portfolio manager for mortgage- and asset-backed fixed income
investments: Philadelphia.
-  Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2002.
-  Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1995 after nine years of experience as a trader,
   analyst and developer of analytical and risk management systems for
   PaineWebber and Merrill Lynch.
-  BS from Pennsylvania State University; MBA from Drexel University.

Thomas J. Flaherty
Senior portfolio manager for corporate and taxable municipal fixed income
investments: Philadelphia.
-  Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2002.
-  Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1995 after 10 years of fixed income experience,
   including vice president for US taxable fixed income securities at
   Prudential Securities.
-  BA from SUNY Stony Brook.

J. Christopher Gagnier
Head of Core Plus Fixed Income product and senior portfolio manager for
corporate and commercial mortgages: Philadelphia.
-  Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2002.
-  Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1997 after 17 years of experience in fixed income
   investments at PaineWebber and Continental Bank.
-  BS from Wharton School of Business; MBA from University of Chicago.

                                         Who Manages and Oversees the Fund  | 19
<PAGE>

Daniel R. Taylor, CFA
Senior portfolio manager for asset-backed and commercial mortgage fixed income
investments: Philadelphia.
- Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2002.
- Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1998 after six years of experience as fixed income
   portfolio manager and senior credit analyst for CoreStates Investment
   Advisors.
- BS from Villanova University.

Timothy C. Vile, CFA
Senior portfolio manager for Core Fixed Income and Global Aggregate Fixed
Income: Philadelphia.
- Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2002.
- Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1991 as member of Core Fixed Income; seconded to the
   London office from January 1999 to June 2002 to design and develop the
   firm's European Credit and Global Aggregate capabilities; before joining
   Deutsche Asset Management, he had six years of experience that included
   portfolio manager for fixed income portfolios at Equitable Capital
   Management.
- BS from Susquehanna University.

William T. Lissenden
Portfolio manager for Core Fixed Income: Philadelphia.
- Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2004.
- Formerly, Director of Deutsche Asset Management; joined Deutsche Asset
   Management in 2002 after 31 years of experience, including fixed income
   strategist and director of research at Conseco Capital Management, director
   of fixed income research and product management at Prudential Securities
   and national sales manager for fixed income securities at Prudential
   Securities.
- BS from St. Peter's College; MBA from Baruch College.


20 | Who Manages and Oversees the Fund
<PAGE>

The following portfolio managers of the sub-subadvisor, Aberdeen Asset
Management Investment Services Limited, are responsible for the day-to-day
management of the foreign securities, foreign currencies and related
investments for the fund:

Brett Diment
Head of Emerging Markets and Co-Manager of the fund.
-  Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2002.
-  Formerly, Managing Director of Deutsche Asset Management, joined Deutsche
   Asset Management 1991. Head of Emerging Markets.
-  BSc from London School of Economics.

Annette Fraser
Head of Fixed Income - Asia Pacific and Co-Manager of the fund.
-  Joined Aberdeen Asset Management Inc. and the fund in 2005.
-  Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1990.
-  Portfolio Manager in the fixed income team for 16 years specializing in the
   global and US core plus mandates.
-  MA from St. Andrews University.

Anthony Fletcher
Client Portfolio Manager and Co-Manager of the fund.
-  Joined Aberdeen Asset Management Inc. and the fund in 2005.
-  Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1996 as a portfolio manager covering global and UK
   fixed income products.
-  Over 20 years investment industry experience, including serving as the Head
   of global fixed income at the Saudi American Bank and as a fund manager for
   the Industrial Bank of Japan.
-  BSc Geology from University of London.

Nik Hart
Head of European Investment Grade and Co-Manager of the fund.
-  Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2002.
-  Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1992.
-  Head of European Investment Grade, analyst specializing in investing credit
   and managing sterling portfolios.

Stephen Ilott
Head of Fixed Income and Co-Manager of the fund.
-  Joined Aberdeen Asset Management in 2005 as head of the fixed income
   business globally.
-  Joined the fund in 2004.
-  Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1998.
-  Prior to 1998, managed global fixed income and currency portfolios on behalf
   of central banks, corporations and pension funds at Robert Fleming &
   Company from 1986 to 1997.

                                         Who Manages and Oversees the Fund  | 21
<PAGE>

Ian Winship
Head of Global Interest Rates and Co-Manager of the fund.
- Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2004.
- Formerly, Director of Deutsche Asset Management; joined Deutsche Asset
   Management in 1999 as a member of the fixed income team.
- Previously had nine years of experience as a fixed income portfolio manager
   at Scottish Amicable Investment Managers, Murray Johnstone, and Hill Samuel
   Asset Managers.
- BA from University of Strathclyde.

Matthew Cobon
Head of Currency and Co-Manager of the fund.
- Joined Aberdeen Asset Management Inc. and the fund in 2005.
- Formerly, Director of Deutsche Asset Management; joined Deutsche Asset
   Management in 2001 as a member of the fixed income currency desk.
- Previously had five years of experience at Citibank advising global fixed
   income and currency fund managers on the active management of their
   currency exposure.
- BA from Warwick University.


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



22 | Who Manages and Oversees the Fund
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights are designed to help you understand recent financial
performance. The figures in the first part of each table are for a single
share. The total return figures represent the percentage that an investor in
the fund would have earned (or lost), assuming all dividends and distributions
were reinvested. This information has been audited by PricewaterhouseCoopers
LLP, independent registered public accounting firm, whose report, along with
the fund's financial statements, is included in the fund's annual report (see
"Shareholder reports" on the back cover).

DWS Core Plus Income Fund - Class A



<TABLE>
<CAPTION>
YEARS ENDED JANUARY 31,                 2008           2007           2006           2005           2004
<S>                                 <C>            <C>            <C>            <C>            <C>
SELECTED PER SHARE DATA
---------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD                            $  12.60       $  12.68       $  13.04       $  12.97       $  12.76
--------------------------------     --------       --------       --------       --------       --------
Income (loss) from
investment operations:
  Net investment income a                  .58            .56            .49            .50            .44
________________________________     ________       ________       ________       ________       ________
  Net realized and unrealized
  gain (loss)                             .02         (  .04)        (  .26)           .12            .26
--------------------------------     --------       --------       --------       --------       --------
  TOTAL FROM INVESTMENT
  OPERATIONS                              .60            .52            .23            .62            .70
________________________________     ________       ________       ________       ________       ________
Less distributions from:
  Net investment income                (  .59)        (  .60)        (  .59)        (  .55)        (  .49)
________________________________     ________       ________       ________       ________       ________
Redemption fees                           .00*           .00*           .00*             -              -
--------------------------------     --------       --------       --------       --------       --------
Net asset value, end of period       $  12.61       $  12.60       $  12.68       $  13.04       $  12.97
________________________________     ________       ________       ________       ________       ________
Total Return (%)b                        4.87           4.20           1.78           4.90           5.57
--------------------------------     --------       --------       --------       --------       --------

RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
---------------------------------------------------------------------------------------------------------------
Net assets, end of period ($
millions)                                 193            212            240            263            283
________________________________     ________       ________       ________       ________       ________
Ratio of expenses (%)                    1.02           1.06           1.02           1.01           1.07
________________________________     ________       ________       ________       ________       ________
Ratio of net investment
income (%)                               4.58           4.44           3.82           3.87           3.47
________________________________     ________       ________       ________       ________       ________
Portfolio turnover rate (%)c              140            150            184            156            210
--------------------------------     --------       --------       --------       --------       --------
</TABLE>



a   Based on average shares outstanding during the period.

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


c   The portfolio turnover rate including mortgage dollar roll transactions was
   150%, 151%, 196%, 190% and 248% for the years ended January 31, 2008, 2007,
   2006, 2005 and 2004, respectively.


*   Amount is less than $.005.

                                                      Financial Highlights  | 23
<PAGE>

DWS Core Plus Income Fund - Class B



<TABLE>
<CAPTION>
YEARS ENDED JANUARY 31,                2008             2007            2006             2005            2004
<S>                               <C>              <C>              <C>             <C>              <C>
SELECTED PER SHARE DATA
--------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD                           $  12.61         $  12.68         $  13.04        $  12.97        $  12.76
------------------------------      --------         --------         --------        --------        --------
Income (loss) from
investment operations:
  Net investment income a                 .48              .46              .38             .39             .35
______________________________      ________         ________         ________        ________        ________
  Net realized and unrealized
  gain (loss)                            .02           (  .04)          (  .27)            .12             .25
------------------------------      --------         --------         --------        --------        --------
  TOTAL FROM INVESTMENT
  OPERATIONS                             .50              .42              .11             .51             .60
______________________________      ________         ________         ________        ________        ________
Less distributions from:
  Net investment income               (  .49)          (  .49)          (  .47)         (  .44)         (  .39)
______________________________      ________         ________         ________        ________        ________
Redemption fees                          .00*             .00*             .00*              -               -
------------------------------      --------         --------         --------        --------        --------
NET ASSET VALUE, END OF
PERIOD                              $  12.62         $  12.61         $  12.68        $  13.04        $  12.97
------------------------------      --------         --------         --------        --------        --------
Total Return (%)b                     4.02c            3.38c            .88c            3.95c             4.86
------------------------------      --------         --------         --------        --------        --------

RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($
millions)                                  7               12               17              29              47
______________________________      ________         ________         ________        ________        ________
Ratio of expenses before
expense reductions (%)                  1.88             2.09             2.02            1.93            1.83
______________________________      ________         ________         ________        ________        ________
Ratio of expenses after
expense reductions (%)                  1.79             1.86             1.90            1.88            1.83
______________________________      ________         ________         ________        ________        ________
Ratio of net investment
income (%)                              3.80             3.64             2.94            3.00            2.71
______________________________      ________         ________         ________        ________        ________
Portfolio turnover rate (%)d             140              150              184             156             210
------------------------------      --------         --------         --------        --------        --------
</TABLE>



a   Based on average shares outstanding during the period.

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

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


d   The portfolio turnover rate including mortgage dollar roll transactions was
   150%, 151%, 196%, 190% and 248% for the years ended January 31, 2008, 2007,
   2006, 2005 and 2004, respectively.


*   Amount is less than $.005.

24 | Financial Highlights
<PAGE>

DWS Core Plus Income Fund - Class C



<TABLE>
<CAPTION>
YEARS ENDED JANUARY 31,                2008             2007            2006            2005            2004
<S>                               <C>              <C>              <C>            <C>              <C>
SELECTED PER SHARE DATA
-------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD                           $  12.60         $  12.67        $  13.03        $  12.97        $  12.76
------------------------------      --------         --------        --------        --------        --------
Income (loss) from
investment operations:
  Net investment income a                 .48              .46             .38             .39             .36
______________________________      ________         ________        ________        ________        ________
  Net realized and unrealized
  gain (loss)                            .02           (  .04)         (  .27)            .12             .25
------------------------------      --------         --------        --------        --------        --------
  TOTAL FROM INVESTMENT
  OPERATIONS                             .50              .42             .11             .51             .61
______________________________      ________         ________        ________        ________        ________
Less distributions from:
  Net investment income               (  .49)          (  .49)         (  .47)         (  .45)         (  .40)
______________________________      ________         ________        ________        ________        ________
Redemption fees                          .00*             .00*            .00*              -               -
------------------------------      --------         --------        --------        --------        --------
NET ASSET VALUE, END OF
PERIOD                              $  12.61         $  12.60        $  12.67        $  13.03        $  12.97
------------------------------      --------         --------        --------        --------        --------
Total Return (%)b                     4.04c            3.39c              .89          4.01c             4.88
------------------------------      --------         --------        --------        --------        --------

RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($
millions)                                 13               13              15              16              19
______________________________      ________         ________        ________        ________        ________
Ratio of expenses before
expense reductions (%)                  1.81             1.89            1.89            1.88            1.73
______________________________      ________         ________        ________        ________        ________
Ratio of expenses after
expense reductions (%)                  1.79             1.86            1.89            1.86            1.73
______________________________      ________         ________        ________        ________        ________
Ratio of net investment
income (%)                              3.81             3.64            2.95            3.02            2.81
______________________________      ________         ________        ________        ________        ________
Portfolio turnover rate (%)d             140              150             184             156             210
------------------------------      --------         --------        --------        --------        --------
</TABLE>



a   Based on average shares outstanding during the period.

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

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


d   The portfolio turnover rate including mortgage dollar roll transactions was
   150%, 151%, 196%, 190% and 248% for the years ended January 31, 2008, 2007,
   2006, 2005 and 2004, respectively.


*   Amount is less than $.005.

                                                      Financial Highlights  | 25
<PAGE>

HOW TO INVEST IN THE FUND

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

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

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



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


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

<PAGE>

CHOOSING A SHARE CLASS


We describe each share class in detail on the following pages. But first, you
may want to look at the table below, which gives you a brief description and
comparison of the main features of each class.




<TABLE>
<S>                                          <C>
 CLASS A
 -  Sales charge of up to 4.50% charged       -  Some investors may be able to reduce
  when you buy shares                        or eliminate their sales charge; see
                                             "Class A shares"
 -  In most cases, no charge when you
  sell shares                                -  Total annual expenses are lower than
                                             those for Class B or Class C
 -  Up to 0.25% annual shareholder
  servicing fee
 CLASS B
 -  No sales charge when you buy shares       -  The deferred sales charge rate falls to
                                             zero after six years
 -  Deferred sales charge declining from
  4.00%, charged when you sell shares        -  Shares automatically convert to
  you bought within the last six years       Class A after six years, which means
                                             lower annual expenses going forward
 -  0.75% annual distribution fee and up
  to 0.25% annual shareholder servicing
  fee
 CLASS C
 -  No sales charge when you buy shares       -  The deferred sales charge rate for one
                                             year is lower for Class C shares than
 -  Deferred sales charge of 1.00%,
                                             Class B shares, but your shares never
  charged when you sell shares you
                                             convert to Class A, so annual expenses
  bought within the last year
                                             remain higher
 -  0.75% annual distribution fee and up
  to 0.25% annual shareholder servicing
  fee
</TABLE>




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




                                                    Choosing a Share Class  | 27
<PAGE>

           Class A shares

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


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


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


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


           1   The offering price includes the sales charge.

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


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

           -  you plan to invest at least $100,000 in Class A shares (including
              Class A shares in other retail DWS funds) over the next 24 months
              ("Letter of Intent")

           -  the amount of Class A shares you already own (including Class A
              shares in other retail DWS funds) plus the amount you're
              investing now in Class A shares is at least $100,000 ("Cumulative
              Discount")

           -  you are investing a total of $100,000 or more in Class A shares
              of several retail DWS funds on the same day ("Combined
              Purchases")

28 | Choosing a Share Class
<PAGE>

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

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

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


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

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



                                                    Choosing a Share Class  | 29
<PAGE>

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

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


           IF YOU'RE INVESTING $1 MILLION OR MORE, either as a lump sum or
           through one of the sales charge reduction features described above,
           you may be eligible to buy Class A shares without a sales charge
           ("Large Order NAV Purchase Privilege"). However, you may be charged
           a contingent deferred sales charge (CDSC) of 0.85% on any shares you
           sell within 12 months of owning them and a similar charge of 0.50%
           on shares you sell within the following six months. This CDSC is
           waived under certain circumstances (see "Policies You Should Know
           About"). Your financial advisor or Shareholder Services can answer
           your questions and help you determine if you're eligible.



           Class B shares


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

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



30 | Choosing a Share Class
<PAGE>

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


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


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


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


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



                                                    Choosing a Share Class  | 31
<PAGE>

           Class C shares

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

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

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

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


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


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


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

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


32 | Choosing a Share Class
<PAGE>

How to BUY Class A, B and C Shares




<TABLE>
<CAPTION>
 FIRST INVESTMENT                                ADDITIONAL INVESTMENTS
<S>                                             <C>
 $1,000 or more for most accounts                $50 or more for regular accounts and
 $500 or more for IRAs                          IRAs
 $500 or more for an account with an            $50 or more for an account with an
 Automatic Investment Plan                      Automatic Investment Plan
 THROUGH A FINANCIAL ADVISOR
 -  To obtain an application, contact your      -  Contact your advisor using the
  advisor                                       method that's most convenient for you
 BY MAIL OR EXPRESS MAIL (SEE BELOW)
 -  Fill out and sign an application            -  Send a check made payable to "DWS
                                                Scudder" and an investment slip to us
 -  Send it to us at the appropriate
  address, along with an investment             -  If you don't have an investment slip,
  check made payable to "DWS                    simply include a letter with your
  Scudder"                                      name, account number, the full name
                                                of the fund and the share class and
                                                your investment instructions
 BY WIRE
 -  Call (800) 621-1048 for instructions        -  Call (800) 621-1048 for instructions
 BY PHONE
 Not available                                  -  Call (800) 621-1048 for instructions
 WITH AN AUTOMATIC INVESTMENT PLAN
 -  Fill in the information on our              -  To set up regular investments from a
  application including a check for the         bank checking account call (800) 621-
  initial investment and a voided check         1048 ($50 minimum)
 USING QuickBuy
 Not available                                  -  Call (800) 621-1048 to make sure
                                                QuickBuy is set up on your account; if
                                                it is, you can request a transfer from
                                                your bank account of any amount
                                                between $50 and $250,000
 ON THE INTERNET
 Not available                                  -  Call (800) 621-1048 to ensure you have
                                                electronic services
                                                -  Register at www.dws-scudder.com or
                                                log in if already registered
                                                -  Follow the instructions for buying
                                                shares with money from your bank
                                                account
</TABLE>



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

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

EXPRESS, REGISTERED OR CERTIFIED MAIL:

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


                                        How to Buy Class A, B and C Shares  | 33
<PAGE>

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


<TABLE>
<CAPTION>
 EXCHANGING INTO ANOTHER FUND                    SELLING SHARES
<S>                                             <C>
                                                 Some transactions, including most for
 -  Exchanges into existing accounts:
                                                over $100,000, can only be ordered in
  $50 minimum per fund
                                                writing with a signature guarantee;
 -  Exchanges into new accounts:
                                                please see "Signature Guarantee"
  $1,000 minimum per fund for most
  accounts
  $500 minimum for IRAs
 THROUGH A FINANCIAL ADVISOR
 -  Contact your advisor using the              -  Contact your advisor by the method
  method that's most convenient for you         that's most convenient for you
 BY PHONE                                        BY PHONE OR WIRE
 -  Call (800) 621-1048 for instructions        -  Call (800) 621-1048 for instructions
 BY MAIL OR EXPRESS MAIL
 (see previous page for address)
 Write a letter that includes:                  Write a letter that includes:
 -  the fund, class and account number          -  the fund, class and account number
  you're exchanging out of                      from which you want to sell shares
 -  the dollar amount or number of shares       -  the dollar amount or number of shares
  you want to exchange                          you want to sell
 -  the name and class of the fund you          -  your name(s), signature(s) and
  want to exchange into                         address, as they appear on your
                                                account
 -  your name(s), signature(s) and
  address, as they appear on your               -  a daytime telephone number
  account
 -  a daytime telephone number
 WITH AN AUTOMATIC EXCHANGE PLAN                 WITH AN AUTOMATIC WITHDRAWAL PLAN
 -  To set up regular exchanges from a          -  Call (800) 621-1048 (minimum $50)
  fund account, call (800) 621-1048
 USING QuickSell
 Not available                                  -  Call (800) 621-1048 to make sure
                                                QuickSell is set up on your account; if
                                                it is, you can request a transfer to your
                                                bank account of any amount between
                                                $50 and $250,000
 ON THE INTERNET
 -  Register at www.dws-scudder.com or          -  Register at www.dws-scudder.com or
  log in if already registered                  log in if already registered
 -  Follow the instructions for making on-      -  Follow the instructions for making on-
  line exchanges                                line redemptions
</TABLE>



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

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



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


           Financial intermediary support payments

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

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



                           How to Exchange or Sell Class A, B and C Shares  | 35
<PAGE>


           The Advisor, the Distributor and/or their affiliates currently make
           revenue sharing payments from their own assets in connection with
           the sale and/or distribution of DWS Fund shares or the retention
           and/or servicing of investors and DWS Fund shares to financial
           advisors in amounts that generally range from .01% up to .50% of
           assets of the fund serviced and maintained by the financial advisor,
           .10% to .25% of sales of the fund attributable to the financial
           advisor, a flat fee of $13,350 up to $500,000, or any combination
           thereof. These amounts are subject to change at the discretion of
           the Advisor, the Distributor and/or their affiliates. Receipt of, or
           the prospect of receiving, this additional compensation may
           influence your financial advisor's recommendation of the fund or of
           any particular share class of the fund. You should review your
           financial advisor's compensation disclosure and/or talk to your
           financial advisor to obtain more information on how this
           compensation may have influenced your financial advisor's
           recommendation of the fund. Additional information regarding these
           revenue sharing payments is included in the fund's Statement of
           Additional Information, which is available to you on request at no
           charge (see the back cover of this prospectus for more information
           on how to request a copy of the Statement of Additional
           Information).

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

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



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


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



POLICIES YOU SHOULD KNOW ABOUT


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


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

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

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


           Policies about transactions

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


                                            Policies You Should Know About  | 37
<PAGE>

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

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

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

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

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


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


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

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


38 | Policies You Should Know About
<PAGE>

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


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

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

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



                                            Policies You Should Know About  | 39
<PAGE>


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

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

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



40 | Policies You Should Know About
<PAGE>


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

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

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

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



                                            Policies You Should Know About  | 41
<PAGE>


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


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


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

           The redemption fee will not be charged in connection with the
           following exchange or redemption transactions: (i) transactions on
           behalf of participants in certain research wrap programs; (ii)
           transactions on behalf of a shareholder to return any excess IRA
           contributions to the shareholder; (iii) transactions on behalf of a
           shareholder to effect a required minimum distribution on an IRA;
           (iv) transactions on behalf of any mutual fund advised by



42 | Policies You Should Know About
<PAGE>


            the Advisor and its affiliates (e.g., "funds of funds") or, in the
            case of a master/feeder relationship, redemptions by the feeder fund
            from the master portfolio; (v) transactions on behalf of certain
            unaffiliated mutual funds operating as funds of funds; (vi)
            transactions following death or disability of any registered
            shareholder, beneficial owner or grantor of a living trust with
            respect to shares purchased before death or disability; (vii)
            transactions involving hardship of any registered shareholder;
            (viii) systematic transactions with pre-defined trade dates for
            purchases, exchanges or redemptions, such as automatic account
            rebalancing, or loan origination and repayments; (ix) transactions
            involving shares purchased through the reinvestment of dividends or
            other distributions; (x) transactions involving shares transferred
            from another account in the same fund or converted from another
            class of the same fund (the redemption fee period will carry over to
            the acquired shares); (xi) transactions initiated by the fund or
            administrator (e.g., redemptions for not meeting account minimums,
            to pay account fees funded by share redemptions, or in the event of
            the liquidation or merger of the fund); or (xii) transactions in
            cases when there are legal or contractual limitations or
            restrictions on the imposition of the redemption fee (as determined
            by the fund or its agents in their sole discretion). It is the
            policy of the DWS funds to permit approved fund platform providers
            to execute transactions with the funds without the imposition of a
            redemption fee if such providers have implemented alternative
            measures that are determined by the Advisor to provide controls on
            short-term and excessive trading that are comparable to the DWS
            funds' policies.

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


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


THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

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


                                            Policies You Should Know About  | 43
<PAGE>


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


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


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


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


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

           SIGNATURE GUARANTEE. When you want to sell more than $100,000 worth
           of shares or send proceeds to a third party or to a new address,
           you'll usually need to place your order in writing and include a
           signature guarantee. However, if you want money




THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

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



44 | Policies You Should Know About
<PAGE>

           wired to a bank account that is already on file with us, you don't
           need a signature guarantee. Also, generally you don't need a
           signature guarantee for an exchange, although we may require one in
           certain other circumstances.

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

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


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


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

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


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


           -  withdrawals related to certain retirement or benefit plans

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

           -  for Class A shares purchased through the Large Order NAV Purchase
              Privilege, redemption of shares whose dealer of record at the
              time of the investment notifies the Distributor that the dealer
              waives the applicable commission

                                            Policies You Should Know About  | 45
<PAGE>

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

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

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

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


           MONEY FROM SHARES YOU SELL is normally sent out within one business
           day of when your order is processed (not when it is received),
           although it could be delayed for up to seven days. There are
           circumstances when it could be longer, including, but not limited
           to, when you are selling shares you bought recently by check or ACH
           (the funds will be placed under a 10 calendar day hold to ensure
           good funds) or when unusual circumstances prompt the SEC to allow
           further delays. Certain expedited redemption processes (e.g.,
           redemption proceeds by wire) may also be delayed or unavailable when
           you are selling shares recently purchased or in the event of closing
           of the Federal Reserve wire payment system. The fund reserves the
           right to suspend or postpone redemptions as permitted pursuant to
           Section 22(e) of the Investment Company Act of 1940. Generally,
           those circumstances are when 1) the New York Stock Exchange is
           closed other than customary weekend or holiday closings; 2) trading
           on the New York Stock Exchange is



46 | Policies You Should Know About
<PAGE>


           restricted; 3) an emergency exists which makes the disposal of
           securities owned by the fund or the fair determination of the value
           of the fund's net assets not reasonably practicable; or 4) the SEC,
           by order, permits the suspension of the right of redemption.
           Redemption payments by wire may also be delayed in the event of a
           non-routine closure of the Federal Reserve wire payment system. For
           additional rights reserved by the fund, please see "Other rights we
           reserve."


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


           How the fund calculates share price

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


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



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

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


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


                                            Policies You Should Know About  | 47
<PAGE>

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

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


           Other rights we reserve

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

           -  withdraw or suspend the offering of shares at any time


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


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

48 | Policies You Should Know About
<PAGE>


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

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

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

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



UNDERSTANDING DISTRIBUTIONS AND TAXES

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


           INCOME DIVIDENDS ARE DECLARED AND PAID MONTHLY. Short-term and
           long-term capital gains are paid in November or December, or
           otherwise as needed.





THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

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

                                     Understanding Distributions and Taxes  | 49
<PAGE>

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


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

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

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



50 | Understanding Distributions and Taxes
<PAGE>


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




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




           ANY DIRECT INVESTMENTS IN FOREIGN SECURITIES BY THE FUND MAY BE
           SUBJECT TO FOREIGN WITHHOLDING TAXES. In that case, the fund's yield
           on those securities would generally be decreased. Shareholders
           generally will not be entitled to claim a credit or deduction with
           respect to foreign taxes paid by the fund. In addition, any
           investments in foreign securities or foreign currencies may increase
           or accelerate the fund's recognition of ordinary income and may
           affect the timing or amount of the fund's distributions. If you
           invest in the fund through a taxable account, your after-tax return
           could be negatively impacted.

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

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



                                     Understanding Distributions and Taxes  | 51
<PAGE>


           holding period and other requirements with respect to the
           dividend-paying stocks in its portfolio and the shareholder must
           meet certain holding period and other requirements with respect to
           the fund's shares for the lower tax rates to apply. The fund does
           not expect a significant portion of its distributions to constitute
           qualified dividend income.

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


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


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

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

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



52 | Understanding Distributions and Taxes
<PAGE>

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


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

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


                                                                  Appendix  | 53
<PAGE>

DWS Core Plus Income Fund - Class A




<TABLE>
<CAPTION>
              MAXIMUM              INITIAL HYPOTHETICAL                   ASSUMED RATE
           SALES CHARGE:               INVESTMENT:                         OF RETURN:
               4.50%                     $10,000                               5%
                                                                   HYPOTHETICAL
             CUMULATIVE        ANNUAL                                YEAR-END          ANNUAL
           RETURN BEFORE        FUND           CUMULATIVE         BALANCE AFTER         FEES
              FEES AND        EXPENSE         RETURN AFTER           FEES AND            AND
YEAR          EXPENSES         RATIOS      FEES AND EXPENSES         EXPENSES         EXPENSES
<S>       <C>                <C>          <C>                    <C>                <C>
   1            5.00%        1.01%                -0.69%         $  9,931.05        $   548.38
   2           10.25%        1.02%                 3.26%         $ 10,326.30        $   103.31
   3           15.76%        1.02%                 7.37%         $ 10,737.29        $   107.42
   4           21.55%        1.02%                11.65%         $ 11,164.63        $   111.70
   5           27.63%        1.02%                16.09%         $ 11,608.98        $   116.15
   6           34.01%        1.02%                20.71%         $ 12,071.02        $   120.77
   7           40.71%        1.02%                25.51%         $ 12,551.45        $   125.57
   8           47.75%        1.02%                30.51%         $ 13,051.00        $   130.57
   9           55.13%        1.02%                35.70%         $ 13,570.43        $   135.77
  10           62.89%        1.02%                41.11%         $ 14,110.53        $   141.17
  TOTAL                                                                             $ 1,640.81
</TABLE>



DWS Core Plus Income Fund - Class B





<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                   ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                        OF RETURN:
               0.00%                   $10,000                              5%
             CUMULATIVE        ANNUAL       CUMULATIVE         HYPOTHETICAL
           RETURN BEFORE        FUND       RETURN AFTER      YEAR-END BALANCE        ANNUAL
              FEES AND        EXPENSE        FEES AND         AFTER FEES AND        FEES AND
YEAR          EXPENSES         RATIOS        EXPENSES            EXPENSES           EXPENSES
<S>       <C>                <C>          <C>               <C>                   <C>
   1            5.00%        1.76%              3.24%          $ 10,324.00        $   178.85
   2           10.25%        1.88%              6.46%          $ 10,646.11        $   197.12
   3           15.76%        1.88%              9.78%          $ 10,978.27        $   203.27
   4           21.55%        1.88%             13.21%          $ 11,320.79        $   209.61
   5           27.63%        1.88%             16.74%          $ 11,674.00        $   216.15
   6           34.01%        1.88%             20.38%          $ 12,038.23        $   222.89
   7           40.71%        1.02%             25.17%          $ 12,517.35        $   125.23
   8           47.75%        1.02%             30.16%          $ 13,015.54        $   130.22
   9           55.13%        1.02%             35.34%          $ 13,533.56        $   135.40
  10           62.89%        1.02%             40.72%          $ 14,072.19        $   140.79
  TOTAL                                                                           $ 1,759.53
</TABLE>




54 | Appendix
<PAGE>

DWS Core Plus Income Fund - Class C




<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER        ANNUAL
              FEES AND        EXPENSE        FEES AND           FEES AND         FEES AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        1.76%              3.24%       $ 10,324.00        $   178.85
   2           10.25%        1.81%              6.53%       $ 10,653.34        $   189.84
   3           15.76%        1.81%              9.93%       $ 10,993.18        $   195.90
   4           21.55%        1.81%             13.44%       $ 11,343.86        $   202.15
   5           27.63%        1.81%             17.06%       $ 11,705.73        $   208.60
   6           34.01%        1.81%             20.79%       $ 12,079.14        $   215.25
   7           40.71%        1.81%             24.64%       $ 12,464.47        $   222.12
   8           47.75%        1.81%             28.62%       $ 12,862.08        $   229.21
   9           55.13%        1.81%             32.72%       $ 13,272.38        $   236.52
  10           62.89%        1.81%             36.96%       $ 13,695.77        $   244.06
  TOTAL                                                                        $ 2,122.50
</TABLE>




                                                                  Appendix  | 55
<PAGE>

TO GET MORE INFORMATION

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

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

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


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



<TABLE>
<S>                      <C>                            <C>
SEC FILE NUMBER:
DWS Portfolio Trust        DWS Core Plus Income Fund    811-42
</TABLE>








(05/01/08) DCPIF-1
[RECYCLE GRAPHIC APPEARS HERE]
                                                                       [Logo]DWS
                                                                         SCUDDER
                                                             Deutsche Bank Group




<PAGE>


                                  MAY 1, 2008








                                   PROSPECTUS
                              ------------------
                              INSTITUTIONAL CLASS

                           DWS CORE PLUS INCOME FUND

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


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





<PAGE>

CONTENTS





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


</TABLE>
<TABLE>
<S>      <C>
HOW TO INVEST IN THE FUND
 24      Buying and Selling
         Institutional Class Shares
 30      Policies You Should Know
         About
 41      Understanding Distributions
         and Taxes
 44      Appendix
</TABLE>


<PAGE>

HOW THE FUND WORKS

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


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

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

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


<TABLE>
<S>                              <C>
                                   Institutional Class
  ticker symbol                    SZIIX
    fund number                    1463

    DWS CORE PLUS INCOME FUND


</TABLE>

            THE FUND'S MAIN INVESTMENT STRATEGY

            The fund seeks to maximize total return consistent with
            preservation of capital and prudent investment management, by
            investing for both current income and capital appreciation.

            The fund primarily invests in US dollar-denominated investment
            grade fixed income securities, including corporate bonds, US
            government and agency bonds and mortgage- and asset-backed
            securities. A significant portion of the fund's assets may also be
            allocated among foreign investment grade fixed income securities,
            high yield bonds of US and foreign issuers (including high yield
            bonds of issuers in countries with new or emerging securities
            markets), or, to maintain liquidity, in cash or money market
            instruments.

            The fund normally invests at least 65% of total assets in high
            grade US bonds (those considered to be in the top three grades of
            credit quality). The fund may invest up to 25% of its total assets
            in foreign investment grade bonds (those considered to be in the
            top four grades of credit quality).

            In addition, the fund may also invest up to 20% of total assets in
            securities of US and foreign issuers that are below investment
            grade (rated as low as the sixth credit grade, i.e., grade B,
            otherwise known as junk bonds), including investment in US dollar
            or foreign currency denominated bonds of issuers located in
            countries with new or emerging securities markets. The fund
            considers an emerging securities market to be one where the
            sovereign debt issued by the government in local currency terms is
            rated below investment grade. Compared to investment-grade bonds,
            junk bonds may pay higher yields, have higher volatility and may
            have higher risk of default on payments of interest or principal.

            The fund may have exposure of up to 10% of total assets in foreign
            currencies. Currency forward contracts are permitted for both
            non-hedging and hedging purposes.


4 | DWS Core Plus Income Fund
<PAGE>

            The subadvisor employs a team approach to allocate the fund's
            assets among the various asset classes.

            The asset allocation team meets formally on a monthly basis to
            determine relative value across asset classes, drawing on input
            from sector and market specialists. Once allocation targets for
            each broad fixed income sector are set, sector specialists consider
            the relative attractiveness of purchase candidates in light of the
            distinct characteristics of that particular asset class. Company
            research and fundamental analysis are used to select the best
            securities within each asset class. The techniques used by the
            sector specialists in evaluating each asset class include those
            described below:

            US INVESTMENT GRADE SECURITIES. In selecting these securities for
            investment, the subadvisor typically:

            -  assigns a relative value to each bond, based on
               creditworthiness, cash flow and price;

            -  determines the value of each issue by examining the issuer's
               credit quality, debt structure, option value and liquidity
               risks. The portfolio managers look to take advantage of any
               inefficiencies between this value and market trading price;

            -  uses credit analysis to determine the issuer's ability to
               fulfill its contracts; and

            -  uses a bottom-up approach which subordinates sector weightings
               to individual bonds that the advisor believes may add
               above-market value.

            The subadvisor generally sells these securities when they reach
            their target price or when there is a negative change in their
            outlook relative to the other securities held by the fund. Bonds
            may also be sold to facilitate the purchase of an issue with more
            attractive risk/return characteristics.

            FOREIGN INVESTMENT GRADE SECURITIES AND EMERGING MARKETS HIGH YIELD
            SECURITIES. In selecting these securities for investment, the
            subadvisor follows a bottom-up, relative value strategy. The
            subadvisor looks to purchase foreign securities that offer
            incremental value over US Treasuries. The subadvisor invests in a
            focused fashion, so that it is not simply investing in a basket of
            all non-US fixed income markets, but instead only those markets
            that its relative value process has identified as being the most
            attractive. The subadvisor sells


                                                  DWS Core Plus Income Fund  | 5
<PAGE>

            securities or exchanges currencies when they meet their target
            price objectives or when the subadvisor revises price objectives
            downward. In selecting emerging market securities, the subadvisor
            also considers short-term factors such as market sentiment, capital
            flows, and new issue programs.

            HIGH YIELD SECURITIES (EXCLUDING EMERGING MARKET SOVEREIGN DEBT).
            In selecting these securities for investment, the subadvisor:

            -  analyzes economic conditions for improving or undervalued
               sectors and industries;

            -  uses independent credit research and on-site management visits
               to evaluate individual issuer's debt service, growth rate, and
               both downgrade and upgrade potential;

            -  assesses new issues versus secondary market opportunities; and

            -  seeks issues within attractive industry sectors and with strong
               long-term fundamentals and improving credits.

            Factors that influence the portfolio managers' decision to sell a
            security could include the realization of anticipated gains/target
            yield, deterioration in a company's fundamentals (i.e., a repeated
            shortfall in revenues or cash flow), or some unexpected development
            that, in the portfolio managers' opinion, will diminish the
            company's competitive position or ability to generate adequate cash
            flow.


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


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


6 | DWS Core Plus Income Fund
<PAGE>

            THE MAIN RISKS OF INVESTING IN THE FUND

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


            INTEREST RATE RISK. Generally, fixed income securities will
            decrease in value when interest rates rise. The longer the
            effective maturity of the fund's securities, the more sensitive the
            fund will be to interest rate changes. (As a general rule, a 1%
            rise in interest rates means a 1% fall in value for every year of
            duration.) As interest rates decline, the issuers of securities
            held by the fund may prepay principal earlier than scheduled,
            forcing the fund to reinvest in lower-yielding securities.
            Prepayment may reduce the fund's income. As interest rates
            increase, slower than expected principal payments may extend the
            average life of fixed income securities. This will have the effect
            of locking in a below-market interest rate, increasing the fund's
            duration and reducing the value of such a security. Because the
            fund may invest in mortgage-related securities, it is more
            vulnerable to both of these risks.

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

            MARKET RISK. Deteriorating market conditions might cause a general
            weakness in the market that reduces the prices of securities in
            that market. Developments in a particular class of bonds or the
            stock market could also adversely affect the fund by reducing the
            relative attractiveness of bonds as an investment. Also, to the
            extent that the fund emphasizes bonds from any given industry, it
            could be hurt if that industry does not do well.


THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS



This fund is designed for individuals who are seeking a relatively high level of
income and who can accept a moderate level of risk to their investment.


                                                  DWS Core Plus Income Fund  | 7
<PAGE>

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


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

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

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


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


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

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


8 | DWS Core Plus Income Fund
<PAGE>

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

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


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

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

            PRICING RISK. At times, market conditions may make it difficult to
            value some investments, and the fund may use certain valuation
            methodologies for some of its investments, such as fair value
            pricing. Given the subjective nature of such valuation



                                                  DWS Core Plus Income Fund  | 9
<PAGE>


            methodologies, it is possible that the value determined for an
            investment may be different than the value realized upon such
            investment's sale. If the fund has valued its securities too
            highly, you may pay too much for fund shares when you buy into the
            fund. If the fund has underestimated the price of its securities,
            you may not receive the full market value when you sell your fund
            shares.


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

            Another factor that could affect performance is:

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


10 | DWS Core Plus Income Fund
<PAGE>

THE FUND'S PERFORMANCE HISTORY

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


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


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

DWS Core Plus Income Fund

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






<TABLE>
<S>       <C>       <C>       <C>       <C>       <C>
 7.67      5.12      5.41      2.68      4.60     4.21
2002      2003      2004      2005      2006       2007
</TABLE>







<TABLE>
<CAPTION>
                 2008 TOTAL RETURN AS OF MARCH 31: -1.07%
<S>                                        <C>
For the periods included in the bar chart:
BEST QUARTER: 4.00%, Q3 2002               WORST QUARTER: -2.40%, Q2 2004
</TABLE>




                                                 DWS Core Plus Income Fund  | 11
<PAGE>


AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2007




<TABLE>
<CAPTION>
                                                1 YEAR         5 YEAR       SINCE INCEPTION*
<S>                                          <C>            <C>            <C>
 INSTITUTIONAL CLASS
   Return before Taxes                           4.21           4.40              4.91
   Return after Taxes on Distributions           2.41           2.64              3.03
   Return after Taxes on Distributions
   and Sale of Fund Shares                       2.71**         2.71**            3.06**
 LEHMAN BROTHERS U.S. AGGREGATE
 INDEX (reflects no deductions for fees,
 expenses or taxes)                              6.97           4.42              5.69
</TABLE>



     *   Since 6/25/2001. Index comparison begins 6/30/2001.



 **   Return after Taxes on Distributions and Sale of Fund Shares is higher
     than Return after Taxes on Distributions for the same period due to
     capital losses occurring upon redemption resulting in an assumed tax
     deduction for shareholders.

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



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

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



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

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


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



12 | DWS Core Plus Income Fund
<PAGE>

HOW MUCH INVESTORS PAY


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




<TABLE>
<CAPTION>
FEE TABLE
<S>                                       <C>
 SHAREHOLDER FEES, paid directly from
 your investment                                     None
______________________________________
 Redemption/Exchange fee on shares
 owned less than 15 days (as % of
 redemption proceeds)1                                2.00%
 ANNUAL OPERATING EXPENSES, deducted from fund assets
________________________________________________________________________
 Management Fee                                       0.45%
 Distribution/Service (12b-1) Fee                    None
 Other Expenses2                                      0.18
 TOTAL ANNUAL OPERATING EXPENSES3                     0.63
</TABLE>



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


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



3   Through September 30, 2008, the Advisor has contractually agreed to waive
   all or a portion of its management fee and reimburse or pay certain
   operating expenses of the fund so that the total operating expenses of the
   fund will not exceed 0.76% for Institutional Class shares, excluding
   certain expenses such as extraordinary expenses, taxes, brokerage and
   interest. Although there can be no assurance that the current
   waiver/expense reimbursement arrangement will be maintained beyond
   September 30, 2008, the Advisor has committed to review the continuance of
   such waiver/expense reimbursement arrangements by September 30, 2008.

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




<TABLE>
<CAPTION>
EXAMPLE                    1 YEAR      3 YEARS      5 YEARS      10 YEARS
<S>                       <C>         <C>          <C>          <C>
 Institutional Class         $64         $202         $351         $786
</TABLE>




                                                 DWS Core Plus Income Fund  | 13
<PAGE>

OTHER POLICIES AND RISKS

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


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

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



           -  The fund may trade actively. This could raise transaction costs
              (thus lowering return) and could mean distributions at higher tax
              rates.

           -  Portfolio management measures credit quality at the time it buys
              securities, using independent rating agencies or, for unrated
              securities, its own judgment. All securities must meet the credit
              quality standards applied by portfolio management at the time
              they are purchased. If a security's credit quality changes,
              portfolio management will decide what to do with the security,
              based on its assessment of what would most benefit the fund.



           For more information

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

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


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

           A complete list of the fund's portfolio holdings as of the month-end
           is posted on www.dws-scudder.com (the Web site does not form a part
           of this prospectus) on or after the last day of the following month.
           This posted information generally remains accessible at least until
           the date on which the fund files its



14 | Other Policies and Risks
<PAGE>

           Form N-CSR or N-Q with the Securities and Exchange Commission for
           the period that includes the date as of which the posted information
           is current. The fund's Statement of Additional Information includes
           a description of the fund's policies and procedures with respect to
           the disclosure of the fund's portfolio holdings.


WHO MANAGES AND OVERSEES THE FUND


           The investment advisor


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


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

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

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


                                         Who Manages and Oversees the Fund  | 15
<PAGE>


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




<TABLE>
<CAPTION>
FUND NAME                                  FEE PAID
<S>                                       <C>
  DWS Core Plus Income Fund                  0.45%
</TABLE>




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


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


           Subadvisor for DWS Core Plus Income Fund


           Pursuant to an investment subadvisory agreement between the Advisor
           and Aberdeen Asset Management Inc. ("AAMI"), an investment adviser
           registered under the Investment Advisers Act of 1940, as amended,
           AAMI acts as subadvisor. As the subadvisor, AAMI, under the
           supervision of the Board and the Advisor, makes investment
           decisions, buys and sells securities and conducts the research that
           leads to these purchase and sale decisions. AAMI provides a full
           range of international investment advisory services to institutional
           and retail clients.


           AAMI is a direct, wholly owned subsidiary of Aberdeen Asset
           Management PLC, the parent company of an asset management group
           formed in 1983. AAMI is located at 1735 Market Street, Philadelphia,
           PA 19103.


           Sub-subadvisor for DWS Core Plus Income Fund


           Pursuant to an investment sub-subadvisory agreement between AAMI and
           Aberdeen Asset Management Investment Services Limited ("AAMISL"), an
           investment adviser registered under the Investment Advisers Act of
           1940, as amended, AAMISL acts as the sub-subadvisor for the fund. As
           the sub-subadvisor, AAMISL, under the supervision of the Board of
           Trustees, DIMA and AAMI, manages the fund's investments in foreign
           securities, foreign currencies and related investments and



16 | Who Manages and Oversees the Fund
<PAGE>

           conducts the research that leads to these investments. AAMISL
           provides a full range of international investment advisory services
           to institutional and retail clients. AAMI continues to manage the
           core bond and active fixed income strategies of the fund.

           AAMISL will be paid for its sub-subadvisory services by AAMI, the
           fund's subadvisor, from AAMI's subadvisory fee paid by DIMA to AAMI.



                                         Who Manages and Oversees the Fund  | 17
<PAGE>

Portfolio management

DWS Core Plus Income Fund's subadvisor is Aberdeen Asset Management, Inc. A
team approach is utilized with respect to the day-to-day management of the
fund's portfolio. Portfolio decisions are made jointly by the senior members of
the management team. The following members of the management team handle the
day-to-day operations of the core bond, active fixed income and high-yield
portions of the fund:

DWS CORE PLUS INCOME FUND

Gary W. Bartlett, CFA
Head of US Fixed Income and senior portfolio manager specializing in taxable
municipal, utility and government fixed income investments: Philadelphia.
-  Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2002.
-  Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1992 after nine years of experience as an analyst and
   fixed income portfolio manager at PNC Financial and credit analyst at First
   Pennsylvania Bank.
-  BA from Bucknell University; MBA from Drexel University.

Warren S. Davis, III
Senior portfolio manager for mortgage- and asset-backed fixed income
investments: Philadelphia.
-  Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2002.
-  Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1995 after nine years of experience as a trader,
   analyst and developer of analytical and risk management systems for
   PaineWebber and Merrill Lynch.
-  BS from Pennsylvania State University; MBA from Drexel University.

Thomas J. Flaherty
Senior portfolio manager for corporate and taxable municipal fixed income
investments: Philadelphia.
-  Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2002.
-  Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1995 after 10 years of fixed income experience,
   including vice president for US taxable fixed income securities at
   Prudential Securities.
-  BA from SUNY Stony Brook.

J. Christopher Gagnier
Head of Core Plus Fixed Income product and senior portfolio manager for
corporate and commercial mortgages: Philadelphia.
-  Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2002.
-  Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1997 after 17 years of experience in fixed income
   investments at PaineWebber and Continental Bank.
-  BS from Wharton School of Business; MBA from University of Chicago.

18 | Who Manages and Oversees the Fund
<PAGE>

Daniel R. Taylor, CFA
Senior portfolio manager for asset-backed and commercial mortgage fixed income
investments: Philadelphia.
- Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2002.
- Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1998 after six years of experience as fixed income
   portfolio manager and senior credit analyst for CoreStates Investment
   Advisors.
- BS from Villanova University.

Timothy C. Vile, CFA
Senior portfolio manager for Core Fixed Income and Global Aggregate Fixed
Income: Philadelphia.
- Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2002.
- Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1991 as member of Core Fixed Income; seconded to the
   London office from January 1999 to June 2002 to design and develop the
   firm's European Credit and Global Aggregate capabilities; before joining
   Deutsche Asset Management, he had six years of experience that included
   portfolio manager for fixed income portfolios at Equitable Capital
   Management.
- BS from Susquehanna University.

William T. Lissenden
Portfolio manager for Core Fixed Income: Philadelphia.
- Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2004.
- Formerly, Director of Deutsche Asset Management; joined Deutsche Asset
   Management in 2002 after 31 years of experience, including fixed income
   strategist and director of research at Conseco Capital Management, director
   of fixed income research and product management at Prudential Securities
   and national sales manager for fixed income securities at Prudential
   Securities.
- BS from St. Peter's College; MBA from Baruch College.


                                         Who Manages and Oversees the Fund  | 19
<PAGE>

The following portfolio managers of the sub-subadvisor, Aberdeen Asset
Management Investment Services Limited, are responsible for the day-to-day
management of the foreign securities, foreign currencies and related
investments for the fund:

Brett Diment
Head of Emerging Markets and Co-Manager of the fund.
-  Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2002.
-  Formerly, Managing Director of Deutsche Asset Management, joined Deutsche
   Asset Management 1991. Head of Emerging Markets.
-  BSc from London School of Economics.

Annette Fraser
Head of Fixed Income - Asia Pacific and Co-Manager of the fund.
-  Joined Aberdeen Asset Management Inc. and the fund in 2005.
-  Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1990.
-  Portfolio Manager in the fixed income team for 16 years specializing in the
   global and US core plus mandates.
-  MA from St. Andrews University.

Anthony Fletcher
Client Portfolio Manager and Co-Manager of the fund.
-  Joined Aberdeen Asset Management Inc. and the fund in 2005.
-  Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1996 as a portfolio manager covering global and UK
   fixed income products.
-  Over 20 years investment industry experience, including serving as the Head
   of global fixed income at the Saudi American Bank and as a fund manager for
   the Industrial Bank of Japan.
-  BSc Geology from University of London.

Nik Hart
Head of European Investment Grade and Co-Manager of the fund.
-  Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2002.
-  Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1992.
-  Head of European Investment Grade, analyst specializing in investing credit
   and managing sterling portfolios.

Stephen Ilott
Head of Fixed Income and Co-Manager of the fund.
-  Joined Aberdeen Asset Management in 2005 as head of the fixed income
   business globally.
-  Joined the fund in 2004.
-  Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1998.
-  Prior to 1998, managed global fixed income and currency portfolios on behalf
   of central banks, corporations and pension funds at Robert Fleming &
   Company from 1986 to 1997.

20 | Who Manages and Oversees the Fund
<PAGE>

Ian Winship
Head of Global Interest Rates and Co-Manager of the fund.
- Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2004.
- Formerly, Director of Deutsche Asset Management; joined Deutsche Asset
   Management in 1999 as a member of the fixed income team.
- Previously had nine years of experience as a fixed income portfolio manager
   at Scottish Amicable Investment Managers, Murray Johnstone, and Hill Samuel
   Asset Managers.
- BA from University of Strathclyde.

Matthew Cobon
Head of Currency and Co-Manager of the fund.
- Joined Aberdeen Asset Management Inc. and the fund in 2005.
- Formerly, Director of Deutsche Asset Management; joined Deutsche Asset
   Management in 2001 as a member of the fixed income currency desk.
- Previously had five years of experience at Citibank advising global fixed
   income and currency fund managers on the active management of their
   currency exposure.
- BA from Warwick University.


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



                                         Who Manages and Oversees the Fund  | 21
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights are designed to help you understand recent financial
performance. The figures in the first part of the table are for a single share.
The total return figures represent the percentage that an investor in the fund
would have earned (or lost), assuming all dividends and distributions were
reinvested. This information has been audited by PricewaterhouseCoopers LLP,
independent registered public accounting firm, whose report, along with the
fund's financial statements, is included in the fund's annual report (see
"Shareholder reports" on the back cover).

DWS Core Plus Income Fund - Institutional Class



<TABLE>
<CAPTION>
YEARS ENDED JANUARY 31,               2008           2007           2006           2005           2004
<S>                               <C>            <C>            <C>            <C>            <C>
SELECTED PER SHARE DATA
-------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD                          $  12.57       $  12.66       $  13.01       $  12.97       $  12.76
------------------------------     --------       --------       --------       --------       --------
Income (loss) from
investment operations:
  Net investment income a                .62            .59            .53            .54            .50
______________________________     ________       ________       ________       ________       ________
  Net realized and unrealized
  gain (loss)                           .02         (  .04)        (  .25)           .11            .25
------------------------------     --------       --------       --------       --------       --------
  Total from investment
  operations                            .64            .55            .28            .65            .75
______________________________     ________       ________       ________       ________       ________
Less distributions from:
  Net investment income              (  .63)        (  .64)        (  .63)        (  .61)        (  .54)
______________________________     ________       ________       ________       ________       ________
Redemption fees                         .00*           .00*           .00*             -              -
------------------------------     --------       --------       --------       --------       --------
NET ASSET VALUE, END OF
PERIOD                             $  12.58       $  12.57       $  12.66       $  13.01       $  12.97
------------------------------     --------       --------       --------       --------       --------
Total Return (%)                       5.21           4.46           2.13           5.22           6.03
------------------------------     --------       --------       --------       --------       --------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------------------------
Net assets, end of period ($
millions)                                21            .3             .4               9            .6
______________________________     ________       ________       ________       ________       ________
Ratio of expenses after
expense reductions (%)                  .63            .76            .68            .66            .62
______________________________     ________       ________       ________       ________       ________
Ratio of net investment
income (%)                             4.96           4.74           4.16           4.22           3.92
______________________________     ________       ________       ________       ________       ________
Portfolio turnover rate (%)b            140            150            184            156            210
------------------------------     --------       --------       --------       --------       --------
</TABLE>



a   Based on average shares outstanding during the period.


b   The portfolio turnover rate including mortgage dollar roll transactions was
   150%, 151%, 196%, 190% and 248% for the years ended January 31, 2008, 2007,
   2006, 2005 and 2004, respectively.


*   Amount is less than $.005.

22 | Financial Highlights
<PAGE>


HOW TO INVEST IN THE FUND

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

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



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

<PAGE>

Buying and Selling INSTITUTIONAL CLASS Shares



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

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



           Eligibility requirements

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

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

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

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

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

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

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


           Investment minimum

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


24 | Buying and Selling Institutional Class Shares
<PAGE>

           The minimum initial investment is waived for:

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

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

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

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

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


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

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



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


           The fund reserves the right to modify the above eligibility
           requirements and investment minimum at any time.


           How to contact the transfer agent



<TABLE>
<S>                       <C>
  BY PHONE:                (800) 730-1313
  FIRST INVESTMENTS        DWS Scudder Investments Service Company
  BY MAIL:                P.O. Box 219210
                          Kansas City, MO 64121-9210
  ADDITIONAL               DWS Scudder Investments Service Company
  INVESTMENTS BY          P.O. Box 219210
  MAIL:                   Kansas City, MO 64121-9210
  BY OVERNIGHT MAIL:       DWS Scudder Investments Service Company
                          210 West 10th Street
                          Kansas City, MO 64105-1614
</TABLE>



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


                             Buying and Selling Institutional Class Shares  | 25
<PAGE>

           How to open your fund account


<TABLE>
<S>                  <C>
  MAIL:               Complete and sign the account application that
                     accompanies this prospectus. (You may obtain
                     additional applications by calling the transfer agent.)
                     Mail the completed application along with a check
                     payable to the fund you have selected to the transfer
                     agent. Be sure to include the fund number. The
                     applicable addresses are shown under "How to
                     contact the transfer agent."
  WIRE:               Call the transfer agent to set up a wire account.
  FUND NAME AND       Please use the complete fund name. Refer to the
  FUND NUMBER:       start of "The Fund's Main Investment Strategy" above
                     for the fund number.
</TABLE>




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



           How to BUY and SELL shares

           MAIL:


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

           SELLING: Send a signed letter to the transfer agent with your name,
           your fund number and account number, the fund's name, and either the
           number of shares you wish to sell or the dollar amount you wish to
           receive. In certain circumstances, a signature guarantee may be
           required to sell shares of the fund by mail. For information about a
           signature guarantee, see "Signature Guarantee." Unless exchanging
           into another DWS fund, you must submit a written authorization to
           sell shares in a retirement account.



26 | Buying and Selling Institutional Class Shares
<PAGE>

           WIRE:


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




<TABLE>
<S>                <C>
  BANK NAME:        State Street Bank Boston
  ROUTING NO:       011000028
  ATTN:             DWS Scudder
  DDA NO:           9903-5552
  FBO:              (Account name) (Account number)
  CREDIT:           (Fund name, Fund number and, if applicable, class
                   name) (see "How to open your fund account")
</TABLE>



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


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



                             Buying and Selling Institutional Class Shares  | 27
<PAGE>

           TELEPHONE TRANSACTIONS:


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

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



           Financial intermediary support payments


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



28 | Buying and Selling Institutional Class Shares
<PAGE>

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


           The Advisor, the Distributor and/or their affiliates currently make
           revenue sharing payments from their own assets in connection with
           the sale and/or distribution of DWS Fund shares or the retention
           and/or servicing of investors and DWS Fund shares to financial
           advisors in amounts that generally range from .01% up to .50% of
           assets of the fund serviced and maintained by the financial advisor,
           .10% to .25% of sales of the fund attributable to the financial
           advisor, a flat fee of $13,350 up to $500,000, or any combination
           thereof. These amounts are subject to change at the discretion of
           the Advisor, the Distributor and/or their affiliates. Receipt of, or
           the prospect of receiving, this additional compensation may
           influence your financial advisor's recommendation of the fund or of
           any particular share class of the fund. You should review your
           financial advisor's compensation disclosure and/or talk to your
           financial advisor to obtain more information on how this
           compensation may have influenced your financial advisor's
           recommendation of the fund. Additional information regarding these
           revenue sharing payments is included in the fund's Statement of
           Additional Information, which is available to you on request at no
           charge (see the back cover of this prospectus for more information
           on how to request a copy of the Statement of Additional
           Information).


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


                             Buying and Selling Institutional Class Shares  | 29
<PAGE>

           based upon sales of both the DWS funds and the non-DWS funds by the
           financial advisor on the Platform or current assets of both the DWS
           funds and the non-DWS funds serviced and maintained by the financial
           advisor on the Platform.

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


POLICIES YOU SHOULD KNOW ABOUT


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


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

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

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


30 | Policies You Should Know About
<PAGE>

           Policies about transactions

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

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

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

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

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

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


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



                                            Policies You Should Know About  | 31
<PAGE>

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


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

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

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



32 | Policies You Should Know About
<PAGE>


           (including exchanges) of the same fund's shares. The fund may take
           other trading activity into account if the fund believes such
           activity is of an amount or frequency that may be harmful to
           long-term shareholders or disruptive to portfolio management.

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

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

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

           The Advisor may also accept undertakings from a financial
           intermediary to enforce short-term or excessive trading policies on
           behalf of the fund that provide a substantially similar level of
           protection for the fund against such transactions. For example,
           certain financial intermediaries may have contractual, legal or



                                            Policies You Should Know About  | 33
<PAGE>


           operational restrictions that prevent them from blocking an account.
           In such instances, the financial intermediary may use alternate
           techniques that the Advisor considers to be a reasonable substitute
           for such a block.

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

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

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


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


34 | Policies You Should Know About
<PAGE>

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


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



                                            Policies You Should Know About  | 35
<PAGE>


           restrictions on the imposition of the redemption fee (as determined
           by the fund or its agents in their sole discretion). It is the
           policy of the DWS funds to permit approved fund platform providers
           to execute transactions with the funds without the imposition of a
           redemption fee if such providers have implemented alternative
           measures that are determined by the Advisor to provide controls on
           short-term and excessive trading that are comparable to the DWS
           funds' policies.

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


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



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

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


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




THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS



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


36 | Policies You Should Know About
<PAGE>

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


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

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

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


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


           MONEY FROM SHARES YOU SELL is normally sent out within one business
           day of when your order is processed (not when it is received),
           although it could be delayed for up to seven days. There are
           circumstances when it could be longer, including, but



THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS



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

                                            Policies You Should Know About  | 37
<PAGE>


           not limited to, when you are selling shares you bought recently by
           check or ACH (the funds will be placed under a 10 calendar day hold
           to ensure good funds) or when unusual circumstances prompt the SEC
           to allow further delays. Certain expedited redemption processes
           (e.g., redemption proceeds by wire) may also be delayed or
           unavailable when you are selling shares recently purchased or in the
           event of closing of the Federal Reserve wire payment system. The
           fund reserves the right to suspend or postpone redemptions as
           permitted pursuant to Section 22(e) of the Investment Company Act of
           1940. Generally, those circumstances are when 1) the New York Stock
           Exchange is closed other than customary weekend or holiday closings;
           2) trading on the New York Stock Exchange is restricted; 3) an
           emergency exists which makes the disposal of securities owned by the
           fund or the fair determination of the value of the fund's net assets
           not reasonably practicable; or 4) the SEC, by order, permits the
           suspension of the right of redemption. Redemption payments by wire
           may also be delayed in the event of a non-routine closure of the
           Federal Reserve wire payment system. For additional rights reserved
           by the fund, please see "Other rights we reserve."


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


           How the fund calculates share price

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


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



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

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


           WE TYPICALLY VALUE SECURITIES USING INFORMATION FURNISHED BY AN
           INDEPENDENT PRICING SERVICE OR MARKET QUOTATIONS, WHERE APPROPRIATE.
           However, we may use methods approved by the fund's Board, such as a
           fair valuation model, which are intended


38 | Policies You Should Know About
<PAGE>

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

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


                                            Policies You Should Know About  | 39
<PAGE>

           Other rights we reserve

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

           -  withdraw or suspend the offering of shares at any time


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


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


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

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

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

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



40 | Policies You Should Know About
<PAGE>

UNDERSTANDING DISTRIBUTIONS AND TAXES

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


           INCOME DIVIDENDS ARE DECLARED AND PAID MONTHLY. Short-term and
           long-term capital gains are paid in November or December, or
           otherwise as needed.


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


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


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

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


THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS



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

                                     Understanding Distributions and Taxes  | 41
<PAGE>

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


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




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

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




           ANY DIRECT INVESTMENTS IN FOREIGN SECURITIES BY THE FUND MAY BE
           SUBJECT TO FOREIGN WITHHOLDING TAXES. In that case, the fund's yield
           on those securities would generally be decreased. Shareholders
           generally will not be entitled to claim a credit or deduction with
           respect to foreign taxes paid by the fund. In addition, any
           investments in foreign securities or foreign currencies may increase
           or accelerate the fund's recognition of ordinary income and may
           affect the timing or amount of the fund's distributions. If you
           invest in the fund through a taxable account, your after-tax return
           could be negatively impacted.

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

           For taxable years beginning before January 1, 2011, distributions to
           individuals and other noncorporate shareholders of investment income
           designated by the fund as derived from qualified dividend income are
           eligible for taxation for federal income tax purposes at the more
           favorable long-term capital



42 | Understanding Distributions and Taxes
<PAGE>


           gain rates. Qualified dividend income generally includes dividends
           from domestic and some foreign corporations. It does not include
           income from investments in debt securities or, generally, from
           REITs. In addition, the fund must meet certain holding period and
           other requirements with respect to the dividend-paying stocks in its
           portfolio and the shareholder must meet certain holding period and
           other requirements with respect to the fund's shares for the lower
           tax rates to apply. The fund does not expect a significant portion
           of its distributions to constitute qualified dividend income.

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


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


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

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

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



                                     Understanding Distributions and Taxes  | 43
<PAGE>

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


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

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


44 | Appendix
<PAGE>


                DWS Core Plus Income Fund - Institutional Class





<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER      ANNUAL FEES
              FEES AND        EXPENSE        FEES AND           FEES AND            AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        0.63%              4.37%       $ 10,437.00         $  64.38
   2           10.25%        0.63%              8.93%       $ 10,893.10         $  67.19
   3           15.76%        0.63%             13.69%       $ 11,369.13         $  70.13
   4           21.55%        0.63%             18.66%       $ 11,865.96         $  73.19
   5           27.63%        0.63%             23.84%       $ 12,384.50         $  76.39
   6           34.01%        0.63%             29.26%       $ 12,925.70         $  79.73
   7           40.71%        0.63%             34.91%       $ 13,490.55         $  83.21
   8           47.75%        0.63%             40.80%       $ 14,080.09         $  86.85
   9           55.13%        0.63%             46.95%       $ 14,695.39         $  90.64
  10           62.89%        0.63%             53.38%       $ 15,337.58         $  94.60
  TOTAL                                                                         $ 786.31
</TABLE>




                                                                  Appendix  | 45
<PAGE>

TO GET MORE INFORMATION

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

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

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


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



<TABLE>
<S>                      <C>                            <C>
SEC FILE NUMBER:
DWS Portfolio Trust        DWS Core Plus Income Fund    811-42
</TABLE>










(05/01/08) DCPIF-1-IN

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





<PAGE>


                                  MAY 1, 2008








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

                           DWS CORE PLUS INCOME FUND

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


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





<PAGE>

CONTENTS





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


</TABLE>
<TABLE>
<S>      <C>
HOW TO INVEST IN THE FUND
 24      How to Buy Shares
 25      How to Exchange or Sell
         Shares
 28      Policies You Should Know
         About
 40      Understanding Distributions
         and Taxes
 43      Appendix
</TABLE>


<PAGE>

HOW THE FUND WORKS

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


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


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


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

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


<TABLE>
<S>                              <C>
                                   Class S
  ticker symbol                    SCSBX
    fund number                    2063

    DWS CORE PLUS INCOME FUND


</TABLE>

            THE FUND'S MAIN INVESTMENT STRATEGY

            The fund seeks to maximize total return consistent with
            preservation of capital and prudent investment management, by
            investing for both current income and capital appreciation.

            The fund primarily invests in US dollar-denominated investment
            grade fixed income securities, including corporate bonds, US
            government and agency bonds and mortgage- and asset-backed
            securities. A significant portion of the fund's assets may also be
            allocated among foreign investment grade fixed income securities,
            high yield bonds of US and foreign issuers (including high yield
            bonds of issuers in countries with new or emerging securities
            markets), or, to maintain liquidity, in cash or money market
            instruments.

            The fund normally invests at least 65% of total assets in high
            grade US bonds (those considered to be in the top three grades of
            credit quality). The fund may invest up to 25% of its total assets
            in foreign investment grade bonds (those considered to be in the
            top four grades of credit quality).

            In addition, the fund may also invest up to 20% of total assets in
            securities of US and foreign issuers that are below investment
            grade (rated as low as the sixth credit grade, i.e., grade B,
            otherwise known as junk bonds), including investment in US dollar
            or foreign currency denominated bonds of issuers located in
            countries with new or emerging securities markets. The fund
            considers an emerging securities market to be one where the
            sovereign debt issued by the government in local currency terms is
            rated below investment grade. Compared to investment-grade bonds,
            junk bonds may pay higher yields, have higher volatility and may
            have higher risk of default on payments of interest or principal.

            The fund may have exposure of up to 10% of total assets in foreign
            currencies. Currency forward contracts are permitted for both
            non-hedging and hedging purposes.


4 | DWS Core Plus Income Fund
<PAGE>

            The subadvisor employs a team approach to allocate the fund's
            assets among the various asset classes.

            The asset allocation team meets formally on a monthly basis to
            determine relative value across asset classes, drawing on input
            from sector and market specialists. Once allocation targets for
            each broad fixed income sector are set, sector specialists consider
            the relative attractiveness of purchase candidates in light of the
            distinct characteristics of that particular asset class. Company
            research and fundamental analysis are used to select the best
            securities within each asset class. The techniques used by the
            sector specialists in evaluating each asset class include those
            described below:

            US INVESTMENT GRADE SECURITIES. In selecting these securities for
            investment, the subadvisor typically:

            -  assigns a relative value to each bond, based on
               creditworthiness, cash flow and price;

            -  determines the value of each issue by examining the issuer's
               credit quality, debt structure, option value and liquidity
               risks. The portfolio managers look to take advantage of any
               inefficiencies between this value and market trading price;

            -  uses credit analysis to determine the issuer's ability to
               fulfill its contracts; and

            -  uses a bottom-up approach which subordinates sector weightings
               to individual bonds that the advisor believes may add
               above-market value.

            The subadvisor generally sells these securities when they reach
            their target price or when there is a negative change in their
            outlook relative to the other securities held by the fund. Bonds
            may also be sold to facilitate the purchase of an issue with more
            attractive risk/return characteristics.

            FOREIGN INVESTMENT GRADE SECURITIES AND EMERGING MARKETS HIGH YIELD
            SECURITIES. In selecting these securities for investment, the
            subadvisor follows a bottom-up, relative value strategy. The
            subadvisor looks to purchase foreign securities that offer
            incremental value over US Treasuries. The subadvisor invests in a
            focused fashion, so that it is not simply investing in a basket of
            all non-US fixed income markets, but instead only those markets
            that its relative value process has identified as being the most
            attractive. The subadvisor sells


                                                  DWS Core Plus Income Fund  | 5
<PAGE>

            securities or exchanges currencies when they meet their target
            price objectives or when the subadvisor revises price objectives
            downward. In selecting emerging market securities, the subadvisor
            also considers short-term factors such as market sentiment, capital
            flows, and new issue programs.

            HIGH YIELD SECURITIES (EXCLUDING EMERGING MARKET SOVEREIGN DEBT).
            In selecting these securities for investment, the subadvisor:

            -  analyzes economic conditions for improving or undervalued
               sectors and industries;

            -  uses independent credit research and on-site management visits
               to evaluate individual issuer's debt service, growth rate, and
               both downgrade and upgrade potential;

            -  assesses new issues versus secondary market opportunities; and

            -  seeks issues within attractive industry sectors and with strong
               long-term fundamentals and improving credits.

            Factors that influence the portfolio managers' decision to sell a
            security could include the realization of anticipated gains/target
            yield, deterioration in a company's fundamentals (i.e., a repeated
            shortfall in revenues or cash flow), or some unexpected development
            that, in the portfolio managers' opinion, will diminish the
            company's competitive position or ability to generate adequate cash
            flow.


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


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


6 | DWS Core Plus Income Fund
<PAGE>

            THE MAIN RISKS OF INVESTING IN THE FUND

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


            INTEREST RATE RISK. Generally, fixed income securities will
            decrease in value when interest rates rise. The longer the
            effective maturity of the fund's securities, the more sensitive the
            fund will be to interest rate changes. (As a general rule, a 1%
            rise in interest rates means a 1% fall in value for every year of
            duration.) As interest rates decline, the issuers of securities
            held by the fund may prepay principal earlier than scheduled,
            forcing the fund to reinvest in lower-yielding securities.
            Prepayment may reduce the fund's income. As interest rates
            increase, slower than expected principal payments may extend the
            average life of fixed income securities. This will have the effect
            of locking in a below-market interest rate, increasing the fund's
            duration and reducing the value of such a security. Because the
            fund may invest in mortgage-related securities, it is more
            vulnerable to both of these risks.

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

            MARKET RISK. Deteriorating market conditions might cause a general
            weakness in the market that reduces the prices of securities in
            that market. Developments in a particular class of bonds or the
            stock market could also adversely affect the fund by reducing the
            relative attractiveness of bonds as an investment. Also, to the
            extent that the fund emphasizes bonds from any given industry, it
            could be hurt if that industry does not do well.



 THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS



This fund is designed for individuals who are seeking a relatively high level of
income and who can accept a moderate level of risk to their investment.

                                                 DWS Core Plus Income Fund  | 7
<PAGE>

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


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

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

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


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


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

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


8 | DWS Core Plus Income Fund
<PAGE>

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

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


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

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

            PRICING RISK. At times, market conditions may make it difficult to
            value some investments, and the fund may use certain valuation
            methodologies for some of its investments, such as fair value
            pricing. Given the subjective nature of such valuation



                                                  DWS Core Plus Income Fund  | 9
<PAGE>


            methodologies, it is possible that the value determined for an
            investment may be different than the value realized upon such
            investment's sale. If the fund has valued its securities too
            highly, you may pay too much for fund shares when you buy into the
            fund. If the fund has underestimated the price of its securities,
            you may not receive the full market value when you sell your fund
            shares.


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

            Another factor that could affect performance is:

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


10 | DWS Core Plus Income Fund
<PAGE>

THE FUND'S PERFORMANCE HISTORY

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


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


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

DWS Core Plus Income Fund

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






<TABLE>
<S>       <C>        <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
 6.11      -1.49      9.79      5.87      7.63      5.00      5.29      2.44      4.59     4.20
1998      1999       2000      2001      2002      2003      2004      2005      2006      2007
</TABLE>







<TABLE>
<CAPTION>
                 2008 TOTAL RETURN AS OF MARCH 31: -1.09%
<S>                                        <C>
For the periods included in the bar chart:
BEST QUARTER: 3.95%, Q3 2002               WORST QUARTER: -2.45%, Q2 2004
</TABLE>




                                                 DWS Core Plus Income Fund  | 11
<PAGE>


AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2007




<TABLE>
<CAPTION>
                                              1 YEAR      5 YEARS      10 YEARS
<S>                                          <C>         <C>          <C>
 CLASS S
   Return before Taxes                         4.20         4.30         4.90
   Return after Taxes on Distributions         2.43         2.60         2.76
   Return after Taxes on Distributions
   and Sale of Fund Shares                     2.71*        2.66*        2.85*
 LEHMAN BROTHERS U.S. AGGREGATE
 INDEX (reflects no deductions for fees,
 expenses or taxes)                            6.97         4.42         5.97
</TABLE>



 In both the chart and the table, total returns would have been lower if
 operating expenses
     hadn't been reduced and if fund losses hadn't been reimbursed.


 *   Return after Taxes on Distributions and Sale of Fund Shares is higher than
     Return after Taxes on Distributions for the same period due to capital
     losses occurring upon redemption resulting in an assumed tax deduction for
     shareholders.

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



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

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



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

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


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



12 | DWS Core Plus Income Fund
<PAGE>

HOW MUCH INVESTORS PAY

Class S has no sales charges or other  shareholder  fees other than a short-term
redemption/exchange  fee. This information  doesn't include any fees that may be
charged by your financial advisor. The fund does have annual operating expenses,
and as a shareholder of Class S shares, you pay them indirectly.




<TABLE>
<CAPTION>
FEE TABLE                                           CLASS S
<S>                                       <C>
 SHAREHOLDER FEES, paid directly from
 your investment                                     None
______________________________________
 Redemption/Exchange fee on shares
 owned less than 15 days (as % of
 redemption proceeds)1                                2.00%
 ANNUAL OPERATING EXPENSES, deducted from fund assets
________________________________________________________________________
 Management Fee                                       0.45%
 Distribution/Service (12b-1) Fee                    None
 Other Expenses2                                      0.34
 TOTAL ANNUAL OPERATING EXPENSES                      0.79
 Less Fee Waiver/Expense
 Reimbursement3                                       0.03
 NET ANNUAL OPERATING EXPENSES3                       0.76
</TABLE>



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


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



3   Through April 30, 2009, the Advisor has contractually agreed to waive all
   or a portion of its management fee and reimburse or pay certain operating
   expenses of the fund so that the fund's total operating expenses will not
   exceed 0.76% for Class S shares, excluding certain expenses such as
   extraordinary expenses, taxes, brokerage and interest.

Based on the costs above (including one year of capped expenses in each
period), this example helps you compare the expenses of the fund's Class S
shares to those of other mutual funds. This example assumes the expenses remain
the same. It also assumes that you invested $10,000, earned 5% annual returns,
reinvested all dividends and distributions and sold all of your shares at the
end of each period. This is only an example; actual expenses will be different.





<TABLE>
<CAPTION>
EXAMPLE               1 YEAR      3 YEARS      5 YEARS      10 YEARS
<S>                  <C>         <C>          <C>          <C>
 Class S shares         $78         $249         $436         $975
</TABLE>




                                                 DWS Core Plus Income Fund  | 13
<PAGE>

OTHER POLICIES AND RISKS

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


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

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



           -  The fund may trade actively. This could raise transaction costs
              (thus lowering return) and could mean distributions at higher tax
              rates.

           -  Portfolio management measures credit quality at the time it buys
              securities, using independent rating agencies or, for unrated
              securities, its own judgment. All securities must meet the credit
              quality standards applied by portfolio management at the time
              they are purchased. If a security's credit quality changes,
              portfolio management will decide what to do with the security,
              based on its assessment of what would most benefit the fund.



           For more information

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

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


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

           A complete list of the fund's portfolio holdings as of the month-end
           is posted on www.dws-scudder.com (the Web site does not form a part
           of this prospectus) on or after the last day of the following month.
           This posted information generally remains accessible at least until
           the date on which the fund files its



14 | Other Policies and Risks
<PAGE>

           Form N-CSR or N-Q with the Securities and Exchange Commission for
           the period that includes the date as of which the posted information
           is current. The fund's Statement of Additional Information includes
           a description of the fund's policies and procedures with respect to
           the disclosure of the fund's portfolio holdings.


WHO MANAGES AND OVERSEES THE FUND


           The investment advisor


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


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

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

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


                                         Who Manages and Oversees the Fund  | 15
<PAGE>


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




<TABLE>
<CAPTION>
FUND NAME                                  FEE PAID
<S>                                       <C>
  DWS Core Plus Income Fund                  0.45%
</TABLE>




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


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


           Subadvisor for DWS Core Plus Income Fund


           Pursuant to an investment subadvisory agreement between the Advisor
           and Aberdeen Asset Management Inc. ("AAMI"), an investment adviser
           registered under the Investment Advisers Act of 1940, as amended,
           AAMI acts as subadvisor. As the subadvisor, AAMI, under the
           supervision of the Board and the Advisor, makes investment
           decisions, buys and sells securities and conducts the research that
           leads to these purchase and sale decisions. AAMI provides a full
           range of international investment advisory services to institutional
           and retail clients.


           AAMI is a direct, wholly owned subsidiary of Aberdeen Asset
           Management PLC, the parent company of an asset management group
           formed in 1983. AAMI is located at 1735 Market Street, Philadelphia,
           PA 19103.


           Sub-subadvisor for DWS Core Plus Income Fund


           Pursuant to an investment sub-subadvisory agreement between AAMI and
           Aberdeen Asset Management Investment Services Limited ("AAMISL"), an
           investment adviser registered under the Investment Advisers Act of
           1940, as amended, AAMISL acts as the sub-subadvisor for the fund. As
           the sub-subadvisor, AAMISL, under the supervision of the Board of
           Trustees, DIMA and AAMI, manages the fund's investments in foreign
           securities, foreign currencies and related investments and



16 | Who Manages and Oversees the Fund
<PAGE>

           conducts the research that leads to these investments. AAMISL
           provides a full range of international investment advisory services
           to institutional and retail clients. AAMI continues to manage the
           core bond and active fixed income strategies of the fund.

           AAMISL will be paid for its sub-subadvisory services by AAMI, the
           fund's subadvisor, from AAMI's subadvisory fee paid by DIMA to AAMI.



                                         Who Manages and Oversees the Fund  | 17
<PAGE>

Portfolio management

DWS Core Plus Income Fund's subadvisor is Aberdeen Asset Management, Inc. A
team approach is utilized with respect to the day-to-day management of the
fund's portfolio. Portfolio decisions are made jointly by the senior members of
the management team. The following members of the management team handle the
day-to-day operations of the core bond, active fixed income and high-yield
portions of the fund:

DWS CORE PLUS INCOME FUND

Gary W. Bartlett, CFA
Head of US Fixed Income and senior portfolio manager specializing in taxable
municipal, utility and government fixed income investments: Philadelphia.
-  Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2002.
-  Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1992 after nine years of experience as an analyst and
   fixed income portfolio manager at PNC Financial and credit analyst at First
   Pennsylvania Bank.
-  BA from Bucknell University; MBA from Drexel University.

Warren S. Davis, III
Senior portfolio manager for mortgage- and asset-backed fixed income
investments: Philadelphia.
-  Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2002.
-  Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1995 after nine years of experience as a trader,
   analyst and developer of analytical and risk management systems for
   PaineWebber and Merrill Lynch.
-  BS from Pennsylvania State University; MBA from Drexel University.

Thomas J. Flaherty
Senior portfolio manager for corporate and taxable municipal fixed income
investments: Philadelphia.
-  Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2002.
-  Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1995 after 10 years of fixed income experience,
   including vice president for US taxable fixed income securities at
   Prudential Securities.
-  BA from SUNY Stony Brook.

J. Christopher Gagnier
Head of Core Plus Fixed Income product and senior portfolio manager for
corporate and commercial mortgages: Philadelphia.
-  Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2002.
-  Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1997 after 17 years of experience in fixed income
   investments at PaineWebber and Continental Bank.
-  BS from Wharton School of Business; MBA from University of Chicago.

18 | Who Manages and Oversees the Fund
<PAGE>

Daniel R. Taylor, CFA
Senior portfolio manager for asset-backed and commercial mortgage fixed income
investments: Philadelphia.
- Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2002.
- Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1998 after six years of experience as fixed income
   portfolio manager and senior credit analyst for CoreStates Investment
   Advisors.
- BS from Villanova University.

Timothy C. Vile, CFA
Senior portfolio manager for Core Fixed Income and Global Aggregate Fixed
Income: Philadelphia.
- Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2002.
- Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1991 as member of Core Fixed Income; seconded to the
   London office from January 1999 to June 2002 to design and develop the
   firm's European Credit and Global Aggregate capabilities; before joining
   Deutsche Asset Management, he had six years of experience that included
   portfolio manager for fixed income portfolios at Equitable Capital
   Management.
- BS from Susquehanna University.

William T. Lissenden
Portfolio manager for Core Fixed Income: Philadelphia.
- Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2004.
- Formerly, Director of Deutsche Asset Management; joined Deutsche Asset
   Management in 2002 after 31 years of experience, including fixed income
   strategist and director of research at Conseco Capital Management, director
   of fixed income research and product management at Prudential Securities
   and national sales manager for fixed income securities at Prudential
   Securities.
- BS from St. Peter's College; MBA from Baruch College.


                                         Who Manages and Oversees the Fund  | 19
<PAGE>

The following portfolio managers of the sub-subadvisor, Aberdeen Asset
Management Investment Services Limited, are responsible for the day-to-day
management of the foreign securities, foreign currencies and related
investments for the fund:

Brett Diment
Head of Emerging Markets and Co-Manager of the fund.
-  Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2002.
-  Formerly, Managing Director of Deutsche Asset Management, joined Deutsche
   Asset Management 1991. Head of Emerging Markets.
-  BSc from London School of Economics.

Annette Fraser
Head of Fixed Income - Asia Pacific and Co-Manager of the fund.
-  Joined Aberdeen Asset Management Inc. and the fund in 2005.
-  Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1990.
-  Portfolio Manager in the fixed income team for 16 years specializing in the
   global and US core plus mandates.
-  MA from St. Andrews University.

Anthony Fletcher
Client Portfolio Manager and Co-Manager of the fund.
-  Joined Aberdeen Asset Management Inc. and the fund in 2005.
-  Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1996 as a portfolio manager covering global and UK
   fixed income products.
-  Over 20 years investment industry experience, including serving as the Head
   of global fixed income at the Saudi American Bank and as a fund manager for
   the Industrial Bank of Japan.
-  BSc Geology from University of London.

Nik Hart
Head of European Investment Grade and Co-Manager of the fund.
-  Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2002.
-  Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1992.
-  Head of European Investment Grade, analyst specializing in investing credit
   and managing sterling portfolios.

Stephen Ilott
Head of Fixed Income and Co-Manager of the fund.
-  Joined Aberdeen Asset Management in 2005 as head of the fixed income
   business globally.
-  Joined the fund in 2004.
-  Formerly, Managing Director of Deutsche Asset Management; joined Deutsche
   Asset Management in 1998.
-  Prior to 1998, managed global fixed income and currency portfolios on behalf
   of central banks, corporations and pension funds at Robert Fleming &
   Company from 1986 to 1997.

20 | Who Manages and Oversees the Fund
<PAGE>

Ian Winship
Head of Global Interest Rates and Co-Manager of the fund.
- Joined Aberdeen Asset Management Inc. in 2005 and the fund in 2004.
- Formerly, Director of Deutsche Asset Management; joined Deutsche Asset
   Management in 1999 as a member of the fixed income team.
- Previously had nine years of experience as a fixed income portfolio manager
   at Scottish Amicable Investment Managers, Murray Johnstone, and Hill Samuel
   Asset Managers.
- BA from University of Strathclyde.

Matthew Cobon
Head of Currency and Co-Manager of the fund.
- Joined Aberdeen Asset Management Inc. and the fund in 2005.
- Formerly, Director of Deutsche Asset Management; joined Deutsche Asset
   Management in 2001 as a member of the fixed income currency desk.
- Previously had five years of experience at Citibank advising global fixed
   income and currency fund managers on the active management of their
   currency exposure.
- BA from Warwick University.


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



                                         Who Manages and Oversees the Fund  | 21
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights are designed to help you understand recent financial
performance. The figures in the first part of the table are for a single share.
The total return figures represent the percentage that an investor in the fund
would have earned (or lost), assuming all dividends and distributions were
reinvested. This information has been audited by PricewaterhouseCoopers LLP,
independent registered public accounting firm, whose report, along with the
fund's financial statements, is included in the fund's annual report (see
"Shareholder reports" on the back cover).

DWS Core Plus Income Fund - Class S



<TABLE>
<CAPTION>
YEARS ENDED JANUARY 31,                2008             2007            2006            2005            2004
<S>                               <C>              <C>              <C>            <C>              <C>
SELECTED PER SHARE DATA
-------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD                           $  12.60         $  12.68        $  13.04        $  12.97        $  12.76
------------------------------      --------         --------        --------        --------        --------
Income (loss) from
investment operations:
  Net investment income a                 .61              .59             .52             .52             .47
______________________________      ________         ________        ________        ________        ________
  Net realized and unrealized
  gain (loss)                            .02           (  .04)         (  .27)            .12             .26
------------------------------      --------         --------        --------        --------        --------
  TOTAL FROM INVESTMENT
  OPERATIONS                             .63              .55             .25             .64             .73
______________________________      ________         ________        ________        ________        ________
Less distributions from:
  Net investment income               (  .62)          (  .63)         (  .61)         (  .57)         (  .52)
______________________________      ________         ________        ________        ________        ________
Redemption fees                          .00*             .00*            .00*              -               -
------------------------------      --------         --------        --------        --------        --------
NET ASSET VALUE, END OF
PERIOD                              $  12.61         $  12.60        $  12.68        $  13.04        $  12.97
------------------------------      --------         --------        --------        --------        --------
Total Return (%)                      5.12b            4.45b             1.98          5.10b             5.82
------------------------------      --------         --------        --------        --------        --------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($
millions)                                417              442             352             374             408
______________________________      ________         ________        ________        ________        ________
Ratio of expenses before
expense reductions (%)                   .79              .85             .81             .85             .83
______________________________      ________         ________        ________        ________        ________
Ratio of expenses after
expense reductions (%)                   .77              .82             .81             .84             .83
______________________________      ________         ________        ________        ________        ________
Ratio of net investment
income (%)                              4.83             4.68            4.03            4.04            3.71
______________________________      ________         ________        ________        ________        ________
Portfolio turnover rate (%)c             140              150             184             156             210
------------------------------      --------         --------        --------        --------        --------
</TABLE>



a   Based on average shares outstanding during the period.

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


c   The portfolio turnover rate including mortgage dollar roll transactions was
   150%, 151%, 196%, 190% and 248% for the years ended January 31, 2008, 2007,
   2006, 2005 and 2004, respectively.


*   Amount is less than $.005.

22 | Financial Highlights
<PAGE>


HOW TO INVEST IN THE FUND

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

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


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


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

<PAGE>


How to BUY Shares





<TABLE>
<CAPTION>
 FIRST INVESTMENT                              ADDITIONAL INVESTMENTS
<S>                                           <C>
 $2,500 or more for regular accounts           $50 or more for regular accounts and
 $1,000 or more for IRAs and UTMAs/           IRAs
 UGMAs                                        $50 or more for an account with an
 $1,000 or more for an account with an        Automatic Investment Plan
 Automatic Investment Plan
 BY MAIL OR EXPRESS MAIL (SEE BELOW)
                                              Send a DWS Scudder investment slip or
 -  Fill out and sign an application
                                              short note that includes:
 -  Send it to us at the appropriate
                                              -  fund and class name
  address, along with an investment
  check made payable to "DWS                  -  account number
  Scudder"                                    -  check made payable to "DWS
                                              Scudder"
 BY WIRE
 -  Call (800) 728-3337 for instructions      -  Call (800) 728-3337 for instructions
 BY PHONE
 Not available                                -  Call (800) 728-3337 for instructions
 WITH AN AUTOMATIC INVESTMENT PLAN
 -  Fill in the information on our            -  To set up regular investments from a
  application including a check for the       bank checking account, call
  initial investment and a voided check       (800) 728-3337 (minimum $50)
 USING QuickBuy
 Not available                                -  Call (800) 728-3337 to make sure
                                              QuickBuy is set up on your account; if
                                              it is, you can request a transfer from
                                              your bank account of any amount
                                              between $50 and $250,000
 ON THE INTERNET
 -  Register at www.dws-scudder.com or        -  Call (800) 728-3337 to ensure you have
  log in if already registered                electronic services
 -  Print out a prospectus and a new          -  Register at www.dws-scudder.com
  account application                         or log in if already registered
 -  Complete and return the application       -  Follow the instructions for buying
  with your check                             shares with money from your bank
                                              account
</TABLE>



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

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

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


24 | How to Buy Shares
<PAGE>


How to EXCHANGE or SELL Shares





<TABLE>
<CAPTION>
 EXCHANGING INTO ANOTHER FUND                    SELLING SHARES
<S>                                             <C>
                                                 Some transactions, including most for
 -  Exchanges into existing accounts:
                                                over $100,000, can only be ordered in
  $50 minimum per fund
                                                writing with a signature guarantee;
 -  Exchanges into new accounts:
                                                please see "Signature Guarantee"
  $2,500 minimum per fund
  $1,000 minimum for IRAs and UTMAs/
  UGMAs
 BY PHONE                                        BY PHONE OR WIRE
 -  Call (800) 728-3337 for instructions        -  Call (800) 728-3337 for instructions
 USING THE AUTOMATED INFORMATION LINE
 -  Call (800) 728-3337 for instructions        -  Call (800) 728-3337 for instructions
 BY MAIL OR EXPRESS MAIL
 (see previous page for address)
 Your instructions should include:              Your instructions should include:
 -  the fund, class and account number          -  the fund, class and account number
  you're exchanging out of                      from which you want to sell shares
 -  the dollar amount or number of shares       -  the dollar amount or number of shares
  you want to exchange                          you want to sell
 -  the name and class of the fund you          -  your name(s), signature(s) and
  want to exchange into                         address, as they appear on your
                                                account
 -  your name(s), signature(s) and
  address, as they appear on your               -  a daytime telephone number
  account
 -  a daytime telephone number
 WITH AN AUTOMATIC EXCHANGE PLAN                 WITH AN AUTOMATIC WITHDRAWAL PLAN
 -  To set up regular exchanges from a          -  To set up regular cash payments from
  fund account, call (800) 728-3337             a DWS fund account, call
                                                (800) 728-3337
 USING QuickSell
 Not available                                  -  Call (800) 728-3337 to make sure
                                                QuickSell is set up on your account; if
                                                it is, you can request a transfer to your
                                                bank account of any amount between
                                                $50 and $250,000
 ON THE INTERNET
 -  Register at www.dws-scudder.com or          -  Register at www.dws-scudder.com or
  log in if already registered                  log in if already registered
 -  Follow the instructions for making on-      -  Follow the instructions for making on-
  line exchanges                                line redemptions
</TABLE>



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


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




                                            How to Sell or Exchange Shares  | 25
<PAGE>

           Financial intermediary support payments


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


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


26 | How to Sell or Exchange Shares
<PAGE>


           The Advisor, the Distributor and/or their affiliates currently make
           revenue sharing payments from their own assets in connection with
           the sale and/or distribution of DWS Fund shares or the retention
           and/or servicing of investors and DWS Fund shares to financial
           advisors in amounts that generally range from .01% up to .50% of
           assets of 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 $13,350 up to $500,000, or any combination
           thereof. These amounts are subject to change at the discretion of
           the Advisor, the Distributor and/or their affiliates. Receipt of, or
           the prospect of receiving, this additional compensation may
           influence your financial advisor's recommendation of the fund or of
           any particular share class of the fund. You should review your
           financial advisor's compensation disclosure and/or talk to your
           financial advisor to obtain more information on how this
           compensation may have influenced your financial advisor's
           recommendation of the fund. Additional information regarding these
           revenue sharing payments is included in the fund's Statement of
           Additional Information, which is available to you on request at no
           charge (see the back cover of this prospectus for more information
           on how to request a copy of the Statement of Additional
           Information).


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

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


                                            How to Sell or Exchange Shares  | 27
<PAGE>

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


POLICIES YOU SHOULD KNOW ABOUT


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


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

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

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

           Policies about transactions

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


THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS


Questions?

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


28 | Policies You Should Know About
<PAGE>

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

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

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

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

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


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


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

           INITIAL PURCHASE. The minimum initial investment is $2,500, except
           for investments on behalf of participants in certain fee-based and
           wrap programs offered through certain financial intermediaries
           approved by the Advisor, for which there is no
           minimum initial investment; and fiduciary accounts such as IRAs


                                            Policies You Should Know About  | 29
<PAGE>

           and custodial accounts such as Uniform Gifts to Minors Act and
           Uniform Transfers to Minors Act accounts for which the minimum
           initial investment is $1,000 per account. In addition, the minimum
           initial investment is $1,000 if an automatic investment plan of $50
           per month is established. Group retirement plans and certain other
           accounts have similar or lower minimum share balance requirements.


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

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

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



30 | Policies You Should Know About
<PAGE>


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

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

           Shareholders are limited to four roundtrip transactions in the same
           DWS Fund (excluding money market funds) over a rolling 12-month
           period. Shareholders with four or more roundtrip transactions in the
           same DWS Fund within a rolling 12-month period generally will be
           blocked from making additional purchases of, or exchanges into, that
           DWS Fund. The fund has sole discretion whether to remove a block
           from a shareholder's



                                            Policies You Should Know About  | 31
<PAGE>


           account. The rights of a shareholder to redeem shares of a DWS Fund
           are not affected by the four roundtrip transaction limitation, but
           all redemptions remain subject to the fund's redemption fee policy
           (see "Redemption fees" described below).

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

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

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

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



32 | Policies You Should Know About
<PAGE>


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

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


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

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


                                            Policies You Should Know About  | 33
<PAGE>

           customer accounts and to collect and remit the proceeds to the fund.
           However, due to operational requirements, the intermediaries'
           methods for tracking and calculating the fee may be inadequate or
           differ in some respects from the fund's.


           The redemption fee will not be charged in connection with the
           following exchange or redemption transactions: (i) transactions on
           behalf of participants in certain research wrap programs; (ii)
           transactions on behalf of a shareholder to return any excess IRA
           contributions to the shareholder; (iii) transactions on behalf of a
           shareholder to effect a required minimum distribution on an IRA;
           (iv) transactions on behalf of any mutual fund advised by the
           Advisor and its affiliates (e.g., "funds of funds") or, in the case
           of a master/feeder relationship, redemptions by the feeder fund from
           the master portfolio; (v) transactions on behalf of certain
           unaffiliated mutual funds operating as funds of funds; (vi)
           transactions following death or disability of any registered
           shareholder, beneficial owner or grantor of a living trust with
           respect to shares purchased before death or disability; (vii)
           transactions involving hardship of any registered shareholder;
           (viii) systematic transactions with pre-defined trade dates for
           purchases, exchanges or redemptions, such as automatic account
           rebalancing, or loan origination and repayments; (ix) transactions
           involving shares purchased through the reinvestment of dividends or
           other distributions; (x) transactions involving shares transferred
           from another account in the same fund or converted from another
           class of the same fund (the redemption fee period will carry over to
           the acquired shares); (xi) transactions initiated by the fund or
           administrator (e.g., redemptions for not meeting account minimums,
           to pay account fees funded by share redemptions, or in the event of
           the liquidation or merger of the fund); or (xii) transactions in
           cases when there are legal or contractual limitations or
           restrictions on the imposition of the redemption fee (as determined
           by the fund or its agents in their sole discretion). It is the
           policy of the DWS funds to permit approved fund platform providers
           to execute transactions with the funds without the imposition of a
           redemption fee if such providers have implemented alternative
           measures that are determined by the Advisor to provide controls on
           short-term and excessive trading that are comparable to the DWS
           funds' policies.



34 | Policies You Should Know About
<PAGE>


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


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


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


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


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


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

THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS



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

                                            Policies You Should Know About  | 35
<PAGE>


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

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


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

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


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


THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS



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


36 | Policies You Should Know About
<PAGE>


           recently purchased or in the event of closing of the Federal Reserve
           wire payment system. The fund reserves the right to suspend or
           postpone redemptions as permitted pursuant to Section 22(e) of the
           Investment Company Act of 1940. Generally, those circumstances are
           when 1) the New York Stock Exchange is closed other than customary
           weekend or holiday closings; 2) trading on the New York Stock
           Exchange is restricted; 3) an emergency exists which makes the
           disposal of securities owned by the fund or the fair determination
           of the value of the fund's net assets not reasonably practicable; or
           4) the SEC, by order, permits the suspension of the right of
           redemption. Redemption payments by wire may also be delayed in the
           event of a non-routine closure of the Federal Reserve wire payment
           system. For additional rights reserved by the fund, please see
           "Other rights we reserve."


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


           How the fund calculates share price

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


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



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

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


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


                                            Policies You Should Know About  | 37
<PAGE>

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

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


38 | Policies You Should Know About
<PAGE>

           Other rights we reserve

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

           -  withdraw or suspend the offering of shares at any time


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


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


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

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

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

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



                                            Policies You Should Know About  | 39
<PAGE>

UNDERSTANDING DISTRIBUTIONS AND TAXES

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


           INCOME DIVIDENDS ARE DECLARED AND PAID MONTHLY. Short-term and
           long-term capital gains are paid in November or December, or
           otherwise as needed.


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


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


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


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


THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS




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

40 | Understanding Distributions and Taxes
<PAGE>

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


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




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

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




           ANY DIRECT INVESTMENTS IN FOREIGN SECURITIES BY THE FUND MAY BE
           SUBJECT TO FOREIGN WITHHOLDING TAXES. In that case, the fund's yield
           on those securities would generally be decreased. Shareholders
           generally will not be entitled to claim a credit or deduction with
           respect to foreign taxes paid by the fund. In addition, any
           investments in foreign securities or foreign currencies may increase
           or accelerate the fund's recognition of ordinary income and may
           affect the timing or amount of the fund's distributions. If you
           invest in the fund through a taxable account, your after-tax return
           could be negatively impacted.

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

           For taxable years beginning before January 1, 2011, distributions to
           individuals and other noncorporate shareholders of investment income
           designated by the fund as derived from qualified dividend income are
           eligible for taxation for federal income tax purposes at the more
           favorable long-term capital



                                     Understanding Distributions and Taxes  | 41
<PAGE>


           gain rates. Qualified dividend income generally includes dividends
           from domestic and some foreign corporations. It does not include
           income from investments in debt securities or, generally, from
           REITs. In addition, the fund must meet certain holding period and
           other requirements with respect to the dividend-paying stocks in its
           portfolio and the shareholder must meet certain holding period and
           other requirements with respect to the fund's shares for the lower
           tax rates to apply. The fund does not expect a significant portion
           of its distributions to constitute qualified dividend income.

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


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


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

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

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



42 | Understanding Distributions and Taxes
<PAGE>

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


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

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


                                                                  Appendix  | 43
<PAGE>

                      DWS Core Plus Income Fund - Class S




<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER      ANNUAL FEES
              FEES AND        EXPENSE        FEES AND           FEES AND            AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        0.76%              4.24%       $ 10,424.00         $  77.61
   2           10.25%        0.79%              8.63%       $ 10,862.85         $  84.08
   3           15.76%        0.79%             13.20%       $ 11,320.18         $  87.62
   4           21.55%        0.79%             17.97%       $ 11,796.76         $  91.31
   5           27.63%        0.79%             22.93%       $ 12,293.40         $  95.16
   6           34.01%        0.79%             28.11%       $ 12,810.95         $  99.16
   7           40.71%        0.79%             33.50%       $ 13,350.29         $ 103.34
   8           47.75%        0.79%             39.12%       $ 13,912.34         $ 107.69
   9           55.13%        0.79%             44.98%       $ 14,498.05         $ 112.22
  10           62.89%        0.79%             51.08%       $ 15,108.42         $ 116.95
  TOTAL                                                                         $ 975.14
</TABLE>




44 | Appendix
<PAGE>

TO GET MORE INFORMATION

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

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

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


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



<TABLE>
<S>                      <C>                            <C>
SEC FILE NUMBER:
DWS Portfolio Trust        DWS Core Plus Income Fund    811-42
</TABLE>









(05/01/08) 63-2

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





<PAGE>


                               DWS PORTFOLIO TRUST

                            DWS Core Plus Income Fund
           (Class A, Class B, Class C and Institutional Class shares)














                       STATEMENT OF ADDITIONAL INFORMATION


                                   May 1, 2008

This Statement of Additional Information ("SAI") is not a prospectus and should
be read in conjunction with the prospectuses dated May 1, 2008 for DWS Core Plus
Income Fund, (the "Fund"), a series of DWS Portfolio Trust (the "Trust"), as
amended from time to time, copies of which may be obtained without charge by
contacting DWS Scudder Distributors, Inc. ("DWS-SDI" or the "Distributor"), 222
South Riverside Plaza, Chicago, Illinois 60606, (800) 621-1148, or from the firm
from which this SAI was obtained. The Prospectuses are also available along with
other materials on the Securities and Exchange Commission's (the "SEC" or
"Commission") Internet Web site (http://www.sec.gov).

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


This SAI is incorporated by reference into the Fund's Prospectuses.



<PAGE>
                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

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

INVESTMENT POLICIES AND TECHNIQUES.............................................3
   Portfolio Holdings Information.............................................28

MANAGEMENT OF THE FUND........................................................34
   Investment Advisor.........................................................34
   Compensation of Portfolio Managers.........................................38

FUND SERVICE PROVIDERS........................................................43

   Distributor................................................................44
   Independent Registered Public Accounting Firm and Reports to Shareholders..49
   Legal Counsel..............................................................49
   Custodian, Transfer Agent and Shareholder Service Agent....................49

PURCHASE AND REDEMPTION OF SHARES.............................................55

DIVIDENDS.....................................................................79

TAXES.........................................................................80

NET ASSET VALUE...............................................................87

TRUSTEES AND OFFICERS.........................................................88

PROXY VOTING GUIDELINES......................................................108

FINANCIAL STATEMENTS.........................................................109

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


APPENDIX.....................................................................110




                                       i



<PAGE>



                             INVESTMENT RESTRICTIONS

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

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

The Fund has elected to be classified as 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 or invest in more than 10% of the outstanding
voting securities of such issuer.

As a matter of fundamental policy, the Fund may not:

(1)      borrow money, except as permitted under the Investment Company Act of
         1940, as amended (the "1940 Act"), as amended, and as interpreted or
         modified by regulatory authority having jurisdiction, from time to
         time;

(2)      issue senior securities, except as permitted under the 1940 Act 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 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 the 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; or

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

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

The Trustees of the Trust have voluntarily adopted certain policies and
restrictions, which are observed in the conduct of the Fund's affairs. These
represent intentions of the Trustees based upon current circumstances.
Non-fundamental policies may be changed by the Trustees of the Trust without
requiring approval of or, with certain exceptions, prior notice to shareholders.

As a matter of non-fundamental policy, the Fund currently does not intend to:

(a)      borrow money in an amount greater than 5% of its total assets except
         (i) for temporary or emergency purposes and (ii) by engaging in reverse
         repurchase agreements, dollar rolls, or other investments or
         transactions described in the Fund's registration statement which may
         be deemed to be borrowings;


                                       1
<PAGE>

(b)      purchase securities on margin or make short sales, except (i) short
         sales against the box, (ii) in connection with arbitrage transactions,
         (iii) for margin deposits in connection with futures contracts, options
         or other permitted investments, (iv) that transactions in futures
         contracts and options shall not be deemed to constitute selling
         securities short, and (v) that the Fund may obtain such short-term
         credits as may be necessary for the clearance of securities
         transactions;

(c)      purchase options, unless the aggregate premiums paid on all such
         options held by the Fund at any time do not exceed 20% of its total
         assets; or sell put options, if as a result, the aggregate value of the
         obligations underlying such put options would exceed 50% of its total
         assets;

(d)      enter into futures contracts or purchase options thereon unless
         immediately after the purchase, the value of the aggregate initial
         margin with respect to such futures contracts entered into on behalf of
         the Fund and the premiums paid for such options on futures contracts
         does not exceed 5% of the fair market value of the Fund's total assets;
         provided that in the case of an option that is in-the-money at the time
         of purchase, the in-the-money amount may be excluded in computing the
         5% limit;

(e)      purchase warrants if as a result, such securities, taken at the lower
         of cost or market value, would represent more than 5% of the value of
         the Fund's total assets (for this purpose, warrants acquired in units
         or attached to securities will be deemed to have no value);

(f)      lend portfolio securities in an amount greater than 33 1/3% of its
         total assets; or

(g)      acquire securities of registered open-end investment companies or
         registered unit investment trusts in reliance on Sections 12(d)(1)(F)
         or 12(d)(1)(G) of the 1940 Act.

The Fund will not purchase illiquid securities, including repurchase agreements
maturing in more than seven days, if, as a result thereof, more than 15% of the
Fund's net assets, valued at the time of the transaction, would be invested in
such securities.

The Fund has undertaken that if the Fund obtains an exemptive order from the
Securities and Exchange Commission (the "SEC") which would permit the taking of
action in contravention of any policy which may not be changed without a
shareholder vote, the Fund will not take such action unless either (i) the
applicable exemptive order permits the taking of such action without a
shareholder vote or (ii) the staff of the SEC has issued to the Fund a "no
action" or interpretive letter to the effect that the Fund may proceed without
shareholder vote.

The Fund may invest in foreign currencies (utilizing instruments such as forward
foreign currency exchange contracts) for both hedging and non-hedging purposes
although no more than 10% of its total assets in currencies may be used for
these purposes.

Temporary Defensive Policy. For temporary defensive purposes, the Fund may
invest, without limit, in cash and cash equivalents (including foreign money
market instruments, such as bankers' acceptances, certificates of deposit,
commercial paper, short-term government and corporate obligations, and
repurchase agreements), obligations issued or guaranteed by the US government,
its agencies or instrumentalities ("Government Securities"), domestic repurchase
agreements, money market instruments and high quality debt securities without
equity features. In such a case, the Fund would not be pursuing, and may not
achieve, its investment objective.

Master/feeder Fund Structure. The Board of Trustees has the discretion to retain
the current distribution arrangement for the Fund while investing in a master
fund in a master/feeder fund structure as described below.

A master/feeder fund structure is one in which a fund (a "feeder fund"), instead
of investing directly in a portfolio of securities, invests most or all of its
investment assets in a separate registered investment company (the "master
fund") with substantially the same investment objective and policies as the
feeder fund. Such a structure permits the pooling of assets of two or more
feeder funds, preserving separate identities or distribution channels at the
feeder fund level. Based on the premise that certain of the expenses of
operating an investment portfolio are relatively fixed, a larger investment
portfolio may eventually achieve a lower ratio of operating expenses to average
net assets. An existing


                                       2
<PAGE>

investment company is able to convert to a feeder fund by selling all of its
investments, which involves brokerage and other transaction costs and
realization of a taxable gain or loss, or by contributing its assets to the
master fund and avoiding transaction costs and, if proper procedures are
followed, the realization of taxable gain or loss.


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


                       INVESTMENT POLICIES AND TECHNIQUES

General Investment Objective and Policies


The Fund is an open-end management investment company which continuously offers
and redeems shares at net asset value. The Fund is a company of the type
commonly known as a mutual fund. The Fund offers five classes of shares: Class
A, Class B, Class C, Institutional Class and Class S.

The Fund seeks to maximize total return consistent with preservation of capital
and prudent investment management, by investing for both current income and
capital appreciation. The Fund primarily invests in US dollar-denominated
investment grade fixed income securities, including corporate bonds, US
government and agency bonds and mortgage- and asset-backed securities. A
significant portion of the Fund's assets may also be allocated among foreign
investment grade fixed income securities, high yield bonds of US and foreign
issuers (including high yield bonds of issuers in countries with new or emerging
securities markets), or, to maintain liquidity, in cash or money market
instruments. The Fund normally invests at least 65% of total assets in high
grade US bonds (those considered to be in the top three grades of credit
quality). The Fund may invest up to 25% of its total assets in foreign
investment grade bonds (those considered to be in the top four grades of credit
quality). In addition, the Fund may also invest up to 20% of total assets in
securities of US and foreign issuers that are below investment grade (rated as
low as the sixth credit grade, i.e., grade B, otherwise known as junk bonds),
including investment in US dollar or foreign currency denominated bonds of
issuers located in countries with new or emerging securities markets. The Fund
may have an exposure of up to 10% of total assets in foreign currencies.
Currency forward contracts are permitted for both non-hedging and hedging
purposes.


It is possible that certain investment practices and techniques described below
may not be permissible for the Fund based on its investment restrictions, as
described herein, and in the Funds' applicable prospectus.

Descriptions in this SAI of a particular investment practice or technique in
which the Fund may engage are meant to describe the spectrum of investments that
Deutsche Investment Management Americas Inc. ("DIMA" or the "Advisor") in its
discretion might, but is not required to, use in managing the Fund's portfolio
assets. The Advisor may in its discretion at any time employ such practice,
technique or instrument for one or more funds but not for all funds advised by
it. Furthermore, it is possible that certain types of financial instruments or
investment practices and techniques described herein and in the Fund's
applicable prospectus, may not be available, permissible, economically feasible
or effective for their intended purposes in all markets. Certain practices,
techniques or instruments may not be principal activities of the Fund, but, to
the extent employed, could from time to time have a material impact on the
Fund's performance.

Adjustable Rate Securities. The interest rates paid on the adjustable rate
securities in which the Fund invests generally are readjusted at intervals of
one year or less to an increment over some predetermined interest rate index.
There are three main categories of indices: those based on US Treasury
securities, those derived from a calculated measure such as a cost of funds
index and those based on a moving average of mortgage rates. Commonly used
indices

                                       3
<PAGE>

include the one-year, three-year and five-year constant maturity Treasury rates,
the three-month Treasury bill rate, the 180-day Treasury bill rate, rates on
longer-term Treasury securities, the 11th District Federal Home Loan Bank Cost
of Funds, the National Median Cost of Funds, the one-month, three-month,
six-month or one-year London Interbank Offered Rate ("LIBOR"), the prime rate of
a specific bank or commercial paper rates. Some indices, such as the one-year
constant maturity Treasury rate, closely mirror changes in market interest rate
levels. Others, such as the 11th District Home Loan Bank Cost of Funds index,
tend to lag behind changes in market rate levels and tend to be somewhat less
volatile.

The Mortgage-Backed Securities either issued or guaranteed by Government
National Mortgage Association ("GNMA"), the Federal Home Loan Mortgage
Corporation ("FHLMC") or the Federal National Mortgage Association ("FNMA" or
"Fannie Mae") ("Certificates") are called pass-through Certificates because a
pro rata share of both regular interest and principal payments (less GNMA's,
FHLMC's or FNMA's fees and any applicable loan servicing fees), as well as
unscheduled early prepayments on the underlying mortgage pool, are passed
through monthly to the holder of the Certificate (i.e., a fund). The principal
and interest on GNMA securities are guaranteed by GNMA and backed by the full
faith and credit of the US Government. FNMA guarantees full and timely payment
of all interest and principal, while FHLMC guarantees timely payment of interest
and ultimate collection of principal. Mortgage-Backed Securities from FNMA and
FHLMC are not backed by the full faith and credit of the United States; however,
they are generally considered to offer minimal credit risks. The yields provided
by these Mortgage-Backed Securities have historically exceeded the yields on
other types of US Government Securities with comparable maturities in large
measure due to the prepayment risk discussed below.

If prepayments of principal are made on the underlying mortgages during periods
of rising interest rates, the Fund generally will be able to reinvest such
amounts in securities with a higher current rate of return. However, the Fund
will not benefit from increases in interest rates to the extent that interest
rates rise to the point where they cause the current coupon of adjustable rate
mortgages held as investments by the Fund to exceed the maximum allowable annual
or lifetime reset limits (or "cap rates") for a particular mortgage. Also, the
Fund's net asset value could vary to the extent that current yields on
Mortgage-Backed Securities are different than market yields during interim
periods between coupon reset dates.

During periods of declining interest rates, of course, the coupon rates may
readjust downward, resulting in lower yields to the Fund. Further, because of
this feature, the value of adjustable rate mortgages is unlikely to rise during
periods of declining interest rates to the same extent as fixed-rate
instruments. As with other Mortgage-Backed Securities, interest rate declines
may result in accelerated prepayment of mortgages, and the proceeds from such
prepayments must be reinvested at lower prevailing interest rates.

One additional difference between adjustable rate mortgages and fixed rate
mortgages is that for certain types of adjustable rate mortgage securities, the
rate of amortization of principal, as well as interest payments, can and does
change in accordance with movements in a specified, published interest rate
index. The amount of interest due to an adjustable rate mortgage security holder
is calculated by adding a specified additional amount, the "margin," to the
index, subject to limitations or "caps" on the maximum and minimum interest that
is charged to the mortgagor during the life of the mortgage or to maximum and
minimum changes to that interest rate during a given period.

Advance Refunded Bonds. The Fund may purchase Municipal Securities that are
subsequently refunded by the issuance and delivery of a new issue of bonds prior
to the date on which the outstanding issue of bonds can be redeemed or paid. The
proceeds from the new issue of bonds are typically placed in an escrow fund
consisting of US Government obligations that are used to pay the interest,
principal and call premium on the issue being refunded. The Fund may also
purchase Municipal Securities that have been refunded prior to purchase by the
Fund.

Asset-Backed Securities. Asset backed securities may include pools of mortgages
("mortgage-backed securities"), loans, receivables or other assets. Payment of
principal and interest may be largely dependent upon the cash flows generated by
the assets backing the securities. Asset-backed securities present certain risks
that are not presented by mortgage-backed securities. Primarily, these
securities may not have the benefit of any security interest in the related
assets. Credit card receivables are generally unsecured and the debtors are
entitled to the protection of a number of state and federal consumer credit
laws, many of which give such debtors the right to set off certain amounts owed
on the credit cards, thereby reducing the balance due. There is the possibility
that recoveries on repossessed collateral


                                       4
<PAGE>

may not, in some cases, be available to support payments on these securities.
Asset-backed securities are often backed by a pool of assets representing the
obligations of a number of different parties. To lessen the effect of failures
by obligors on underlying assets to make payments, the securities may contain
elements of credit support which fall into two categories: (i) liquidity
protection, and (ii) protection against losses resulting from ultimate default
by an obligor on the underlying assets. Liquidity protection refers to the
provision of advances, generally by the entity administering the pool of assets,
to ensure that the receipt of payments on the underlying pool occurs in a timely
fashion. Protection against losses results from payment of the insurance
obligations on at least a portion of the assets in the pool. This protection may
be provided through guarantees, policies or letters of credit obtained by the
issuer or sponsor from third parties, through various means of structuring the
transaction or through a combination of such approaches. The Fund will not pay
any additional or separate fees for credit support. The degree of credit support
provided for each issue is generally based on historical information respecting
the level of credit risk associated with the underlying assets. Delinquency or
loss in excess of that anticipated or failure of the credit support could
adversely affect the return on an investment in such a security. The
availability of asset-backed securities may be affected by legislative or
regulatory developments. It is possible that such developments may require the
Fund to dispose of any then existing holdings of such securities.

Other Asset-Backed Securities. The securitization techniques used to develop
mortgage-backed securities are now being applied to a broad range of assets.
Through the use of trusts and special purpose corporations, various types of
assets, including automobile loans, computer leases and credit card receivables,
are being securitized in pass-through structures similar to mortgage
pass-through structures or in a structure similar to the CMO structure. In
general, the collateral supporting these securities is of shorter maturity than
mortgage loans and is less likely to experience substantial prepayments with
interest rate fluctuations.

Several types of asset-backed securities have already been offered to investors,
including Certificates of Automobile Receivables(SM) ("CARS(SM)"). CARS(SM)
represent undivided fractional interests in a trust whose assets consist of a
pool of motor vehicle retail installment sales contracts and security interests
in the vehicles securing the contracts. Payments of principal and interest on
CARS(SM) are passed through monthly to certificate holders, and are guaranteed
up to certain amounts and for a certain time period by a letter of credit issued
by a financial institution unaffiliated with the trustee or originator of the
trust. An investor's return on CARS(SM) may be affected by early prepayment of
principal on the underlying vehicle sales contracts. If the letter of credit is
exhausted, the trust may be prevented from realizing the full amount due on a
sales contract because of state law requirements and restrictions relating to
foreclosure sales of vehicles and the obtaining of deficiency judgments
following such sales or because of depreciation, damage or loss of a vehicle,
the application of federal and state bankruptcy and insolvency laws, or other
factors. As a result, certificate holders may experience delays in payments or
losses if the letter of credit is exhausted.

Asset-backed securities present certain risks that are not presented by
mortgage-backed securities. Primarily, these securities may not have the benefit
of any security interest in the related assets. Credit card receivables are
generally unsecured and the debtors are entitled to the protection of a number
of state and federal consumer credit laws, many of which give such debtors the
right to set off certain amounts owed on the credit cards, thereby reducing the
balance due. There is the possibility that recoveries on repossessed collateral
may not, in some cases, be available to support payments on these securities.

Asset-backed securities are often backed by a pool of assets representing the
obligations of a number of different parties. To lessen the effect of failures
by obligors on underlying assets to make payments, the securities may contain
elements of credit support which fall into two categories: (i) liquidity
protection, and (ii) protection against losses resulting from ultimate default
by an obligor on the underlying assets. Liquidity protection refers to the
provision of advances, generally by the entity administering the pool of assets,
to ensure that the receipt of payments on the underlying pool occurs in a timely
fashion. Protection against losses results from payment of the insurance
obligations on at least a portion of the assets in the pool. This protection may
be provided through guarantees, policies or letters of credit obtained by the
issuer or sponsor from third parties, through various means of structuring the
transaction or through a combination of such approaches. The Fund will not pay
any additional or separate fees for credit support. The degree of credit support
provided for each issue is generally based on historical information respecting
the level of credit risk associated with the underlying assets. Delinquency or
loss in excess of that anticipated or failure of the credit support could
adversely affect the return on an investment in such a security.


                                       5
<PAGE>

The Fund may also invest in residual interests in asset-backed securities. In
the case of asset-backed securities issued in a pass-through structure, the cash
flow generated by the underlying assets is applied to make required payments on
the securities and to pay related administrative expenses. The residual in an
asset-backed security pass-through structure represents the interest in any
excess cash flow remaining after making the foregoing payments. The amount of
residual cash flow resulting from a particular issue of asset-backed securities
will depend on, among other things, the characteristics of the underlying
assets, the coupon rates on the securities, prevailing interest rates, the
amount of administrative expenses and the actual prepayment experience on the
underlying assets. Asset-backed security residuals not registered under the
Securities Act of 1933 may be subject to certain restrictions on
transferability. In addition, there may be no liquid market for such securities.

The availability of asset-backed securities may be affected by legislative or
regulatory developments. It is possible that such developments may require a
Fund to dispose of any then-existing holdings of such securities.

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

Certificates of Deposit and Bankers' Acceptances. Certificates of deposit are
receipts issued by a depository institution in exchange for the deposit of
funds. The issuer agrees to pay the amount deposited plus interest to the bearer
of the receipt on the date specified on the certificate. The certificate usually
can be traded in the secondary market prior to maturity. Bankers' acceptances
typically arise from short-term credit arrangements designed to enable
businesses to obtain funds to finance commercial transactions. Generally, an
acceptance is a time draft drawn on a bank by an exporter or an importer to
obtain a stated amount of funds to pay for specific merchandise. The draft is
then "accepted" by a bank that, in effect, unconditionally guarantees to pay the
face value of the instrument on its maturity date. The acceptance may then be
held by the accepting bank as an earning asset or it may be sold in the
secondary market at the going rate of discount for a specific maturity. Although
maturities for acceptances can be as long as 270 days, most acceptances have
maturities of six months or less.

The Fund may also invest in certificates of deposit issued by banks and savings
and loan institutions which had, at the time of their most recent annual
financial statements, total assets of less than $1 billion, provided that (i)
the principal amounts of such certificates of deposit are insured by an agency
of the US Government, (ii) at no time will the Fund hold more than $100,000
principal amount of certificates of deposit of any one such bank, and (iii) at
the time of acquisition, no more than 10% of a Fund's assets (taken at current
value) are invested in certificates of deposit of such banks having total assets
not in excess of $1 billion.


                                       6
<PAGE>

Banker's acceptances are credit instruments evidencing the obligations of a bank
to pay a draft drawn on it by a customer. These instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of the
instrument upon maturity.

Time deposits are non-negotiable deposits maintained in a banking institution
for a specified period of time at a stated interest rate. Time deposits which
may be held by the Fund will not benefit from insurance from the Bank Insurance
Fund or the Savings Association Insurance Fund administered by the Federal
Deposit Insurance Corporation. Fixed time deposits may be withdrawn on demand by
the investor, but may be subject to early withdrawal penalties that vary with
market conditions and the remaining maturity of the obligation. Fixed time
deposits subject to withdrawal penalties maturing in more than seven calendar
days are subject to the Fund's limitation on investments in illiquid securities.

Collateralized Mortgage Obligations ("CMOs"). CMOs are hybrids between
mortgage-backed bonds and mortgage pass-through securities. Similar to a bond,
interest and prepaid principal are paid, in most cases, semiannually. CMOs may
be collateralized by whole mortgage loans but are more typically collateralized
by portfolios of mortgage pass-through securities guaranteed by GNMA, FHLMC, or
Fannie Mae, and their income streams.

CMOs are structured into multiple classes, each bearing a different stated
maturity. Actual maturity and average life will depend upon the prepayment
experience of the collateral. CMOs provide for a modified form of call
protection through a de facto breakdown of the underlying pool of mortgages
according to how quickly the loans are repaid. Monthly payment of principal
received from the pool of underlying mortgages, including prepayments, is first
returned to investors holding the shortest maturity class. Investors holding the
longer maturity classes receive principal only after the first class has been
retired. An investor is partially guarded against a sooner than desired return
of principal because of the sequential payments. The prices of certain CMOs,
depending on their structure and the rate of prepayments, can be volatile. Some
CMOs may also not be as liquid as other securities.

In a typical CMO transaction, a corporation issues multiple series (e.g., A, B,
C, Z) of CMO bonds ("Bonds"). Proceeds of the Bond offering are used to purchase
mortgages or mortgage pass-through certificates ("Collateral"). The Collateral
is pledged to a third party trustee as security for the Bonds. Principal and
interest payments from the Collateral are used to pay principal on the Bonds in
the order A, B, C, Z. The Series A, B, and C bonds all bear current interest.
Interest on the Series Z Bond is accrued and added to principal and a like
amount is paid as principal on the Series A, B, or C Bond currently being paid
off. When the Series A, B, and C Bonds are paid in full, interest and principal
on the Series Z Bond begins to be paid currently. With some CMOs, the issuer
serves as a conduit to allow loan originators (primarily builders or savings and
loan associations) to borrow against their loan portfolios.

The principal risk of CMOs results from the rate of prepayments on underlying
mortgages serving as collateral and from the structure of the deal. An increase
or decrease in prepayment rates will affect the yield, average life and price of
CMOs.

Common Stock. The Fund may invest in common stocks in such securities. The Fund
currently does not intend to invest in this type of securities to any
significant extent. Common stock is issued by companies to raise cash for
business purposes and represents a proportionate interest in the issuing
companies. Therefore, the Fund participates in the success or failure of any
company in which it holds stock. The market value of common stock can fluctuate
significantly, reflecting the business performance of the issuing company,
investor perception and general economic or financial market movements. Smaller
companies are specially sensitive to these factors and may even become
valueless. Despite the risk of price volatility, however, common stocks also
offer a greater potential for gain on investment, compared to other classes of
financial assets such as bonds or cash equivalents.

Convertible Securities. The Fund may invest in convertible securities, that is,
bonds, notes, debentures, preferred stocks and other securities which are
convertible into common stock. Investments in convertible securities can provide
an opportunity for capital appreciation and/or income through interest and
dividend payments by virtue of their conversion or exchange features.


                                       7
<PAGE>

The convertible securities in which the Fund may invest are either fixed income
or zero coupon debt securities which may be converted or exchanged at a stated
or determinable exchange ratio into underlying shares of common stock. The
exchange ratio for any particular convertible security may be adjusted from time
to time due to stock splits, dividends, spin-offs, other corporate distributions
or scheduled changes in the exchange ratio. Convertible debt securities and
convertible preferred stocks, until converted, have general characteristics
similar to both debt and equity securities. Although to a lesser extent than
with debt securities generally, the market value of convertible securities tends
to decline as interest rates increase and, conversely, tends to increase as
interest rates decline. In addition, because of the conversion or exchange
feature, the market value of convertible securities typically changes as the
market value of the underlying common stocks changes, and, therefore, also tends
to follow movements in the general market for equity securities. A unique
feature of convertible securities is that as the market price of the underlying
common stock declines, convertible securities tend to trade increasingly on a
yield basis, and so may not experience market value declines to the same extent
as the underlying common stock. When the market price of the underlying common
stock increases, the prices of the convertible securities tend to rise as a
reflection of the value of the underlying common stock, although typically not
as much as the underlying common stock. While no securities investments are
without risk, investments in convertible securities generally entail less risk
than investments in common stock of the same issuer.

As debt securities, convertible securities are investments which provide for a
stream of income (or in the case of zero coupon securities, accretion of income)
with generally higher yields than common stocks. Convertible securities
generally offer lower yields than non-convertible securities of similar quality
because of their conversion or exchange features.

Of course, like all debt securities, there can be no assurance of income or
principal payments because the issuers of the convertible securities may default
on their obligations.

Convertible securities generally are subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds, as
corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock, of the
same issuer. However, because of the subordination feature, convertible bonds
and convertible preferred stock typically have lower ratings than similar
non-convertible securities. Convertible securities may be issued as fixed income
obligations that pay current income or as zero coupon notes and bonds, including
Liquid Yield Option Notes ("LYONs"(TM)).

Corporate Obligations. Investment in corporate debt obligations involves credit
and interest rate risk. The value of fixed-income investments will fluctuate
with changes in interest rates and bond market conditions, tending to rise as
interest rates decline and to decline as interest rates rise. Corporate debt
obligations generally offer less current yield than securities of lower quality,
but lower-quality securities generally have less liquidity, greater credit and
market risk, and as a result, more price volatility. Longer term bonds are,
however, generally more volatile than bonds with shorter maturities.

Direct Debt Instruments. Direct debt instruments are interests in amounts owed
by a corporate, governmental or other borrower to lenders (direct loans), to
suppliers of goods or services (trade claims or other receivables) or to other
parties. The Fund may invest in all types of direct debt investments, but among
these investments the Fund currently intends to invest primarily in direct loans
and trade claims.

When the Fund participates in a direct loan it will be lending money directly to
an issuer. Direct loans generally do not have an underwriter or agent bank, but
instead, are negotiated between a company's management team and a lender or
group of lenders. Direct loans typically offer better security and structural
terms than other types of high yield securities. Direct debt obligations are
often the most senior-obligations in an issuer's capital structure or are
well-collateralized so that overall risk is lessened.

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.


                                       8
<PAGE>

Direct debt instruments involve a risk of loss in case of default or insolvency
of the borrower. The Fund will rely primarily upon the creditworthiness of the
borrower and/or the collateral for payment of interest and repayment of
principal. The value of the Fund's investments may be adversely affected if
scheduled interest or principal payments are not made. Because most direct loans
will be secured, there will be a smaller risk of loss with direct loans than
with an investment in unsecured high yield bonds or trade claims. Indebtedness
of borrowers whose creditworthiness is poor involves substantially greater risks
and may be highly speculative. Borrowers that are in bankruptcy or restructuring
may never pay off their indebtedness or may pay only a small fraction of the
amount owed. Investments in direct debt instruments also involve interest rate
risk and liquidity risk. However, interest rate risk is lessened by the
generally short-term nature of direct debt instruments and their interest rate
structure, which typically floats. To the extent the direct debt instruments in
which the Fund invests are considered illiquid, the lack of a liquid secondary
market (1) will have an adverse impact on the value of such instruments, (2)
will have an adverse impact on the Fund's ability to dispose of them when
necessary to meet the Fund's liquidity needs or in response to a specific
economic event, such as a decline in creditworthiness of the issuer, and (3) may
make it more difficult for the Fund to assign a value of these instruments for
purposes of valuing the Fund's portfolio and calculating its net asset value. In
order to lessen liquidity risk, the Fund anticipates investing primarily in
direct debt instruments that are quoted and traded in the high yield market and
will not invest in these instruments if it would cause more than 15% of the
Fund's net assets to be illiquid. Trade claims may also present a tax risk to
the Fund.

The Fund will not invest in trade claims if it effects the Fund's qualification
as a regulated investment company under Subchapter M of the Internal Revenue
Code.

Debt Securities. The Fund may invest in debt securities, including bonds of
private issuers. Portfolio debt investments will be selected on the basis of,
among other things, credit quality, and the fundamental outlooks for currency,
economic and interest rate trends, taking into account the ability to hedge a
degree of currency or local bond price risk.

The principal risks involved with investments in bonds include interest rate
risk, credit risk and pre-payment risk. Interest rate risk refers to the likely
decline in the value of bonds as interest rates rise. Generally, longer-term
securities are more susceptible to changes in value as a result of interest-rate
changes than are shorter-term securities. Credit risk refers to the risk that an
issuer of a bond may default with respect to the payment of principal and
interest. The lower a bond is rated, the more it is considered to be a
speculative or risky investment. Pre-payment risk is commonly associated with
pooled debt securities, such as mortgage-backed securities and asset backed
securities, but may affect other debt securities as well. When the underlying
debt obligations are prepaid ahead of schedule, the return on the security will
be lower than expected. Pre-payment rates usually increase when interest rates
are falling.

Dollar Roll Transactions. Dollar roll transactions consist of the sale by the
Fund to a bank or broker/dealer (the "counterparty") of GNMA certificates or
other mortgage-backed securities together with a commitment to purchase from the
counterparty similar, but not identical, securities at a future date, at the
same price. The counterparty receives all principal and interest payments,
including prepayments, made on the security while it is the holder. The Fund
receives a fee from the counterparty as consideration for entering into the
commitment to purchase. Dollar rolls may be renewed over a period of several
months with a different purchase and repurchase price fixed and a cash
settlement made at each renewal without physical delivery of securities.
Moreover, the transaction may be preceded by a firm commitment agreement
pursuant to which the Fund agrees to buy a security on a future date.


The Fund will segregate cash, US Government securities or other liquid assets in
an amount sufficient to meet their purchase obligations under the transactions.


Dollar rolls may be treated for purposes of the 1940 Act as borrowings of the
Fund because they involve the sale of a security coupled with an agreement to
repurchase. Like all borrowings, a dollar roll involves costs to the Fund. For
example, while the Fund receives a fee as consideration for agreeing to
repurchase the security, the Fund forgoes the right to receive all principal and
interest payments while the counterparty holds the security. These payments to
the counterparty may exceed the fee received by the Fund, thereby effectively
charging the Fund interest on its borrowing. Further, although the Fund can
estimate the amount of expected principal prepayment over the term of the dollar
roll, a variation in the actual amount of prepayment could increase or decrease
the cost of the Fund's borrowing.

                                       9
<PAGE>

The entry into dollar rolls involves potential risks of loss that are different
from those related to the securities underlying the transactions. For example,
if the counterparty becomes insolvent, the Fund's right to purchase from the
counterparty might be restricted. Additionally, the value of such securities may
change adversely before the Fund is able to purchase them. Similarly, the Fund
may be required to purchase securities in connection with a dollar roll at a
higher price than may otherwise be available on the open market. Since, as noted
above, the counterparty is required to deliver a similar, but not identical
security to the Fund, the security that the Fund is required to buy under the
dollar roll may be worth less than an identical security. Finally, there can be
no assurance that the Fund's use of the cash that it receives from a dollar roll
will provide a return that exceeds borrowing costs.


Eurodollar Instruments. The Fund may make investments in Eurodollar instruments
for hedging purposes or to enhance potential gain. Eurodollar instruments are US
dollar-denominated futures contracts or options thereon which are linked to the
London Interbank Offered Rate ("LIBOR"), although foreign currency-denominated
instruments are available from time to time. Eurodollar futures contracts enable
purchasers to obtain a fixed rate for the lending of funds and sellers to obtain
a fixed rate for borrowings. The Fund might use Eurodollar futures contracts and
options thereon to hedge against changes in LIBOR, to which many interest rate
swaps and fixed income instruments are linked.




Foreign Currencies. Because investments in foreign securities usually will
involve currencies of foreign countries, and because the Fund may hold foreign
currencies and forward contracts, futures contracts and options on foreign
currencies and foreign currency futures contracts, the value of the assets of
the Fund as measured in US dollars may be affected favorably or unfavorably by
changes in foreign currency exchange rates and exchange control regulations, and
the Fund may incur costs and experience conversion difficulties and
uncertainties in connection with conversions between various currencies.
Fluctuations in exchange rates may also affect the earning power and asset value
of the foreign entity issuing the security.

The strength or weakness of the US dollar against these currencies is
responsible for part of the Fund's investment performance. If the dollar falls
in value relative to the Japanese yen, for example, the dollar value of a
Japanese stock held in the portfolio will rise even though the price of the
stock remains unchanged. Conversely, if the dollar rises in value relative to
the yen, the dollar value of the Japanese stock will fall. Many foreign
currencies have experienced significant devaluation relative to the dollar.

Although the Fund values its assets daily in terms of US dollars, it does not
intend to convert its holdings of foreign currencies into US dollars on a daily
basis. It will do so from time to time, and investors should be aware of the
costs of currency conversion. Although foreign exchange dealers typically do not
charge a fee for conversion, they do realize a profit based on the difference
(the "spread") between the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency to the Fund at
one rate, while offering a lesser rate of exchange should the Fund desire to
resell that currency to the dealer. The Fund will conduct its foreign currency
exchange transactions either on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign currency exchange market, or through entering into
options or forward or futures contracts to purchase or sell foreign currencies.

Foreign Fixed Income Securities. Since most foreign fixed income securities are
not rated, the Fund will invest in foreign fixed income securities based on the
Advisor's analysis without relying on published ratings. Since such investments
will be based upon the Advisor's analysis rather than upon published ratings,
achievement of the Fund's goals may depend more upon the abilities of the
Advisor than would otherwise be the case.

The value of the foreign fixed income securities held by the Fund, and thus the
net asset value of the Fund's shares, generally will fluctuate with (a) changes
in the perceived creditworthiness of the issuers of those securities, (b)
movements in interest rates, and (c) changes in the relative values of the
currencies in which the Fund's investments in


                                       10
<PAGE>

fixed income securities are denominated with respect to the US Dollar. The
extent of the fluctuation will depend on various factors, such as the average
maturity of the Fund's investments in foreign fixed income securities, and the
extent to which the Fund hedges its interest rate, credit and currency exchange
rate risks. A longer average maturity generally is associated with a higher
level of volatility in the market value of such securities in response to
changes in market conditions.

Investments in sovereign debt, including Brady Bonds (Brady Bonds are debt
securities issued under a plan implemented to allow debtor nations to
restructure their outstanding commercial bank indebtedness), involve special
risks. Foreign governmental issuers of debt or the governmental authorities that
control the repayment of the debt may be unable or unwilling to repay principal
or pay interest when due. In the event of default, there may be limited or no
legal recourse in that, generally, remedies for defaults must be pursued in the
courts of the defaulting party. Political conditions, especially a sovereign
entity's willingness to meet the terms of its fixed income securities, are of
considerable significance. Also, there can be no assurance that the holders of
commercial bank loans to the same sovereign entity may not contest payments to
the holders of sovereign debt in the event of default under commercial bank loan
agreements. In addition, there is no bankruptcy proceeding with respect to
sovereign debt on which a sovereign has defaulted, and the Fund may be unable to
collect all or any part of its investment in a particular issue. Foreign
investment in certain sovereign debt is restricted or controlled to varying
degrees, including requiring governmental approval for the repatriation of
income, capital or proceeds of sales by foreign investors. These restrictions or
controls may at times limit or preclude foreign investment in certain sovereign
debt or increase the costs and expenses of the Fund. Sovereign debt may be
issued as part of debt restructuring and such debt is to be considered
speculative. There is a history of defaults with respect to commercial bank
loans by public and private entities issuing Brady Bonds. All or a portion of
the interest payments and/or principal repayment with respect to Brady Bonds may
be uncollateralized.

Foreign Investment. Foreign securities are normally denominated and traded in
foreign currencies. As a result, the value of the Fund's foreign investments and
the value of its shares may be affected favorably or unfavorably by changes in
currency exchange rates relative to the US dollar. There may be less information
publicly available about a foreign issuer than about a US issuer, and foreign
issuers may not be subject to accounting, auditing and financial reporting
standards and practices comparable to those in the US. The securities of some
foreign issuers are less liquid and at times more volatile than securities of
comparable US issuers. Foreign brokerage commissions and other fees are also
generally higher than in the US. Foreign settlement procedures and trade
regulations may involve certain risks (such as delay in payment or delivery of
securities or in the recovery of a Fund's assets held abroad) and expenses not
present in the settlement of investments in US markets. Payment for securities
without delivery may be required in certain foreign markets.

In addition, foreign securities may be subject to the risk of nationalization or
expropriation of assets, imposition of currency exchange controls or
restrictions on the repatriation of foreign currency, confiscatory taxation,
political or financial instability and diplomatic developments which could
affect the value of the Fund's investments in certain foreign countries.
Governments of many countries have exercised and continue to exercise
substantial influence over many aspects of the private sector through the
ownership or control of many companies, including some of the largest in these
countries. As a result, government actions in the future could have a
significant effect on economic conditions which may adversely affect prices of
certain portfolio securities. There is also generally less government
supervision and regulation of stock exchanges, brokers, and listed companies
than in the US. Dividends or interest on, or proceeds from the sale of, foreign
securities may be subject to foreign withholding taxes, and special US tax
considerations may apply. Moreover, foreign economies may differ favorably or
unfavorably from the US economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position.

Legal remedies available to investors in certain foreign countries may be more
limited than those available with respect to investments in the US or in other
foreign countries. The laws of some foreign countries may limit the Fund's
ability to invest in securities of certain issuers organized under the laws of
those foreign countries.

Of particular importance, many foreign countries are heavily dependent upon
exports, particularly to developed countries, and, accordingly, have been and
may continue to be adversely affected by trade barriers, managed adjustments in
relative currency values, and other protectionist measures imposed or negotiated
by the US and other


                                       11
<PAGE>

countries with which they trade. These economies also have been and may continue
to be negatively impacted by economic conditions in the US and other trading
partners, which can lower the demand for goods produced in those countries.

The risks described above, including the risks of nationalization or
expropriation of assets, typically are increased in connection with investments
in "emerging markets." For example, political and economic structures in these
countries may be in their infancy and developing rapidly, and such countries may
lack the social, political and economic stability characteristic of more
developed countries (including amplified risk of war and terrorism). Certain of
these countries have in the past failed to recognize private property rights and
have at times nationalized and expropriated the assets of private companies.
Investments in emerging markets may be considered speculative.

The currencies of certain emerging market countries have experienced
devaluations relative to the US dollar, and future devaluations may adversely
affect the value of assets denominated in such currencies. In addition, currency
hedging techniques may be unavailable in certain emerging market countries. Many
emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation or deflation for many years, and future
inflation may adversely affect the economies and securities markets of such
countries.

In addition, unanticipated political or social developments may affect the value
of investments in emerging markets and the availability of additional
investments in these markets. Any change in the leadership or politics of
emerging market countries, or the countries that exercise a significant
influence over those countries, may halt the expansion of or reverse the
liberalization of foreign investment policies now occurring and adversely affect
existing investment opportunities. The small size, limited trading volume and
relative inexperience of the securities markets in these countries may make
investments in securities traded in emerging markets illiquid and more volatile
than investments in securities traded in more developed countries. For example,
limited market size may cause prices to be unduly influenced by traders who
control large positions. In addition, the Fund may be required to establish
special custodial or other arrangements before making investments in securities
traded in emerging markets. There may be little financial or accounting
information available with respect to issuers of emerging market securities, and
it may be difficult as a result to assess the value of prospects of an
investment in such securities.

The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for a Fund's securities in such markets may
not be readily available. The Fund may suspend redemption of its shares for any
period during which an emergency exists, as determined by the SEC. Accordingly
if the Fund believes that appropriate circumstances exist, it will promptly
apply to the SEC for a determination that an emergency is present. During the
period commencing from the Fund's identification of such condition until the
date of the SEC action, the Fund's securities in the affected markets will be
valued at fair value determined in good faith by or under the direction of the
Fund's Board.

Certain of the foregoing risks may also apply to some extent to securities of US
issuers that are denominated in foreign currencies or that are traded in foreign
markets, or securities of US issuers having significant foreign operations.

High Yield/High Risk Bonds. The Fund may also purchase debt securities which are
rated below investment-grade (commonly referred to as "junk bonds"), that is,
rated below Baa by Moody's or below BBB by S&P or Fitch Investors Service
("Fitch") and unrated securities judged to be of equivalent quality as
determined by the Advisor. These securities usually entail greater risk
(including the possibility of default or bankruptcy of the issuers of such
securities), generally involve greater volatility of price and risk to principal
and income, and may be less liquid, than securities in the higher rating
categories. The lower the ratings of such debt securities, the more their risks
render them like equity securities. Securities rated D may be in default with
respect to payment of principal or interest. See the Appendix to this SAI for a
more complete description of the ratings assigned by these ratings organizations
and their respective characteristics.

Issuers of such high yield securities often are highly leveraged and may not
have available to them more traditional methods of financing. Therefore, the
risk associated with acquiring the securities of such issuers generally is
greater than is the case with higher rated securities. For example, during an
economic downturn or a sustained period of rising interest rates, highly
leveraged issuers of high yield securities may experience financial stress.
During such periods, such issuers may not have sufficient revenues to meet their
interest payment obligations. The issuer's ability to service


                                       12
<PAGE>

its debt obligations may also be adversely affected by specific corporate
developments, or the issuer's inability to meet specific projected business
forecasts, or the unavailability of additional financing. The risk of loss from
default by the issuer is significantly greater for the holders of high yield
securities because such securities are generally unsecured and are often
subordinated to other creditors of the issuer. Prices and yields of high yield
securities will fluctuate over time and, during periods of economic uncertainty,
volatility of high yield securities may adversely affect a Fund's net asset
value. In addition, investments in high yield zero coupon or pay-in-kind bonds,
rather than income-bearing high yield securities, may be more speculative and
may be subject to greater fluctuations in value due to changes in interest
rates.

The Fund may have difficulty disposing of certain high-yield securities because
they may have a thin trading market. Because not all dealers maintain markets in
all high yield securities, the Fund anticipates that such securities could be
sold only to a limited number of dealers or institutional investors. The lack of
a liquid secondary market may have an adverse effect on the market price and the
Fund's ability to dispose of particular issues and may also make it more
difficult for the Fund to obtain accurate market quotations for purposes of
valuing the Fund's assets. Market quotations generally are available on many
high yield issues only from a limited number of dealers and may not necessarily
represent firm bids of such dealers or prices for actual sales. Adverse
publicity and investor perceptions may decrease the values and liquidity of high
yield securities. These securities may also involve special registration
responsibilities, liabilities and costs, and liquidity and valuation
difficulties.

Credit quality in the high-yield securities market can change suddenly and
unexpectedly, and even recently issued credit ratings may not fully reflect the
actual risks posed by a particular high-yield security. For these reasons, it is
generally the policy of the Advisor not to rely exclusively on ratings issued by
established credit rating agencies, but to supplement such ratings with its own
independent and on-going review of credit quality. The achievement of the Fund's
investment objective by investment in such securities may be more dependent on
the Advisor's credit analysis than is the case for higher quality bonds. Should
the rating of a portfolio security be downgraded, the Advisor will determine
whether it is in the best interests of the Fund to retain or dispose of such
security.

Prices for high-yield securities may be affected by legislative and regulatory
developments. Also, Congress has from time to time considered legislation which
would restrict or eliminate the corporate tax deduction for interest payments in
these securities and regulate corporate restructurings. Such legislation may
significantly depress the prices of outstanding securities of this type.

A portion of the high-yield securities acquired by the Fund will be purchased
upon issuance, which may involve special risks because the securities so
acquired are new issues. In such instances the Fund may be a substantial
purchaser of the issue and therefore have the opportunity to participate in
structuring the terms of the offering. Although this may enable the Fund to seek
to protect itself against certain of such risks, the considerations discussed
herein would nevertheless remain applicable.

Illiquid Securities and Restricted Securities. The Fund may purchase securities
that are subject to legal or contractual restrictions on resale ("restricted
securities"). Generally speaking, restricted securities may be sold (i) only to
qualified institutional buyers; (ii) in a privately negotiated transaction to a
limited number of purchasers; (iii) in limited quantities after they have been
held for a specified period of time and other conditions are met pursuant to an
exemption from registration; or (iv) in a public offering for which a
registration statement is in effect under the Securities Act of 1933, as amended
(the "1933 Act"). Issuers of restricted securities may not be subject to the
disclosure and other investor protection requirements that would be applicable
if their securities were publicly traded.

Restricted securities are often illiquid, but they may also be liquid. For
example, restricted securities that are eligible for resale under Rule 144A are
often deemed to be liquid.

The Fund's Board has approved guidelines for use by the Advisor in determining
whether a security is liquid or illiquid. Among the factors the Advisor may
consider in reaching liquidity decisions relating to Rule 144A securities are:
(1) the frequency of trades and quotes for the security; (2) the number of
dealers wishing to purchase or sell the security and the number of other
potential purchasers; (3) dealer undertakings to make a market in the security;
and (4) the nature of the security and the nature of the market for the security
(i.e., the time needed to dispose of the security, the method of soliciting
offers, and the mechanics of the transfer. Issuers of restricted securities may
not be subject to


                                       13
<PAGE>

the disclosure and other investor protection requirement that would be
applicable if their securities were publicly traded. Where a registration
statement is required for the resale of restricted securities, the Fund may be
required to bear all or part of the registration expenses. The Fund may be
deemed to be an "underwriter" for purposes of the Securities Act of 1933, as
amended, when selling restricted securities to the public and, in such event,
the Fund may be liable to purchasers of such securities if the registration
statement prepared by the issuer is materially inaccurate or misleading.

The Fund may also purchase securities that are not subject to legal or
contractual restrictions on resale, but that are deemed illiquid. Such
securities may be illiquid, for example, because there is a limited trading
market for them.

The Fund may be unable to sell a restricted or illiquid security. In addition,
it may be more difficult to determine a market value for restricted or illiquid
securities. Moreover, if adverse market conditions were to develop during the
period between the Fund's decision to sell a restricted or illiquid security and
the point at which the Fund is permitted or able to sell such security, the Fund
might obtain a price less favorable than the price that prevailed when it
decided to sell. This investment practice, therefore, could have the effect of
decreasing the level of illiquidity of the Fund.


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




Indexed Securities. The Fund may invest in indexed securities, the value of
which is linked to currencies, interest rates, commodities, indices or other
financial indicators ("reference instruments"). Most indexed securities have
maturities of three years or less.

Indexed securities differ from other types of debt securities in which the Fund
may invest in several respects. First, the interest rate or, unlike other debt
securities, the principal amount payable at maturity of an indexed security may
vary based on changes in one or more specified reference instruments, such as an
interest rate compared with a fixed interest rate or the currency exchange rates
between two currencies (neither of which need be the currency in which the
instrument is denominated). The reference instrument need not be related to the
terms of the indexed security. For example, the principal amount of a US dollar
denominated indexed security may vary based on the exchange rate of two foreign
currencies. An indexed security may be positively or negatively indexed; that
is, its value may increase or decrease if the value of the reference instrument
increases. Further, the change in the principal amount payable or the interest
rate of an indexed security may be a multiple of the percentage change (positive
or negative) in the value of the underlying reference instrument(s).

Investment in indexed securities involves certain risks. In addition to the
credit risk of the security's issuer and the normal risks of price changes in
response to changes in interest rates, the principal amount of indexed
securities may decrease as a result of changes in the value of reference
instruments. Further, in the case of certain indexed securities in which the
interest rate is linked to a reference instrument, the interest rate may be
reduced to zero, and any further declines in the value of the security may then
reduce the principal amount payable on maturity. Finally, indexed securities may
be more volatile than the reference instruments underlying the indexed
securities.


                                       14
<PAGE>

Interfund Borrowing and Lending Program. The Fund has received exemptive relief
from the SEC, which permits the Fund to participate in an interfund lending
program among certain investment companies advised by the Advisor. The interfund
lending program allows the participating funds to borrow money from and loan
money to each other for temporary or emergency purposes. The program is subject
to a number of conditions designed to ensure fair and equitable treatment of all
participating funds, including the following: (1) no fund may borrow money
through the program unless it receives a more favorable interest rate than a
rate approximating the lowest interest rate at which bank loans would be
available to any of the participating funds under a loan agreement; and (2) no
fund may lend money through the program unless it receives a more favorable
return than that available from an investment in repurchase agreements and, to
the extent applicable, money market cash sweep arrangements. In addition, the
Fund may participate in the program only if and to the extent that such
participation is consistent with the Fund's investment objectives and policies
(for instance, money market funds would normally participate only as lenders and
tax exempt funds only as borrowers). Interfund loans and borrowings may extend
overnight, but could have a maximum duration of seven days. Loans may be called
on one day's notice. The Fund may have to borrow from a bank at a higher
interest rate if an interfund loan is called or not renewed. Any delay in
repayment to a lending fund could result in a lost investment opportunity or
additional costs. The program is subject to the oversight and periodic review of
the Boards of the participating funds. To the extent the Fund is actually
engaged in borrowing through the interfund lending program, the Fund will comply
with its respective non-fundamental policies on borrowing.

Investment-Grade Bonds. The Fund may purchase "investment-grade" bonds, which
are those rated Aaa, Aa, A or Baa by Moody's or AAA, AA, A or BBB by S&P or
Fitch or, if unrated, judged to be of equivalent quality as determined by the
Advisor. Moody's considers bonds it rates Baa to have speculative elements as
well as investment-grade characteristics. To the extent that the Fund invests in
higher-grade securities, the Fund will not be able to avail itself of
opportunities for higher income which may be available at lower grades.

Investment of Uninvested Cash Balances. The Fund may have cash balances that
have not been invested in portfolio securities ("Uninvested Cash"). Uninvested
Cash may result from a variety of sources, including dividends or interest
received from portfolio securities, unsettled securities transactions, reserves
held for investment strategy purposes, scheduled maturity of investments,
liquidation of investment securities to meet anticipated redemptions and
dividend payments, and new cash received from investors. Uninvested Cash may be
invested directly in money market instruments or other short-term debt
obligations. Pursuant to an Exemptive Order issued by the SEC, the Fund may use
Uninvested Cash to purchase shares of affiliated funds including money market
funds, short-term bond funds and Cash Management QP Trust, or one or more future
entities for which the Advisor acts as trustee or investment advisor that
operate as cash management investment vehicles and that are excluded from the
definition of investment company pursuant to section 3(c)(1) or 3(c)(7) of the
1940 Act (collectively, the "Central Funds") in excess of the limitations of
Section 12(d)(1) of the 1940 Act. Investment by the Fund in shares of the
Central Funds will be in accordance with the Fund's investment policies and
restrictions as set forth in its registration statement.

Certain of the Central Funds comply with rule 2a-7 under the 1940 Act. The other
Central Funds are or will be short-term bond funds that invest in fixed-income
securities and maintain a dollar weighted average maturity of three years or
less. Each of the Central Funds will be managed specifically to maintain a
highly liquid portfolio, and access to them will enhance the Fund's ability to
manage Uninvested Cash.

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

Lending of Portfolio Securities. The Fund may lend its investment securities to
approved institutional borrowers who need to borrow securities in order to
complete certain transactions, such as covering short sales, avoiding failures
to deliver securities or completing arbitrage operations. By lending its
investment securities, the Fund attempts to increase its net investment income
through the receipt of interest on the loan. Any gain or loss in the market
price of the securities loaned that might occur during the term of the loan
would belong to the Fund. The Fund may lend its investment securities so long as
the terms, structure and the aggregate amount of such loans are not inconsistent
with the 1940 Act or the rules and regulations or interpretations of the SEC
thereunder, which currently require that (a) the borrower pledge and maintain
with the Fund collateral consisting of liquid, unencumbered assets having a
value at all times not less than 100% of the value of the securities loaned, (b)
the borrower add to such collateral whenever the


                                       15
<PAGE>

price of the securities loaned rises (i.e., the borrower "marks to the market"
on a daily basis), (c) the loan be made subject to termination by the Fund at
any time, and (d) the Fund receives reasonable interest on the loan (which may
include the Fund investing any cash collateral in interest bearing short-term
investments), and distributions on the loaned securities and any increase in
their market value. There may be risks of delay in recovery of the securities or
even loss of rights in the collateral should the borrower of the securities fail
financially. However, loans will be made only to borrowers selected by the
Fund's delegate after a commercially reasonable review of relevant facts and
circumstances, including the creditworthiness of the borrower.

At the present time, the staff of the SEC does not object if an investment
company pays reasonable negotiated fees in connection with loaned securities, so
long as such fees are set forth in a written contract and approved by the
investment company's Board of Trustees. In addition, voting rights may pass with
the loaned securities, but if a material event occurs affecting an investment on
loan, the loan must be called and the securities voted. Pursuant to an exemptive
order granted by the SEC, cash collateral received by the Fund may be invested
in a money market fund managed by the Advisor (or one of its affiliates).

Mortgage-Backed Securities and Mortgage Pass-Through Securities. The Fund may
invest in mortgage-backed securities which are interests in pools of mortgage
loans, including mortgage loans made by savings and loan institutions, mortgage
bankers, commercial banks and others. Pools of mortgage loans are assembled as
securities for sale to investors by various governmental, government-related and
private organizations as further described below. Underlying mortgages may be of
a variety of types, including adjustable rate, conventional 30-year, graduated
payment and 15-year.

A decline in interest rates may lead to a faster rate of repayment of the
underlying mortgages, and may expose the Fund to a lower rate of return upon
reinvestment. To the extent that such mortgage-backed securities are held by the
Fund, the prepayment right will tend to limit to some degree the increase in net
asset value of the Fund because the value of the mortgage-backed securities held
by the Fund may not appreciate as rapidly as the price of non-callable debt
securities. Mortgage-backed securities are subject to the risk of prepayment and
the risk that the underlying loans will not be repaid. Because principal may be
prepaid at any time, mortgage-backed securities may involve significantly
greater price and yield volatility than traditional debt securities.

When interest rates rise, mortgage prepayment rates tend to decline, thus
lengthening the life of a mortgage-related security and increasing the price
volatility of that security, affecting the price volatility of the Fund's
shares.

Interests in pools of mortgage-backed securities differ from other forms of debt
securities, which normally provide for periodic payment of interest in fixed
amounts with principal payments at maturity or specified call dates. Instead,
these securities provide a monthly payment which consists of both interest and
principal payments. In effect, these payments are a "pass-through" of the
monthly payments made by the individual borrowers on their mortgage loans, net
of any fees paid to the issuer or guarantor of such securities. Additional
payments are caused by repayments of principal resulting from the sale of the
underlying property, refinancing or foreclosure, net of fees or costs which may
be incurred. Some mortgage-related securities (such as securities issued by the
GNMA) are described as "modified pass-through." These securities entitle the
holder to receive all interest and principal payments owed on the mortgage pool,
net of certain fees, at the scheduled payment dates regardless of whether or not
the mortgagor actually makes the payment.

The principal governmental guarantor of mortgage-related securities is the GNMA.
GNMA is a wholly owned US Government corporation within the Department of
Housing and Urban Development. GNMA is authorized to guarantee, with the full
faith and credit of the US Government, the timely payment of principal and
interest on securities issued by institutions approved by GNMA (such as savings
and loan institutions, commercial banks and mortgage bankers) and backed by
pools of FHA-insured or VA-guaranteed mortgages. These guarantees, however, do
not apply to the market value or yield of mortgage-backed securities or to the
value of fund shares. Also, GNMA securities often are purchased at a premium
over the maturity value of the underlying mortgages. This premium is not
guaranteed and will be lost if prepayment occurs.

Government-related guarantors (i.e., not backed by the full faith and credit of
the US Government) include Fannie Mae and the Federal Home Loan Mortgage
Corporation ("FHLMC"). Fannie Mae is a government-sponsored


                                       16
<PAGE>

corporation owned entirely by private stockholders. It is subject to general
regulation by the Secretary of Housing and Urban Development. Fannie Mae
purchases conventional (i.e., not insured or guaranteed by any government
agency) mortgages from a list of approved seller/servicers which include state
and federally chartered savings and loan associations, mutual savings banks,
commercial banks and credit unions and mortgage bankers. Pass-through securities
issued by Fannie Mae are guaranteed as to timely payment of principal and
interest by Fannie Mae but are not backed by the full faith and credit of the US
Government.

FHLMC is a corporate instrumentality of the US Government and was created by
Congress in 1970 for the purpose of increasing the availability of mortgage
credit for residential housing. Its stock is owned by the twelve Federal Home
Loan Banks. FHLMC issues Participation Certificates ("PCs") which represent
interests in conventional mortgages from FHLMC's national portfolio. FHLMC
guarantees the timely payment of interest and ultimate collection of principal,
but PCs are not backed by the full faith and credit of the US Government.

Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create
pass-through pools of conventional mortgage loans. Such issuers may, in
addition, be the originators and/or servicers of the underlying mortgage loans
as well as the guarantors of the mortgage-related securities. Pools created by
such non-governmental issuers generally offer a higher rate of interest than
government and government-related pools because there are no direct or indirect
government or agency guarantees of payments. However, timely payment of interest
and principal of these pools may be supported by various forms of insurance or
guarantees, including individual loan, title, pool and hazard insurance and
letters of credit. The insurance and guarantees are issued by governmental
entities, private insurers and the mortgage poolers. Such insurance and
guarantees and the creditworthiness of the issuers thereof will be considered in
determining whether a mortgage-related security meets the Fund's investment
quality standards. There can be no assurance that the private insurers or
guarantors can meet their obligations under the insurance policies or guarantee
arrangements. The Fund may buy mortgage-related securities without insurance or
guarantees, if through an examination of the loan experience and practices of
the originators/servicers and poolers, the Advisor determines that the
securities meet the Fund's quality standards. Although the market for such
securities is becoming increasingly liquid, securities issued by certain private
organizations may not be readily marketable.

Participation Interests. The Fund may purchase from financial institutions
participation interests in securities in which the Fund may invest. A
participation interest gives the Fund an undivided interest in the security in
the proportion that the Fund's participation interest bears to the principal
amount of the security. These instruments may have fixed, floating or variable
interest rates with remaining maturities of 397 days or less. If the
participation interest is unrated, or has been given a rating below that which
is permissible for purchase by the Fund, the participation interest will be
backed by an irrevocable letter of credit or guarantee of a bank, or the payment
obligation otherwise will be collateralized by US Government securities, or, in
the case of unrated participation interest, determined by the Advisor to be of
comparable quality to those instruments in which the Fund may invest. For
certain participation interests, the Fund will have the right to demand payment,
on not more than seven days' notice, for all or any part of the Fund's
participation interests in the security, plus accrued interest. As to these
instruments, the Fund generally intends to exercise its right to demand payment
only upon a default under the terms of the security.

Privatized Enterprises. Investments in foreign securities may include securities
issued by enterprises that have undergone or are currently undergoing
privatization. The governments of certain foreign countries have, to varying
degrees, embarked on privatization programs contemplating the sale of all or
part of their interests in state enterprises. The Fund's investments in the
securities of privatized enterprises may include privately negotiated
investments in a government or state-owned or controlled company or enterprise
that has not yet conducted an initial equity offering, investments in the
initial offering of equity securities of a state enterprise or former state
enterprise and investments in the securities of a state enterprise following its
initial equity offering.

In certain jurisdictions, the ability of foreign entities, such as the Fund, to
participate in privatizations may be limited by local law, or the price or terms
on which the Fund may be able to participate may be less advantageous than for
local investors. Moreover, there can be no assurance that governments that have
embarked on privatization programs will continue to divest their ownership of
state enterprises, that proposed privatizations will be successful or that
governments will not re-nationalize enterprises that have been privatized.


                                       17
<PAGE>

In the case of the enterprises in which the Fund may invest, large blocks of the
stock of those enterprises may be held by a small group of stockholders, even
after the initial equity offerings by those enterprises. The sale of some
portion or all of those blocks could have an adverse effect on the price of the
stock of any such enterprise.

Prior to making an initial equity offering, most state enterprises or former
state enterprises go through an internal reorganization or management. Such
reorganizations are made in an attempt to better enable these enterprises to
compete in the private sector. However, certain reorganizations could result in
a management team that does not function as well as an enterprise's prior
management and may have a negative effect on such enterprise. In addition, the
privatization of an enterprise by its government may occur over a number of
years, with the government continuing to hold a controlling position in the
enterprise even after the initial equity offering for the enterprise.

Prior to privatization, most of the state enterprises in which the Fund may
invest enjoy the protection of and receive preferential treatment from the
respective sovereigns that own or control them. After making an initial equity
offering, these enterprises may no longer have such protection or receive such
preferential treatment and may become subject to market competition from which
they were previously protected. Some of these enterprises may not be able to
operate effectively in a competitive market and may suffer losses or experience
bankruptcy due to such competition.

Real Estate Investment Trusts ("REITs"). REITs are sometimes informally
characterized as equity REITs, mortgage REITs and hybrid REITs. Investment in
REITs may subject the Fund to risks associated with the direct ownership of real
estate, such as decreases in real estate values, overbuilding, increased
competition and other risks related to local or general economic conditions,
increases in operating costs and property taxes, changes in zoning laws,
casualty or condemnation losses, possible environmental liabilities, regulatory
limitations on rent and fluctuations in rental income. Equity REITs generally
experience these risks directly through fee or leasehold interests, whereas
mortgage REITs generally experience these risks indirectly through mortgage
interests, unless the mortgage REIT forecloses on the underlying real estate.
Changes in interest rates may also affect the value of the Fund's investment in
REITs. For instance, during periods of declining interest rates, certain
mortgage REITs may hold mortgages that the mortgagors elect to prepay, which
prepayment may diminish the yield on securities issued by those REITs.

Certain REITs have relatively small market capitalizations, which may tend to
increase the volatility of the market price of their securities. Furthermore,
REITs are dependent upon specialized management skills, have limited
diversification and are, therefore, subject to risks inherent in operating and
financing a limited number of projects. REITs are also subject to heavy cash
flow dependency, defaults by borrowers and the possibility of failing to qualify
for tax-free pass-through of income under the Internal Revenue Code of 1986, as
amended, and to maintain exemption from the registration requirements of the
Investment Company Act of 1940. By investing in REITs indirectly through the
Fund, a shareholder will bear not only his or her proportionate share of the
expenses of the Fund, but also, indirectly, similar expenses of the REITs. In
addition, REITs depend generally on their ability to generate cash flow to make
distributions to shareholders.

Repurchase Agreements. The Fund may invest in repurchase agreements pursuant to
its investment guidelines. In a repurchase agreement, the Fund acquires
ownership of a security and simultaneously commits to resell that security to
the seller, typically a bank or broker/dealer.

A repurchase agreement provides a means for the Fund to earn income on funds for
periods as short as overnight. It is an arrangement under which the purchaser
(i.e., a fund) acquires a security ("Obligation") and the seller agrees, at the
time of sale, to repurchase the Obligation at a specified time and price.
Securities subject to a repurchase agreement are held in a segregated account
and, as described in more detail below, the value of such securities is kept at
least equal to the repurchase price on a daily basis. The repurchase price may
be higher than the purchase price, the difference being income to a fund, or the
purchase and repurchase prices may be the same, with interest at a stated rate
due to a fund together with the repurchase price upon repurchase. In either
case, the income to a fund is unrelated to the interest rate on the Obligation
itself. Obligations will be held by the custodian or in the Federal Reserve Book
Entry System.

It is not clear whether a court would consider the Obligation purchased by the
Fund subject to a repurchase agreement 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 repurchase


                                       18
<PAGE>

of the Obligation under a repurchase agreement, the Fund may encounter delay and
incur costs before being able to sell the security. Delays may involve loss of
interest or decline in price of the Obligation. If the court characterizes the
transaction as a loan and the Fund has not perfected a security interest in the
Obligation, the Fund may be required to return the Obligation to the seller's
estate and be treated as an unsecured creditor of the seller. As an unsecured
creditor, 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 Obligation
purchased for the Fund, the Advisor seeks to reduce the risk of loss through
repurchase agreements by analyzing the creditworthiness of the obligor, in this
case the seller of the Obligation. Apart from the risk of bankruptcy or
insolvency proceedings, there is also the risk that the seller may fail to
repurchase the Obligation, in which case the Fund may incur a loss if the
proceeds to the Fund of the sale to a third party are less than the repurchase
price. However, if the market value of the Obligation subject to the repurchase
agreement becomes less than the repurchase price (including interest), the Fund
will direct the seller of the Obligation to deliver additional securities so
that the market value (including interest) of all securities subject to the
repurchase agreement will equal or exceed the repurchase price.

Reverse Repurchase Agreements. The Fund may enter into "reverse repurchase
agreements," which are repurchase agreements in which the Fund, as the seller of
the securities, agrees to repurchase them at an agreed upon time and price. The
Fund maintains a segregated account in connection with outstanding reverse
repurchase agreements. Reverse repurchase agreements are deemed to be borrowings
subject to the Fund's investment restrictions applicable to that activity. The
Fund will enter into reverse repurchase agreements only when the Advisor
believes that the interest income to be earned from the investment of the
proceeds of the transaction will be greater than the interest expense of the
transaction. Such transactions may increase fluctuation in the market value of
fund assets and their yields.

Securities Backed by Guarantees. The Fund may invest in securities backed by
guarantees from banks, insurance companies and other financial institutions.
Changes in the credit quality of these institutions could have an adverse impact
on securities they have guaranteed or backed, which could cause losses to the
Fund.

Short Sales Against the Box. The Fund may make short sales of common stocks if,
at all times when a short position is open, the Fund owns the stock or owns
preferred stocks or debt securities convertible or exchangeable, without payment
of further consideration, into the shares of common stock sold short. Short
sales of this kind are referred to as short sales "against the box." The
broker/dealer that executes a short sale generally invests cash proceeds of the
sale until they are paid to the Fund. Arrangements may be made with the
broker/dealer to obtain a portion of the interest earned by the broker on the
investment of short sale proceeds. The Fund will segregate the common stock or
convertible or exchangeable preferred stock or debt securities in a special
account with the custodian. Uncertainty regarding the tax effects of short sales
of appreciated investments may limit the extent to which the Fund may enter into
short sales against the box.

Sovereign Debt. Investment in sovereign debt can involve a high degree of risk.
The governmental entity that controls the repayment of sovereign debt may not be
able or willing to repay the principal and/or interest when due in accordance
with the terms of such debt. A governmental entity's willingness or ability to
repay principal and interest due in a timely manner may be affected by, among
other factors, its cash flow situation, the extent of its foreign reserves, the
availability of sufficient foreign exchange on the date a payment is due, the
relative size of the debt service burden to the economy as a whole, the
governmental entity's policy toward the International Monetary Fund, and the
political constraints to which a governmental entity may be subject.
Governmental entities may also be dependent on expected disbursements from
foreign governments, multilateral agencies and others abroad to reduce principal
and interest arrearages on their debt. The commitment on the part of these
governments, agencies and others to make such disbursements may be conditioned
on a governmental entity's implementation of economic reforms and/or economic
performance and the timely service of such debtor's obligations. Failure to
implement such reforms, achieve such levels of economic performance or repay
principal or interest when due may result in the cancellation of such third
parties commitments to lend funds to the governmental entity, which may further
impair such debtor's ability or willingness to service its debts in a timely
manner. Consequently, governmental entities may default on their sovereign debt.
Holders of sovereign debt may be requested to participate in the rescheduling of
such debt and to extend further loans to governmental entities. There is no
bankruptcy proceeding by which sovereign debt on which governmental entities
have defaulted may be collected in whole or in part.


                                       19
<PAGE>


Impact of Sub-Prime Mortgage Market. The Fund may invest in mortgage-backed,
asset-backed and other fixed-income securities whose value and liquidity may be
adversely affected by the critical downturn in the sub-prime mortgage lending
market in the US. Sub-prime loans, which, have higher interest rates, are made
to borrowers with low credit ratings or other factors that increase the risk of
default. Concerns about widespread defaults on sub-prime loans have also created
heightened volatility and turmoil in the general credit markets. As a result,
the Fund's investments in certain fixed-income securities may decline in value,
their market value may be more difficult to determine, and the Fund may have
more difficulty disposing of them.


Strategic Transactions and Derivatives. The Fund may, but is not required to,
utilize various other investment strategies as described below for a variety of
purposes, such as hedging various market risks, managing the effective maturity
or duration of the fixed-income securities in the Fund's portfolio or enhancing
potential gain. These strategies may be executed through the use of derivative
contracts.

In the course of pursuing these investment strategies, the Fund may purchase and
sell exchange-listed and over-the-counter put and call options on securities,
equity and fixed-income indices and other instruments, purchase and sell futures
contracts and options thereon, enter into various transactions such as swaps,
caps, floors, collars, currency forward contracts, currency futures contracts,
currency swaps or options on currencies, or currency futures and various other
currency transactions (collectively, all the above are called "Strategic
Transactions"). In addition, strategic transactions may also include new
techniques, instruments or strategies that are permitted as regulatory changes
occur. Strategic Transactions may be used without limit (subject to certain
limits imposed by the 1940 Act) to attempt to protect against possible changes
in the market value of securities held in or to be purchased for the Fund's
portfolio resulting from securities markets or currency exchange rate
fluctuations, to protect the Fund's unrealized gains in the value of its
portfolio securities, to facilitate the sale of such securities for investment
purposes, to manage the effective maturity or duration of the Fund's portfolio,
or to establish a position in the derivatives markets as a substitute for
purchasing or selling particular securities. Any or all of these investment
techniques may be used at any time and in any combination, and there is no
particular strategy that dictates the use of one technique rather than another,
as use of any strategic transaction is a function of numerous variables
including market conditions. The ability of the Fund to utilize these Strategic
Transactions successfully will depend on the Advisor's ability to predict
pertinent market movements, which cannot be assured. The Fund will comply with
applicable regulatory requirements when implementing these strategies,
techniques and instruments. Strategic Transactions will not be used to alter
fundamental investment purposes and characteristics of the Fund, and the Fund
will segregate assets (or as provided by applicable regulations, enter into
certain offsetting positions) to cover its obligations under options, futures
and swaps to limit leveraging of the Fund.

Strategic Transactions, including derivative contracts, have risks associated
with them including possible default by the other party to the transaction,
illiquidity and, to the extent the Advisor's view as to certain market movements
is incorrect, the risk that the use of such Strategic Transactions could result
in losses greater than if they had not been used. Use of put and call options
may result in losses to the Fund, force the sale or purchase of portfolio
securities at inopportune times or for prices higher than (in the case of put
options) or lower than (in the case of call options) current market values,
limit the amount of appreciation the Fund can realize on its investments or
cause the Fund to hold a security it might otherwise sell. The use of currency
transactions can result in the Fund incurring losses as a result of a number of
factors including the imposition of exchange controls, suspension of
settlements, or the inability to deliver or receive a specified currency. The
use of options and futures transactions entails certain other risks. In
particular, the variable degree of correlation between price movements of
futures contracts and price movements in the related portfolio position of the
Fund creates the possibility that losses on the hedging instrument may be
greater than gains in the value of the Fund's position. In addition, futures and
options markets may not be liquid in all circumstances and certain
over-the-counter options may have no markets. As a result, in certain markets,
the Fund might not be able to close out a transaction without incurring
substantial losses, if at all. Although the use of futures and options
transactions for hedging should tend to minimize the risk of loss due to a
decline in the value of the hedged position, at the same time they tend to limit
any potential gain which might result from an increase in value of such
position. Finally, the daily variation margin requirements for futures contracts
would create a greater ongoing potential financial risk than would purchases of
options, where the exposure is limited to the cost of the initial premium.
Losses resulting from the use of Strategic Transactions would reduce net asset
value, and possibly income, and such losses can be greater than if the Strategic
Transactions had not been utilized.


                                       20
<PAGE>

General Characteristics of Futures. The Fund may enter into futures contracts or
purchase or sell put and call options on such futures as a hedge against
anticipated interest rate, currency or equity market changes, and for duration
management, risk management and return enhancement purposes. Futures are
generally bought and sold on the commodities exchanges where they are listed
with payment of initial and variation margin as described below. The sale of a
futures contract creates a firm obligation by the Fund, as seller, to deliver to
the buyer the specific type of financial instrument called for in the contract
at a specific future time for a specified price (or, with respect to index
futures and Eurodollar instruments, the net cash amount). Options on futures
contracts are similar to options on securities except that an option on a
futures contract gives the purchaser the right in return for the premium paid to
assume a position in a futures contract and obligates the seller to deliver such
position.

The Fund has claimed exclusion from the definition of the term "commodity pool
operator" adopted by the CFTC and the National Futures Association, which
regulate trading in the futures markets. Therefore, the Fund is not subject to
commodity pool operator registration and regulation under the Commodity Exchange
Act. Futures and options on futures may be entered into for bona fide hedging,
risk management (including duration management) or other portfolio and return
enhancement management purposes to the extent consistent with the exclusion from
commodity pool operator registration. Typically, maintaining a futures contract
or selling an option thereon requires the Fund to deposit with a financial
intermediary as security for its obligations an amount of cash or other
specified assets (initial margin) which initially is typically 1% to 10% of the
face amount of the contract (but may be higher in some circumstances).
Additional cash or assets (variation margin) may be required to be deposited
thereafter on a daily basis as the marked to market value of the contract
fluctuates. The purchase of an option on financial futures involves payment of a
premium for the option without any further obligation on the part of the Fund.
If the Fund exercises an option on a futures contract it will be obligated to
post initial margin (and potential subsequent variation margin) for the
resulting futures position just as it would for any position. Futures contracts
and options thereon are generally settled by entering into an offsetting
transaction but there can be no assurance that the position can be offset prior
to settlement at an advantageous price, nor that delivery will occur.

The Fund will not enter into a futures contract or related option (except for
closing transactions) if, immediately thereafter, the sum of the amount of its
initial margin and premiums on open futures contracts and options thereon would
exceed 5% of the Fund's total assets (taken at current value); however, in the
case of an option that is in-the-money at the time of the purchase, the
in-the-money amount may be excluded in calculating the 5% limitation. The
segregation requirements with respect to futures contracts and options thereon
are described below.

General Characteristics of Options. Put options and call options typically have
similar structural characteristics and operational mechanics regardless of the
underlying instrument on which they are purchased or sold. Thus, the following
general discussion relates to each of the particular types of options discussed
in greater detail below. In addition, many Strategic Transactions involving
options require segregation of fund assets in special accounts, as described
below under "Use of Segregated and Other Special Accounts."

A put option gives the purchaser of the option, upon payment of a premium, the
right to sell, and the writer the obligation to buy, the underlying security,
commodity, index, currency or other instrument at the exercise price. For
instance, the Fund's purchase of a put option on a security might be designed to
protect its holdings in the underlying instrument (or, in some cases, a similar
instrument) against a substantial decline in the market value by giving the Fund
the right to sell such instrument at the option exercise price. A call option,
upon payment of a premium, gives the purchaser of the option the right to buy,
and the seller the obligation to sell, the underlying instrument at the exercise
price. The Fund's purchase of a call option on a security, financial future,
index, currency or other instrument might be intended to protect the Fund
against an increase in the price of the underlying instrument that it intends to
purchase in the future by fixing the price at which it may purchase such
instrument. An American style put or call option may be exercised at any time
during the option period while a European style put or call option may be
exercised only upon expiration or during a fixed period prior thereto. The Fund
is authorized to purchase and sell exchange listed options and over-the-counter
options ("OTC options"). Exchange listed options are issued by a regulated
intermediary such as the Options Clearing Corporation ("OCC"), which guarantees
the performance of the obligations of the parties to such options. The
discussion below uses the OCC as an example, but is also applicable to other
financial intermediaries.

With certain exceptions, OCC issued and exchange listed options generally settle
by physical delivery of the underlying security or currency, although in the
future cash settlement may become available. Index options and


                                       21
<PAGE>

Eurodollar instruments are cash settled for the net amount, if any, by which the
option is "in-the-money" (i.e., where the value of the underlying instrument
exceeds, in the case of a call option, or is less than, in the case of a put
option, the exercise price of the option) at the time the option is exercised.
Frequently, rather than taking or making delivery of the underlying instrument
through the process of exercising the option, listed options are closed by
entering into offsetting purchase or sale transactions that do not result in
ownership of the new option.

The Fund's ability to close out its position as a purchaser or seller of an OCC
or exchange listed put or call option is dependent, in part, upon the liquidity
of the option market. Among the possible reasons for the absence of a liquid
option market on an exchange are: (i) insufficient trading interest in certain
options; (ii) restrictions on transactions imposed by an exchange; (iii) trading
halts, suspensions or other restrictions imposed with respect to particular
classes or series of options or underlying securities including reaching daily
price limits; (iv) interruption of the normal operations of the OCC or an
exchange; (v) inadequacy of the facilities of an exchange or OCC to handle
current trading volume; or (vi) a decision by one or more exchanges to
discontinue the trading of options (or a particular class or series of options),
in which event the relevant market for that option on that exchange would cease
to exist, although outstanding options on that exchange would generally continue
to be exercisable in accordance with their terms.

The hours of trading for listed options may not coincide with the hours during
which the underlying financial instruments are traded. To the extent that the
option markets close before the markets for the underlying financial
instruments, significant price and rate movements can take place in the
underlying markets that cannot be reflected in the option markets.

OTC options are purchased from or sold to securities dealers, financial
institutions or other parties ("Counterparties") through direct bilateral
agreement with the Counterparty. In contrast to exchange listed options, which
generally have standardized terms and performance mechanics, all the terms of an
OTC option, including such terms as method of settlement, term, exercise price,
premium, guarantees and security, are set by negotiation of the parties. The
Fund will only sell OTC options (other than OTC currency options) that are
subject to a buy-back provision permitting the Fund to require the Counterparty
to sell the option back to the Fund at a formula price within seven days. The
Fund expects generally to enter into OTC options that have cash settlement
provisions, although it is not required to do so.

Unless the parties provide for it, there is no central clearing or guaranty
function in an OTC option. As a result, if the Counterparty fails to make or
take delivery of the security, currency or other instrument underlying an OTC
option it has entered into with the Fund or fails to make a cash settlement
payment due in accordance with the terms of that option, the Fund will lose any
premium it paid for the option as well as any anticipated benefit of the
transaction. Accordingly, the Advisor must assess the creditworthiness of each
such Counterparty or any guarantor or credit enhancement of the Counterparty's
credit to determine the likelihood that the terms of the OTC option will be
satisfied. The Fund will engage in OTC option transactions only with US
government securities dealers recognized by the Federal Reserve Bank of New York
as "primary dealers" or broker/dealers, domestic or foreign banks or other
financial institutions which have received (or the guarantors of the obligation
of which have received) a short-term credit rating of A-1 from S&P or P-1 from
Moody's or an equivalent rating from any nationally recognized statistical
rating organization ("NRSRO") or, in the case of OTC currency transactions, are
determined to be of equivalent credit quality by the Advisor. The staff of the
SEC currently takes the position that OTC options purchased by the Fund, and
portfolio securities "covering" the amount of the Fund's obligation pursuant to
an OTC option sold by it (the cost of the sell-back plus the in-the-money
amount, if any) are illiquid, and are subject to the Fund's limitation on
investing no more than 15% of its net assets in illiquid securities.

If the Fund sells a call option, the premium that it receives may serve as a
partial hedge, to the extent of the option premium, against a decrease in the
value of the underlying securities or instruments in its portfolio or will
increase the Fund's income. The sale of put options can also provide income.

The Fund may purchase and sell call options on securities including US Treasury
and agency securities, mortgage-backed securities, foreign sovereign debt,
corporate debt securities, equity securities (including convertible securities)
and Eurodollar instruments that are traded on US and foreign securities
exchanges and in the over-the-counter markets, and on securities indices,
currencies and futures contracts. All calls sold by the Fund must be "covered"
(i.e., the Fund must own the securities or futures contract subject to the call)
or must meet the asset segregation requirements described below as long as the
call is outstanding. Even though the Fund will receive the


                                       22
<PAGE>

option premium to help protect it against loss, a call sold by the Fund exposes
the Fund during the term of the option to possible loss of opportunity to
realize appreciation in the market price of the underlying security or
instrument and may require the Fund to hold a security or instrument which it
might otherwise have sold.

The Fund may purchase and sell put options on securities including US Treasury
and agency securities, mortgage-backed securities, foreign sovereign debt,
corporate debt securities, equity securities (including convertible securities)
and Eurodollar instruments (whether or not it holds the above securities in its
portfolio), and on securities indices, currencies and futures contracts other
than futures on individual corporate debt and individual equity securities. The
Fund will not sell put options if, as a result, more than 50% of the Fund's
total assets would be required to be segregated to cover its potential
obligations under such put options other than those with respect to futures and
options thereon. In selling put options, there is a risk that the Fund may be
required to buy the underlying security at a disadvantageous price above the
market price.

Options on Securities Indices and Other Financial Indices. The Fund also may
purchase and sell call and put options on securities indices and other financial
indices and in so doing can achieve many of the same objectives it would achieve
through the sale or purchase of options on individual securities or other
instruments. Options on securities indices and other financial indices are
similar to options on a security or other instrument except that, rather than
settling by physical delivery of the underlying instrument, they settle by cash
settlement, i.e., an option on an index gives the holder the right to receive,
upon exercise of the option, an amount of cash if the closing level of the index
upon which the option is based exceeds, in the case of a call, or is less than,
in the case of a put, the exercise price of the option (except if, in the case
of an OTC option, physical delivery is specified). This amount of cash is equal
to the excess of the closing price of the index over the exercise price of the
option, which also may be multiplied by a formula value. The seller of the
option is obligated, in return for the premium received, to make delivery of
this amount. The gain or loss on an option on an index depends on price
movements in the instruments making up the market, market segment, industry or
other composite on which the underlying index is based, rather than price
movements in individual securities, as is the case with respect to options on
securities.

Swaps, Caps, Floors and Collars. Among the Strategic Transactions into which the
Fund may enter are interest rate, credit default, currency, index and other
swaps and the purchase or sale of related caps, floors and collars. The Fund
expects to enter into these transactions primarily to preserve a return or
spread on a particular investment or portion of its portfolio, to protect
against currency fluctuations, as a duration management technique or to protect
against any increase in the price of securities the Fund anticipates purchasing
at a later date. The Fund will not sell interest rate caps or floors where it
does not own securities or other instruments providing the income stream the
Fund may be obligated to pay. Interest rate swaps involve the exchange by the
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.

The Fund will usually enter into swaps on a net basis, i.e., the two payment
streams are netted out in a cash settlement on the payment date or dates
specified in the instrument, with the Fund receiving or paying, as the case may
be, only the net amount of the two payments. Inasmuch as the 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. The 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, the 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


                                       23
<PAGE>

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.

Synthetic Investments. In certain circumstances, the Fund may wish to obtain the
price performance of a security without actually purchasing the security in
circumstances where, for example, the security is illiquid, or is unavailable
for direct investment or available only on less attractive terms. In such
circumstances, the Fund may invest in synthetic or derivative alternative
investments ("Synthetic Investments") that are based upon or otherwise relate to
the economic performance of the underlying securities. Synthetic Investments may
include swap transactions, notes or units with variable redemption amounts, and
other similar instruments and contracts. Synthetic Investments typically do not
represent beneficial ownership of the underlying security, usually are not
collateralized or otherwise secured by the counterparty and may or may not have
any credit enhancements attached to them. Accordingly, Synthetic Investments
involve exposure not only to the creditworthiness of the issuer of the
underlying security, changes in exchange rates and future governmental actions
taken by the jurisdiction in which the underlying security is issued, but also
to the creditworthiness and legal standing of the counterparties involved. In
addition, Synthetic Investments typically are illiquid.

Currency Transactions. The Fund may engage in currency transactions with
Counterparties primarily in order to hedge, or manage the risk of the value of
portfolio holdings denominated in particular currencies against fluctuations in
relative value. Currency transactions include forward currency contracts,
exchange listed currency futures, exchange listed and OTC options on currencies,
and currency swaps. A forward currency contract involves a privately negotiated
obligation to purchase or sell (with delivery generally required) a specific
currency at a future date, which may be any fixed number of days from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. A currency swap is an agreement to exchange cash flows based on the
notional difference among two or more currencies and operates similarly to an
interest rate swap, which is described below. The Fund may enter into currency
transactions with Counterparties which have received (or the guarantors of the
obligations which have received) a credit rating of A-1 or P-1 by S&P or
Moody's, respectively, or that have an equivalent rating from a NRSRO or (except
for OTC currency options) are determined to be of equivalent credit quality by
the Advisor.

The Fund's dealings in forward currency contracts and other currency
transactions such as futures, options, options on futures and swaps generally
will be limited to hedging involving either specific transactions or portfolio
positions except as described below. Transaction hedging is entering into a
currency transaction with respect to specific assets or liabilities of the Fund,
which will generally arise in connection with the purchase or sale of its
portfolio securities or the receipt of income therefrom. Position hedging is
entering into a currency transaction with respect to portfolio security
positions denominated or generally quoted in that currency.

The Fund generally will not enter into a transaction to hedge currency exposure
to an extent greater, after netting all transactions intended wholly or
partially to offset other transactions, than the aggregate market value (at the
time of entering into the transaction) of the securities held in its portfolio
that are denominated or generally quoted in or currently convertible into such
currency, other than with respect to proxy hedging or cross hedging as described
below.

The Fund may also cross-hedge currencies by entering into transactions to
purchase or sell one or more currencies that are expected to decline in value
relative to other currencies to which the Fund has or in which the Fund expects
to have portfolio exposure.

To reduce the effect of currency fluctuations on the value of existing or
anticipated holdings of portfolio securities, the Fund may also engage in proxy
hedging. Proxy hedging is often used when the currency to which the Fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar. Proxy
hedging entails entering into a commitment or option to sell a currency whose
changes in value are generally considered to be correlated to a currency or
currencies in which some or all of the Fund's portfolio securities are or are
expected to be denominated, in exchange for US dollars. The amount of the
commitment or option would not exceed the value of the Fund's securities
denominated in correlated currencies. Currency hedging involves some of the same
risks and considerations as other transactions with similar instruments.
Currency transactions can result in losses to the Fund if the currency being
hedged fluctuates in value to a degree or in a direction that is not
anticipated. Further, there is the risk that the perceived correlation between
various currencies may not be present or may not be present during the
particular time that the Fund is


                                       24
<PAGE>

engaging in proxy hedging. If the Fund enters into a currency hedging
transaction, the Fund will comply with the asset segregation requirements
described below.

Risks of Currency Transactions. Currency transactions are subject to risks
different from those of other portfolio transactions. Because currency control
is of great importance to the issuing governments and influences economic
planning and policy, purchases and sales of currency and related instruments can
be negatively affected by government exchange controls, blockages, and
manipulations or exchange restrictions imposed by governments. These can result
in losses to the Fund if it is unable to deliver or receive currency or funds in
settlement of obligations and could also cause hedges it has entered into to be
rendered useless, resulting in full currency exposure as well as incurring
transaction costs. Buyers and sellers of currency futures are subject to the
same risks that apply to the use of futures generally. Further, settlement of a
currency futures contract for the purchase of most currencies must occur at a
bank based in the issuing nation. Trading options on currency futures is
relatively new, and the ability to establish and close out positions on such
options is subject to the maintenance of a liquid market which may not always be
available. Currency exchange rates may fluctuate based on factors extrinsic to
that country's economy.

Risks of Strategic Transactions Outside the US. When conducted outside the US,
Strategic Transactions may not be regulated as rigorously as in the US, may not
involve a clearing mechanism and related guarantees, and are subject to the risk
of governmental actions affecting trading in, or the prices of, foreign
securities, currencies and other instruments. The value of such positions also
could be adversely affected by: (i) other complex foreign political, legal and
economic factors, (ii) lesser availability than in the US of data on which to
make trading decisions, (iii) delays in the Fund's ability to act upon economic
events occurring in foreign markets during non-business hours in the US, (iv)
the imposition of different exercise and settlement terms and procedures and
margin requirements than in the US, and (v) lower trading volume and liquidity.

Use of Segregated and Other Special Accounts. Many Strategic Transactions, in
addition to other requirements, require that the Fund segregate cash or liquid
assets with its custodian to the extent fund obligations are not otherwise
"covered" through ownership of the underlying security, financial instrument or
currency. In general, either the full amount of any obligation by the Fund to
pay or deliver securities or assets must be covered at all times by the
securities, instruments or currency required to be delivered, or, subject to any
regulatory restrictions, an amount of cash or liquid assets at least equal to
the current amount of the obligation must be segregated with the custodian. The
segregated assets cannot be sold or transferred unless equivalent assets are
substituted in their place or it is no longer necessary to segregate them. For
example, a call option written by the Fund will require the Fund to hold the
securities subject to the call (or securities convertible into the needed
securities without additional consideration) or to segregate cash or liquid
assets sufficient to purchase and deliver the securities if the call is
exercised. A call option sold by the Fund on an index will require the Fund to
own portfolio securities which correlate with the index or to segregate cash or
liquid assets equal to the excess of the index value over the exercise price on
a current basis. A put option written by the Fund requires the Fund to segregate
cash or liquid assets equal to the exercise price.

Except when the Fund enters into a forward contract for the purchase or sale of
a security denominated in a particular currency, which requires no segregation,
a currency contract which obligates the Fund to buy or sell currency will
generally require the Fund to hold an amount of that currency or liquid assets
denominated in that currency equal to the Fund's obligations or to segregate
cash or liquid assets equal to the amount of the Fund's obligation.

OTC options entered into by the Fund, including those on securities, currency,
financial instruments or indices and OCC issued and exchange listed index
options, will generally provide for cash settlement. As a result, when the Fund
sells these instruments it will only segregate an amount of cash or liquid
assets equal to its accrued net obligations, as there is no requirement for
payment or delivery of amounts in excess of the net amount. These amounts will
equal 100% of the exercise price in the case of a non cash-settled put, the same
as an OCC guaranteed listed option sold by the Fund, or the in-the-money amount
plus any sell-back formula amount in the case of a cash-settled put or call. In
addition, when the Fund sells a call option on an index at a time when the
in-the-money amount exceeds the exercise price, the Fund will segregate, until
the option expires or is closed out, cash or cash equivalents equal in value to
such excess. OCC issued and exchange listed options sold by the Fund other than
those above generally settle with physical delivery, or with an


                                       25
<PAGE>

election of either physical delivery or cash settlement and the Fund will
segregate an amount of cash or liquid assets equal to the full value of the
option. OTC options settling with physical delivery, or with an election of
either physical delivery or cash settlement will be treated the same as other
options settling with physical delivery.

In the case of a futures contract or an option thereon, the Fund must deposit
initial margin and possible daily variation margin in addition to segregating
cash or liquid assets sufficient to meet its obligation to purchase or provide
securities or currencies, or to pay the amount owed at the expiration of an
index-based futures contract. Such liquid assets may consist of cash, cash
equivalents, liquid debt or equity securities or other acceptable assets.

With respect to swaps, the Fund will accrue the net amount of the excess, if
any, of its obligations over its entitlements with respect to each swap on a
daily basis and will segregate an amount of cash or liquid assets having a value
equal to the accrued excess. Caps, floors and collars require segregation of
assets with a value equal to the Fund's net obligation, if any.

Strategic Transactions may be covered by other means when consistent with
applicable regulatory policies. The Fund may also enter into offsetting
transactions so that its combined position, coupled with any segregated assets,
equals its net outstanding obligation in related options and Strategic
Transactions. For example, the Fund could purchase a put option if the strike
price of that option is the same or higher than the strike price of a put option
sold by the Fund. Moreover, instead of segregating cash or liquid assets if the
Fund held a futures or forward contract, it could purchase a put option on the
same futures or forward contract with a strike price as high or higher than the
price of the contract held. Other Strategic Transactions may also be offset in
combinations. If the offsetting transaction terminates at the time of or after
the primary transaction no segregation is required, but if it terminates prior
to such time, cash or liquid assets equal to any remaining obligation would need
to be segregated.

Combined Transactions. The Fund may enter into multiple transactions, including
multiple options transactions, multiple futures transactions, multiple currency
transactions (including forward currency contracts) and multiple interest rate
transactions and any combination of futures, options, currency and interest rate
transactions ("component" transactions), instead of a single Strategic
Transaction, as part of a single or combined strategy when, in the opinion of
the Advisor, it is in the best interests of the Fund to do so. A combined
transaction will usually contain elements of risk that are present in each of
its component transactions. Although combined transactions are normally entered
into based on the Advisor's judgment that the combined strategies will reduce
risk or otherwise more effectively achieve the desired portfolio management
goal, it is possible that the combination will instead increase such risks or
hinder achievement of the portfolio management objective.

Stripped Zero Coupon Securities. Zero coupon securities include securities
issued directly by the US Treasury, and US Treasury bonds or notes and their
unmatured interest coupons and receipts for their underlying principal
("coupons") which have been separated by their holder, typically a custodian
bank or investment brokerage firm. A holder will separate the interest coupons
from the underlying principal (the "corpus") of the US Treasury security. A
number of securities firms and banks have stripped the interest coupons and
receipts and then resold them in custodial receipt programs with a number of
different names, including "Treasury Income Growth Receipts" (TIGRS(TM)) and
Certificate of Accrual on Treasuries (CATS(TM)). The underlying US Treasury
bonds and notes themselves are held in book-entry form at the Federal Reserve
Bank or, in the case of bearer securities (i.e., unregistered securities which
are owned ostensibly by the bearer or holder thereof), in trust on behalf of the
owners thereof. The US Treasury has facilitated transfers of ownership of zero
coupon securities by accounting separately for the beneficial ownership of
particular interest coupon and corpus payments on Treasury securities through
the Federal Reserve book-entry record keeping system. The Federal Reserve
program as established by the Treasury Department is known as "STRIPS" or
"Separate Trading of Registered Interest and Principal of Securities." Under the
STRIPS program, the Fund will be able to have its beneficial ownership of zero
coupon securities recorded directly in the book-entry record-keeping system in
lieu of having to hold certificates or other evidences of ownership of the
underlying US Treasury securities.

When US Treasury obligations have been stripped of their unmatured interest
coupons by the holder, the principal or corpus is sold at a deep discount
because the buyer receives only the right to receive a future fixed payment on
the security and does not receive any rights to periodic interest (i.e. cash)
payments. Once stripped or separated, the corpus and coupons may be sold
separately. Typically, the coupons are sold separately or grouped with other
coupons with like maturity dates and sold bundled in such form. Purchasers of
stripped obligations acquire, in effect, discount obligations that are
economically identical to the zero coupon securities that the Treasury sells
itself.


                                       26
<PAGE>

Supranational Entities. Supranational entities are international organizations
designated or supported by governmental entities to promote economic
reconstruction or development and international banking institutions and related
government agencies. Examples include the International Bank for Reconstruction
and Development (the World Bank), the European Coal and Steel Community, The
Asian Development Bank and the InterAmerican Development Bank. Obligations of
supranational entities are backed by the guarantee of one or more foreign
governmental parties which sponsor the entity.

Trust Preferred Securities. The Fund may invest in Trust Preferred Securities,
which are hybrid instruments issued by a special purpose trust (the "Special
Trust"), the entire equity interest of which is owned by a single issuer. The
proceeds of the issuance to the Fund of Trust Preferred Securities are typically
used to purchase a junior subordinated debenture, and distributions from the
Special Trust are funded by the payments of principal and interest on the
subordinated debenture.

If payments on the underlying junior subordinated debentures held by the Special
Trust are deferred by the debenture issuer, the debentures would be treated as
original issue discount ("OID") obligations for the remainder of their term. As
a result, holders of Trust Preferred Securities, such as the Fund, would be
required to accrue daily for Federal income tax purposes their share of the
stated interest and the de minimis OID on the debentures (regardless of whether
the Fund receives any cash distributions from the Special Trust), and the value
of Trust Preferred Securities would likely be negatively affected. Interest
payments on the underlying junior subordinated debentures typically may only be
deferred if dividends are suspended on both common and preferred stock of the
issuer. The underlying junior subordinated debentures generally rank slightly
higher in terms of payment priority than both common and preferred securities of
the issuer, but rank below other subordinated debentures and debt securities.
Trust Preferred Securities may be subject to mandatory prepayment under certain
circumstances. The market values of Trust Preferred Securities may be more
volatile than those of conventional debt securities. Trust Preferred Securities
may be issued in reliance on Rule 144A under the Securities Act of 1933 (the
"1933 Act"), and, unless and until registered, are restricted securities; there
can be no assurance as to the liquidity of Trust Preferred Securities and the
ability of holders of Trust Preferred Securities, such as the Fund, to sell
their holdings.

US Government Securities. There are two broad categories of US
Government-related debt instruments: (a) direct obligations of the US Treasury,
and (b) securities issued or guaranteed by US Government agencies.

Examples of direct obligations of the US Treasury are Treasury Bills, Notes,
Bonds and other debt securities issued by the US Treasury. These instruments are
backed by the "full faith and credit" of the United States. They differ
primarily in interest rates, the length of maturities and the dates of issuance.
Treasury bills have original maturities of one year or less. Treasury notes have
original maturities of one to ten years and Treasury bonds generally have
original maturities of greater than ten years.

Some agency securities are backed by the full faith and credit of the United
States (such as Maritime Administration Title XI Ship Financing Bonds and Agency
for International Development Housing Guarantee Program Bonds) and others are
backed only by the rights of the issuer to borrow from the US Treasury (such as
Federal Home Loan Bank Bonds and Federal National Mortgage Association Bonds),
while still others, such as the securities of the Federal Farm Credit Bank, are
supported only by the credit of the issuer. With respect to securities supported
only by the credit of the issuing agency or by an additional line of credit with
the US Treasury, there is no guarantee that the US Government will provide
support to such agencies and such securities may involve risk of loss of
principal and interest.

US Government Securities may include "zero coupon" securities that have been
stripped by the US Government of their unmatured interest coupons and
collateralized obligations issued or guaranteed by a US Government agency or
instrumentality.

Interest rates on US Government obligations may be fixed or variable. Interest
rates on variable rate obligations are adjusted at regular intervals, at least
annually, according to a formula reflecting then current specified standard
rates, such as 91-day US Treasury bill rates. These adjustments generally tend
to reduce fluctuations in the market value of the securities.


                                       27
<PAGE>

The government guarantee of the US Government Securities in the Fund's portfolio
does not guarantee the net asset value of the shares of the Fund. There are
market risks inherent in all investments in securities and the value of an
investment in the Fund will fluctuate over time. Normally, the value of
investments in US Government Securities varies inversely with changes in
interest rates. For example, as interest rates rise the value of investments in
US Government Securities will tend to decline, and as interest rates fall the
value of the Fund's investments will tend to increase. In addition, the
potential for appreciation in the event of a decline in interest rates may be
limited or negated by increased principal prepayments with respect to certain
Mortgage-Backed Securities, such as GNMA Certificates. Prepayments of high
interest rate Mortgage-Backed Securities during times of declining interest
rates will tend to lower the return of the Fund and may even result in losses to
the Fund if some securities were acquired at a premium. Moreover, during periods
of rising interest rates, prepayments of Mortgage-Backed Securities may decline,
resulting in the extension of the Fund's average portfolio maturity. As a
result, the Fund's portfolio may experience greater volatility during periods of
rising interest rates than under normal market conditions.

Warrants. The holder of a warrant has the right, until the warrant expires, to
purchase a given number of shares of a particular issuer at a specified price.
Such investments can provide a greater potential for profit or loss than an
equivalent investment in the underlying security. Prices of warrants do not
necessarily move, however, in tandem with the prices of the underlying
securities and are, therefore, considered speculative investments. Warrants pay
no dividends and confer no rights other than a purchase option. Thus, if a
warrant held by the Fund were not exercised by the date of its expiration, the
Fund would lose the entire purchase price of the warrant.

When-Issued Securities. The Fund may from time to time purchase equity and debt
securities on a "when-issued," "delayed delivery" or "forward delivery" basis.
The price of such securities, which may be expressed in yield terms, is fixed at
the time the commitment to purchase is made, but delivery and payment for the
securities takes place at a later date. During the period between purchase and
settlement, no payment is made by the Fund to the issuer and no interest accrues
to the Fund. When the Fund purchases such securities, it immediately assumes the
risks of ownership, including the risk of price fluctuation. Failure to deliver
a security purchased on this basis may result in a loss or missed opportunity to
make an alternative investment.

To the extent that assets of the Fund are held in cash pending the settlement of
a purchase of securities, the Fund would earn no income. While such securities
may be sold prior to the settlement date, the Fund intends to purchase them with
the purpose of actually acquiring them unless a sale appears desirable for
investment reasons. At the time the Fund makes the commitment to purchase a
security on this basis, it will record the transaction and reflect the value of
the security in determining its net asset value. The market value of the
securities may be more or less than the purchase price. The Fund will establish
a segregated account in which it will maintain cash and liquid securities equal
in value to commitments for such securities.



Portfolio Holdings Information


In addition to the public disclosure of Fund portfolio holdings through required
Securities and Exchange Commission ("SEC") quarterly filings, the Fund may make
its portfolio holdings information publicly available on the DWS


                                       28
<PAGE>

Funds' Web site as described in the Fund's prospectus. The Fund does not
disseminate non-public information about portfolio holdings except in accordance
with policies and procedures adopted by the Fund.

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

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

Portfolio holdings information distributed by the trading desks of DeAM or a
subadvisor for the purpose of facilitating efficient trading of such securities
and receipt of relevant research is not subject to the foregoing requirements.
Non-public portfolio holding information does not include portfolio
characteristics (other than holdings or subsets of holdings) about the Fund and
information derived therefrom, including, but not limited to, how the Fund's
investments are divided among various sectors, industries, countries, value and
growth stocks, bonds, currencies and cash, types of bonds, bond maturities,
duration, bond coupons and bond credit quality ratings so long as the Fund's
holdings could not be derived from such information.





                                       29
<PAGE>



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

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

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





                                       30
<PAGE>




                                       31
<PAGE>




                                       32
<PAGE>




                                       33
<PAGE>



                  MANAGEMENT OF THE FUND

Investment Advisor


Deutsche Investment Management Americas Inc. ("DIMA" or the "Advisor"), which is
part of Deutsche Asset Management (DeAM), is the investment advisor for the
Fund. Under the supervision of the Board of Trustees of the Fund, DIMA, with
headquarters at 345 Park Avenue, New York, New York 10154, or the subadvisors,
makes the Fund's investment decisions, buys and sells securities for the Fund
and conducts research that leads to these purchase and sale decisions. The
Advisor manages the Fund's daily investment and business affairs subject to the
policies established by the Trust's Board of Trustees. DIMA, together with its
predecessors, has more than 80 years of experience managing mutual funds and
provides a full range of investment advisory services to institutional and
retail clients. The Fund's investment advisor or the subadvisors are also
responsible for selecting brokers and dealers and for negotiating brokerage
commissions and dealer charges.

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


                                       34
<PAGE>

well-resourced global investment platform brings together a wide variety of
experience and investment insight, across industries, regions, asset classes and
investing styles. DIMA is an indirect, wholly owned subsidiary of Deutsche Bank
AG. Deutsche Bank AG is a major global banking institution that is engaged in a
wide range of financial services, including investment management, mutual fund,
retail, private and commercial banking, investment banking and insurance. The
term "DWS Scudder" is the designation given to the products and services
provided by DIMA and its affiliates to the DWS Mutual Funds.


The Board and the shareholders approved an amended and restated investment
management agreement (the "Investment Management Agreement") for the Fund.
Pursuant to the Investment Management Agreement, the Advisor provides continuing
investment management of the assets of the Fund. In addition to the investment
management of the assets of the Fund, the Advisor determines the investments to
be made for the Fund, including what portion of its assets remain uninvested in
cash or cash equivalents, and with whom the orders for investments are placed,
consistent with the Fund's policies as stated in its Prospectus and SAI, or as
adopted by the Fund's Board. The Advisor will also monitor, to the extent not
monitored by the Fund's administrator or other agent, the Fund's compliance with
its investment and tax guidelines and other compliance policies.

The Advisor provides assistance to the Board in valuing the securities and other
instruments held by the Fund, to the extent reasonably required by valuation
policies and procedures that may be adopted by the Fund.

Pursuant to the Investment Management Agreement (unless otherwise provided in
the agreement or as determined by the Fund's Board and to the extent permitted
by applicable law), the Advisor pays the compensation and expenses of all Board
members, officers, and executive employees of the Fund, including the Fund's
share of payroll taxes, who are affiliated persons of the Advisor.

The Investment Management Agreement provides that the Fund is generally
responsible for expenses that include: fees payable to the Advisor; outside
legal, accounting or auditing expenses, including with respect to expenses
related to negotiation, acquisition or distribution of portfolio investments;
maintenance of books and records that are maintained by the Fund, the Fund's
custodian, or other agents of the Fund; taxes and governmental fees; fees and
expenses of the Fund's accounting agent, custodian, sub-custodians,
depositories, transfer agents, dividend reimbursing agents and registrars;
payment for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; brokerage commissions or
other costs of acquiring or disposing of any portfolio securities or other
instruments of the Fund; and litigation expenses and other extraordinary
expenses not incurred in the ordinary course of the Fund's business.

The Investment Management Agreement allows the Advisor to delegate any of its
duties under the Agreement to a subadvisor, subject to a majority vote of the
Board of the Fund, including a majority of the Board who are not interested
persons of the Fund, and, if required by applicable law, subject to a majority
vote of the Fund's shareholders.


The Investment Management Agreement will remain in effect from year to year if
approved annually (i) by the Board or by the vote of a "majority of the
outstanding voting securities" of the Fund, and (ii) by a majority of the
Independent Board Members who are not parties to the relevant agreement, cast in
person at a meeting called for such purpose.


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

In addition, the Board and shareholders approved a subadvisor approval policy
for the Fund (the "Subadvisor Approval Policy"). The Subadvisor Approval Policy
permits the Advisor, subject to the approval of the Board, including a majority
of its independent board members, to appoint and replace subadvisors and to
amend sub-advisory contracts without obtaining shareholder approval. Under the
Subadvisor Approval Policy, the Board, including its independent board members,
will continue to evaluate and approve all new sub-advisory contracts


                                       35
<PAGE>

between the Advisor and any subadvisor, as well as all changes to any existing
sub-advisory contract. The Fund cannot implement the Subadvisor Approval Policy
without the SEC either adopting revisions to current rules (as it proposed to do
in October 2003) or granting the 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
Subadvisor Approval Policy, including any shareholder notice requirements.

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


The Fund pays the Advisor a fee at an annual rate of 0.465% on the first $250
million of average daily net assets, 0.435% on the next $750 million, 0.415% on
the next $1.5 billion, 0.395% on the next $2.5 billion, 0.365% on the next $2.5
billion, 0.345% on the next $2.5 billion, 0.325% on the next $2.5 billion, and
0.315% of such net assets, thereafter, payable monthly, provided that the Fund
will make such interim payments as may be requested by the Advisor not to exceed
75% of the amount of the fee then accrued on the books of the Fund and unpaid.
Prior to June 1, 2006, the Fund paid the Advisor a fee at an annual rate of
0.500% on the first $250 million of average daily net assets, 0.520% on the next
$750 million, 0.500% on the next $1.5 billion, 0.480% on the next $2.5 billion,
0.450% on the next $2.5 billion, 0.430% on the next $2.5 billion, 0.410% on the
next $2.5 billion, and 0.400% of such net assets in excess of $12.5 billion.

For the fiscal years ended January 31, 2006, 2007 and 2008 the Fund paid fees of
$4,312,659, $3,404,810 and $3,008,141, respectively.

Through April 30, 2009, the Advisor has contractually agreed to waive all or a
portion of its management fee and reimburse or pay certain operating expenses of
the fund so that the fund's total operating expenses will not exceed 1.01% for
Class A shares, 1.76% for Class B and Class C shares, respectively, excluding
certain expenses such as extraordinary expenses, taxes, brokerage and interest.

Through September 30, 2008, the Advisor has contractually agreed to waive all or
a portion of its management fee and reimburse or pay certain operating expenses
of the fund so that the fund's total operating expenses will not exceed 0.76%
for Institutional Class shares, excluding certain expenses such as extraordinary
expenses, taxes, brokerage and interest. Although there can be no assurances
that the current waiver/expense reimbursement arrangement will be maintained
beyond September 30, 2008, the Advisor has committed to review the continuance
of such waiver/expense reimbursement arrangements by September 30, 2008.


Under a separate agreement between Deutsche Bank AG and the Fund, Deutsche Bank
AG has granted a license to the Fund to utilize the trademark "DWS."

In reviewing the terms of the Agreement and in discussions with the Advisor
concerning such Agreement, the Trustees of the Trust who are not "interested
persons" of the Advisor are represented by independent counsel at the Fund's
expense.

The Advisor may serve as advisor to other funds with investment objectives and
policies similar to those of the Fund that may have different distribution
arrangements or expenses, which may affect performance.

Officers and employees of the Advisor from time to time may have transactions
with various banks, including the Funds' custodian bank. It is the Advisor's
opinion that the terms and conditions of those transactions which have occurred
were not influenced by existing or potential custodial or other Fund
relationships.


                                       36
<PAGE>


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.


Subadvisor. Prior to December 2, 2005, Deutsche Asset Management Investment
Services Limited ("DeAMIS"), an affiliate of the Advisor was the subadvisor for
the Fund. DeAMIS rendered investment advisory and management services, including
services related to foreign securities, foreign currency transactions and
related investments. The Advisor managed all other assets of the Fund.

On December 1, 2005, Aberdeen Asset Management PLC ("Aberdeen PLC") acquired
from Deutsche Bank AG, the parent company of the Advisor, parts of its asset
management business and related assets based in London and Philadelphia.
Effective December 1, 2005, DeAMIS became a direct wholly-owned subsidiary of
Aberdeen PLC and was renamed Aberdeen Asset Management Investment Services
Limited ("AAMISL"), and the individuals at the Advisor's Philadelphia based
Fixed Income team who managed all or a portion of the assets of the Fund became
employees of Aberdeen Asset Management Inc. ("AAMI"). AAMI and AAMISL are each a
direct wholly-owned subsidiary of Aberdeen PLC and a registered investment
advisor under the Investment Advisers Act of 1940, as amended.

Effective December 2, 2005, and pursuant to a written contract with the Advisor,
AAMI became the subadvisor to the Fund (the "Sub-Advisory Agreement"). As the
subadvisor and pursuant to the Sub-Advisory Agreement, AAMI may delegate certain
of its duties and responsibilities with respect to the services it is contracted
to provide to the Fund. Pursuant to such authority, AAMI has entered into an
investment sub-sub-advisory agreement with AAMISL to provide investment services
to the Fund ("Sub-Sub-Advisory Agreement").

Sub-Advisory Agreement and the Sub-Sub-Advisory Agreement

Under the terms of the Sub-Advisory Agreement and the Sub-Sub-Advisory
Agreement, AAMI and AAMISL, respectively, each agree, subject to the supervision
and control of the Advisor and the Board (and, in the case of the
Sub-Sub-Advisory Agreement, also subject to the supervision and control of
AAMI), to manage the securities and assets of the DWS Core Plus Income Fund
entrusted to it by the Advisor (or, in the case of the Sub-Sub-Advisory
Agreement, entrusted to AAMISL by AAMI), in accordance with the Fund's
investment objectives, policies and restrictions. As compensation for their
services under the Sub-Advisory Agreement and the Sub-Sub-Advisory Agreement,
AAMISL and AAMI will each be paid an annual fee of 0.33% (a portion of which
(0.05%) AAMI pays to AAMISL under the Sub-Sub-Advisory Agreement) of average
daily net assets computed daily and paid monthly. AAMI is paid for its services
by the Advisor, and not the Fund, from its fee as investment advisor to the
Fund.


The Sub-Advisory Agreement and the Sub-Sub-Advisory Agreement will each remain
in effect from year to year if approved annually (i) by the Board or by the vote
of a "majority of the outstanding voting securities" of the Fund, and (ii) by a
majority of the Independent Board Members who are not parties to the relevant
agreement, cast in person at a meeting called for such purpose.


AAMISL and AAMI are each obligated to pay all expenses (excluding brokerage
costs, custodian fees, fees of independent registered public accounting firms or
other expenses of the Fund to be borne by the Fund) in connection with the
performance of its services. The Fund bears certain other expenses incurred in
its operation. The services of AAMISL and AAMI are not deemed to be exclusive
and nothing in the Sub-Advisory Agreement or Sub-Sub-Advisory Agreement prevents
AAMISL and AAMI or their 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 Fund) or from engaging in
other activities.

Under the Sub-Advisory Agreement and the Sub-Sub-Advisory Agreement, AAMISL and
AAMI will each be liable (i) if it causes the 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

                                       37
<PAGE>

duties or its reckless disregard of its obligations and duties under the
Sub-Advisory Agreement or the Sub-Sub-Advisory Agreement.

Compensation of Portfolio Managers

Remuneration of Personnel


The remuneration policy ("Policy") of AAMISL and AAMI (for purposes of this
section, referred to collectively as "Aberdeen") 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 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.

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 the relevant
Fund as well as in all DWS Funds as a group (i.e. those funds advised by
Deutsche Asset Management or its affiliates), including investments by their
immediate family members sharing the same household and amounts invested through
retirement and deferred compensation plans. This information is provided as of
the Fund's most recent fiscal year end.



                                       38
<PAGE>

                                                     Dollar Range of
Name of Portfolio Manager                           Fund Shares Owned
-------------------------                           -----------------


Gary W. Bartlett                                         None
Warren S. Davis, III                                     None
Thomas J. Flaherty                                       None
J. Christopher Gagnier                                   None
Daniel R. Taylor                                         None
Timothy C. Vile                                          None
William T. Lissenden                                     None
Brett Diment*                                            None
Annette Fraser*                                          None
Anthony Fletcher*                                        None
Nick Hart*                                               None
Stephen Ilott*                                           None
Ian Winship*                                             None
Matthew Cobon*                                           None

*        Because these portfolio managers are not resident in the US, they
         generally do not invest in US registered investment companies, such as
         the Fund, on account of US tax and other regulatory limitations
         applicable to foreign investors.


Conflicts of Interest

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

Other SEC Registered Investment Companies Managed:


<TABLE>
<CAPTION>
                               Number of                               Number of Investment
                               Registered        Total Assets of      Company Accounts with    Total Assets of
                              Investment      Registered Investment        Performance-       Performance-Based
Name of Portfolio Manager      Companies            Companies               Based Fee            Fee Accounts
-------------------------      ---------            ---------               ---------            ------------
<S>                                <C>           <C>                            <C>                   <C>
Gary W. Bartlett                   8             $3,523,243,000                 0                     $0
Warren S. Davis, III               8             $3,523,243,000                 0                     $0
Thomas J. Flaherty                 8             $3,523,243,000                 0                     $0
J. Christopher Gagnier             8             $3,523,243,000                 0                     $0
Daniel R. Taylor                   8             $3,523,243,000                 0                     $0
Timothy C. Vile                    8             $3,523,243,000                 0                     $0
William T. Lissenden               8             $3,523,243,000                 0                     $0



                                       39
<PAGE>

                               Number of                               Number of Investment
                               Registered        Total Assets of      Company Accounts with    Total Assets of
                              Investment      Registered Investment        Performance-       Performance-Based
Name of Portfolio Manager      Companies            Companies               Based Fee            Fee Accounts
-------------------------      ---------            ---------               ---------            ------------

Brett Diment                       5               $501,836,000                 0                     $0
Annette Fraser                     2               $125,387,800                 0                     $0
Anthony Fletcher                   2               $125,387,800                 0                     $0
Nick Hart                          2               $125,387,800                 0                     $0
Stephen Ilott                      2               $125,387,800                 0                     $0
Ian Winship                        2               $125,387,800                 0                     $0
Matthew Cobon                      2               $125,387,800                 0                     $0


Other Pooled Investment Vehicles Managed:

                                                                         Number of Pooled
                               Number of                                Investment Vehicle
                                 Pooled          Total Assets of          Accounts with        Total Assets of
                              Investment        Pooled Investment       Performance-Based        Performance-
Name of Portfolio Manager       Vehicles             Vehicles                  Fee            Based Fee Accounts
-------------------------       --------             --------                  ---            ------------------

Gary W. Bartlett                   9             $4,251,787,278                 0                     $0
Warren S. Davis, III               9             $4,251,787,278                 0                     $0
Thomas J. Flaherty                 9             $4,251,787,278                 0                     $0
J. Christopher Gagnier             9             $4,251,787,278                 0                     $0
Daniel R. Taylor                   9             $4,251,787,278                 0                     $0
Timothy C. Vile                    9             $4,251,787,278                 0                     $0
William T. Lissenden               9             $4,251,787,278                 0                     $0
Brett Diment                      103           $21,930,216,394                 0                     $0
Annette Fraser                     96           $19,857,688,880                 0                     $0
Anthony Fletcher                   96           $19,857,688,880                 0                     $0
Nick Hart                          96           $19,857,688,880                 0                     $0
Stephen Ilott                      96           $19,857,688,880                 0                     $0
Ian Winship                        96           $19,857,688,880                 0                     $0



                                       40
<PAGE>

                                                                         Number of Pooled
                               Number of                                Investment Vehicle
                                 Pooled          Total Assets of          Accounts with        Total Assets of
                              Investment        Pooled Investment       Performance-Based        Performance-
Name of Portfolio Manager       Vehicles             Vehicles                  Fee            Based Fee Accounts
-------------------------       --------             --------                  ---            ------------------

Matthew Cobon                      96           $19,857,688,880                 0                     $0


Other Accounts Managed:

                                                                         Number of Other
                                                                          Accounts with        Total Assets of
                            Number of Other      Total Assets of           Performance-       Performance-Based
Name of Portfolio Manager       Accounts          Other Accounts            Based Fee            Fee Accounts
-------------------------       --------          --------------            ---------            ------------


Gary W. Bartlett                     178          $29,373,780,698                    4           $478,536,000
Warren S. Davis, III                 178          $29,373,780,698                    4           $478,536,000
Thomas J. Flaherty                   178          $29,373,780,698                    4           $478,536,000
J. Christopher Gagnier               178          $29,373,780,698                    4           $478,536,000
Daniel R. Taylor                     178          $29,373,780,698                    4           $478,536,000
Timothy C. Vile                      178          $29,373,780,698                    4           $478,536,000
William T. Lissenden                 178          $29,373,780,698                    4           $478,536,000
Brett Diment                         414          $61,714,476,936                    0                     $0
Annette Fraser                       398          $58,646,939,893                    0                     $0
Anthony Fletcher                     398          $58,646,939,893                    0                     $0
Nick Hart                            398          $58,646,939,893                    0                     $0
Stephen Ilott                        398          $58,646,939,893                    0                     $0
Ian Winship                          398          $58,646,939,893                    0                     $0
Matthew Cobon                        398          $58,646,939,893                    0                     $0

</TABLE>

Conflicts of Interest

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 and AAMISL 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:

                                       41
<PAGE>

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

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

In some cases, an apparent conflict may arise where AAMI and AAMISL 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 and AAMISL have in place supervisory oversight processes to
periodically monitor performance deviations for accounts with like strategies.

DIMA is owned by Deutsche Bank AG, a multi-national financial services company.
Therefore, DIMA 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 interests. 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 DIMA's advisory clients. DIMA 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 each Fund's/Portfolio's Boards.

Codes of Ethics

The Fund, the Advisor, the subadvisor and the Fund's principal underwriter have
each adopted codes of ethics under Rule 17j-1 under the 1940 Act. Board members,
officers of the Trusts and employees of the Advisor and principal underwriter
are permitted to make personal securities transactions, including transactions
in securities that may be purchased or held by the Fund, subject to certain
requirements and restrictions set forth in the applicable Code of Ethics. The
Advisor's/subadvisor's Code of Ethics contains provisions and requirements
designed to identify and address certain conflicts of interest between personal
investment activities and the interests of the Fund. Among other things, the
Advisor's/subadvisor's Code of Ethics prohibits certain types of transactions
absent prior approval, imposes time periods during which personal transactions
may not be made in certain securities, and requires the submission of duplicate
broker confirmations and quarterly reporting of securities transactions.
Additional restrictions apply to portfolio managers, traders, research analysts
and others involved in the investment advisory process. Exceptions to these and
other provisions of the Advisor's/subadvisor's Code of Ethics may be granted in
particular circumstances after review by appropriate personnel.


                                       42
<PAGE>

                             FUND SERVICE PROVIDERS

Administrator


The Fund entered into an administrative services agreement with the Advisor (the
"Administrative Services Agreement"), pursuant to which the Advisor provides
administrative services to the Fund including, among others, providing the Fund
with personnel, preparing and making required filings on behalf of the Fund,
maintaining books and records for the Fund, and monitoring the valuation of Fund
securities. For all services provided under the Administrative Services
Agreement, the Fund pays the Advisor a fee, computed daily and paid monthly, of
0.100% of the Fund's net assets.


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

For all services under the Administrative Services Agreement, the Fund pays the
Advisor 0.10% of the Fund's average daily net assets, computed and accrued daily
and payable monthly.


For the period from June 1, 2006 through January 31, 2007, the Advisor received
an Administration Fee of $471,281.

For the fiscal year ended January 31, 2008, the Advisor received an
Administration Fee of $674,285, of which $56,043 was unpaid at year end.





                                       43
<PAGE>



Pursuant to an agreement between the Administrator and State Street Bank and
Trust Company ("SSB"), the Administrator has delegated certain administrative
functions to SSB. The costs and expenses of such delegation are borne by the
Administrator, not by the Fund.




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

Distributor

Pursuant to an Underwriting and Distribution Services Agreement (the
"Distribution Agreement"), DWS Scudder Distributors, Inc. ("DWS-SDI"), 222 South
Riverside Plaza, Chicago, Illinois 60606 (the "Distributor"), an affiliate of
the Advisor, is the principal underwriter, distributor and administrator for the
Class A, Class B, Class C and Institutional Class shares of the Fund and acts as
agent of the Fund in the continuous offering of its Shares. The Distribution
Agreement for the Fund, each dated April 5, 2002, were last approved by the
Trustees in September 2007. The Distribution Agreement will remain in effect
from year to year and only if its continuance is approved for each class at
least annually by a vote of the Board members of the Fund, including the
Trustees who are not interested persons of the Fund and who have no direct or
indirect financial interest in the Distribution Agreement.

The Distribution Agreement continues in effect from year to year so long as such
continuance is approved for each class at least annually by a vote of the Board
of Trustees of the Fund, including the Trustees who are not interested persons
of the Fund and who have no direct or indirect financial interest in the
Agreement. The Distribution Agreement automatically terminates in the event of
its assignment and may be terminated for a class at any time without penalty by
the Fund or by DWS-SDI upon 60 days' notice. Termination by the Fund with
respect to a class may be by vote of (i) a majority of the Board members who are
not interested persons of the Fund and who have no direct or indirect financial
interest in the Distribution Agreement, or (ii) a "majority of the outstanding
voting securities" of the class of the Fund, as defined under the 1940 Act. All
material amendments must be approved by the Board of Trustees in the manner
described above with respect to the continuation of the Distribution Agreement.
The provisions concerning continuation, amendment and termination of a
Distribution Agreement are on a series by series and class-by-class basis.


DWS-SDI bears all of its expenses of providing services pursuant to the
Distribution Agreement, including the payment of any commissions. The Fund pays
the cost for the prospectus and shareholder reports to be typeset and printed
for existing shareholders, and DWS-SDI, as principal underwriter, pays for the
printing and distribution of copies thereof used in connection with the offering
of shares to prospective investors. DWS-SDI also pays for supplementary sales
literature and advertising costs. As indicated under "Purchase of Shares,"
DWS-SDI retains the sales charge of Class A shares and pays or allows
concessions or discounts to firms for the sale of the Fund's shares. DWS-SDI
receives no compensation from the Fund as principal underwriter for Class A and
Institutional shares. DWS-SDI receives compensation from the Fund as principal
underwriter for Class B and Class C shares.


                                       44
<PAGE>

Shareholder and administrative services are provided to the Fund on behalf of
Class A, Class B and Class C shareholders under a Shareholder Services Agreement
(the "Services Agreement") with DWS-SDI. The Services Agreement continues in
effect from year to year so long as such continuance is approved for the Fund at
least annually by a vote of the Board of the applicable Fund, including the
Board members who are not interested persons of the Fund and who have no direct
or indirect financial interest in the Services Agreement. The Services Agreement
automatically terminates in the event of its assignment and may be terminated at
any time without penalty by the Fund or by DWS-SDI upon 60 days' notice.
Termination with respect to the Class A, B or C shares of the Fund may be by a
vote of (i) the majority of the Board members of the Fund who are not interested
persons of the Fund and who have no direct or indirect financial interest in the
Services Agreement, or (ii) a "majority of the outstanding voting securities" of
the Class A, B or C shares, as defined under the 1940 Act. The Services
Agreement may not be amended for a class to increase materially the fee to be
paid by the Fund without approval of a majority of the outstanding voting
securities of such class of the Fund, and all material amendments must in any
event be approved by the Board of Trustees in the manner described above with
respect to the continuation of the Services Agreement.

Under the Services Agreement, DWS-SDI may provide or appoint various
broker-dealer firms and other service or administrative firms ("firms") to
provide information and services to investors in the Fund.
Typically, DWS-SDI appoints firms that provide services and facilities for their
customers or clients who are investors in the Fund. Firms appointed by DWS-SDI
provide such office space and equipment, telephone facilities and personnel as
is necessary or beneficial for providing information and services to their
clients. Such services and assistance may include, but are not limited to,
establishing and maintaining accounts and records, processing purchase and
redemption transactions, answering routine inquiries regarding the Fund,
providing assistance to clients in changing dividend and investment options,
account designations and addresses and such other
administrative services as may be agreed upon from time to time and permitted by
applicable statute, rule or regulation.

DWS-SDI bears all of its expenses of providing those services pursuant to the
Services Agreement, including the payment of a service fee to firms (as defined
below). As indicated under each Rule 12b-1 Plan (described below), DWS-SDI
receives compensation from the Fund for its services under the Services
Agreement.

Rule 12b-1 Plans

The Fund has adopted plans pursuant to Rule 12b-1 under the 1940 Act (each a
"Rule 12b-1 Plan") that provides for fees payable as an expense of the Class B
shares and Class C shares that are used by DWS-SDI to pay for distribution
services for those classes. Pursuant to each Rule 12b-1 Plan, shareholder and
administrative services are provided to the applicable Fund on behalf of its
Class A, B and C shareholders under the Fund's Services Agreement with DWS-SDI.
Because 12b-1 fees are paid out of Fund assets on an ongoing basis, they will,
over time, increase the cost of an investment and may cost more than other types
of sales charges.

The Rule 12b-1 distribution plans for Class B and Class C shares provide
alternative methods for paying sales charges and may help funds grow or maintain
asset levels to provide operational efficiencies and economies of scale. Rule
12b-1 service plans provide compensation to DWS-SDI or intermediaries for
post-sales servicing. Since each Distribution Agreement provides for fees
payable as an expense of the Class B shares and the Class C shares that are used
by DWS-SDI to pay for distribution and services for those classes, the agreement
is approved and reviewed separately for the Class B shares and the Class C
shares in accordance with Rule 12b-1 under the 1940 Act, which regulates the
manner in which an investment company may, directly or indirectly, bear the
expenses of distributing its shares. The Distribution Agreement may not be
amended to increase the fee to be paid by the Fund with respect to a class
without approval by a majority of the outstanding voting securities of such
class of the Fund. Similarly, the Services Agreement is approved and reviewed
separately for the Class A shares, Class B shares and Class C shares in
accordance with Rule 12b-1.

If a Rule 12b-1 Plan is terminated in accordance with its terms, the obligation
of the Fund to make payments to DWS-SDI pursuant to the Rule 12b-1 Plan will
cease and the Fund will not be required to make any payments not previously
accrued past the termination date. Thus, there is no legal obligation for the
Fund to pay any expenses incurred by DWS-SDI other than fees previously accrued
and payable under a Rule 12b-1 Plan, if for any reason the Rule 12b-1 Plan is
terminated in accordance with its terms. Future fees under the Rule 12b-1 Plan
may or may not be sufficient to cover DWS-SDI for its expenses incurred. On the
other hand, under certain circumstances, DWS-SDI



                                       45
<PAGE>

might collect in the aggregate over certain periods more in fees under the Rule
12b-1 Plan than it has expended over that same period in providing distribution
services for the Fund. In connection with Class B shares, for example, if shares
of the Fund were to appreciate (resulting in greater asset base against which
Rule 12b-1 fees are charged) and sales of the Fund's shares were to decline
(resulting in lower expenditures by DWS-SDI under the Rule 12b-1 Plan), fees
payable could exceed expenditures. This may also happen over certain periods
shorter than the life of the Rule 12b-1 Plan simply due to the timing of
expenses incurred by DWS-SDI that is not matched to the timing of revenues
received (e.g., a sales commission may be paid by DWS-SDI related to an
investment in year 1, while the Rule 12b-1 fee to DWS-SDI related to that
investment may accrue during year 1 through year 6 prior to conversion of the
investment to Class A shares). As a result, if DWS-SDI's expenses are less than
the Rule 12b-1 fees, DWS-SDI will retain its full fees and make a profit.

Class B and Class C Shares

Distribution Services. For its services under the Distribution Agreement,
DWS-SDI receives a fee from the Fund under its Rule 12b-1 Plan for Class B
shares, payable monthly, at the annual rate of 0.75% of average daily net assets
of the Fund attributable to its Class B shares. This fee is accrued daily as an
expense of Class B shares. DWS-SDI also receives any contingent deferred sales
charges paid with respect to Class B shares. DWS-SDI currently compensates firms
for sales of Class B shares at a commission rate of 3.75%.


For its services under the Distribution Agreement, DWS-SDI receives a fee from
the Fund under its Rule 12b-1 Plan for Class C shares, payable monthly, at the
annual rate of 0.75% of average daily net assets of the Fund attributable to
Class C shares. This fee is accrued daily as an expense of Class C shares.
DWS-SDI currently advances to firms the first year distribution fee at a rate of
0.75% of the purchase price of Class C shares. For periods after the first year,
DWS-SDI currently pays firms for sales of Class C shares a distribution fee,
payable quarterly, at an annual rate of 0.75% of net assets attributable to
Class C shares maintained and serviced by the firm. This fee continues until
terminated by DWS-SDI or the applicable Fund. DWS-SDI also receives any
contingent deferred sales charges paid with respect to Class C shares.


Class A, Class B and Class C Shares

Shareholder Services. For its services under the Services Agreement, DWS-SDI
receives a shareholder services fee from the Fund under a Rule 12b-1 Plan,
payable monthly, at an annual rate of up to 0.25% of the average daily net
assets of Class A, B and C shares of that Fund.


With respect to Class A Shares of the Fund, DWS-SDI pays each firm a service
fee, payable quarterly, at an annual rate of up to 0.25% of the net assets in
Fund accounts that it maintains and services attributable to Class A Shares of
the Fund, commencing with the month after investment. With respect to Class B
and Class C Shares of the Fund, DWS-SDI currently advances to firms the
first-year service fee at a rate of up to 0.25% of the purchase price of such
shares. For periods after the first year, DWS-SDI currently pays firms for sales
of Class C shares a distribution fee, payable quarterly, at an annual rate of
0.75% of net assets attributable to Class C shares maintained and serviced by
the firm. This fee continues until terminated by DWS-SDI or the applicable Fund.
DWS-SDI also receives any contingent deferred sales charges paid with respect to
Class C shares.


DWS-SDI also may provide some of the above services and may retain any portion
of the fee under the Services Agreement not paid to firms to compensate itself
for shareholder or administrative functions performed for the Fund. Currently,
the shareholder services fee payable to DWS-SDI is payable at an annual rate of
up to 0.25% of net assets based upon Fund assets in accounts for which a firm
provides administrative services and at the annual rate of 0.15% of net assets
based upon Fund assets in accounts for which there is no firm of record (other
than DWS-SDI) listed on the Fund's records. The effective shareholder services
fee rate to be charged against all assets of the Fund while this procedure is in
effect will depend upon the proportion of Fund assets that is held in accounts
for which a firm of record



                                       46
<PAGE>

provides shareholder services. The Board of the Fund, in its discretion, may
approve basing the fee to DWS-SDI at the annual rate of 0.25% on all Fund assets
in the future.

Expenses of the Fund paid in connection with the Rule 12b-1 Plans for each class
of shares are set forth below. A portion of the marketing and sales and
operating expenses shown below could be considered overhead expenses.


                                       47
<PAGE>




<TABLE>
<CAPTION>
                                  12b-1 Compensation to Underwriter and Firms for the
                                      Twelve-Month Period Ended December 31, 2007
                                      -------------------------------------------

                                    12b-1             12b-1         12b-1 Compensation
                                 Distribution      Shareholder
                                     Fees         Services Fees       Paid to Firms
                                     ----         -------------       -------------

<S>                  <C>                   <C>          <C>                   <C>
DWS Core Plus      Class A                  $0           $406,807              $479,690
Income Fund

                   Class B             $69,059            $19,122               $33,880

                   Class C                  $0            $25,680              $137,114



                                                    Other Expenses Paid by Underwriter for the
                                                   Twelve-Month Period Ended December 31, 2007
                                                   -------------------------------------------

                                   Advertising, Sales,     Prospectus     Marketing      Postage      Imputed
                                      Literature and                      and Sales
                                  Promotional Materials     Printing      Expenses     and Mailing    Interest
                                  ---------------------     --------      --------     -----------    --------

DWS Core Plus      Class A                $39,727             $2,607         $9,356       $6,230            $0
Income Fund

                   Class B                 $1,882               $109           $351         $213      $640,715

                   Class C                 $7,911               $620         $1,450         $876            $0



                                       48
<PAGE>



The following table shows, for Class A shares, the aggregate amount of
underwriting commissions paid to DWS-SDI, the amount in commissions it paid out
to brokers and the amount of underwriting commissions retained by DWS-SDI.

                                                                                                          Aggregate
                                                  Aggregate       Aggregate    Aggregate Commissions     Commissions
                                                   Sales        Commissions            Paid              Retained by
Fund                             Fiscal Year    Commissions    Paid to Firms   to Affiliated Firms         DWS-SDI
----                             -----------    -----------    -------------   -------------------         -------


DWS Core Plus Income Fund             2008         $105,000        $21,000               $78,000              $6,000
                                      2007          $28,000        $17,000                $5,000              $6,000
                                      2006          $51,000        $37,000                $5,000              $9,000
</TABLE>



Independent Registered Public Accounting Firm and Reports to Shareholders

The financial highlights of the Fund included in the Fund's prospectus and the
Financial Statements incorporated by reference to this SAI have been so included
or incorporated by reference in reliance on the report of PricewaterhouseCoopers
LLP, an independent registered public accounting firm, 125 High Street, Boston,
MA 02110 given on the authority of said firm as experts in auditing and
accounting. PricewaterhouseCoopers LLP, audits the financial statements of the
Fund and provides other audit, tax and related services. Shareholders will
receive annual audited financial statements and semi-annual unaudited financial
statements.

Legal Counsel

Ropes & Gray LLP, One International Place, Boston, Massachusetts, 02110-2624,
serves as legal counsel to the Fund and its Independent Trustees.



Custodian, Transfer Agent and Shareholder Service Agent

The Fund employs State Street Bank and Trust Company ("SSB"), 225 Franklin
Street, Boston, Massachusetts 02110, as custodian. SSB has entered into
agreements with foreign subcustodians approved by the Trustees of the Trust
pursuant to Rule 17f-5 of the 1940 Act. 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 the Fund
holds any securities in the countries in


                                       49
<PAGE>

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.


DWS Scudder Investments Service Company ("DWS-SISC"), 210 W. 10th Street, Kansas
City, Missouri 64105-1614, an affiliate of the Advisor, serves as the Fund's
transfer, dividend-paying agent and shareholder service agent for the Fund's
Class A, B, C and Institutional Class shares. The Transfer Agent receives an
annual service fee for each account of the Fund, based on the type of account.
For open retail accounts, the fee is a flat fee ranging from $20.00 to $27.50
per account, for open wholesale money funds the fee is $32.50 per account, while
for certain retirement accounts serviced on the recordkeeping system of ADP,
Inc., the fee is a flat fee up to $3.60 per account (as of 2007, indexed to
inflation) plus an asset based fee of up to 0.25% of average net assets. 1/12th
of the annual service charge for each account is charged and payable to the
Transfer Agent each month. A fee is charged for any account which at any time
during the month had a share balance in the Fund. Smaller fees are also charged
for closed accounts for which information must be retained on the Transfer
Agent's system for up to 18 months after closing for tax reporting purposes.

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





For the fiscal year ended January 31, 2008, the amount charged to the Class A,
B, C and Institutional Class shares of the Fund by DWS-SISC aggregated $276,882,
$21,471 (of which $7,240 was waived), $20,441 (of which $2,155 was waived) and
$269, respectively.

For the fiscal year ended January 31, 2007, the amount charged to the Class A,
B, C and Institutional Class shares of the Fund by DWS-SISC aggregated $316,971,
$57,990 (of which $32,120 was waived), $28,592 (of which $4,737 was waived) and
$320, respectively.

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




                                       50
<PAGE>

The Fund, or the Advisor (including any affiliate of the Advisor), or both, may
pay unaffiliated third parties for providing recordkeeping and other
administrative services with respect to beneficial owners of Fund shares whose
interests are generally held in an omnibus account.


Regulatory Matters and Legal Proceedings

On December 21, 2006, DeAM settled proceedings with the Securities SEC and the
New York Attorney General on behalf of Deutsche Asset Management, Inc. ("DAMI")
and DIMA, the investment advisors to many of the DWS Scudder funds, regarding
allegations of improper trading of fund shares at DeAM and at the legacy Scudder
and Kemper organizations prior to their acquisition by DeAM in April 2002. These
regulators alleged that although the prospectuses for certain funds in the
regulators' view indicated that the funds did not permit market timing, DAMI and
DIMA breached their fiduciary duty to those funds in that their efforts to limit
trading activity in the funds were not effective at certain times. The
regulators also alleged that DAMI and DIMA breached their fiduciary duty to
certain funds by entering into certain market timing arrangements with
investors. These trading arrangements originated in businesses that existed
prior to the currently constituted DeAM organization, which came together as a
result of various mergers of the legacy Scudder, Kemper and Deutsche fund
groups, and all of the arrangements were terminated prior to the start of the
regulatory investigations that began in the summer of 2003. No current DeAM
employee approved these trading arrangements. Under the terms of the
settlements, DAMI and DIMA neither admitted nor denied any wrongdoing.

The terms of the SEC settlement, which identified improper trading in the legacy
Deutsche and Kemper mutual funds only, provide for payment of disgorgement in
the amount of $17.2 million. The terms of the settlement with the New York
Attorney General provide for payment of disgorgement in the amount of $102.3
million, which is inclusive of the amount payable under the SEC settlement, plus
a civil penalty in the amount of $20 million. The total amount payable by DeAM,
approximately $122.3 million, will be distributed to shareholders of the
affected funds in accordance with a distribution plan to be developed by a
distribution consultant. The funds' investment advisors do not believe these
amounts will have a material adverse financial impact on them or materially
affect their ability to perform under their investment management agreements
with the DWS funds. The above-described amounts are not material to Deutsche
Bank, and have already been reserved.

Among the terms of the settled orders, DeAM is subject to certain undertakings
regarding the conduct of its business in the future, including formation of a
Code of Ethics Oversight Committee to oversee all matters relating to issues
arising under the advisors' Code of Ethics; establishment of an Internal
Compliance Controls Committee having overall compliance oversight responsibility
of the advisors; engagement of an Independent Compliance Consultant to conduct a
comprehensive review of the advisors' supervisory compliance and other policies
and procedures designed to prevent and detect breaches of fiduciary duty,
breaches of the Code of Ethics and federal securities law violations by the
advisors and their employees; and commencing in 2008, the advisors shall undergo
a compliance review by an independent third party.

In addition, DeAM is subject to certain further undertakings relating to the
governance of the mutual funds, including that at least 75% of the members of
the Boards of Trustees/Directors overseeing the DWS Funds continue to be
independent of DeAM; the Chairmen of the DWS Funds' Boards of Trustees/Directors
continue to be independent of DeAM; DeAM maintain existing management fee
reductions for certain funds for a period of five years and not increase
management fees for these certain funds during this period; the funds retain a
senior officer (or independent consultants, as applicable) responsible for
assisting in the review of fee arrangements and monitoring compliance by the
funds and the investment advisors with securities laws, fiduciary duties, codes
of ethics and other compliance policies, the expense of which shall be borne by
DeAM; and periodic account statements, fund prospectuses and the mutual funds'
web site contain additional disclosure and/or tools that assist investors in
understanding the fees and costs associated with an investment in the funds and
the impact of fees and expenses on fund returns.

DeAM has also settled proceedings with the Illinois Secretary of State regarding
market timing matters. The terms of the Illinois settlement provide for investor
education contributions totaling approximately $4 million and a payment in the
amount of $2 million to the Securities Audit and Enforcement Fund.

On September 28, 2006, the SEC and the National Association of Securities
Dealers ("NASD") (now known as FINRA) announced final agreements in which DIMA,

                                       51
<PAGE>

DAMI DWS-SDI settled administrative proceedings regarding disclosure of
brokerage allocation practices in connection with sales of the Scudder Funds'
(now known as the DWS Scudder Funds) shares during 2001-2003. The agreements
with the SEC and NASD are reflected in orders which state, among other things,
that DIMA and DAMI failed to disclose potential conflicts of interest to the
funds' Boards and to shareholders relating to DWS-SDI's use of certain funds'
brokerage commissions to reduce revenue sharing costs to broker-dealer firms
with whom it had arrangements to market and distribute Scudder Fund shares.
These directed brokerage practices were discontinued in October 2003.

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

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

Additional information announced by DeAM regarding the terms of the settlements
is available at www.dws-scudder.com/regulatory_settlements.

The matters alleged in the regulatory settlements described above also serve as
the general basis of a number of private class action lawsuits involving the DWS
funds. These lawsuits name as defendants various persons, including certain DWS
funds, the funds' investment advisors and their affiliates, and certain
individuals, including in some cases fund Trustees/Directors, officers, and
other parties. Each DWS fund's investment advisor has agreed to indemnify the
applicable DWS funds in connection with these lawsuits, or other lawsuits or
regulatory actions that may be filed making similar allegations.

Based on currently available information, the funds' investment advisors believe
the likelihood that the pending lawsuits will have a material adverse financial
impact on a DWS fund is remote and such actions are not likely to materially
affect their ability to perform under their investment management agreements
with the DWS funds.





                                       52
<PAGE>




                             PORTFOLIO TRANSACTIONS

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

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

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

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

The Advisor is permitted by Section 28(e) of the Securities Exchange Act of
1934, as amended ("1934 Act"), when placing portfolio transactions for a Fund,
to cause the Fund to pay brokerage commissions in excess of that which another
broker-dealer might charge for executing the same transaction in order to obtain
research and brokerage services if the Advisor determines that such commissions
are reasonable in relation to the overall services provided. The Advisor may
from time to time, in reliance on Section 28(e) of the 1934 Act, execute
portfolio transactions with broker-dealers that provide research and brokerage
services to the Advisor. Consistent with the Advisor's policy regarding best
execution, where more than one broker is believed to be capable of providing
best execution for a particular trade, the Advisor may take into consideration
the receipt of research and brokerage services in selecting the broker-dealer to
execute the trade. Although certain research and brokerage services from
broker-dealers may be useful to a Fund and to the Advisor, it is the opinion of
the Advisor that such information only supplements its own


                                       53
<PAGE>

research effort since the information must still be analyzed, weighed and
reviewed by the Advisor's staff. To the extent that research and brokerage
services of value are received by the Advisor, the Advisor may avoid expenses
that it might otherwise incur. Research and brokerage services received from a
broker-dealer may be useful to the Advisor and its affiliates in providing
investment management services to all or some of its clients, which includes a
Fund. Services received from broker-dealers that executed securities
transactions for a Portfolio will not necessarily be used by the Advisor
specifically to service such Fund.

Research and brokerage services provided by broker-dealers may include, but are
not limited to, information on the economy, industries, groups of securities,
individual companies, statistical information, accounting and tax law
interpretations, political developments, legal developments affecting portfolio
securities, technical market action, pricing and appraisal services, credit
analysis, risk measurement analysis, performance analysis and measurement and
analysis of corporate responsibility issues. Research and brokerage services are
typically received in the form of written or electronic reports, access to
specialized financial publications, telephone contacts and personal meetings
with security analysts, but may also be provided in the form of access to
various computer software and meetings arranged with corporate and industry
representatives.

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

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

The Advisor may use brokerage commissions to obtain certain brokerage products
or services that have a mixed use (i.e., it also serves a function that does not
relate to the investment decision-making process). In those circumstances, the
Advisor will make a good faith judgment to evaluate the various benefits and
uses to which it intends to put the mixed use product or service and will pay
for that portion of the mixed use product or service that it reasonably believes
does not constitute research and brokerage services with its own resources.

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

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

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

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


                                       54
<PAGE>

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

For the fiscal years ended January 31, 2006, 2007 and 2008, the Fund did not pay
any brokerage commissions.

The 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 January 31, 2008, the Fund held the
following securities of its regular brokers or dealers:

Name of Regular Broker or Dealer or            Value of Securities Owned as of
Parent (Issuer)                                        January 31, 2008
---------------                                        ----------------
Arch Western Finance                                           $362,000
ICICI Bank Ltd.                                              $1,093,000
Aes El Salvador Trust                                        $1,693,000
Wachovia Capital Trust                                       $3,191,000
Goldman Sachs Group, Inc.                                    $3,965,000
American General Finance Corp.                               $5,489,000

Portfolio Turnover

Portfolio turnover rate is defined by the SEC as the ratio of the lesser of
sales or purchases to the monthly average value of securities owned during the
year, excluding all securities whose remaining maturities at the time of
acquisition were one year or less.

A higher rate involves greater brokerage and transaction expenses to the Fund
and may result in the realization of net capital gains, which would be taxable
to shareholders when distributed. Purchases and sales are made for the Fund's
portfolio whenever necessary, in the Advisor's discretion, to meet the Fund's
objective.

Portfolio turnover rates for the two most recent fiscal years for the Fund are
as follows:

150% (151% including mortgage dollar roll transactions) and 140% (150% including
mortgage dollar roll transactions) for the fiscal years ended January 31, 2007
and 2008, respectively.


                        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
(including any applicable sales charge) next determined after receipt in good
order by DWS-SDI of the order accompanied by payment. Orders received by dealers
or other financial services firms prior to the determination of net asset value
and received in good order by


                                       55
<PAGE>

DWS-SDI prior to the determination of net asset value will be confirmed at a
price based on the net asset value next determined after receipt by DWS-SDI
("trade date").

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

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

The Fund has authorized one or more financial service institutions, including
certain members of the NASD other than the Distributor ("financial
institutions"), to accept purchase and redemption orders for the Fund's shares.
Such financial institutions may also designate other parties, including plan
administrator intermediaries, to accept purchase and redemption orders on the
Fund's behalf. Orders for purchases or redemptions will be deemed to have been
received by the Fund when such financial institutions or, if applicable, their
authorized designees accept the orders. Subject to the terms of the contract
between the Fund and the financial institution, ordinarily orders will be priced
at the Fund's net asset value next computed after acceptance by such financial
institution or its authorized designees and accepted by the Fund. Further, if
purchases or redemptions of the Fund's shares are arranged and settlement is
made at an investor's election through any other authorized financial
institution, that financial institution may, at its discretion, charge a fee for
that service. The Board of Trustees and the Distributor, also the Fund's
principal underwriter, each has the right to limit the amount of purchases by,
and to refuse to sell to, any person. The Trustees and the Distributor may
suspend or terminate the offering of shares of the Fund at any time for any
reason.


DWS-SDI has adopted an Incentive Plan (the "Plan") covering wholesalers that are
regional vice presidents ("DWS Scudder Wholesalers"). Generally, DWS Scudder
Wholesalers market shares of the DWS funds to financial advisors, who in turn
may recommend that investors purchase shares of a DWS fund. The Plan is an
incentive program that combines a monthly incentive component with a quarterly
strategic bonus component. Under the Plan, DWS Scudder Wholesalers will receive
a monetary monthly incentive based on the amount of sales generated from their
marketing of the funds, and that incentive will differ depending on the product
category of the fund. Each fund is assigned to one of three product
categories--"Strategic," "Tactical" or "all other funds"-taking into
consideration, among other things, the following criteria, where applicable:

o        The Fund's consistency with DWS Scudder's branding and long-term
         strategy.
o        The Fund's competitive performance;
o        The Fund's Morningstar rating;
o        The length of time the Fund's Portfolio Managers have managed the
         Fund/Strategy
o        Market size for the fund category;
o        The Fund's size, including sales and redemptions of the Fund's shares;

This information and other factors are presented to a committee comprised of
representatives from various groups within DWS Scudder, who review on a
quarterly basis the funds assigned to each product category described above, and
make any changes to those assignments at that time. No one factor, whether
positive or negative, determines a fund's placement in a given category; all
these factors together are considered, and the designation of funds in the

                                       56
<PAGE>

Strategic and Tactical categories represents management's judgment based on the
above criteria. In addition, management may consider a fund's profile over the
course of several review periods before making a change to its category
assignment. These category assignments will be posted quarterly to the DWS
funds' Web site at www.dws-scudder.com, approximately one month after the end of
each quarter. DWS Scudder Wholesalers receive the highest compensation for
Strategic funds, less for Tactical funds and the lowest for all other funds. The
level of compensation among these categories may differ significantly.

The prospect of receiving, or the receipt of, additional compensation by a DWS
Scudder Wholesaler under the Plan may provide an incentive to favor marketing
the Strategic or Tactical funds over all other funds. The Plan, however, will
not change the price that investors pay for shares of a fund. The DWS Scudder
Compliance Department monitors DWS Scudder Wholesaler sales and other activity
in an effort to detect unusual activity in the context of the compensation
structure under the Plan. However, investors may wish to take the Plan and the
product category of the fund into account when considering purchasing a fund or
evaluating any recommendations relating to fund shares.





                                       57
<PAGE>




Telephone and Electronic Transaction Procedures. Shareholders have various
telephone, Internet, wire and other electronic privileges available. The Fund or
its agents will not be liable for any losses, expenses or costs arising out of
fraudulent or unauthorized instructions pursuant to these privileges if the Fund
or its agents reasonably believe, based upon reasonable verification procedures,
that the instructions were genuine. Verification procedures include recording
instructions, requiring certain identifying information before acting upon
instructions and sending written confirmations. During periods when it is
difficult to contact the Shareholder Service Agent, it may be difficult to use
telephone, wire and other privileges.





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





Share Pricing. Purchases will be filled at the net asset value per share next
computed after receipt by the Transfer Agent of the application in good order.
The net asset value of shares of the 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 FINRA, other than the
Distributor, it is the responsibility of the member broker, rather than the
Fund, to forward the purchase order to 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 DWS
Scudder's Dividend Payment Option request form. Shareholders whose predesignated
checking account of record is with a member bank of Automated Clearing House
Network (ACH) can have income and capital gain distributions automatically
deposited to their personal bank account usually within three business days
after the Fund pays its distribution. A Dividend Payment Option request form can
be obtained by visiting our Web site at: www.dws-scudder.com or calling (800)
621-1048. Confirmation Statements will be mailed to shareholders as notification
that distributions have been deposited.


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

o        Traditional, Roth and Education IRAs. This includes Savings Incentive
         Match Plan for Employees of Small Employers ("SIMPLE"), Simplified
         Employee Pension Plan ("SEP") IRA accounts and prototype documents.

                                       58
<PAGE>

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

o        Prototype money purchase pension and profit-sharing plans may be
         adopted by employers.

Brochures describing these plans as well as model defined benefit plans, target
benefit plans, 457 plans, 401(k) plans, simple 401(k) plans and materials for
establishing them are available from the Shareholder Service Agent upon request.
Additional fees and transaction policies and procedures may apply to such plans.
Investors should consult with their own tax advisors before establishing a
retirement plan.

Purchases

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

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

The Funds may waive the minimum for purchases by Trustees, Directors, officers
or employees of a Trust or the Advisor and its affiliates.

Financial Services Firms' Compensation. Banks and other financial services firms
may provide administrative services related to order placement and payment to
facilitate transactions in shares of the Fund for their clients, and DWS-SDI may
pay them a transaction fee up to the level of the discount or commission
allowable or payable to dealers.

DWS-SDI may, from time to time, pay or allow to firms a 1% commission on the
amount of shares of the Fund sold under the following conditions: (i) the
purchased shares are held in a DWS Scudder IRA account, (ii) the shares are
purchased as a direct "roll over" of a distribution from a qualified retirement
plan account maintained on the subaccount record keeping system maintained for
DWS-branded plans by ADP, Inc. under an alliance with DWS-SDI and its
affiliates, (iii) the registered representative placing the trade is a member of
ProStar, a group of persons designated by DWS-SDI in acknowledgment of their
dedication to the employee benefit plan area; and (iv) the purchase is not
otherwise subject to a commission.

In addition to the discounts or commissions described herein and in the
prospectus, DWS-SDI, the Advisor, or its affiliates may pay or allow additional
discounts, commissions or promotional incentives, in the form of cash, to firms
that sell shares of the Fund. In some instances, such amounts may be offered
only to certain firms that sell or are expected to sell during specified time
periods certain minimum amounts of shares of the Fund, or other Funds
underwritten by DWS-SDI.

Upon notice to all dealers, DWS-SDI may re-allow to dealers up to the full
applicable Class A sales charge during periods and for transactions specified in
such notice and such re-allowances may be based upon attainment of minimum sales
levels. During periods when 90% or more of the sales charge is re-allowed, such
dealers may be deemed to be underwriters as that term is defined in the 1933
Act.

DWS-SDI may at its discretion compensate investment dealers or other financial
services firms in connection with the sale of Class A shares of the Fund in
accordance with the Large Order NAV Purchase Privilege and one of the four
compensation schedules up to the following amounts:


                                       59
<PAGE>

<TABLE>
<CAPTION>

                 Compensation Schedule #1:                        Compensation Schedule #2: DWS Scudder
         Retail Sales and DWS Scudder Flex Plan(1)                         Retirement Plans(2)
         --------------------------------------                            ----------------
             Amount of               As a Percentage of Net             Amount of        As a Percentage of
            Shares Sold                    Asset Value                 Shares Sold        Net Asset Value
            -----------                    -----------                 -----------        ---------------

<S>                                           <C>                         <C>                   <C>
$1 million to $3 million                      1.00%                  Over $3 million        0.00%-0.50%
Over $3 million to $50 million                0.50%
Over $50 million                              0.25%
</TABLE>

                Compensation Schedule #3:
                DWS Scudder Choice Plan(3)
                --------------------------
            Amount of                As a Percentage of
           Shares Sold                Net Asset Value
           -----------                ---------------

All Amounts                                1.00%

(1)      For purposes of determining the appropriate commission percentage to be
         applied to a particular sale under the foregoing schedule, DWS-SDI will
         consider the cumulative amount invested by the purchaser in the Fund
         and other DWS Funds including purchases pursuant to the "Combined
         Purchases," "Letter of Intent" and "Cumulative Discount" features
         referred to below.

(2)      Compensation Schedule 2 applies to employer sponsored employee benefit
         plans using the OmniPlus subaccount record keeping system made
         available through ADP, Inc. under an alliance with DWS-SDI and its
         affiliates.

(3)      DWS-SDI compensates UBS Financial at the rate of 0.50%.

DWS-SDI compensates firms for sales of Class B shares at the time of sale at a
commission rate of up to 3.75% of the amount of Class B shares purchased.
DWS-SDI is compensated by the Fund for services as distributor and principal
underwriter for Class B shares. Except as provided below, for Class C shares,
DWS-SDI advances to firms the first year distribution fee at a rate of 0.75% of
the purchase price of such shares and, or periods after the first year, DWS-SDI
currently pays firms for sales of Class C shares a distribution fee, payable
quarterly, at an annual rate of 0.75% of net assets attributable to Class C
shares maintained and serviced by the firm. For sales of Class C shares to
employer sponsored employee benefit plans using the OmniPlus subaccount record
keeping system made available through ADP, Inc. under an alliance with DWS-SDI
and its affiliates, DWS-SDI does not advance the first year distribution fee and
for periods after the date of sale, DWS-SDI currently pays firms a distribution
fee, payable quarterly, at an annual rate of 0.75% based on net assets as of the
last business day of the month attributable to Class C shares maintained and
serviced by the firm. DWS-SDI is compensated by the Fund for services as
distributor and principal underwriter for Class C shares.


Revenue Sharing

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

The Advisor, the Distributor and/or their affiliates may pay additional
compensation, out of their own assets and not as an additional charge to each
Fund, to financial advisors in connection with the sale and/or distribution of
Fund shares or the retention and/or servicing of Fund investors and Fund shares.
Such revenue sharing payments are in addition to any distribution or service
fees payable under any Rule 12b-1 or service plan of any fund, any record
keeping/sub-transfer agency/networking fees payable by each Fund (generally
through the Distributor or an affiliate) and/or the Distributor to certain
financial advisors for performing such services and any sales charges,
commissions, non-cash compensation arrangements expressly permitted under
applicable rules of FINRA or other concessions


                                       60
<PAGE>

described in the fee table or elsewhere in the Prospectuses or the SAI as
payable to all financial advisors. For example, the Advisor, the Distributor
and/or their affiliates may compensate financial advisors for providing each
Fund with "shelf space" or access to a third party platform or fund offering
list, or other marketing programs including, without limitation, inclusion of
each Fund on preferred or recommended sales lists, mutual fund "supermarket"
platforms and other formal sales programs; granting the Distributor access to
the financial advisor's sales force; granting the Distributor access to the
financial advisor's conferences and meetings; assistance in training and
educating the financial advisor's personnel; and, obtaining other forms of
marketing support. The level of revenue sharing payments made to financial
advisors may be a fixed fee or based upon one or more of the following factors:
gross sales, current assets and/or number of accounts of each Fund attributable
to the financial advisor, the particular fund or fund type or other measures as
agreed to by the Advisor, the Distributor and/or their affiliates and the
financial advisors or any combination thereof. The amount of these payments is
determined at the discretion of the Advisor, the Distributor and/or their
affiliates from time to time, may be substantial, and may be different for
different financial advisors based on, for example, the nature of the services
provided by the financial advisor.

The Advisor, the Distributor and/or their affiliates currently make revenue
sharing payments from their own assets in connection with the sale and/or
distribution of DWS Fund shares, or the retention and/or servicing of investors,
to financial advisors in amounts that generally range from .01% up to .50% of
assets of the Fund serviced and maintained by the financial advisor, .10% to
..25% of sales of the Fund attributable to the financial advisor, a flat fee of
$13,350 up to $500,000, or any combination thereof. These amounts are annual
figures typically paid on a quarterly basis and are subject to change at the
discretion of the Advisor, the Distributor and/or their affiliates. Receipt of,
or the prospect of receiving, this additional compensation, may influence your
financial advisor's recommendation of this Fund or of any particular share class
of the Fund. You should review your financial advisor's compensation disclosure
and/or talk to your financial advisor to obtain more information on how this
compensation may have influenced your financial advisor's recommendation of this
Fund.

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

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

Channel: Broker-Dealers and Financial Advisors

AIG Advisors Group
Ameriprise
Cadaret, Grant & Co. Inc.
Capital Analyst, Incorporated
Citigroup Global Markets, Inc. (dba Smith Barney)
Commonwealth Equity Services, LLP (dba Commonwealth Financial Network)
Deutsche Bank group
First Clearing/Wachovia Securities
Fiserv Trust Company
HD Vest Investment Securities, Inc.
ING Group
John Hancock Distributors LLC
LPL Financial
M.L. Stern & Co.
Marsh Insurance and Investment Company
Meridien Financial Group
Merrill Lynch, Pierce, Fenner & Smith Inc.
Morgan Stanley
Oppenheimer & Co., Inc.



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<PAGE>

Raymond James & Associates
Raymond James Financial Services
RBC Dain Rauscher, Inc
Securities America, Inc.
UBS Financial Services
Wachovia Securities
Wells Fargo Investments, LLC

Channel: Cash Product Platform

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
D.A. Davidson & Company
Deutsche Bank Group
Emmett A. Larkin Company
Fiduciary Trust Co. - International
First Southwest Company
Huntleigh Securities
Lincoln Investment Planning
LPL Financial
Mellon Financial Markets LLC
Penson Financial Services
Pershing Choice Platform
ProFunds Distributors, Inc.
Ridge Clearing & Outsourcing Solutions
Romano Brothers and Company
SAMCO Capital Markets
Smith Moore & Company
Sungard Institutional Brokerage Inc.
US Bancorp
UBS
William Blair & Company

Channel: Third Party Insurance Platforms

Allstate Life Insurance Company of New York
Ameritas Life Insurance Group
Annuity Investors Life Insurance Company
Columbus Life Insurance Company
Commonwealth Annuity and Life Insurance Company
Companion Life Insurance Company
Connecticut General Life Insurance Company
Farmers New World Life Insurance Company
Fidelity Security Life Insurance Company
First Allmerica Financial Life Insurance Company
First Great West Life and Annuity Company
Genworth Life Insurance Company of New York
Genworth Life and Annuity Insurance Company
Great West Life and Annuity Insurance Company
Hartford Life Insurance Company
Integrity Life Insurance Company



                                       62
<PAGE>

John Hancock Life Insurance companies
Kemper Investors Life Insurance Company
Lincoln Benefit Life Insurance Company
Lincoln Life & Annuity Company of New York
Lincoln National Life Insurance Company
Massachusetts Mutual Life Insurance Group
MetLife Group
Minnesota Life Insurance Company
National Life Insurance Company
National Integrity Life Insurance Company
Nationwide Group
New York Life Insurance and Annuity Corporation
Phoenix Life Insurance Company
Protective Life Insurance
Provident Mutual Life Insurance
Prudential Insurance Company of America
Sun Life Group
Symetra Life Insurance Company
Transamerica Life Insurance Company
Union Central Life Insurance Company
United of Omaha Life Insurance Company
United Investors Life Insurance Company
Western Southern Life Assurance Company

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

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

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

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





                                       63
<PAGE>



                                       64
<PAGE>




                                       65
<PAGE>




                                       66
<PAGE>




                                       67
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Class A Purchases. The public offering price of DWS Core Plus Income Fund Class
A shares for purchasers choosing the initial sales charge alternative is the net
asset value plus a sales charge, as set forth below:

<TABLE>
<CAPTION>
                                                         Sales Charge
                                                         ------------
                                                                                         Allowed to Dealers
                                           As a Percentage of    As a Percentage of     as a Percentage of
Amount of Purchase                         Offering Price*, **   Net Asset Value***        Offering Price
------------------                         --------------        ---------------           --------------
<S>                                                <C>                   <C>                     <C>
Less than $100,000                               4.50%                 4.71%                   4.00%
$100,000 but less than $250,000                  3.50%                 3.63%                   3.00%
$250,000 but less than $500,000                  2.60%                 2.67%                   2.25%
$500,000 but less than $1 million                2.00%                 2.04%                   1.75%
$1 million and over                              0.00****              0.00****                0.00*****
</TABLE>

*        The Offering Price includes the sales charge.

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

***      Rounded to the nearest one-hundredth percent.

****     Redemption of shares may be subject to a contingent deferred sales
         charge as discussed below.

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<PAGE>

*****    Commission is payable by DWS-SDI as discussed below.


Class A NAV Sales. Class A shares may be sold at net asset value to:

(a)      a current or former director or trustee of Deutsche or DWS mutual
         funds;

(b)      an employee (including the employee's spouse or life partner and
         children or stepchildren age 21 or younger) of Deutsche Bank or its
         affiliates or of a subadvisor to any fund in the DWS family of funds or
         of a broker-dealer authorized to sell shares of the Fund or service
         agents of the Funds;

(c)      certain professionals who assist in the promotion of DWS mutual funds
         pursuant to personal services contracts with DWS-SDI, for themselves or
         members of their families. DWS-SDI in its discretion may compensate
         financial services firms for sales of Class A shares under this
         privilege at a commission rate of 0.50% of the amount of Class A shares
         purchased;

(d)      any trust, pension, profit-sharing or other benefit plan for only such
         persons listed under the preceding paragraphs (a) and (b);

(e)      persons who purchase such shares through bank trust departments that
         process such trades through an automated, integrated mutual fund
         clearing program provided by a third party clearing firm;

(f)      selected employees (including their spouses or life partners and
         children or stepchildren age 21 or younger) of banks and other
         financial services firms that provide administrative services related
         to order placement and payment to facilitate transactions in shares of
         the Fund for their clients pursuant to an agreement with DWS-SDI or one
         of its affiliates. Only those employees of such banks and other firms
         who as part of their usual duties provide services related to
         transactions in Fund shares qualify;

(g)      unit investment trusts sponsored by Ranson & Associates, Inc. and
         unitholders of unit investment trusts sponsored by Ranson & Associates,
         Inc. or its predecessors through reinvestment programs described in the
         prospectuses of such trusts that have such programs;

(h)      through certain investment advisors registered under the Investment
         Advisers Act of 1940 and other financial services firms acting solely
         as agent for their clients, that adhere to certain standards
         established by DWS-SDI, including a requirement that such shares be
         sold for the benefit of their clients participating in an investment
         advisory program or agency commission program under which such clients
         pay a fee to the investment advisor or other firm for portfolio
         management or agency brokerage services. Such shares are sold for
         investment purposes and on the condition that they will not be resold
         except through redemption or repurchase by the Fund;

(i)      employer sponsored employee benefit plans using the Flex subaccount
         recordkeeping system ("Flex Plans") made available through ADP under an
         alliance with DWS-SDI and its affiliates, established prior to October
         1, 2003, provided that the Flex Plan is a participant-directed plan
         that has not less than 200 eligible employees;

(j)      investors investing $1 million or more, either as a lump sum or through
         the "Combined Purchases," "Letter of Intent" and "Cumulative Discount"
         features referred to above (collectively, the "Large Order NAV Purchase
         Privilege"). The Large Order NAV Purchase Privilege is not available if
         another net asset value purchase privilege is available;

(k)      defined contribution investment only plans with a minimum of $1,000,000
         in plan assets regardless of the amount allocated to the DWS funds;

In addition, Class A shares may be sold at net asset value in connection with:



                                       69
<PAGE>

(l)      the acquisition of the assets of or merger or consolidation with
         another investment company, or to shareholders in connection with the
         investment or reinvestment of income and capital gain dividends, and
         under other circumstances deemed appropriate by DWS-SDI and consistent
         with regulatory requirements; and

(m)      a direct "roll over" of a distribution from a Flex Plan or from
         participants in employer sponsored employee benefit plans maintained on
         the OmniPlus subaccount record keeping system made available through
         ADP, Inc. under an alliance with DWS-SDI and its affiliates into a DWS
         Scudder IRA;

(n)      reinvestment of fund dividends and distributions;

(o)      exchanging an investment in Class A shares of another fund in the DWS
         family of funds for an investment in the fund.

Class A shares also may be purchased at net asset value in any amount by members
of the plaintiff class in the proceeding known as Howard and Audrey Tabankin, et
al. v. Kemper Short-Term Global Income Fund, et al., Case No. 93 C 5231 (N.D.
IL). This privilege is generally non-transferable and continues for the lifetime
of individual class members and for a ten-year period for non-individual class
members. To make a purchase at net asset value under this privilege, the
investor must, at the time of purchase, submit a written request that the
purchase be processed at net asset value pursuant to this privilege specifically
identifying the purchaser as a member of the "Tabankin Class." Shares purchased
under this privilege will be maintained in a separate account that includes only
shares purchased under this privilege. For more details concerning this
privilege, class members should refer to the Notice of (i) Proposed Settlement
with Defendants; and (ii) Hearing to Determine Fairness of Proposed Settlement,
dated August 31, 1995, issued in connection with the aforementioned court
proceeding. For sales of Fund shares at net asset value pursuant to this
privilege, DWS-SDI may in its discretion pay investment dealers and other
financial services firms a concession, payable quarterly, at an annual rate of
up to 0.25% of net assets attributable to such shares maintained and serviced by
the firm. A firm becomes eligible for the concession based upon assets in
accounts attributable to shares purchased under this privilege in the month
after the month of purchase and the concession continues until terminated by
DWS-SDI. The privilege of purchasing Class A shares of the Fund at net asset
value under this privilege is not available if another net asset value purchase
privilege also applies.




                                       70
<PAGE>




                                       71
<PAGE>



Class A Quantity Discounts. An investor or the investor's dealer or other
financial services firm must notify the Shareholder Service Agent or DWS-SDI
whenever a quantity discount or reduced sales charge is applicable to a
purchase. In order to qualify for a lower sales charge, all orders from an
organized group will have to be placed through a single investment dealer or
other firm and identified as originating from a qualifying purchaser.

Letter of Intent. The reduced sales charges for Class A shares, as shown in the
applicable prospectus, also apply to the aggregate amount of purchases of Class
A shares of Scudder Funds that bear a sales charge made by any purchaser within
a 24-month period under a written Letter of Intent ("Letter") provided by
DWS-SDI. The Letter, which imposes no obligation to purchase or sell additional
Class A shares, provides for a price adjustment depending upon the actual amount
purchased within such period. The Letter provides that the first purchase
following execution of the Letter must be at least 5% of the amount of the
intended purchase, and that 5% of the amount of the intended purchase normally
will be held in escrow in the form of shares pending completion of the intended
purchase. If the total investments under the Letter are less than the intended
amount and thereby qualify only for a higher sales charge than actually paid,
the appropriate number of escrowed shares are redeemed and the proceeds used
toward satisfaction of the obligation to pay the increased sales charge. The
Letter for an employer-sponsored employee benefit plan maintained on the
subaccount record keeping system available through ADP, Inc. under an alliance
with SDI and its affiliates may have special provisions regarding payment of any
increased sales charge resulting from a failure to complete the intended
purchase under the Letter. A shareholder may include the value (at the maximum
offering price, which is determined by adding the maximum applicable sales load
charged to the net asset value) of all Class A shares of such Scudder Funds held
of record as of the initial purchase date under the Letter as an "accumulation
credit" toward the completion of the Letter, but no price adjustment will be
made on such shares.

Class A Cumulative Discount. Class A shares of the Fund may also be purchased at
the rate applicable to the discount bracket attained by adding to the cost of
shares being purchased, the value of all Class A shares of DWS Funds that bear a
sales charge (computed at the maximum offering price at the time of the purchase
for which the discount is applicable) already owned by the investor or his or
her immediate family member (including the investor's spouse or life partner and
children or stepchildren age 21 or younger).

For purposes of the Combined Purchases, Letter of Intent and Cumulative Discount
features described above, employer sponsored employee benefit plans using the
Flex subaccount record keeping system available through ADP, Inc. under an
alliance with DWS-SDI and its affiliates may include: (a) Money Market Funds as
"DWS Funds," (b) all classes of shares of any DWS Fund and (c) the value of any
other plan investments, such as guaranteed investment contracts and employer
stock, maintained on such subaccount record keeping system. Once eligible plan
assets under this provision reach the $1,000,000 threshold, a later decline in
assets below the $1,000,000 threshold will not affect the plan's ability to
continue to purchase Class A shares at net asset value.

Combined Purchases. The Fund's Class A shares may be purchased at the rate
applicable to the sales charge discount bracket attained by combining same day
investments in Class A shares of any DWS Funds that bear a sales charge.


Class B Purchases. Class B shares of the Fund are offered at net asset value. No
initial sales charge is imposed. Class B shares sold without an initial sales
charge allow the full amount of the investor's purchase payment to be invested
in Class B shares for his or her account. Class B shares have a contingent
deferred sales charge of 4.00% that declines over time (for shares sold within
six years of purchase) and Rule 12b-1 fees, as described in the Fund's
Prospectus and SAI. Class B shares automatically convert to Class A shares after
six years.





                                       72
<PAGE>


Class C Purchases. Class C shares of the Fund are offered at net asset value. No
initial sales charge is imposed, which allows the full amount of the investor's
purchase payment to be invested in Class C shares for his or her account. Class
C shares are subject to a contingent deferred sales charge of 1.00% (for shares
sold within one year of purchase) and Rule 12b-1 fees, as described in the
Funds' prospectus and SAI.

Purchase of Institutional Class Shares. Information on how to buy Institutional
Class shares is set forth in the section entitled "Buying and Selling Shares" in
the Fund's prospectus. The following supplements that information. The minimum
initial investment for Institutional Class shares is $1,000,000. The minimum
initial investment may be waived in certain circumstances. The minimum amounts
may be changed at any time in management's discretion.




To sell shares in a retirement account, other than an IRA, your request must be
made in writing, except for exchanges to other eligible funds in the DWS family
of funds, which can be requested by phone or in writing. For information on
retirement distributions, contact your Service Agent or call DWS Scudder
Investments Service Company at 1-800-621-1048. To sell shares by bank wire you
will need to sign up for these services in advance when completing your account
application.

Multi-Class Suitability. DWS-SDI has established the following procedures
regarding the purchase of Class A, Class B and Class C shares. Orders to
purchase Class B shares of $100,000 or more and orders to purchase Class C
shares of $500,000 or more will be declined with the exception of orders
received from financial representatives acting for clients whose shares are held
in an omnibus account and employer-sponsored employee benefit plans using the
subaccount record keeping system ("System") maintained for DWS-branded plans
under an alliance with DWS-SDI and its affiliates ("DWS Scudder Flex Plans" and
"DWS Scudder Choice Plans").

The following provisions apply to DWS Scudder Flex Plans and DWS Scudder Choice
Plans.

a.       Class B Share DWS Scudder Flex Plans. Class B shares have not been sold
         to DWS Scudder Flex Plans that were established on the System after
         October 1, 2003. Orders to purchase Class B shares for a DWS Scudder
         Flex Plan established on the System prior to October 1, 2003 that has
         regularly been purchasing Class B shares will be invested instead in
         Class A shares at net asset value when the combined subaccount value in
         Scudder Funds or other eligible assets held by the plan is $100,000 or
         more. This provision will be imposed for the first purchase after
         eligible plan assets reach the $100,000 threshold. A later decline in
         assets below the $100,000 threshold will not affect the plan's ability
         to continue to purchase Class A shares at net asset value.
b.       Class C Share DWS Scudder Flex Plans. Orders to purchase Class C shares
         for a DWS Scudder Flex Plan, regardless of when such plan was
         established on the System, will be invested instead in Class A shares
         at net asset value when the combined subaccount value in DWS Scudder
         Funds or other eligible assets held by the plan is $1,000,000 or more.
         This provision will be imposed for the first purchase after eligible
         plan assets reach the $1,000,000 threshold. A later decline in assets
         below the $1,000,000 threshold will not affect the plan's ability to
         continue to purchase Class A shares at net asset value.

c.       Class C Share DWS Scudder Choice Plans. Orders to purchase Class C
         shares for a DWS Scudder Choice Plan that has been regularly purchasing
         Class C shares will be invested instead in Class A shares at net asset
         value when the combined subaccount value in Scudder Funds or other
         eligible assets held by the plan is $1,000,000 or more. This provision
         will be imposed for purchases made beginning in the month after
         eligible plan assets reach the $1,000,000 threshold. In addition, as a
         condition to being permitted to use the Choice Plan platform, plans
         must agree that, within one month after eligible plan assets reach the
         $1,000,000 threshold, all existing Class C shares held in the plan will
         be automatically converted to Class A shares.


                                       73
<PAGE>

The procedures above do not reflect in any way the suitability of a particular
class of shares for a particular investor and should not be relied upon as such.
A suitability determination must be made by investors with the assistance of
their financial representative.


Automatic Investment Plan. A shareholder may purchase shares of the Fund through
an automatic investment program. With the Direct Deposit Purchase Plan ("Direct
Deposit"), investments are made automatically (minimum $500 and maximum $250,000
for initial investments and a minimum of $50 and maximum of $250,000 for
subsequent investments) from the shareholder's account at a bank, savings and
loan or credit union into the shareholder's Fund account. Termination by a
shareholder will become effective within thirty days after the Shareholder
Service Agent has received the request. The Fund may immediately terminate a
shareholder's Direct Deposit in the event that any item is unpaid by the
shareholder's financial institution.

Minimum Subsequent Investment Policies. For current shareholders of Class A, B
or C shares there is a $50 minimum investment requirement for subsequent
investments in the fund. There is no minimum subsequent investment requirement
in Class A shares for investments on behalf of participants in certain fee-based
and wrap programs offered through financial intermediaries approved by the
Advisor. There is no minimum subsequent investment required for Institutional
Class Shares.


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

It is our policy to offer purchase privileges to current or former directors or
trustees of the Deutsche or DWS Scudder mutual funds, employees, their spouses
or life partners and children or step-children age 21 or younger of Deutsche
Bank or its affiliates or a subadvisor to any fund in the DWS family of funds or
a broker-dealer authorized to sell shares of the funds. Qualified individuals
will generally be allowed to purchase shares in the class with the lowest
expense ratio, usually the Institutional Class shares. If the Fund does not
offer Institutional Class shares, these individuals will be allowed to buy Class
A shares at NAV. The Fund also reserves the right to waive the minimum account
balance requirement for employee and director accounts. Fees generally charged
to IRA accounts will be charged to accounts of employees and directors.


Expedited Purchase Procedures for Existing Shareholders. Shareholders of other
DWS Funds who have submitted an account application and have certified a tax
identification number, clients having a regular investment counsel account with
the Advisor or its affiliates and members of their immediate families, officers
and employees of the Advisor or of any affiliated organization and their
immediate families, members of FINRA, and banks may open an account by wire by
calling (800) 621-1048 for instructions. The investor must send a duly completed
and signed application to the Fund promptly. A subsequent purchase order may be
placed by established shareholders (except by DWS Scudder Individual Retirement
Account (IRA), DWS Scudder Profit Sharing and Money Purchase Pension Plans, DWS
Scudder 401(k) and DWS Scudder 403(b) Plan holders), members of FINRA, and
banks.


Redemptions

Redemption fee. The Fund will impose a redemption fee of 2% of the total
redemption amount (calculated at net asset value, without regard to the effect
of any contingent deferred sales charge; any contingent deferred sales is also
assessed on the total redemption amount without regard to the assessment of the
2% redemption fee) on all fund shares redeemed or exchanged within 15 days of
buying them (either by purchase or exchange). The redemption fee is paid
directly to the fund, and is designed to encourage long-term investment and to
offset transaction and other costs associated with short-term or excessive
trading. For purposes of determining whether the redemption fee applies, shares
held the longest time will be treated as being redeemed first and shares held
the shortest time will be treated as being redeemed last. The redemption fee is
applicable to fund shares purchased either directly or through a financial
intermediary, such as a broker-dealer. Transactions through financial
intermediaries typically are placed with the fund on an omnibus basis and
include both purchase and sale transactions placed on behalf of multiple
investors. These purchase and sale transactions are generally netted against one
another and placed on an aggregate basis; consequently


                                       74
<PAGE>

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. The Fund may suspend or postpone redemptions as permitted pursuant to
Section 22(e) of the Investment Company Act of 1940. Generally, those
circumstances are when: 1) the New York Stock Exchange is closed other than
customary weekend or holiday closings; 2) trading on the New York Stock Exchange
is restricted; 3) an emergency exists which makes the disposal of securities
owned by the Fund or the fair determination of the value of the Fund's net
assets not reasonably practicable; or 4) the SEC, by order, permits the
suspension of the right of redemption. Redemption payments by wire may also be
delayed in the event of a non-routine closure of the Federal Reserve wire
payment system.

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 are $100,000 or less and the proceeds are
payable to the shareholder of record at the address of record, normally a
telephone request or a written request by any one account holder without a
signature guarantee is sufficient for redemptions by individual or joint account
holders, and trust, executor and guardian account holders, provided the trustee,
executor or guardian is named in the account registration. Other institutional
account holders may exercise this special privilege of redeeming shares by
telephone request or written request without signature guarantee subject to the
same conditions as individual account holders, provided that this privilege has
been pre-authorized by the institutional account holder by written instruction
to the Shareholder Service Agent with signatures guaranteed. This privilege may
not be used to redeem shares held in certificated form and may not be used if
the shareholder's account has had an address change within 15 days of the
redemption request.

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

Automatic Withdrawal Plan. The owner of $5,000 or more of a class of the Fund's
shares at the offering price (net asset value plus, in the case of Class A
shares, the initial sales charge) may provide for the payment from the owner's
account of any requested dollar amount to be paid to the owner or a designated
payee monthly, quarterly, semiannually or annually. The $5,000 minimum account
size is not applicable to IRAs. The minimum periodic payment is $50. The maximum
annual rate at which shares, subject to CDSC may be redeemed is 12% of the net
asset value of the account. Shares are redeemed so that the payee should receive
payment approximately 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

                                       75
<PAGE>

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 a Portfolio's transfer agent ten days prior to the date of the first
automatic withdrawal. An Automatic Withdrawal Plan may be terminated at any time
by the shareholder, the Trust or its agent on written notice, and will be
terminated when all shares of a Portfolio under the Plan have been liquidated or
upon receipt by the Trust of notice of death of the shareholder.

The purchase of Class A shares while participating in a systematic withdrawal
plan will ordinarily be disadvantageous to the investor because the investor
will be paying a sales charge on the purchase of shares at the same time that
the investor is redeeming shares upon which a sales charge may have already been
paid. Therefore, the Fund will not knowingly permit additional investments of
less than $2,000 if the investor is at the same time making systematic
withdrawals.

Contingent Deferred Sales Charge (CDSC). The following example will illustrate
the operation of the CDSC. Assume that an investor makes a single purchase of
$10,000 of the Fund's Class B shares and that 16 months later the value of the
shares has grown by $1,000 through reinvested dividends and by an additional
$1,000 of share appreciation to a total of $12,000. If the investor were then to
redeem the entire $12,000 in share value, the CDSC would be payable only with
respect to $10,000 because neither the $1,000 of reinvested dividends nor the
$1,000 of share appreciation is subject to the charge. The charge would be at
the rate of 3.00% ($300) because it was in the second year after the purchase
was made.

The rate of the CDSC is determined by the length of the period of ownership.
Investments are tracked on a monthly basis. The period of ownership for this
purpose begins the first day of the month in which the order for the investment
is received. For example, an investment made in March of the year of investment
will be eligible for the second year's charge if redeemed on or after March of
the following year. In the event no specific order is requested when redeeming
shares subject to a CDSC, the redemption will be made first from shares
representing reinvested dividends and then from the earliest purchase of shares.
DWS-SDI receives any CDSC directly. The charge will not be imposed upon
redemption of reinvested dividends or share appreciation.


The Class A CDSC will be waived in the event of:

(a)      redemptions by a participant-directed qualified retirement plan
         described in Code Section 401(a), a participant-directed non-qualified
         deferred compensation plan described in Code Section 457 or a
         participant-directed qualified retirement plan described in Code
         Section 403(b)(7) which is not sponsored by a K-12 school district;

(b)      redemptions by employer-sponsored employee benefit plans using the
         subaccount record keeping system made available through ADP, Inc. under
         an alliance with DWS-SDI and its affiliates;

(c)      redemption of shares of a shareholder (including a registered joint
         owner) who has died or is disabled (under certain circumstances);

(d)      redemption of shares of a shareholder (including a registered joint
         owner) who after purchase of the shares being redeemed becomes totally
         disabled (as evidenced by a determination by the federal Social
         Security Administration);

(e)      redemptions under the Fund's Automatic Withdrawal Plan at a maximum of
         12% per year of the net asset value of the account;

(f)      redemptions of shares whose dealer of record at the time of the
         investment notifies DWS-SDI that the dealer waives the discretionary
         commission applicable to such Large Order NAV Purchase; and

(g)      redemptions for certain loan advances, hardship provisions or returns
         of excess contributions from retirement plans.


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<PAGE>

The Class B CDSC will be waived for the circumstances set forth in items (c),
(d), (e) and (g) for Class A shares. In addition, this CDSC will be waived:

(h)      for redemptions made pursuant to any IRA systematic withdrawal based on
         the shareholder's life expectancy including, but not limited to,
         substantially equal periodic payments described in Internal Revenue
         Code Section 72(t)(2)(A)(iv) prior to age 59 1/2;

(i)      for redemptions to satisfy required minimum distributions after age 70
         1/2 from an IRA account (with the maximum amount subject to this waiver
         being based only upon the shareholder's DWS Scudder IRA accounts); and

(j)      in connection with the following redemptions of shares held by employer
         sponsored employee benefit plans maintained on the subaccount record
         keeping system made available through ADP under an alliance with
         DWS-SDI and its affiliates: (1) to satisfy participant loan advances
         (note that loan repayments constitute new purchases for purposes of the
         CDSC and the conversion privilege), (2) in connection with retirement
         distributions (limited at any one time to 12% of the total value of
         plan assets invested in the Fund), (3) in connection with distributions
         qualifying under the hardship provisions of the Internal Revenue Code,
         (4) representing returns of excess contributions to such plans and (5)
         in connection with direct "roll over" distributions from a Flex Plan
         into a DWS Scudder IRA under the Class A net asset value purchase
         privilege.

The Class C CDSC will be waived for the circumstances set forth in items (b),
(c), (d), (e) and (g) for Class A shares and for the circumstances set forth in
items (h) and (i) for Class B shares. In addition, this CDSC will be waived for:

(k)      redemption of shares by an employer sponsored employee benefit plan
         that offers funds in addition to DWS Funds and whose dealer of record
         has waived the advance of the first year administrative service and
         distribution fees applicable to such shares and agrees to receive such
         fees quarterly; and

(l)      redemption of shares purchased through a dealer-sponsored asset
         allocation program maintained on an omnibus record-keeping system
         provided the dealer of record had waived the advance of the first year
         administrative services and distribution fees applicable to such shares
         and has agreed to receive such fees quarterly.



                                       77
<PAGE>



In-kind Redemptions. The Fund reserves the right to honor any request for
redemption or repurchase by making payment in whole or in part in readily
marketable securities. These securities will be chosen by the fund and valued as
they are for purposes of computing the fund's net asset value. A shareholder may
incur transaction expenses in converting these securities to cash.

Exchanges

Shareholders may request a taxable exchange of their shares for shares of the
corresponding class of other DWS Funds without imposition of a sales charge,
subject to the provisions below. For purposes of calculating any CDSC, amounts
exchanged retain their original cost and purchase date.


Shares of money market funds that were acquired by purchase (not including
shares acquired by dividend reinvestment) are subject to the applicable sales
charge on exchange. 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, Tax-Exempt California Money Market Fund, Cash Account Trust
and Investors Cash Trust are available on exchange but only through a financial
services firm having a services agreement with DWS-SDI. All exchanges among
money funds must meet applicable investor eligibility and investment
requirements. Exchanges may only be made for funds that are available for sale
in the shareholder's state of residence. Currently, Tax-Exempt California Money
Market Fund is available for sale only in California.





                                       78
<PAGE>



Shareholders must obtain prospectuses of the Fund they are exchanging into from
dealers, other firms or DWS-SDI.

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

Multi-Class Conversions. For purposes of conversion to Class A shares, shares
purchased through the reinvestment of dividends and other distributions paid
with respect to Class B shares in a shareholder's Fund account will be converted
to Class A shares on a pro rata basis.

                                    DIVIDENDS


The Fund intends to follow the practice of distributing substantially all of its
investment company taxable income (computed without regard to the dividends-paid
deduction), which includes any excess of net realized short-term capital gains
over net realized long-term capital losses. Investment company taxable income
(which is retained by the Fund) will be subject to tax at regular corporate
rates. The Fund may follow the practice of distributing its entire net capital
gain (the excess of net realized long-term capital gains over net realized
short-term capital losses). However, the Fund may retain all or part of its net
capital gain for reinvestment. If the Fund retains any net capital gain, it will
be subject to tax at regular corporate rates on the amount retained, but may
designate the retained amount as undistributed capital gains in a notice to its
shareholders who (i) will be required to include in income for federal income
tax purposes, as long-term capital gain, their shares of such undistributed
amount, and (ii) will be entitled to credit their proportionate shares of the
tax paid by the Fund on such undistributed amount against their federal income
tax liabilities, if any, and to claim refunds on a properly-filed US tax return
to the extent the credit exceeds such liabilities. For federal income tax
purposes, the tax basis of shares owned by a shareholder of the Fund will be
increased by an amount equal under current law to the difference between the
amount of undistributed capital gains included in the shareholder's gross income
and the tax deemed paid by the shareholder under clause (ii) of the preceding
sentence.


The Fund intends to declare and distribute monthly substantially all of its net
investment income (excluding short-term capital gains) resulting from investment
activity. Distributions, if any, of net realized capital gains (short-term and
long-term) will normally be made in December, or otherwise as needed.

Any dividends or capital gains distributions declared in 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 the 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.

The level of income dividends per share (as a percentage of net asset value)
will be lower for Class B and Class C shares than for Class A shares primarily
as a result of the distribution fee applicable to Class B and Class C shares.
Distributions of capital gains, if any, will be paid in the same amount for each
class.


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<PAGE>

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

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

2.       To receive income and capital gain distributions in cash.

Distributions will be reinvested in Shares of the same class of the Fund unless
shareholders indicate in writing that they wish to receive them in cash or in
shares of other DWS Funds with multiple classes of shares or DWS Funds as
provided in the prospectus. To use this privilege of investing dividends of the
Fund in shares of another DWS Fund, shareholders must maintain a minimum account
value of $1,000 in the Fund distributing the dividends. The Fund will reinvest
dividend checks (and future dividends) in shares of that same Fund and class if
checks are returned as undeliverable. Dividends and other distributions of the
Fund in the aggregate amount of $10 or less are automatically reinvested in
shares of the 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 the Fund issues to each shareholder a statement of the
federal income tax status of all distributions in the prior calendar year.

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

                                      TAXES


The following is intended to be a general summary of certain federal income tax
consequences of investing in the Fund. It is not intended as a complete
discussion of all such consequences, nor does it purport to deal with all
categories of investors. Investors are therefore advised to consult with their
tax advisors before making an investment in the Fund. The summary is based on
the laws in effect on the date of this SAI and existing judicial and
administrative interpretations thereof, all of which are subject to change,
possibly with retroactive effect.

Special tax rules apply to investments through defined contribution plans and
other tax-qualified plans. Shareholders should consult their tax advisers to
determine the suitability of shares of the Fund as an investment through such
plans and the precise effect of an investment on their particular tax situation.


Taxation of the Fund

The Fund intends to elect to be treated and to qualify each year as a regulated
investment company under Subchapter M of the Code. In order to qualify for the
special tax treatment accorded regulated investment companies and their
shareholders, the Fund must, among other things:


                                       80
<PAGE>

(a)      derive at least 90% of its gross income for each taxable year from (i)
         dividends, interest, payments with respect to certain securities loans,
         and gains from the sale or other disposition of stock, securities or
         foreign currencies, or other income (including but not limited to gains
         from options, futures, or forward contracts) derived with respect to
         its business of investing in such stock, securities, or currencies and
         (ii) net income derived from interests in "qualified publicly traded
         partnerships" (as defined below);



(b)      diversify its holdings so that, at the end of each quarter of the
         Fund's taxable year, (i) at least 50% of the market value of the Fund's
         total assets is represented by cash and cash items, US Government
         securities, securities of other regulated investment companies, and
         other securities limited in respect of any one issuer to a value not
         greater than 5% of the value of the Fund's total assets and not more
         than 10% of the outstanding voting securities of such issuer, and (ii)
         not more than 25% of the value of the Fund's total assets is invested
         (x) in the securities (other than those of the US Government or other
         regulated investment companies) of any one issuer or of two or more
         issuers which the Fund controls and which are engaged in the same,
         similar, or related trades or businesses, or (y) in the securities of
         one or more qualified publicly traded partnerships (as defined below);
         and

(c)      distribute with respect to each taxable year at least 90% of the sum of
         its investment company taxable income (as that term is defined in the
         Code without regard to the deduction for dividends paid -- generally,
         taxable ordinary income and the excess, if any, of net short-term
         capital gains over net long-term capital losses) and net tax-exempt
         interest income, for such year.

In general, for purposes of the 90% gross income requirement described in
paragraph (a) above, income derived from a partnership will be treated as
qualifying income only to the extent such income is attributable to items of
income of the partnership which would be qualifying income if realized by the
regulated investment company. However, 100% of the net income derived from an
interest in a "qualified publicly traded partnership" (defined as a partnership
(x) interests in which are traded on an established securities market or readily
tradable on a secondary market or the substantial equivalent thereof (y) that
derives at least 90% of its income from the passive income sources defined in
Code section 7704(d), and (z) that derives less than 90% of its income from the
qualifying income described in (a) (i) above) will be treated as qualifying
income. In addition, although in general the passive loss rules of the Code do
not apply to regulated investment companies, such rules do apply to a regulated
investment company with respect to items attributable to an interest in a
qualified publicly traded partnership. Finally, for purposes of paragraph (b)
above, the term "outstanding voting securities of such issuer" will include the
equity securities of a qualified publicly traded partnership.


If the Fund qualifies as a regulated investment company that is accorded special
tax treatment, such Fund will not be subject to federal income tax on income
distributed in a timely manner to its shareholders in the form of dividends
(including Capital Gain Dividends, as defined below).


In determining its net capital gain for Capital Gain Dividend (as defined below)
purposes, a regulated investment company generally must treat any net capital
loss or any net long-term capital loss incurred after October 31 as if it had
been incurred in the succeeding year. Treasury regulations permit a regulated
investment company, in determining its taxable income, to elect to treat all or
part of any net capital loss, any net long-term capital loss or any foreign
currency loss incurred after October 31 as if it had been incurred in the
succeeding year.


If for any taxable year the Fund does not qualify for the special federal income
tax treatment afforded regulated investment companies, all of its taxable income
will be subject to federal income tax at regular corporate rates (without any
deduction for distributions to its shareholders), and all distributions from
earnings and profits, including any distributions of net tax-exempt income and
net long-term capital gains, will be taxable to shareholders as ordinary income.
Such distributions would be eligible (i) to be treated as qualified dividend
income in the case of shareholders taxed as individuals and (ii) for the
dividends received deduction in the case of corporate shareholders. In addition,
the


                                       81
<PAGE>

Fund could be required to recognize unrealized gains, pay substantial taxes and
interest and make substantial distributions before requalifying as a regulated
investment company that is accorded special tax treatment.


The Fund is subject to a 4% nondeductible excise tax on amounts that have been
retained rather than distributed, as required, under a prescribed formula. The
formula requires payment to shareholders during a calendar year of distributions
representing at least 98% of the Fund's taxable ordinary income for the calendar
year and at least 98% of the excess of its capital gains over capital losses
realized during the one-year period ending October 31 (in most cases) of such
year as well as amounts that were neither distributed nor taxed to the Fund
during the prior calendar year. For these purposes, the Fund will be treated as
having distributed any amount on which it has been subject to corporate income
tax in the taxable year ending within the calendar year. A dividend paid to
shareholders in January of a year generally is deemed to have been paid by the
Fund on December 31 of the preceding year, if the dividend was declared and
payable to shareholders of record on a date in October, November or December of
that preceding year. Although the Fund's distribution policies should enable it
to avoid excise tax liability, the Fund may retain (and be subject to income or
excise tax on) a portion of its capital gain or other income if it appears to be
in the interest of such Fund.


Taxation of Fund Distributions. For federal income tax purposes, distributions
of investment income are generally taxable as ordinary income. Taxes on
distributions of capital gains are determined by how long the Fund owned the
investments that generated them, rather than how long a shareholder has owned
his or her shares. Distributions of net capital gains from the sale of
investments that the Fund owned for more than one year and that are properly
designated by the Fund as capital gain dividends ("Capital Gain Dividends") will
be taxable as long-term capital gains. Distributions of gains from the sale of
investments that the Fund owned for one year or less will be taxable as ordinary
income. For taxable years beginning before January 1, 2011, distributions of
investment income designated by the Fund as derived from "qualified dividend
income" will be taxed in the hands of individuals at the rates applicable to
long-term capital gain, provided holding period and other requirements are met
at both the shareholder and Fund levels.


Distributions are taxable to shareholders even if they are paid from income or
gains earned by the Fund before a shareholder's investment (and thus were
included in the price the shareholder paid). Distributions are taxable whether
shareholders receive them in cash or reinvest them in additional shares through
the reinvestment privilege. Any gain resulting from the sale or exchange of Fund
shares generally will be taxable as capital gains. The Fund does not expect a
significant portion of Fund distributions to be derived from qualified dividend
income.


Long-term capital gain rates applicable to individuals have been temporarily
reduced -- in general, to 15% with lower rates applying to taxpayers in the 10%
and 15% rate brackets -- for taxable years beginning before January 1, 2011.


To the extent that the Fund makes a distribution of income received by the Fund
in lieu of dividends (a "substitute payment") with respect to securities on loan
pursuant to a securities lending transaction, such income will not constitute
qualified dividend income and thus will not be eligible for taxation at the
rates applicable to long-term capital gain.





                                       82
<PAGE>



Capital gains distributions may be reduced if Fund capital loss carryforwards
are available. Any capital loss carryforwards to which the Fund is entitled are
disclosed in the Fund's annual and semi-annual reports to shareholders.


If the Fund makes a distribution to a shareholder in excess of the Fund's
current and accumulated earnings and profits in any taxable year, the excess
distribution will be treated as a return of capital to the extent of such
shareholder's tax basis in its shares, and thereafter as capital gain. A return
of capital is not taxable, but it reduces a shareholder's tax basis in its
shares, thus reducing any loss or increasing any gain on a subsequent taxable
disposition by the shareholder of its shares.


All distributions by the Fund result in a reduction in the net asset value of
the Fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution would nevertheless be taxable to the
shareholder as ordinary income or capital gain as described above, even though,
from an investment standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax implications of
buying shares just prior to a distribution. The price of shares purchased at
that time includes the amount of the forthcoming distribution. Those purchasing
just prior to a distribution will receive a partial return of capital upon the
distribution, which will nevertheless be taxable to them.

Transactions in Fund Shares. The sale, exchange or redemption of shares of the
Fund may give rise to a gain or loss. In general, any gain or loss realized upon
a taxable disposition of shares will be treated as long-term capital gain or
loss if the shares have been held for more than 12 months. Otherwise, the gain
or loss on the taxable disposition of shares of the Fund will be treated as
short-term gain or loss. However, any loss realized upon a taxable disposition
of shares held for six months or less will be treated as long-term, rather than
short-term, to the extent of any long-term capital gain distributions received
(or deemed received) by the shareholder with respect to the shares. All or a
portion of any loss realized upon a taxable disposition of shares of the Fund
will be disallowed if other substantially identical shares of the Fund are
purchased within 30 days before or after the disposition. In such a case, the
basis of the newly purchased shares will be adjusted to reflect the disallowed
loss.


Foreign Taxation. Foreign withholding or other foreign taxes with respect to
income (possibly including, in some cases, capital gains) on certain foreign
securities may occur. These taxes may be reduced or eliminated under the terms
of an applicable US income tax treaty. Shareholders generally will not be
entitled to claim a credit or deduction

                                       83
<PAGE>
with respect to foreign taxes incurred by the Fund.


Taxation of Certain Investments.



The Fund's investment in zero coupon bonds and other debt obligations having
original issue discount may cause the Fund to recognize taxable income in excess
of any cash received from the investment. A portion of the difference between
the issue price of zero coupon securities and their face value ("original issue
discount") is considered to be income to the Fund each year, even though the
Fund will not receive cash interest payments from these securities. This
original issue discount imputed income will comprise a part of the investment
company taxable income of the Fund, 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's level.

In addition, if the Fund invests in certain high yield original issue discount
obligations issued by corporations (including tax-exempt obligations), a portion
of the original issue discount accruing on the obligation may be treated as
taxable dividend income. In such event, dividends of investment company taxable
income received from the Fund by its shareholders, to the extent attributable to
such portion of accrued original issue discount, would be taxable. Any such
dividends received by the Fund's corporate shareholders may be eligible for the
deduction for dividends received by corporations.




Some debt obligations with a fixed maturity date of more than one year from the
date of issuance that are acquired by the Fund in the secondary market may be
treated as having market discount. Generally, any gain recognized on the
disposition of, and any partial payment of principal on, a debt security having
market discount is treated as ordinary income to the extent the gain, or
principal payment, does not exceed the "accrued market discount" on such debt
security. Market discount generally accrues in equal daily installments. The
Fund may make one or more of the elections applicable to debt obligations having
market discount, which could affect the character and timing of recognition of
income. Some debt obligations with a fixed maturity date of one year or less
from the date of issuance that are acquired by the Fund may be treated as having
acquisition discount or OID. Generally, the Fund will be


                                       84
<PAGE>

required to include the acquisition discount or OID in income over the term of
the debt security, even though payment of that amount is not received until a
later time, usually when the debt security matures. The Fund may make one or
more of the elections applicable to debt obligations having acquisition discount
or OID, which could affect the character and timing of recognition of income.

The Fund may invest to a significant extent in debt obligations that are in the
lowest rating categories or are unrated, including debt obligations of issuers
not currently paying interest or who are in default. Investments in debt
obligations that are at risk of or in default present special tax issues for the
Fund. Tax rules are not entirely clear about issues such as when the Fund may
cease to accrue interest, original issue discount or market discount, when and
to what extent deductions may be taken for bad debts or worthless securities and
how payments received on obligations in default should be allocated between
principal and income. These and other related issues will be addressed by the
Fund when, as and if it invests in such securities, in order to seek to ensure
that it distributes sufficient income to preserve its status as a regulated
investment company and does not become subject to US federal income or excise
tax.

If the Fund holds the foregoing kinds of securities, it may be required to pay
out as an income distribution each year an amount which is greater than the
total amount of cash interest the Fund actually received. Such distributions may
be made from the cash assets of the Fund or by liquidation of portfolio
securities, if necessary. The Fund may realize gains or losses from such
liquidations. In the event the Fund realizes net capital gains from such
transactions, its shareholders may receive a larger capital gain distribution
than they would in the absence of such transactions.

The Fund's use of options, futures contracts, forward contracts (to the extent
permitted) and certain other Strategic Transactions will be subject to special
tax rules (including mark-to-market, constructive sale, straddle, wash sale,
short sale and other rules), the effect of which may be to accelerate the Fund's
income, defer losses, cause adjustments in the holding periods of portfolio
securities, convert capital gains into ordinary income and convert short-term
capital losses into long-term capital losses. These rules could therefore affect
the amount, timing and character of distributions to investors.

Tax-Exempt Shareholders. Under current law, the Fund serves to "block" (that is,
prevent the attribution to shareholders of) unrelated business taxable income
("UBTI") from being realized by tax-exempt shareholders. Notwithstanding this
"blocking" effect, a tax-exempt shareholder could realize UBTI by virtue of its
investment in the Fund if shares in the Fund constitute debt-financed property
in the hands of the tax-exempt shareholder within the meaning of Code Section
514(b).

A tax-exempt shareholder may also recognize UBTI if the Fund recognizes "excess
inclusion income" derived from direct or indirect investments in residual
interests in real estate mortgage investment conduits ("REMICs") or taxable
mortgage pools ("TMPs") if the amount of such income recognized by the Fund
exceeds the Fund's investment company taxable income (after taking into account
deductions for dividends paid by the Fund). Furthermore, any investment in
residual interests of a collateralized mortgage obligation (a "CMO") that has
elected to be treated as a REMIC can create complex tax consequences, especially
if the Fund has state or local governments or other tax-exempt organizations as
shareholders.

In addition, special tax consequences apply to charitable remainder trusts
("CRTs") that invest in regulated investment companies ("RICs") that invest
directly or indirectly in residual interests in REMICs or in TMPs. Under
legislation enacted in December 2006, a CRT (as defined in section 664 of the
Code) that realizes any UBTI for a taxable year must pay an excise tax annually
of an amount equal to such UBTI. Under IRS guidance issued in November 2006, a
CRT will not recognize UBTI as a result of investing in a Fund that recognizes
"excess inclusion income." Rather, if at any time during any taxable year a CRT
(or one of certain other tax-exempt shareholders, such as the United States, a
state or political subdivision, or an agency or instrumentality thereof, and
certain energy cooperatives) is a record holder of a share in a Fund that
recognizes "excess inclusion income," then the Fund will be subject to a tax on
that portion of its "excess inclusion income" for the taxable year that is
allocable to such shareholders at the highest federal corporate income tax rate.
The extent to which this IRS guidance remains applicable in light of the
December 2006 legislation is unclear. To the extent permitted under the 1940
Act, each Fund may elect to specially allocate any such tax to the applicable
CRT, or other shareholder, and thus reduce such shareholder's distributions for
the year by the amount of the tax that relates to such shareholder's interest in
the Fund. The Fund has not yet determined whether such an election will be made.
CRTs are urged to consult their tax advisors concerning the consequences of
investing in the Fund.



                                       85
<PAGE>

The Fund may take positions directly in foreign currencies and/or in various
financial instruments covering such positions. Income from direct investments in
foreign currencies currently constitutes Qualifying Income under the Code.
However, the Treasury Department has the authority to issue regulations
excluding all or a portion of such income from the definition of Qualifying
Income. Although the Treasury Department was granted this authority in 1986, it
has not exercised this authority. If the Treasury Department were to exercise
this authority in the future, there is a remote possibility that such
regulations may be applied retroactively.

Congress or the Treasury Department can change or clarify these requirements at
any time, possibly with retroactive effect. If Congress, the Treasury Department
or the Internal Revenue Service were to take any action that altered the current
understanding of these requirements, the Fund could be forced to change the
manner in which it pursues its investment strategy or could cease to qualify for
the special tax treatment accorded regulated investment companies under current
federal income tax law. In either event, such a change would result in a reduced
after-tax return to shareholders. Shareholders should consult with their tax
advisors with respect to the specific tax consequences of an investment in the
Fund.

The Fund's transactions in non-US currencies and hedging activities may give
rise to ordinary income or loss to the extent such income or loss results from
fluctuations in value of the non-US currency concerned. In addition, such
activities are likely to produce a difference between its book income and its
taxable income. If the Fund's book income exceeds it taxable income, the
distribution (if any) of such excess will be treated as (i) a dividend to the
extent of the Fund's remaining earnings and profits (including earnings and
profit arising from tax-exempt income), (ii) thereafter as a return of capital
to the extent of the recipient's basis in the shares, and (iii) thereafter as
gain from the sale or exchange of a capital asset. If the Fund's book income is
less than its taxable income, the Fund could be required to make distributions
exceeding book income to qualify as a regulated investment company that is
accorded special tax treatment.


Withholding and Other Tax Considerations. Under the backup withholding
provisions of the Code, redemption proceeds as well as distributions may be
subject to federal income tax withholding for certain shareholders, including
those who fail to furnish the Fund with their taxpayer identification numbers
and certifications as to their tax status, who have underreported dividend or
interest income, or who fail to certify to the Fund that they are not subject to
such withholding.

Non-US Shareholders. Distributions properly designated Capital Gain Dividends
and exempt-interest dividends generally will not be subject to withholding of
federal income tax. In general, dividends (other than Capital Gain Dividends)
paid by the Fund to a shareholder that is not a "US person" within the meaning
of the Code (such shareholder, a "foreign person") are subject to withholding of
US federal income tax at a rate of 30% (or lower applicable treaty rate) even if
they are funded by income or gains (such as portfolio interest, short-term
capital gains, or foreign-source dividend and interest income) that, if paid to
a foreign person directly, would not be subject to withholding. However,
effective for taxable years of the Fund beginning before January 1, 2008, the
Fund was not required to withhold any amounts (i) with respect to distributions
(other than distributions to a foreign person (w) that has not provided a
satisfactory statement that the beneficial owner is not a US person, (x) to the
extent that the dividend is attributable to certain interest on an obligation if
the foreign person is the issuer or is a 10% shareholder of the issuer, (y) that
is within certain foreign countries that have inadequate information exchange
with the United States, or (z) to the extent the dividend is attributable to
interest paid by a person that is a related person of the foreign person and the
foreign person is a controlled foreign corporation) from US-source interest
income that would not be subject to US federal income tax if earned directly by
an individual foreign person, to the extent such distributions are properly
designated by the Fund, and (ii) with respect to distributions (other than
distributions to an individual foreign person who is present in the United
States for a period or periods aggregating 183 days or more during the year of
the distribution) of net short-term capital gains in excess of net long-term
capital losses, to the extent such distributions are properly designated by the
Fund. Depending on the circumstances, the Fund may make such designations with
respect to all, some or none of its potentially eligible dividends and/or treat
such dividends, in whole or in part, as ineligible from this exemption from
withholding. Pending legislation would extend the exemption from withholding for
interest-related and short-term capital gain distributions for one year, i.e.
for taxable years beginning before January 1, 2009. At the time of this filing,
it is unclear whether the legislation will be enacted.

In order to qualify for this exemption from withholding, a foreign person will
need to comply with applicable certification requirements relating to non-US
status (including, in general, furnishing an IRS Form W-8BEN or


                                       86
<PAGE>

substitute form). In the case of shares held through an intermediary, the
intermediary may withhold even if the Fund makes a designation with respect to a
payment. Foreign persons should consult with their intermediaries with respect
to the application of these rules to their accounts. A beneficial holder of
shares who is a foreign person is not, in general, subject to US federal income
tax on gains (and is not allowed a deduction for losses) realized on the sale of
shares of the Fund or on Capital Gain Dividends unless (i) such gain or dividend
is effectively connected with the conduct of a trade or business carried on by
such holder within the United States or (ii) in the case of an individual
holder, the holder is present in the United States for a period or periods
aggregating 183 days or more during the year of the sale or the receipt of the
Capital Gain Dividend and certain other conditions are met.





In order for a foreign investor to qualify for exemption from the backup
withholding tax rates under income tax treaties, the foreign investor must
comply with special certification and filing requirements. Foreign investors in
the Fund should consult their tax advisers in this regard. Backup withholding is
not an additional tax. Any amounts withheld may be credited against the
shareholder's US federal income tax liability, provided the appropriate
information is furnished to the Internal Revenue Service.

If a shareholder is eligible for the benefits of a tax treaty, any effectively
connected income or gain will generally be subject to US federal income tax on a
net basis only if it is also attributable to a permanent establishment
maintained by the shareholder in the United States.

A beneficial holder of shares who is a foreign person may be subject to state
and local tax and to the US federal estate tax in addition to the federal tax on
income referred to above.


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


The federal income tax discussion set forth above is for general information
only. Shareholders of the Fund may be subject to state and local taxes on
distributions received from the Fund and on redemptions of the Fund's shares.
Investors are advised to consult their own tax advisors with respect to their
own circumstances regarding the above-referenced federal income taxation rules
and with respect to other federal, state, local or foreign tax consequences to
them of an investment in shares of the Fund.


                                 NET ASSET VALUE

The net asset value of shares of the 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.


                                       87
<PAGE>

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 mean of the most recent
bid and asked quotations or evaluated price obtained from a broker-dealer. Other
debt securities are valued at prices supplied by an approved pricing agent, if
available, and otherwise at the most recent bid quotation or evaluated price, as
applicable, obtained from one or more broker-dealers. If it is not possible to
value a particular debt security pursuant to the above methods, the security is
valued on the basis of factors including (but not limited to) maturity, coupon,
creditworthiness, currency denomination, and the movement of the market in which
the security is normally traded.

An exchange-traded option contract on securities, currencies and other financial
instruments is valued at its most recent sale price on the relevant exchange.
Lacking any sales, the option contract is valued at the Calculated Mean. If it
is not possible to determine the Calculated Mean, the option contract is valued
at the most recent bid quotation in the case of a purchased option contract or
the most recent asked quotation in the case of a written option contract, in
each case as of the Value Time. An option contract on securities, currencies and
other financial instruments traded in the OTC market is valued on the Value Date
at the evaluated price provided by the broker-dealer with which it was traded.
Futures contracts (and options thereon) are valued at the most recent settlement
price, if available, on the 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 portfolio assets are not readily available or the value
of a portfolio asset as determined in accordance with Board approved procedures
does not represent the fair market value of the portfolio asset, the value of
the portfolio asset is taken to be an amount which, in the opinion of the Fund's
Pricing Committee (or, in some cases, the Board's Valuation Committee),
represents fair market value. The value of other portfolio holdings owned by the
Fund is determined in a manner which is intended to fairly reflect the fair
market value of the asset on the valuation date, based on valuation procedures
adopted by the Trust's Board and overseen primarily by the Fund's Pricing
Committee.

                              TRUSTEES AND OFFICERS


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


                                       88
<PAGE>

hold office for an indeterminate period. The Board Members may also serve in
similar capacities with other funds in the DWS fund complex.

Independent Board Members

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth, Position                                                                   Number of Funds
 with the Trust and Length of     Business Experience and                                        in DWS Fund
 Time Served(1)                   Directorships During the Past 5 Years                          Complex Overseen
--------------------------------------------------------------------------------------------------------------------
<S>                                       <C>                                                           <C>
Dawn-Marie Driscoll (1946)        President, Driscoll Associates (consulting firm); Executive           135
Chairperson since 2004,(2) and    Fellow, Center for Business Ethics, Bentley College;
Board Member since 1987           formerly: Partner, Palmer & Dodge (1988-1990); Vice President
                                  of Corporate Affairs and General Counsel, Filene's
                                  (1978-1988); Directorships: Trustee of 8 open-end mutual
                                  funds managed by Sun Capital Advisers, Inc. (since 2007);
                                  Director of ICI Mutual Insurance Company (since 2007);
                                  Advisory Board, Center for Business Ethics, Bentley College;
                                  Trustee, Southwest Florida Community Foundation (charitable
                                  organization); former Directorships: Investment Company
                                  Institute (audit, executive, nominating committees) and
                                  Independent Directors Council (governance, executive
                                  committees)
--------------------------------------------------------------------------------------------------------------------
Paul K. Freeman                   Consultant, World Bank/Inter-American Development Bank;               133
(1950)                            formerly: Project Leader, International Institute for Applied
Vice Chairperson since 2008, and  Systems Analysis (1998-2001); Chief Executive Officer, The
Board Member since 1993           Eric Group, Inc. (environmental insurance) (1986-1998)
--------------------------------------------------------------------------------------------------------------------
John W. Ballantine (1946)         Retired; formerly: Executive Vice President and Chief Risk            135
Board Member since 1999           Management Officer, First Chicago NBD Corporation/The First
                                  National Bank of Chicago (1996-1998); Executive Vice
                                  President and Head of International Banking (1995-1996);
                                  Directorships: Healthways Inc. (provider of disease and care
                                  management services); Portland General Electric (utility
                                  company); Stockwell Capital Investments PLC (private equity);
                                  former Directorships: First Oak Brook Bancshares, Inc. and
                                  Oak Brook Bank
--------------------------------------------------------------------------------------------------------------------
 Henry P. Becton, Jr. (1943)      Vice Chair, WGBH Educational Foundation; Directorships:               135
 Board Member since               Association of Public Television Stations; Becton Dickinson
 1990                             and Company(3) (medical technology company); Belo
                                  Corporation(3) (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
--------------------------------------------------------------------------------------------------------------------
Keith R. Fox (1954)               Managing General Partner, Exeter Capital Partners (a series           135
Board Member since                of private equity funds); Directorships: Progressive Holding
1996                              Corporation (kitchen goods importer and distributor); Natural
                                  History, Inc. (magazine publisher); Box Top Media Inc.
                                  (advertising); The Kennel Shop (retailer)
--------------------------------------------------------------------------------------------------------------------
Kenneth C. Froewiss               Clinical Professor of Finance, NYU Stern School of Business           135
(1945)                            (1997-present); Member, Finance Committee, Association for
Board Member since                Asian Studies (2002-present); Director, Mitsui Sumitomo
2001                              Insurance Group (US) (2004-present); prior thereto, Managing
                                  Director, J.P. Morgan (investment banking firm) (until 1996)
--------------------------------------------------------------------------------------------------------------------



                                       89
<PAGE>

--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth, Position                                                                   Number of Funds
 with the Trust and Length of     Business Experience and                                        in DWS Fund
 Time Served(1)                   Directorships During the Past 5 Years                          Complex Overseen
--------------------------------------------------------------------------------------------------------------------
Richard J. Herring                Jacob Safra Professor of International Banking and Professor,         135
(1946)                            Finance Department, The Wharton School, University of
Board Member since                Pennsylvania (since July 1972); Co-Director, Wharton
1990                              Financial Institutions Center (since July 2000); Director,
                                  Japan Equity Fund, Inc. (since September 2007), Thai Capital
                                  Fund, Inc. (since September 2007), Singapore Fund, Inc.
                                  (since September 2007); formerly: Vice Dean and Director,
                                  Wharton Undergraduate Division (July 1995-June 2000);
                                  Director, Lauder Institute of International Management
                                  Studies (July 2000-June 2006)
--------------------------------------------------------------------------------------------------------------------
William McClayton (1944)          Chief Administrative Officer, Diamond Management & Technology         135
Board Member since 2004           Consultants, Inc. (global management consulting firm)
                                  (2001-present); Directorship: Board of Managers, YMCA of
                                  Metropolitan Chicago; formerly: Senior Partner, Arthur
                                  Andersen LLP (accounting) (1966-2001); Trustee, Ravinia
                                  Festival
--------------------------------------------------------------------------------------------------------------------
Rebecca W. Rimel                  President and Chief Executive Officer, The Pew Charitable             135
(1951)                            Trusts (charitable organization) (1994 to present); Trustee,
Board Member since                Thomas Jefferson Foundation (charitable organization) (1994
1995                              to present); Trustee, Executive Committee, Philadelphia
                                  Chamber of Commerce (2001 to 2007); Trustee, Pro Publica
                                  (2007-present) (charitable organization); formerly: Executive
                                  Vice President, The Glenmede Trust Company (investment trust
                                  and wealth management) (1983 to 2004); Board Member, Investor
                                  Education (charitable organization) (2004-2005); Director,
                                  Viasys Health Care(3) (January 2007-June 2007)
--------------------------------------------------------------------------------------------------------------------
William N. Searcy, Jr.            Private investor since October 2003; Trustee of 8 open-end            135
(1946)                            mutual funds managed by Sun Capital Advisers, Inc. (since
Board Member since                October 1998); formerly: Pension & Savings Trust Officer,
1993                              Sprint Corporation(3) (telecommunications) (November
                                  1989-September 2003)
--------------------------------------------------------------------------------------------------------------------
Jean Gleason Stromberg            Retired; formerly: Consultant (1997-2001); Director, US               135
(1943)                            Government Accountability Office (1996-1997); Partner,
Board Member since                Fulbright & Jaworski, L.L.P. (law firm) (1978-1996);
1997                              Directorships: The William and Flora Hewlett Foundation;
                                  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)
--------------------------------------------------------------------------------------------------------------------
Robert H. Wadsworth (1940)        President, Robert H. Wadsworth & Associates, Inc. (consulting         138
Board Member since 1999           firm) (1983 to present).
--------------------------------------------------------------------------------------------------------------------

                                       90
<PAGE>

Interested Board Member

--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth, Position                                                                   Number of Funds
 with the Trust and Length of     Business Experience and                                        in DWS Fund
 Time Served(1)                   Directorships During the Past 5 Years                          Complex Overseen
--------------------------------------------------------------------------------------------------------------------
 Axel Schwarzer(4)                Managing Director(5), Deutsche Asset Management; Head of              135
 (1958)                           Deutsche Asset Management Americas; CEO of DWS Scudder;
 Board Member since               formerly: board member of DWS Investments, Germany
 2006                             (1999-2005); Head of Sales and Product Management for the
                                  Retail and Private Banking Division of Deutsche Bank in
                                  Germany (1997-1999); various strategic and operational
                                  positions for Deutsche Bank Germany Retail and Private
                                  Banking Division in the field of investment funds, tax driven
                                  instruments and asset management for corporates (1989-1996)
--------------------------------------------------------------------------------------------------------------------

Officers(6)

--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth, Position
 with the Trust and Length of     Business Experience and
 Time Served(1)                   Directorships During the Past 5 Years
--------------------------------------------------------------------------------------------------------------------
 Michael G. Clark(8) (1965)       Managing Director(5), Deutsche Asset Management (2006-present); President of
 President, 2006-present          DWS family of funds; Director, ICI Mutual Insurance Company (since
                                  October 2007); formerly: Director of Fund Board Relations (2004-2006) and
                                  Director of Product Development (2000-2004), Merrill Lynch Investment Managers;
                                  Senior Vice President Operations, Merrill Lynch Asset Management (1999-2000)
--------------------------------------------------------------------------------------------------------------------
 John Millette(9) (1962)          Director(5), Deutsche Asset Management
 Vice President and Secretary,
 1999-present
--------------------------------------------------------------------------------------------------------------------
 Paul H. Schubert(8) (1963)       Managing Director(5), Deutsche Asset Management (since July 2004); formerly:
 Chief Financial Officer,         Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family
 2004-present                     of Funds (1998-2004); Vice President and Director of Mutual Fund Finance at UBS
 Treasurer, 2005-present          Global Asset Management (1994-1998)
--------------------------------------------------------------------------------------------------------------------
 Patricia DeFilippis(8) (1963)    Vice President, Deutsche Asset Management (since June 2005); formerly: Counsel,
 Assistant Secretary,             New York Life Investment Management LLC (2003-2005); legal associate, Lord,
 2005-present                     Abbett & Co. LLC (1998-2003)
--------------------------------------------------------------------------------------------------------------------
 Elisa D. Metzger(8)  (1962)      Director(5), Deutsche Asset Management (since September 2005); formerly:
 Assistant Secretary,             Counsel, Morrison and Foerster LLP (1999-2005)
 2005-present
--------------------------------------------------------------------------------------------------------------------
 Caroline Pearson(9) (1962)       Managing Director(5), Deutsche Asset Management
 Assistant Secretary,
 1997-present
--------------------------------------------------------------------------------------------------------------------
 Paul Antosca(9)                  Director(5), Deutsche Asset Management (since 2006); formerly: Vice President,
 (1957)                           The Manufacturers Life Insurance Company (U.S.A.) (1990-2006)
 Assistant Treasurer,
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Jack Clark (9)                   Director(5), Deutsche Asset Management (since 2007); formerly: Vice President,
 (1967)                           State Street Corporation (2002-2007)
 Assistant Treasurer,
 2007-present
--------------------------------------------------------------------------------------------------------------------



                                       91
<PAGE>

--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth, Position
 with the Trust and Length of     Business Experience and
 Time Served(1)                   Directorships During the Past 5 Years
--------------------------------------------------------------------------------------------------------------------
 Kathleen Sullivan D'Eramo(9)     Director(5), Deutsche Asset Management
 (1957)
 Assistant Treasurer,
 2003-present
--------------------------------------------------------------------------------------------------------------------
 Diane Kenneally(9)               Director(5), Deutsche Asset Management
 (1966)
 Assistant Treasurer,
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Jason Vazquez(8) (1972)          Vice President, Deutsche Asset Management (since 2006); formerly: AML
 Anti-Money Laundering            Operations Manager for Bear Stearns (2004-2006); Supervising Compliance
 Compliance Officer,              Principal and Operations Manager for AXA Financial (1999-2004)
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Robert Kloby(8) (1962)           Managing Director(5), Deutsche Asset Management (2004-present); formerly: Chief
 Chief Compliance Officer,        Compliance Officer/Chief Risk Officer, Robeco USA (2000-2004); Vice President,
 2006-present                     The Prudential Insurance Company of America (1988-2000); E.F. Hutton and
                                  Company (1984-1988)
--------------------------------------------------------------------------------------------------------------------
 J. Christopher Jackson(8)        Director(5), Deutsche Asset Management (2006-present); formerly: Director,
 (1951)                           Senior Vice President, General Counsel, and Assistant Secretary, Hansberger
 Chief Legal Officer,             Global Investors, Inc. (1996-2006); Director, National Society of Compliance
 2006-present                     Professionals (2002-2005) (2006-2009)
--------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)      The length of time served represents the year in which the Board Member
         joined the board of one or more DWS funds currently overseen by the
         Board.

(2)      Represents the year in which Ms. Driscoll was first appointed
         Chairperson of certain DWS funds.

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

(4)      The mailing address of Axel Schwarzer is c/o Deutsche Investment
         Management Americas Inc., 345 Park Avenue, New York, New York 10154.
         Mr. Schwarzer is an interested Board Member by virtue of his positions
         with Deutsche Asset Management. As an interested person, Mr. Schwarzer
         receives no compensation from the Fund.

(5)      Executive title, not a board directorship.

(6)      As a result of their respective positions held with the Advisor, these
         individuals are considered "interested persons" of the Advisor within
         the meaning of the 1940 Act. Interested persons receive no compensation
         from the Fund.

(7)      The length of time served represents the year in which the officer was
         first elected in such capacity for one or more DWS funds.

(8)      Address:  345 Park Avenue, New York, New York 10154.

(9)      Address: Two International Place, Boston, Massachusetts 02110.

Certain officers hold similar positions for other investment companies for which
DIMA or an affiliate serves as the Advisor.


                                       92
<PAGE>

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

 Paul H. Schubert:                         Vice President
 Caroline Pearson:                         Secretary

Board Members' Responsibilities. The officers of the Trust manage its day-to-day
operations under the direction of the Board. The primary responsibility of the
Board is to represent the interests of the Fund and to provide oversight of the
management of the Fund.

Board Committees. The Board has established the following standing committees:
Audit Committee, Nominating and Governance Committee, Contract Committee, Equity
Oversight Committee, Fixed-Income and Quant Oversight Committee, Marketing and
Shareholder Services Committee, and Operations Committee. For each committee,
the Board has adopted a written charter setting forth each committee's
responsibilities. Each committee was reconstituted effective April 1, 2008.

Audit Committee: The Audit Committee, which consists entirely of Independent
Board Members, assists the Board in fulfilling its responsibility for oversight
of (1) the integrity of the financial statements, (2) the Fund's accounting and
financial reporting policies and procedures, (3) the Fund's compliance with
legal and regulatory requirements related to accounting and financial reporting
and (4) the qualifications, independence and performance of the independent
registered public accounting firm for the Fund. It also approves and recommends
to the Board the appointment, retention or termination of the independent
registered public accounting firm for the Fund, reviews the scope of audit and
internal controls, considers and reports to the Board on matters relating to the
Fund's accounting and financial reporting practices, and performs such other
tasks as the full Board deems necessary or appropriate. The Audit Committee
receives annual representations from the independent registered public
accounting firm as to its independence. The members of the Audit Committee are
William McClayton (Chair), Kenneth C. Froewiss (Vice Chair), John W. Ballantine,
Henry P. Becton, Jr., Keith R. Fox and William N. Searcy, Jr. During the
calendar year 2007, the Audit Committee of the Fund's Board held nine (9)
meetings.

Nominating and Governance Committee: The Nominating and Governance Committee,
which consists entirely of Independent Board Members, recommends individuals for
membership on the Board, nominates officers, board and committee chairs, vice
chairs and committee members, and oversees the operations of the Board. The
Nominating and Governance Committee also reviews recommendations by shareholders
for candidates for Board positions. Shareholders may recommend candidates for
Board positions by forwarding their correspondence by US mail or courier service
to Dawn-Marie Driscoll, P.O. Box 100176, Cape Coral, FL 33904. The members of
the Nominating and Governance Committee are Henry P. Becton, Jr. (Chair),
Rebecca W. Rimel (Vice Chair), Paul K. Freeman and William McClayton. During the
calendar year 2007, the Nominating/Corporate Governance Committee of the Fund's
Board performed similar functions and held three (3) meetings.

Contract Committee: The Contract Committee, which consists entirely of
Independent Board Members, reviews at least annually, (a) the Fund's financial
arrangements with DIMA and its affiliates, and (b) the Fund's expense ratios.
The members of the Contract Committee are Robert H. Wadsworth (Chair), Keith R.
Fox (Vice Chair), Henry P. Becton, Jr., Richard J. Herring, William McClayton
and Jean Gleason Stromberg.

Equity Oversight Committee: The Equity Oversight Committee reviews the
investment operations of those Funds that primarily invest in equity securities
(except for those funds managed by a quantitative investment team). The members
of the Equity Oversight Committee are John W. Ballantine (Chair), William
McClayton (Vice Chair), Henry P. Becton, Jr., Keith R. Fox, Richard J. Herring
and Rebecca W. Rimel. During the calendar year 2007, the Equity Oversight
Committee of the Fund's Board performed similar functions and held six (6)
meetings.

Fixed-Income and Quant Oversight Committee: The Fixed-Income and Quant Oversight
Committee reviews the investment operations of those Funds that primarily invest
in fixed-income securities or are managed by a quantitative investment team. The
members of the Fixed-Income and Quant Oversight Committee are William N. Searcy,
Jr. (Chair), Jean Gleason Stromberg (Vice Chair), Dawn-Marie Driscoll, Paul K.
Freeman, Kenneth C. Froewiss and Robert H. Wadsworth. During the calendar year
2007, the Fixed-Income Oversight Committee of the Fund's Board performed similar
functions and held six (6) meetings.

                                       93
<PAGE>

Marketing and Shareholder Services Committee: The Marketing and Shareholder
Services Committee reviews the Fund's marketing program, sales practices and
literature and shareholder services. The members of the Marketing and
Shareholder Services Committee are Richard J. Herring (Chair), Dawn-Marie
Driscoll (Vice Chair), Paul K. Freeman, Rebecca W. Rimel, Jean Gleason Stromberg
and Robert H. Wadsworth. During the calendar year 2007, the
Marketing/Distribution/Shareholder Service Committee of the Fund's Board
performed similar functions and held seven (7) meetings.

The Operations Committee: The Operations Committee reviews the administrative
operations, legal affairs and general compliance matters of the Fund. The
Operations Committee reviews administrative matters related to the operations of
the Fund, policies and procedures relating to portfolio transactions, custody
arrangements, fidelity bond and insurance arrangements, valuation of Fund assets
and securities and such other tasks as the full Board deems necessary or
appropriate. The Operations Committee also oversees the valuation of the Fund's
securities and other assets and determines, as needed, the fair value of Fund
securities or other assets under certain circumstances as described in the
Fund's Valuation Procedures. The Operations Committee has appointed a Valuation
Sub-Committee, which may make determinations of fair value required when the
Operations Committee is not in session. The members of the Operations Committee
are Paul K. Freeman (Chair), Dawn-Marie Driscoll (Vice Chair), John W.
Ballantine, Kenneth C. Froewiss, Rebecca W. Rimel and William N. Searcy, Jr. The
members of the Valuation Sub-Committee are Kenneth C. Froewiss (Chair), John W.
Ballantine, Dawn-Marie Driscoll (Alternate), Paul K. Freeman (Alternate),
Rebecca W. Rimel (Alternate) and William N. Searcy, Jr. (Alternate). During the
calendar year 2007, the Expenses/Operations Committee and Valuation Committee
performed similar functions and each held nine (9) meetings and six (6)
meetings, respectively.

Ad Hoc Committees. In addition to the standing committees described above, from
time to time the Board may also form ad hoc committees to consider specific
issues.

Remuneration. Each Independent Board Member receives compensation from the Fund
for his or her services, which includes 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.

Board Members who are officers, directors, employees or stockholders of Deutsche
Asset Management or its affiliates receive no direct compensation from the Fund,
although they are compensated as employees of Deutsche Asset Management, or its
affiliates, and as a result may be deemed to participate in fees paid by the
Fund. The following tables show compensation from the Fund and aggregate
compensation from all of the funds in the DWS fund complex received by each
Independent Board Member during the calendar year 2007. Mr. Schwarzer is an
interested person of the Fund and received no compensation from the Fund or any
fund in the DWS fund complex during the relevant periods.

<TABLE>
<CAPTION>
                                      Aggregate Compensation         Total Compensation
                                          from DWS Core                from Fund and
  Name of Board Member                   Plus Income Fund            DWS Fund Complex(1)
  --------------------                   ----------------            -------------------
<S>                                               <C>                      <C>
  John W. Ballantine                              $0                       $215,000
  Henry P. Becton, Jr.(2)                     $1,503                       $200,000
  Dawn-Marie Driscoll(2)(3)                   $1,887                       $253,000
  Keith R. Fox(2)                             $1,515                       $203,000
  Paul K. Freeman(4)                              $0                       $265,000
  Kenneth C. Froewiss(2)                      $1,492                       $200,000
  Richard J. Herring(2)                       $1,454                       $195,000
  William McClayton(5)                            $0                       $205,000
  Rebecca W. Rimel(2)                         $1,417                       $194,000
  William N. Searcy, Jr.(2)                   $1,492                       $200,000
  Jean Gleason Stromberg(2)                   $1,410                       $189,000



                                       94
<PAGE>
                                      Aggregate Compensation         Total Compensation
                                          from DWS Core                from Fund and
  Name of Board Member                   Plus Income Fund            DWS Fund Complex(1)
  --------------------                   ----------------            -------------------

  Robert H. Wadsworth                             $0                       $245,250
</TABLE>

(1)      The DWS fund complex is composed of 138 funds as of December 31, 2007.

(2)      Aggregate compensation includes amounts paid to the Board Members for
         special meetings of ad hoc committees of the board in connection with
         the consolidation of the DWS fund boards and various funds, meetings
         for considering fund expense simplification initiatives, and
         consideration of issues specific to the Fund's direct shareholders
         (i.e., those shareholders who did not purchase shares through financial
         intermediaries). Such amounts totaled $1,000 for Mr. Becton, $1,000 for
         Ms. Driscoll, $1,000 for Mr. Fox, $1,000 for Mr. Froewiss, $1,000 for
         Dr. Herring, $5,000 for Ms. Rimel, $1,000 for Mr. Searcy and $1,000 for
         Ms. Stromberg. These meeting fees were borne by the Advisor.

(3)      Includes $50,000 in annual retainer fees received by Ms. Driscoll as
         Chairperson of certain DWS funds.

(4)      Includes $25,000 paid to Dr. Freeman for numerous special meetings of
         an ad hoc committee in connection with board consolidation initiatives
         and $50,000 in annual retainer fees received by Dr. Freeman as
         Chairperson of certain DWS funds.

(5)      Does not include $15,000 to be paid to Mr. McClayton in calendar year
         2008 for numerous special meetings of an ad hoc committee of the former
         Chicago Board in connection with board consolidation initiatives.

Dr. Freeman, prior to his service as Independent Board Member, served as a board
member of certain funds in the Deutsche Bank complex ("DB Funds"). In connection
with his resignation and the resignation of certain other board members of the
DB Funds on July 30, 2002 (the "Effective Date"), which was part of a
restructuring of the boards overseeing the DB Funds, Deutsche Asset Management,
Inc. ("DAMI") agreed to recommend, and, if necessary obtain, directors and
officers ("D&O") liability insurance coverage for the prior board members,
including Dr. Freeman, that is at least as equivalent in scope and amount to the
D&O coverage provided to the prior board members for the six-year period
following the Effective Date. In the event that D&O insurance coverage is not
available in the commercial marketplace on commercially reasonable terms from a
conventional third party insurer, DeAM reserved the right to provide
substantially equivalent protection in the form of an indemnity or financial
guarantee from an affiliate of DeAM. The D&O policy in effect prior to the
Effective Date provided aggregate coverage of $25,000,000, subject to a $250,000
per claim deductible.

Board Member Ownership in the Fund

The following table shows the dollar range of equity securities beneficially
owned by each Board Member in the Fund and DWS fund complex as of December 31,
2007.

<TABLE>
<CAPTION>
                                                                                  Aggregate Dollar Range of
                                           Dollar Range of Beneficial        Ownership in all Funds Overseen by
                                                 Ownership in                           Board Member
Board Member                               DWS Core Plus Income Fund             in the DWS Fund Complex(1)
------------                               -------------------------             --------------------------

Independent Board Member:
-------------------------
<S>                                                   <C>                                         <C>
John W. Ballantine                                    None                                 Over $100,000
Henry P. Becton, Jr.                           $10,001 - $50,000                           Over $100,000
Dawn-Marie Driscoll                               $1 - $10,000                             Over $100,000
Keith R. Fox                                          None                                 Over $100,000
Paul K. Freeman                                       None                                 Over $100,000
Kenneth C. Froewiss                                   None                                 Over $100,000
Richard J. Herring                                    None                                 Over $100,000



                                       95
<PAGE>
                                                                                  Aggregate Dollar Range of
                                           Dollar Range of Beneficial        Ownership in all Funds Overseen by
                                                 Ownership in                           Board Member
Board Member                               DWS Core Plus Income Fund             in the DWS Fund Complex(1)
------------                               -------------------------             --------------------------

William McClayton                                     None                                 Over $100,000
Rebecca W. Rimel                                      None                                 Over $100,000
William N. Searcy, Jr.                                None                                 Over $100,000
Jean Gleason Stromberg                         $10,001 - $50,000                           Over $100,000
Robert H. Wadsworth                                   None                                 Over $100,000

Interested Board Member:
------------------------

Axel Schwarzer                                        None                                 Over $100,000

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

Ownership in Securities of the Advisor and Related Companies

As reported to the Fund, the information in the following table reflects
ownership by the Independent Board Members and their immediate family members of
certain securities as of December 31, 2007. Immediate family members can be a
spouse, children residing in the same household including step and adoptive
children, and any dependents. The securities represent ownership in the Advisor
or principal underwriter of the Fund and any persons (other than a registered
investment company) directly or indirectly controlling, controlled by, or under
common control with the Advisor or principal underwriter of the Fund (including
Deutsche Bank AG).


                                                                                   Value of        Percent of
                                   Owner and                                     Securities on     Class on an
Independent                     Relationship to                     Title of     an Aggregate       Aggregate
Board Member                      Board Member         Company        Class          Basis            Basis
------------                      ------------         -------        -----          -----            -----

John W. Ballantine                                      None
Henry P. Becton, Jr.                                    None
Dawn-Marie Driscoll                                     None
Keith R. Fox                                            None
Paul K. Freeman                                         None
Kenneth C. Froewiss                                     None
Richard J. Herring                                      None
William McClayton                                       None
Rebecca W. Rimel                                        None
William N. Searcy, Jr.                                  None
Jean Gleason Stromberg                                  None
Robert H. Wadsworth                                     None

Securities Beneficially Owned

As of April 8, 2008, the Board Members and officers of the Trust owned, as a
group, less than 1% of the outstanding shares of the Fund.



                                       96
<PAGE>

To the best of the Fund's knowledge, as of April 8, 2008, 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 Plus Income Fund

Name and Address of Investor Ownership                          Shares                      % of Total Shares
--------------------------------------                          ------                      -----------------

SANTA ROSA RANCHERIA TACHI TR                                1,294,643.50                   8.57% of Class A
TRIBAL TRUST FOR MINORS
FBO SANTA ROSA RANCHERIA
LEMOORE CA  93245-0008

MLPF&S FOR THE SOLE BENEFIT OF                                 86,748.25                    8.95% of Class C
ITS CUSTOMERS
ATTN FUND ADMINISTRATION 9E8K5
JACKSONVILLE FL  32246-6484

CITIGROUP GLOBAL MARKETS INC                                 2,639,035.41                     8% of Class S
BOOK ENTRY ACCOUNT
MUTUAL FUNDS DEPT
ATTN MATT MAESTRI
NEW YORK NY  10001-2402

DWS TRUST COMPANY TTEE                                       1,686,784.63                   5.11% of Class S
FARMERS GROUP INC
EMPLOYEES PROFIT SHARING SAVINGS
ATTN: ASSET RECON
SALEM NH  03079-1143

DEUTSCHE BANK SECURITIES INC                                 1,504,766.55             98.25% of Institutional Class
FBO XXX-XXXXX-XX
ATTN MUTUAL FUND DEPT 26TH FL
NEW YORK NY  10020-1104
</TABLE>





                                       97
<PAGE>





                                       98
<PAGE>




                                       99
<PAGE>



                                      100
<PAGE>




                                      101
<PAGE>




                                      102
<PAGE>




                                      103
<PAGE>




                                      104
<PAGE>





Agreement to Indemnify Independent Trustees for Certain Expenses

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



                                      105
<PAGE>



                               TRUST ORGANIZATION

DWS Core Plus Income Fund is a diversified series of DWS Portfolio Trust, a
Massachusetts business trust established under a Declaration of Trust dated
November 3, 1987, as amended. On November 4, 1987, the par value of the shares
of beneficial interest was changed from no par value to $0.01 par value per
share. On February 6, 2006 the name of the Trust was changed from Scudder
Portfolio Trust to DWS Portfolio Trust.

Organizational Description

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, that was approved by shareholders in the second quarter of
2006, as may be further amended from time to time (the "Declaration of Trust").
All shares issued and outstanding are fully paid and non-assessable,
transferable, have no pre-emptive or conversion rights (except as may be
determined by the Board of Trustees) and are redeemable as described in the SAI
and the Fund's prospectus. Each share has equal rights with each other share of
the same class of the Fund as to voting, dividends, exchanges, conversion
features and liquidation. Shareholders are entitled to one vote for each full
share held and fractional votes for fractional shares held.

The 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 the 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; (e)(2) a merger,
consolidation or sale of assets; (f)(2) the adoption of an investment advisory
or management contract; (g)(2) the incorporation of the Trust or any series;
(h)(2) any plan adopted pursuant to Rule 12b-1 (or any successor rule) under the
1940 Act; and (i) such additional matters as may be required


                                      106
<PAGE>

by law, the Declaration of Trust, the By-laws of the Fund, or any registration
of the Fund with the SEC, or as the Trustees may determine to be necessary or
desirable. Shareholders also vote upon changes in fundamental policies or
restrictions.

The Declaration of Trust provides that shareholder meeting quorum requirements
shall be established in the Trust's By-laws. The By-laws currently in effect
provide that the presence in person or by proxy of the holders of thirty percent
of the shares entitled to vote at a meeting (or of an individual series or class
if required to vote separately) shall constitute a quorum for the transaction of
business at meetings of shareholders of the Trust.

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

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

Upon the termination of the Trust or any series, after paying or adequately
providing for the payment of all liabilities which may include the establishment
of a liquidating trust or similar vehicle, and upon receipt of such releases,
indemnities and refunding agreements as they deem necessary for their
protection, the Trustees may distribute the remaining Trust property or property
of the series, in cash or in kind or partly each, to the shareholders of the
Trust or the series involved, ratably according to the number of shares of the
Trust or such series held by the several shareholders of the Trust or such
series on the date of termination, except to the extent otherwise required or
permitted by the preferences and special or relative rights and privileges of
any classes of shares of a series involved, provided that any distribution to
the shareholders of a particular class of shares shall be made to such
shareholders pro rata in proportion to the number of shares of such class held
by each of them. The composition of any such distribution (e.g., cash,
securities or other assets) shall be determined by the Trust in its sole
discretion, and may be different among shareholders (including differences among
shareholders in the same series or class).

Under Massachusetts law, shareholders of a Massachusetts business trust could,
under certain circumstances, be held personally liable for obligations of the
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.


                                      107
<PAGE>

                             PROXY VOTING GUIDELINES

The Fund has delegated proxy voting responsibilities to its investment advisor,
subject to each Board's general oversight. The Fund has delegated proxy voting
to the Advisor with the direction that proxies should be voted consistent with
the 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 the Fund, and the interests of
the Advisor and its affiliates, including the Fund's principal underwriter. The
Guidelines set forth the Advisor's general position on various proposals, such
as:

o        Shareholder = Rights -- The Advisor generally votes against proposals
         that restrict shareholder rights.

o        Corporate = Governance -- The = Advisor generally votes for
         confidential and cumulative voting against super majority voting
         requirements for charter and by-law amendments. The Advisor generally
         votes for proposals to restrict a chief executive officer from serving
         on more than three outside boards of directors. The Advisor generally
         votes against proposals that require a company to appoint a chairman
         who is an independent director.

o        Anti-Takeover Matters -- The Advisor generally votes for proposals that
         require shareholder ratification of poison pills or that request boards
         to redeem poison pills, and votes against the adoption of poison pills
         if they are submitted for shareholder ratification. The Advisor
         generally votes for fair price proposals.

o        Compensation Matters -- The Advisor generally votes for executive cash
         compensation proposals, unless they are unreasonably excessive. The
         Advisor generally votes against stock option plans that do not meet the
         Advisor's criteria.

o        Routine Matters -- The Advisor generally votes for the ratification of
         auditors, procedural matters related to the annual meeting and changes
         in company name, and against bundled proposals and adjournment.

The general provisions described above do not apply to investment companies. The
Advisor generally votes proxies solicited by investment companies in accordance
with the recommendations of an independent third party, except for proxies
solicited by or with respect to investment companies for which the Advisor or an
affiliate serves as investment advisor or principal underwriter ("affiliated
investment companies"). The Advisor votes affiliated investment company proxies
in the same proportion as the vote of the investment company's other
shareholders (sometimes called "mirror" or "echo" voting). Master fund proxies
solicited from feeder funds are voted in accordance with applicable requirements
of the Investment Company Act of 1940.

Although the Guidelines set forth the Advisor's general voting positions on
various proposals, the Advisor may, consistent with the 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


                                      108
<PAGE>

should be recused from participating in a particular proxy vote, it will inform
the proxy voting committee. If notified that the Advisor has a material
conflict, or fewer than three voting members are eligible to participate in the
proxy vote, typically the Advisor will engage an independent third party to vote
the proxy or follow the proxy voting recommendations of an independent third
party.

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

You may obtain information about how the Fund voted proxies related to its
portfolio securities during the 12-month period ended June 30 by visiting the
Securities and Exchange Commission's Web site at www.sec.gov or by visiting our
Web site at: www.dws-scudder.com (click on "proxy voting" at the bottom of the
page).

                              FINANCIAL STATEMENTS

The financial statements, including the portfolio of investments, of the Fund,
together with the Report of Independent Registered Public Accounting Firm,
Financial Highlights and notes to financial statements in the Annual Report to
the Shareholders of the Fund dated January 31, 2008 for DWS Core Plus Income
Fund are incorporated herein by reference and are hereby deemed to be a part of
this combined SAI.

                             ADDITIONAL INFORMATION

The CUSIP number of DWS Core Plus Income Fund Class A is 23337F102.

The CUSIP number of DWS Core Plus Income Fund Class B is 23337F201.

The CUSIP number of DWS Core Plus Income Fund Class C is 23337F300.

The CUSIP number of DWS Core Plus Income Fund Institutional Class is 23337F607.

DWS Core Plus Income Fund has a fiscal year end of January 31.

Reference is hereby made to the Registration Statement which the Fund has filed
with the SEC under the 1933 Act for further information with respect to the Fund
and the securities offered hereby. This Registration Statement and its
amendments are available for inspection by the public at the SEC in Washington,
D.C.

                                      109
<PAGE>


                                    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 highest 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 safe-guarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B: Bonds which are rated B are considered speculative and 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 highly speculative.
Such issues are often in default or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds, typically are in
default and can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

Note: Moody's appends numerical modifiers 1, 2 and 3 to each generic rating
classification from Aa through Caa in its corporate bond rating system. The
modifier 1 indicates that the issue 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.


                                      110
<PAGE>

MOODY'S INVESTORS SERVICE, INC.'S - SHORT-TERM RATINGS

Moody's short-term debt ratings are opinions of the ability of issuers to honor
short-term financial obligations. Ratings may be assigned to issuers, short-term
programs or to individual short-term debt instruments. Such obligations
generally have an original maturity not exceeding thirteen months, unless
explicitly noted.

Issuers rated Prime-1 or P-1 (or supporting institutions) have a superior
ability for repayment of 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 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.

MOODY'S INVESTORS SERVICE, INC.'S - MUNICIPAL SHORT-TERM RATINGS

MIG. Moody's short-term debt ratings are opinions of the ability of issuers to
honor short-term financial obligations. Ratings may be assigned to issuers,
short-term programs or to individual short-term debt instruments. Such
obligations generally have an original maturity not exceeding thirteen months,
unless explicitly noted.

Moody's: The highest ratings for state and municipal short-term obligations are
"MIG 1," "MIG 2," and "MIG 3" (or "VMIG 1," "VMIG 2" and "VMIG 3" in the case of
an issue having a variable rate demand feature). Notes rated "MIG 1" or "VMIG 1"
are judged to be of the "best quality". Notes rated "MIG 2" or "VMIG 2" are of
"high quality," with margins or protection "ample although not as large as in
the preceding group". Notes rated "MIG 3" or "VMIG 3" are of "favorable
quality," with all security elements accounted for but lacking the strength of
the preceding grades.

STANDARD & POOR'S RATINGS SERVICES - 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 has 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.


                                      111
<PAGE>

SPECULATIVE GRADE

Debt rated BB, B, CCC, CC, and C has significant 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 may be outweighed by large
uncertainties or major exposures to adverse conditions.

BB: Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments.

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

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

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

CCC: Debt rated CCC has a current 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: Debt rated CC has a current high vulnerability to default, and is dependent
upon favorable business, financial, and economic conditions to meet timely
payment of interest and repayment of principal.

The rating CC is also 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.

R: Debt rated 'R' is under regulatory supervision owing to its financial
condition. During the pendency of the regulatory supervision, the regulators may
have the power to favor one class of obligations over others or pay some
obligations and not others.

N.R.: 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.

                                      112
<PAGE>

STANDARD & POOR'S RATINGS SERVICES - SHORT-TERM RATINGS

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.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the issuer to meet its financial commitments.

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. Bonds rated in the AAA and AA categories
are not significantly vulnerable to foreseeable events.

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 good 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.

SPECULATIVE 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 or financial alternatives may be available 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.

                                      113
<PAGE>

Plus (+) or Minus (-): The ratings from AA to CC may be appended by the addition
of a plus or minus sign to denote the relative status within the rating
category.

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

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 capacity for timely payment.

F-1: Very Strong Credit Quality. Issues assigned this rating reflect a capacity
for timely payment only slightly less than issues rated F-1+.

F-2: Good Credit Quality. Issues assigned this rating have a satisfactory
capacity 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 capacity for timely payment is adequate; however, near-term
adverse changes could cause these securities to be rated below investment grade.

B: Speculative. Minimal capacity for timely payment of financial commitments,
plus vulnerability to near-term adverse changes in financial and economic
conditions.

C: High default risk. Default is a real possibility. Capacity for meeting
financial commitments is solely reliant upon a sustained, favorable business and
economic environment.

D: Default. Denotes actual or imminent payment default.

                                      114



<PAGE>



                               DWS PORTFOLIO TRUST

                            DWS Core Plus Income Fund

                                    (Class S)







                       STATEMENT OF ADDITIONAL INFORMATION


                                   May 1, 2008

This Statement of Additional Information ("SAI") is not a prospectus and should
be read in conjunction with the Class S prospectus dated May 1, 2008 for DWS
Core Plus Income Fund (the "Fund"), a series of DWS Portfolio Trust (the
"Trust"), as amended from time to time, copies of which may be obtained without
charge by contacting DWS Scudder Distributors, Inc. ("DWS-SDI" or the
"Distributor"), 222 South Riverside Plaza, Chicago, Illinois 60606, (800)
728-3337, or from the firm from which this SAI was obtained. This information is
also available along with other materials on the Securities and Exchange
Commission's (the "SEC" or "Commission") Internet Web site (http://www.sec.gov).

Portions of the Annual Report to Shareholders of the Fund, dated January 31,
2008, are incorporated herein by reference, as specified herein. .A copy of the
Fund's Annual Report may be obtained without charge from Shareholder Services by
calling (800) 728-3337.


This SAI is incorporated by reference into the Fund's prospectuses.



                                TABLE OF CONTENTS
                                                                            Page
                                                                            ----

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

INVESTMENT POLICIES AND TECHNIQUES............................................3
   Portfolio Holdings Information............................................29

MANAGEMENT OF THE FUND.......................................................30
   Investment Advisor........................................................30
   Compensation of Portfolio Managers........................................34


FUND SERVICE PROVIDERS.......................................................38
   Administrator.............................................................38
   Distributor...............................................................39
   Independent Registered Public Accounting Firm and Reports to Shareholders.40
   Legal Counsel.............................................................40
   Custodian, Transfer Agent and Shareholder Service Agent...................41

PORTFOLIO TRANSACTIONS.......................................................44

PURCHASE AND REDEMPTION OF SHARES............................................49

DIVIDENDS....................................................................65

TAXES........................................................................67

NET ASSET VALUE..............................................................74

TRUSTEES AND OFFICERS........................................................75

TRUST ORGANIZATION...........................................................94

PROXY VOTING GUIDELINES......................................................95

FINANCIAL STATEMENTS.........................................................96

ADDITIONAL INFORMATION.......................................................96

APPENDIX.....................................................................98



                                       i



                             INVESTMENT RESTRICTIONS

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

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

The Fund has elected to be classified as 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 or invest in more than 10% of the outstanding
voting securities of such issuer.

As a matter of fundamental policy, the Fund may not:

(1)      borrow money, except as permitted under the Investment Company Act of
         1940, as amended (the "1940 Act"), as amended, and as interpreted or
         modified by regulatory authority having jurisdiction, from time to
         time;

(2)      issue senior securities, except as permitted under the 1940 Act 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 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 the 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; or

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

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

The Trustees of the Trust have voluntarily adopted certain policies and
restrictions, which are observed in the conduct of the Fund's affairs. These
represent intentions of the Trustees based upon current circumstances.
Non-fundamental policies may be changed by the Trustees of the Trust without
requiring approval of or, with certain exceptions, prior notice to shareholders.

As a matter of non-fundamental policy, the Fund currently does not intend to:


(a)      borrow money in an amount greater than 5% of its total assets except
         (i) for temporary or emergency purposes and (ii) by engaging in reverse
         repurchase agreements, dollar rolls, or other investments or
         transactions described in the Fund's registration statement which may
         be deemed to be borrowings;

(b)      purchase securities on margin or make short sales, except (i) short
         sales against the box, (ii) in connection with arbitrage transactions,
         (iii) for margin deposits in connection with futures contracts, options
         or other permitted investments, (iv) that transactions in futures
         contracts and options shall not be deemed to constitute selling
         securities short, and (v) that the Fund may obtain such short-term
         credits as may be necessary for the clearance of securities
         transactions;

(c)      purchase options, unless the aggregate premiums paid on all such
         options held by the Fund at any time do not exceed 20% of its total
         assets; or sell put options, if as a result, the aggregate value of the
         obligations underlying such put options would exceed 50% of its total
         assets;

(d)      enter into futures contracts or purchase options thereon unless
         immediately after the purchase, the value of the aggregate initial
         margin with respect to such futures contracts entered into on behalf of
         the Fund and the premiums paid for such options on futures contracts
         does not exceed 5% of the fair market value of the Fund's total assets;
         provided that in the case of an option that is in-the-money at the time
         of purchase, the in-the-money amount may be excluded in computing the
         5% limit;

(e)      purchase warrants if as a result, such securities, taken at the lower
         of cost or market value, would represent more than 5% of the value of
         the Fund's total assets (for this purpose, warrants acquired in units
         or attached to securities will be deemed to have no value);

(f)      lend portfolio securities in an amount greater than 33 1/3% of its
         total assets; or

(g)      acquire securities of registered open-end investment companies or
         registered unit investment trusts in reliance on Sections 12(d)(1)(F)
         or 12(d)(1)(G) of the 1940 Act.

The Fund will not purchase illiquid securities, including repurchase agreements
maturing in more than seven days, if, as a result thereof, more than 15% of the
Fund's net assets, valued at the time of the transaction, would be invested in
such securities.

The Fund has undertaken that if the Fund obtains an exemptive order from the
Securities and Exchange Commission (the "SEC") which would permit the taking of
action in contravention of any policy which may not be changed without a
shareholder vote, the Fund will not take such action unless either (i) the
applicable exemptive order permits the taking of such action without a
shareholder vote or (ii) the staff of the SEC has issued to the Fund a "no
action" or interpretive letter to the effect that the Fund may proceed without
shareholder vote.

The Fund may invest in foreign currencies (utilizing instruments such as forward
foreign currency exchange contracts) for both hedging and non-hedging purposes
although no more than 10% of its total assets in currencies may be used for
these purposes.

Temporary Defensive Policy. For temporary defensive purposes, the Fund may
invest, without limit, in cash and cash equivalents (including foreign money
market instruments, such as bankers' acceptances, certificates of deposit,
commercial paper, short-term government and corporate obligations, and
repurchase agreements), obligations issued or guaranteed by the US government,
its agencies or instrumentalities ("Government Securities"), domestic repurchase
agreements, money market instruments and high quality debt securities without
equity features. In such a case, the Fund would not be pursuing, and may not
achieve, its investment objective.

Master/feeder Fund Structure. The Board of Trustees has the discretion to retain
the current distribution arrangement for the Fund while investing in a master
fund in a master/feeder fund structure as described below.

A master/feeder fund structure is one in which a fund (a "feeder fund"), instead
of investing directly in a portfolio of securities, invests most or all of its
investment assets in a separate registered investment company (the "master
fund") with substantially the same investment objective and policies as the
feeder fund. Such a structure permits the pooling of assets of two or more
feeder funds, preserving separate identities or distribution channels at the
feeder fund level. Based on the premise that certain of the expenses of
operating an investment portfolio are relatively fixed, a larger investment
portfolio may eventually achieve a lower ratio of operating expenses to average
net assets. An existing investment company is able to convert to a feeder fund
by selling all of its investments, which involves brokerage and other
transaction costs and realization of a taxable gain or loss, or by contributing
its assets to the master fund and avoiding transaction costs and, if proper
procedures are followed, the realization of taxable gain or loss.


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


                       INVESTMENT POLICIES AND TECHNIQUES

General Investment Objective and Policies


The Fund is an open-end management investment company which continuously offers
and redeems shares at net asset value. The Fund is a company of the type
commonly known as a mutual fund. The Fund offers five classes of shares: Class
A, Class B, Class C, Institutional Class and Class S.

The Fund seeks to maximize total return consistent with preservation of capital
and prudent investment management, by investing for both current income and
capital appreciation. The Fund primarily invests in US dollar-denominated
investment grade fixed income securities, including corporate bonds, US
government and agency bonds and mortgage- and asset-backed securities. A
significant portion of the Fund's assets may also be allocated among foreign
investment grade fixed income securities, high yield bonds of US and foreign
issuers (including high yield bonds of issuers in countries with new or emerging
securities markets), or, to maintain liquidity, in cash or money market
instruments. The Fund normally invests at least 65% of total assets in high
grade US bonds (those considered to be in the top three grades of credit
quality). The Fund may invest up to 25% of its total assets in foreign
investment grade bonds (those considered to be in the top four grades of credit
quality). In addition, the Fund may also invest up to 20% of total assets in
securities of US and foreign issuers that are below investment grade (rated as
low as the sixth credit grade, i.e., grade B, otherwise known as junk bonds),
including investment in US dollar or foreign currency denominated bonds of
issuers located in countries with new or emerging securities markets. The Fund
may have an exposure of up to 10% of total assets in foreign currencies.
Currency forward contracts are permitted for both non-hedging and hedging
purposes.


It is possible that certain investment practices and techniques described below
may not be permissible for the Fund based on its investment restrictions, as
described herein, and in the Funds' applicable prospectus.

Adjustable Rate Securities. The interest rates paid on the adjustable rate
securities in which the fund invests generally are readjusted at intervals of
one year or less to an increment over some predetermined interest rate index.
There are three main categories of indices: those based on US Treasury
securities, those derived from a calculated measure such as a cost of funds
index and those based on a moving average of mortgage rates. Commonly used
indices include the one-year, three-year and five-year constant maturity
Treasury rates, the three-month Treasury bill rate, the 180-day Treasury bill
rate, rates on longer-term Treasury securities, the 11th District Federal Home
Loan Bank Cost of Funds, the National Median Cost of Funds, the one-month,
three-month, six-month or one-year London Interbank Offered Rate ("LIBOR"), the
prime rate of a specific bank or commercial paper rates. Some indices, such as
the one-year constant maturity Treasury rate, closely mirror changes in market
interest rate levels. Others, such as the 11th District Home Loan Bank Cost of
Funds index, tend to lag behind changes in market rate levels and tend to be
somewhat less volatile.

The Mortgage-Backed Securities either issued or guaranteed by Government
National Mortgage Association ("GNMA"), the Federal Home Loan Mortgage
Corporation ("FHLMC") or Federal National Mortgage Association ("FNMA" or
"Fannie Mae") ("Certificates") are called pass-through Certificates because a
pro rata share of both regular interest and principal payments (less GNMA's,
FHLMC's or FNMA's fees and any applicable loan servicing fees), as well as
unscheduled early prepayments on the underlying mortgage pool, are passed
through monthly to the holder of the Certificate (i.e., the fund). The principal
and interest on GNMA securities are guaranteed by GNMA and backed by the full
faith and credit of the US Government. FNMA guarantees full and timely payment
of all interest and principal, while FHLMC guarantees timely payment of interest
and ultimate collection of principal. Mortgage-Backed Securities from FNMA and
FHLMC are not backed by the full faith and credit of the United States; however,
they are generally considered to offer minimal credit risks. The yields provided
by these Mortgage-Backed Securities have historically exceeded the yields on
other types of US Government Securities with comparable maturities in large
measure due to the prepayment risk discussed below.

If prepayments of principal are made on the underlying mortgages during periods
of rising interest rates, the fund generally will be able to reinvest such
amounts in securities with a higher current rate of return. However, the fund
will not benefit from increases in interest rates to the extent that interest
rates rise to the point where they cause the current coupon of adjustable rate
mortgages held as investments by the fund to exceed the maximum allowable annual
or lifetime reset limits (or "cap rates") for a particular mortgage. Also, the
Fund's net asset value could vary to the extent that current yields on
Mortgage-Backed Securities are different than market yields during interim
periods between coupon reset dates.

During periods of declining interest rates, of course, the coupon rates may
readjust downward, resulting in lower yields to the fund. Further, because of
this feature, the value of adjustable rate mortgages is unlikely to rise during
periods of declining interest rates to the same extent as fixed-rate
instruments. As with other Mortgage-Backed Securities, interest rate declines
may result in accelerated prepayment of mortgages, and the proceeds from such
prepayments must be reinvested at lower prevailing interest rates.

One additional difference between adjustable rate mortgages and fixed rate
mortgages is that for certain types of adjustable rate mortgage securities, the
rate of amortization of principal, as well as interest payments, can and does
change in accordance with movements in a specified, published interest rate
index. The amount of interest due to an adjustable rate mortgage security holder
is calculated by adding a specified additional amount, the "margin," to the
index, subject to limitations or "caps" on the maximum and minimum interest that
is charged to the mortgagor during the life of the mortgage or to maximum and
minimum changes to that interest rate during a given period.

Advance Refunded Bonds. The Fund may purchase Municipal Securities that are
subsequently refunded by the issuance and delivery of a new issue of bonds prior
to the date on which the outstanding issue of bonds can be redeemed or paid. The
proceeds from the new issue of bonds are typically placed in an escrow fund
consisting of US Government obligations that are used to pay the interest,
principal and call premium on the issue being refunded. The Fund may also
purchase Municipal Securities that have been refunded prior to purchase by the
Fund.

Asset-Backed Securities. Asset backed securities may include pools of mortgages
("mortgage-backed securities"), loans, receivables or other assets. Payment of
principal and interest may be largely dependent upon the cash flows generated by
the assets backing the securities. Asset-backed securities present certain risks
that are not presented by mortgage-backed securities. Primarily, these
securities may not have the benefit of any security interest in the related
assets. Credit card receivables are generally unsecured and the debtors are
entitled to the protection of a number of state and federal consumer credit
laws, many of which give such debtors the right to set off certain amounts owed
on the credit cards, thereby reducing the balance due. There is the possibility
that recoveries on repossessed collateral may not, in some cases, be available
to support payments on these securities. Asset-backed securities are often
backed by a pool of assets representing the obligations of a number of different
parties. To lessen the effect of failures by obligors on underlying assets to
make payments, the securities may contain elements of credit support which fall
into two categories: (i) liquidity protection, and (ii) protection against
losses resulting from ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances, generally by the
entity administering the pool of assets, to ensure that the receipt of payments
on the underlying pool occurs in a timely fashion. Protection against losses
results from payment of the insurance obligations on at least a portion of the
assets in the pool. This protection may be provided through guarantees, policies
or letters of credit obtained by the issuer or sponsor from third parties,
through various means of structuring the transaction or through a combination of
such approaches. The Funds will not pay any additional or separate fees for
credit support. The degree of credit support provided for each issue is
generally based on historical information respecting the level of credit risk
associated with the underlying assets. Delinquency or loss in excess of that
anticipated or failure of the credit support could adversely affect the return
on an investment in such a security. The availability of asset-backed securities
may be affected by legislative or regulatory developments. It is possible that
such developments may require the funds to dispose of any then existing holdings
of such securities.

Other Asset-Backed Securities. The securitization techniques used to develop
mortgage-backed securities are now being applied to a broad range of assets.
Through the use of trusts and special purpose corporations, various types of
assets, including automobile loans, computer leases and credit card receivables,
are being securitized in pass-through structures similar to mortgage
pass-through structures or in a structure similar to the CMO structure. In
general, the collateral supporting these securities is of shorter maturity than
mortgage loans and is less likely to experience substantial prepayments with
interest rate fluctuations.

Several types of asset-backed securities have already been offered to investors,
including Certificates of Automobile Receivables(SM) ("CARS(SM)"). CARS(SM)
represent undivided fractional interests in a trust whose assets consist of a
pool of motor vehicle retail installment sales contracts and security interests
in the vehicles securing the contracts. Payments of principal and interest on
CARS(SM) are passed through monthly to certificate holders, and are guaranteed
up to certain amounts and for a certain time period by a letter of credit issued
by a financial institution unaffiliated with the trustee or originator of the
trust. An investor's return on CARS(SM) may be affected by early prepayment of
principal on the underlying vehicle sales contracts. If the letter of credit is
exhausted, the trust may be prevented from realizing the full amount due on a
sales contract because of state law requirements and restrictions relating to
foreclosure sales of vehicles and the obtaining of deficiency judgments
following such sales or because of depreciation, damage or loss of a vehicle,
the application of federal and state bankruptcy and insolvency laws, or other
factors. As a result, certificate holders may experience delays in payments or
losses if the letter of credit is exhausted.

Asset-backed securities present certain risks that are not presented by
mortgage-backed securities. Primarily, these securities may not have the benefit
of any security interest in the related assets. Credit card receivables are
generally unsecured and the debtors are entitled to the protection of a number
of state and federal consumer credit laws, many of which give such debtors the
right to set off certain amounts owed on the credit cards, thereby reducing the
balance due. There is the possibility that recoveries on repossessed collateral
may not, in some cases, be available to support payments on these securities.

Asset-backed securities are often backed by a pool of assets representing the
obligations of a number of different parties. To lessen the effect of failures
by obligors on underlying assets to make payments, the securities may contain
elements of credit support which fall into two categories: (i) liquidity
protection, and (ii) protection against losses resulting from ultimate default
by an obligor on the underlying assets. Liquidity protection refers to the
provision of advances, generally by the entity administering the pool of assets,
to ensure that the receipt of payments on the underlying pool occurs in a timely
fashion. Protection against losses results from payment of the insurance
obligations on at least a portion of the assets in the pool. This protection may
be provided through guarantees, policies or letters of credit obtained by the
issuer or sponsor from third parties, through various means of structuring the
transaction or through a combination of such approaches. The Fund will not pay
any additional or separate fees for credit support. The degree of credit support
provided for each issue is generally based on historical information respecting
the level of credit risk associated with the underlying assets. Delinquency or
loss in excess of that anticipated or failure of the credit support could
adversely affect the return on an investment in such a security.

The Fund may also invest in residual interests in asset-backed securities. In
the case of asset-backed securities issued in a pass-through structure, the cash
flow generated by the underlying assets is applied to make required payments on
the securities and to pay related administrative expenses. The residual in an
asset-backed security pass-through structure represents the interest in any
excess cash flow remaining after making the foregoing payments. The amount of
residual cash flow resulting from a particular issue of asset-backed securities
will depend on, among other things, the characteristics of the underlying
assets, the coupon rates on the securities, prevailing interest rates, the
amount of administrative expenses and the actual prepayment experience on the
underlying assets. Asset-backed security residuals not registered under the
Securities Act of 1933 may be subject to certain restrictions on
transferability. In addition, there may be no liquid market for such securities.

The availability of asset-backed securities may be affected by legislative or
regulatory developments. It is possible that such developments may require the
Fund to dispose of any then-existing holdings of such securities.

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

Certificates of Deposit and Bankers' Acceptances. Certificates of deposit are
receipts issued by a depository institution in exchange for the deposit of
funds. The issuer agrees to pay the amount deposited plus interest to the bearer
of the receipt on the date specified on the certificate. The certificate usually
can be traded in the secondary market prior to maturity. Bankers' acceptances
typically arise from short-term credit arrangements designed to enable
businesses to obtain funds to finance commercial transactions. Generally, an
acceptance is a time draft drawn on a bank by an exporter or an importer to
obtain a stated amount of funds to pay for specific merchandise. The draft is
then "accepted" by a bank that, in effect, unconditionally guarantees to pay the
face value of the instrument on its maturity date. The acceptance may then be
held by the accepting bank as an earning asset or it may be sold in the
secondary market at the going rate of discount for a specific maturity. Although
maturities for acceptances can be as long as 270 days, most acceptances have
maturities of six months or less.

The Fund may also invest in certificates of deposit issued by banks and savings
and loan institutions which had, at the time of their most recent annual
financial statements, total assets of less than $1 billion, provided that (i)
the principal amounts of such certificates of deposit are insured by an agency
of the US Government, (ii) at no time will the Fund hold more than $100,000
principal amount of certificates of deposit of any one such bank, and (iii) at
the time of acquisition, no more than 10% of the Fund's assets (taken at current
value) are invested in certificates of deposit of such banks having total assets
not in excess of $1 billion.

Banker's acceptances are credit instruments evidencing the obligations of a bank
to pay a draft drawn on it by a customer. These instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of the
instrument upon maturity.

Time deposits are non-negotiable deposits maintained in a banking institution
for a specified period of time at a stated interest rate. Time deposits which
may be held by the Fund will not benefit from insurance from the Bank Insurance
Fund or the Savings Association Insurance Fund administered by the Federal
Deposit Insurance Corporation. Fixed time deposits may be withdrawn on demand by
the investor, but may be subject to early withdrawal penalties that vary with
market conditions and the remaining maturity of the obligation. Fixed time
deposits subject to withdrawal penalties maturing in more than seven calendar
days are subject to the Fund's limitation on investments in illiquid securities.

Collateralized Mortgage Obligations ("CMOs"). CMOs are hybrids between
mortgage-backed bonds and mortgage pass-through securities. Similar to a bond,
interest and prepaid principal are paid, in most cases, semiannually. CMOs may
be collateralized by whole mortgage loans but are more typically collateralized
by portfolios of mortgage pass-through securities guaranteed by GNMA, FHLMC, or
Fannie Mae, and their income streams.

CMOs are structured into multiple classes, each bearing a different stated
maturity. Actual maturity and average life will depend upon the prepayment
experience of the collateral. CMOs provide for a modified form of call
protection through a de facto breakdown of the underlying pool of mortgages
according to how quickly the loans are repaid. Monthly payment of principal
received from the pool of underlying mortgages, including prepayments, is first
returned to investors holding the shortest maturity class. Investors holding the
longer maturity classes receive principal only after the first class has been
retired. An investor is partially guarded against a sooner than desired return
of principal because of the sequential payments. The prices of certain CMOs,
depending on their structure and the rate of prepayments, can be volatile. Some
CMOs may also not be as liquid as other securities.

In a typical CMO transaction, a corporation issues multiple series (e.g., A, B,
C, Z) of CMO bonds ("Bonds"). Proceeds of the Bond offering are used to purchase
mortgages or mortgage pass-through certificates ("Collateral"). The Collateral
is pledged to a third party trustee as security for the Bonds. Principal and
interest payments from the Collateral are used to pay principal on the Bonds in
the order A, B, C, Z. The Series A, B, and C bonds all bear current interest.
Interest on the Series Z Bond is accrued and added to principal and a like
amount is paid as principal on the Series A, B, or C Bond currently being paid
off. When the Series A, B, and C Bonds are paid in full, interest and principal
on the Series Z Bond begins to be paid currently. With some CMOs, the issuer
serves as a conduit to allow loan originators (primarily builders or savings and
loan associations) to borrow against their loan portfolios.

The principal risk of CMOs results from the rate of prepayments on underlying
mortgages serving as collateral and from the structure of the deal. An increase
or decrease in prepayment rates will affect the yield, average life and price of
CMOs.


Common Stock. The Fund may invest in common stocks in such securities. The Fund
currently does not intend to invest in this type of securities to any
significant extent. Common stock is issued by companies to raise cash for
business purposes and represents a proportionate interest in the issuing
companies. Therefore, the Fund participates in the success or failure of any
company in which it holds stock. The market value of common stock can fluctuate
significantly, reflecting the business performance of the issuing company,
investor perception and general economic or financial market movements. Smaller
companies are especially sensitive to these factors and may even become
valueless. Despite the risk of price volatility, however, common stocks also
offer a greater potential for gain on investment, compared to other classes of
financial assets such as bonds or cash equivalents.


Convertible Securities. The Fund may invest in convertible securities, that is,
bonds, notes, debentures, preferred stocks and other securities which are
convertible into common stock. Investments in convertible securities can provide
an opportunity for capital appreciation and/or income through interest and
dividend payments by virtue of their conversion or exchange features.

The convertible securities in which the Fund may invest are either fixed income
or zero coupon debt securities which may be converted or exchanged at a stated
or determinable exchange ratio into underlying shares of common stock. The
exchange ratio for any particular convertible security may be adjusted from time
to time due to stock splits, dividends, spin-offs, other corporate distributions
or scheduled changes in the exchange ratio. Convertible debt securities and
convertible preferred stocks, until converted, have general characteristics
similar to both debt and equity securities. Although to a lesser extent than
with debt securities generally, the market value of convertible securities tends
to decline as interest rates increase and, conversely, tends to increase as
interest rates decline. In addition, because of the conversion or exchange
feature, the market value of convertible securities typically changes as the
market value of the underlying common stocks changes, and, therefore, also tends
to follow movements in the general market for equity securities. A unique
feature of convertible securities is that as the market price of the underlying
common stock declines, convertible securities tend to trade increasingly on a
yield basis, and so may not experience market value declines to the same extent
as the underlying common stock. When the market price of the underlying common
stock increases, the prices of the convertible securities tend to rise as a
reflection of the value of the underlying common stock, although typically not
as much as the underlying common stock. While no securities investments are
without risk, investments in convertible securities generally entail less risk
than investments in common stock of the same issuer.

As debt securities, convertible securities are investments which provide for a
stream of income (or in the case of zero coupon securities, accretion of income)
with generally higher yields than common stocks. Convertible securities
generally offer lower yields than non-convertible securities of similar quality
because of their conversion or exchange features.

Of course, like all debt securities, there can be no assurance of income or
principal payments because the issuers of the convertible securities may default
on their obligations.

Convertible securities generally are subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds, as
corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock, of the
same issuer. However, because of the subordination feature, convertible bonds
and convertible preferred stock typically have lower ratings than similar
non-convertible securities. Convertible securities may be issued as fixed income
obligations that pay current income or as zero coupon notes and bonds, including
Liquid Yield Option Notes ("LYONs"(TM)).

Corporate Obligations. Investment in corporate debt obligations involves credit
and interest rate risk. The value of fixed-income investments will fluctuate
with changes in interest rates and bond market conditions, tending to rise as
interest rates decline and to decline as interest rates rise. Corporate debt
obligations generally offer less current yield than securities of lower quality,
but lower-quality securities generally have less liquidity, greater credit and
market risk, and as a result, more price volatility. Longer term bonds are,
however, generally more volatile than bonds with shorter maturities.

Direct Debt Instruments. Direct debt instruments are interests in amounts owed
by a corporate, governmental or other borrower to lenders (direct loans), to
suppliers of goods or services (trade claims or other receivables) or to other
parties. The Fund may invest in all types of direct debt investments, but among
these investments the Fund currently intends to invest primarily in direct loans
and trade claims.

When the fund participates in a direct loan it will be lending money directly to
an issuer. Direct loans generally do not have an underwriter or agent bank, but
instead, are negotiated between a company's management team and a lender or
group of lenders. Direct loans typically offer better security and structural
terms than other types of high yield securities. Direct debt obligations are
often the most senior-obligations in an issuer's capital structure or are
well-collateralized so that overall risk is lessened.

Trade claims are unsecured rights of payment arising from obligations other than
borrowed funds. Trade claims include vendor claims and other receivables that
are adequately documented and available for purchase from high yield
broker-dealers. Trade claims typically may sell at a discount. In addition to
the risks otherwise associated with low-quality obligations, trade claims have
other risks, including the possibility that the amount of the claim may be
disputed by the obligor. Trade claims normally would be considered illiquid and
pricing can be volatile.

Direct debt instruments involve a risk of loss in case of default or insolvency
of the borrower. The fund will rely primarily upon the creditworthiness of the
borrower and/or the collateral for payment of interest and repayment of
principal. The value of the fund's investments may be adversely affected if
scheduled interest or principal payments are not made. Because most direct loans
will be secured, there will be a smaller risk of loss with direct loans than
with an investment in unsecured high yield bonds or trade claims. Indebtedness
of borrowers whose creditworthiness is poor involves substantially greater risks
and may be highly speculative. Borrowers that are in bankruptcy or restructuring
may never pay off their indebtedness or may pay only a small fraction of the
amount owed. Investments in direct debt instruments also involve interest rate
risk and liquidity risk. However, interest rate risk is lessened by the
generally short-term nature of direct debt instruments and their interest rate
structure, which typically floats. To the extent the direct debt instruments in
which the fund invests are considered illiquid, the lack of a liquid secondary
market (1) will have an adverse impact on the value of such instruments, (2)
will have an adverse impact on the fund's ability to dispose of them when
necessary to meet the fund's liquidity needs or in response to a specific
economic event, such as a decline in creditworthiness of the issuer, and (3) may
make it more difficult for the fund to assign a value of these instruments for
purposes of valuing the fund's portfolio and calculating its net asset value. In
order to lessen liquidity risk, the fund anticipates investing primarily in
direct debt instruments that are quoted and traded in the high yield market and
will not invest in these instruments if it would cause more than 15% of the
fund's net assets to be illiquid. Trade claims may also present a tax risk to
the fund.

The Fund will not invest in trade claims if it effects the fund's qualification
as a regulated investment company under Subchapter M of the Internal Revenue
Code.

Debt Securities. The Fund may invest in debt securities, including bonds of
private issuers. Portfolio debt investments will be selected on the basis of,
among other things, credit quality, and the fundamental outlooks for currency,
economic and interest rate trends, taking into account the ability to hedge a
degree of currency or local bond price risk.

The principal risks involved with investments in bonds include interest rate
risk, credit risk and pre-payment risk. Interest rate risk refers to the likely
decline in the value of bonds as interest rates rise. Generally, longer-term
securities are more susceptible to changes in value as a result of interest-rate
changes than are shorter-term securities. Credit risk refers to the risk that an
issuer of a bond may default with respect to the payment of principal and
interest. The lower a bond is rated, the more it is considered to be a
speculative or risky investment. Pre-payment risk is commonly associated with
pooled debt securities, such as mortgage-backed securities and asset backed
securities, but may affect other debt securities as well. When the underlying
debt obligations are prepaid ahead of schedule, the return on the security will
be lower than expected. Pre-payment rates usually increase when interest rates
are falling.

Dollar Roll Transactions. Dollar roll transactions consist of the sale by the
Fund to a bank or broker/dealer (the "counterparty") of GNMA certificates or
other mortgage-backed securities together with a commitment to purchase from the
counterparty similar, but not identical, securities at a future date, at the
same price. The counterparty receives all principal and interest payments,
including prepayments, made on the security while it is the holder. The Fund
receives a fee from the counterparty as consideration for entering into the
commitment to purchase. Dollar rolls may be renewed over a period of several
months with a different purchase and repurchase price fixed and a cash
settlement made at each renewal without physical delivery of securities.
Moreover, the transaction may be preceded by a firm commitment agreement
pursuant to which the Fund agrees to buy a security on a future date.


The Fund will segregate cash, US Government securities or other liquid assets in
an amount sufficient to meet their purchase obligations under the transactions.


Dollar rolls may be treated for purposes of the 1940 Act as borrowings of the
Fund because they involve the sale of a security coupled with an agreement to
repurchase. Like all borrowings, a dollar roll involves costs to the Fund. For
example, while the Fund receives a fee as consideration for agreeing to
repurchase the security, the Fund forgoes the right to receive all principal and
interest payments while the counterparty holds the security. These payments to
the counterparty may exceed the fee received by the Fund, thereby effectively
charging the Fund interest on its borrowing. Further, although the Fund can
estimate the amount of expected principal prepayment over the term of the dollar
roll, a variation in the actual amount of prepayment could increase or decrease
the cost of the Fund's borrowing.

The entry into dollar rolls involves potential risks of loss that are different
from those related to the securities underlying the transactions. For example,
if the counterparty becomes insolvent, the Fund's right to purchase from the
counterparty might be restricted. Additionally, the value of such securities may
change adversely before the Fund is able to purchase them. Similarly, the Fund
may be required to purchase securities in connection with a dollar roll at a
higher price than may otherwise be available on the open market. Since, as noted
above, the counterparty is required to deliver a similar, but not identical
security to the Fund, the security that the Fund is required to buy under the
dollar roll may be worth less than an identical security. Finally, there can be
no assurance that the Fund's use of the cash that it receives from a dollar roll
will provide a return that exceeds borrowing costs.


Eurodollar Instruments. The Fund may make investments in Eurodollar instruments
for hedging purposes or to enhance potential gain. Eurodollar instruments are US
dollar-denominated futures contracts or options thereon which are linked to the
London Interbank Offered Rate ("LIBOR"), although foreign currency-denominated
instruments are available from time to time. Eurodollar futures contracts enable
purchasers to obtain a fixed rate for the lending of funds and sellers to obtain
a fixed rate for borrowings. The Fund might use Eurodollar futures contracts and
options thereon to hedge against changes in LIBOR, to which many interest rate
swaps and fixed income instruments are linked.




Foreign Currencies. Because investments in foreign securities usually will
involve currencies of foreign countries, and because the Fund may hold foreign
currencies and forward contracts, futures contracts and options on foreign
currencies and foreign currency futures contracts, the value of the assets of
the Fund as measured in US dollars may be affected favorably or unfavorably by
changes in foreign currency exchange rates and exchange control regulations, and
the Fund may incur costs and experience conversion difficulties and
uncertainties in connection with conversions between various currencies.
Fluctuations in exchange rates may also affect the earning power and asset value
of the foreign entity issuing the security.

The strength or weakness of the US dollar against these currencies is
responsible for part of the Fund's investment performance. If the dollar falls
in value relative to the Japanese yen, for example, the dollar value of a
Japanese stock held in the portfolio will rise even though the price of the
stock remains unchanged. Conversely, if the dollar rises in value relative to
the yen, the dollar value of the Japanese stock will fall. Many foreign
currencies have experienced significant devaluation relative to the dollar.

Although the Fund values its assets daily in terms of US dollars, it does not
intend to convert its holdings of foreign currencies into US dollars on a daily
basis. It will do so from time to time, and investors should be aware of the
costs of currency conversion. Although foreign exchange dealers typically do not
charge a fee for conversion, they do realize a profit based on the difference
(the "spread") between the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency to the Fund at
one rate, while offering a lesser rate of exchange should the Fund desire to
resell that currency to the dealer. The Fund will conduct its foreign currency
exchange transactions either on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign currency exchange market, or through entering into
options or forward or futures contracts to purchase or sell foreign currencies.

Foreign Fixed Income Securities. Since most foreign fixed income securities are
not rated, the Fund will invest in foreign fixed income securities based on the
Advisor's analysis without relying on published ratings. Since such investments
will be based upon the Advisor's analysis rather than upon published ratings,
achievement of the Fund's goals may depend more upon the abilities of the
Advisor than would otherwise be the case.

The value of the foreign fixed income securities held by the Fund, and thus the
net asset value of the Fund's shares, generally will fluctuate with (a) changes
in the perceived creditworthiness of the issuers of those securities, (b)
movements in interest rates, and (c) changes in the relative values of the
currencies in which the Fund's investments in fixed income securities are
denominated with respect to the US Dollar. The extent of the fluctuation will
depend on various factors, such as the average maturity of the Fund's
investments in foreign fixed income securities, and the extent to which the Fund
hedges its interest rate, credit and currency exchange rate risks. A longer
average maturity generally is associated with a higher level of volatility in
the market value of such securities in response to changes in market conditions.

Investments in sovereign debt, including Brady Bonds (Brady Bonds are debt
securities issued under a plan implemented to allow debtor nations to
restructure their outstanding commercial bank indebtedness), involve special
risks. Foreign governmental issuers of debt or the governmental authorities that
control the repayment of the debt may be unable or unwilling to repay principal
or pay interest when due. In the event of default, there may be limited or no
legal recourse in that, generally, remedies for defaults must be pursued in the
courts of the defaulting party. Political conditions, especially a sovereign
entity's willingness to meet the terms of its fixed income securities, are of
considerable significance. Also, there can be no assurance that the holders of
commercial bank loans to the same sovereign entity may not contest payments to
the holders of sovereign debt in the event of default under commercial bank loan
agreements. In addition, there is no bankruptcy proceeding with respect to
sovereign debt on which a sovereign has defaulted, and the Fund may be unable to
collect all or any part of its investment in a particular issue. Foreign
investment in certain sovereign debt is restricted or controlled to varying
degrees, including requiring governmental approval for the repatriation of
income, capital or proceeds of sales by foreign investors. These restrictions or
controls may at times limit or preclude foreign investment in certain sovereign
debt or increase the costs and expenses of the Fund. Sovereign debt may be
issued as part of debt restructuring and such debt is to be considered
speculative. There is a history of defaults with respect to commercial bank
loans by public and private entities issuing Brady Bonds. All or a portion of
the interest payments and/or principal repayment with respect to Brady Bonds may
be uncollateralized.

Foreign Investment. Foreign securities are normally denominated and traded in
foreign currencies. As a result, the value of the fund's foreign investments and
the value of its shares may be affected favorably or unfavorably by changes in
currency exchange rates relative to the US dollar. There may be less information
publicly available about a foreign issuer than about a US issuer, and foreign
issuers may not be subject to accounting, auditing and financial reporting
standards and practices comparable to those in the US. The securities of some
foreign issuers are less liquid and at times more volatile than securities of
comparable US issuers. Foreign brokerage commissions and other fees are also
generally higher than in the US. Foreign settlement procedures and trade
regulations may involve certain risks (such as delay in payment or delivery of
securities or in the recovery of the Fund's assets held abroad) and expenses not
present in the settlement of investments in US markets. Payment for securities
without delivery may be required in certain foreign markets.

In addition, foreign securities may be subject to the risk of nationalization or
expropriation of assets, imposition of currency exchange controls or
restrictions on the repatriation of foreign currency, confiscatory taxation,
political or financial instability and diplomatic developments which could
affect the value of the Fund's investments in certain foreign countries.
Governments of many countries have exercised and continue to exercise
substantial influence over many aspects of the private sector through the
ownership or control of many companies, including some of the largest in these
countries. As a result, government actions in the future could have a
significant effect on economic conditions which may adversely affect prices of
certain portfolio securities. There is also generally less government
supervision and regulation of stock exchanges, brokers, and listed companies
than in the US. Dividends or interest on, or proceeds from the sale of, foreign
securities may be subject to foreign withholding taxes, and special US tax
considerations may apply. Moreover, foreign economies may differ favorably or
unfavorably from the US economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position.

Legal remedies available to investors in certain foreign countries may be more
limited than those available with respect to investments in the US or in other
foreign countries. The laws of some foreign countries may limit the Fund's
ability to invest in securities of certain issuers organized under the laws of
those foreign countries.

Of particular importance, many foreign countries are heavily dependent upon
exports, particularly to developed countries, and, accordingly, have been and
may continue to be adversely affected by trade barriers, managed adjustments in
relative currency values, and other protectionist measures imposed or negotiated
by the US and other countries with which they trade. These economies also have
been and may continue to be negatively impacted by economic conditions in the US
and other trading partners, which can lower the demand for goods produced in
those countries.

The risks described above, including the risks of nationalization or
expropriation of assets, typically are increased in connection with investments
in "emerging markets." For example, political and economic structures in these
countries may be in their infancy and developing rapidly, and such countries may
lack the social, political and economic stability characteristic of more
developed countries (including amplified risk of war and terrorism). Certain of
these countries have in the past failed to recognize private property rights and
have at times nationalized and expropriated the assets of private companies.
Investments in emerging markets may be considered speculative.

The currencies of certain emerging market countries have experienced
devaluations relative to the US dollar, and future devaluations may adversely
affect the value of assets denominated in such currencies. In addition, currency
hedging techniques may be unavailable in certain emerging market countries. Many
emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation or deflation for many years, and future
inflation may adversely affect the economies and securities markets of such
countries.

In addition, unanticipated political or social developments may affect the value
of investments in emerging markets and the availability of additional
investments in these markets. Any change in the leadership or politics of
emerging market countries, or the countries that exercise a significant
influence over those countries, may halt the expansion of or reverse the
liberalization of foreign investment policies now occurring and adversely affect
existing investment opportunities. The small size, limited trading volume and
relative inexperience of the securities markets in these countries may make
investments in securities traded in emerging markets illiquid and more volatile
than investments in securities traded in more developed countries. For example,
limited market size may cause prices to be unduly influenced by traders who
control large positions. In addition, the Fund may be required to establish
special custodial or other arrangements before making investments in securities
traded in emerging markets. There may be little financial or accounting
information available with respect to issuers of emerging market securities, and
it may be difficult as a result to assess the value of prospects of an
investment in such securities.

The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Fund's securities in such markets may
not be readily available. The Fund may suspend redemption of its shares for any
period during which an emergency exists, as determined by the SEC. Accordingly
if the Fund believes that appropriate circumstances exist, it will promptly
apply to the SEC for a determination that an emergency is present. During the
period commencing from the Fund's identification of such condition until the
date of the SEC action, the Fund's securities in the affected markets will be
valued at fair value determined in good faith by or under the direction of the
Fund's Board.

Certain of the foregoing risks may also apply to some extent to securities of US
issuers that are denominated in foreign currencies or that are traded in foreign
markets, or securities of US issuers having significant foreign operations.

High Yield/High Risk Bonds. The Fund may also purchase debt securities which are
rated below investment-grade (commonly referred to as "junk bonds"), that is,
rated below Baa by Moody's or below BBB by S&P or Fitch Investors Service
("Fitch") and unrated securities judged to be of equivalent quality as
determined by the Advisor. These securities usually entail greater risk
(including the possibility of default or bankruptcy of the issuers of such
securities), generally involve greater volatility of price and risk to principal
and income, and may be less liquid, than securities in the higher rating
categories. The lower the ratings of such debt securities, the more their risks
render them like equity securities. Securities rated D may be in default with
respect to payment of principal or interest. See the Appendix to this SAI for a
more complete description of the ratings assigned by these ratings organizations
and their respective characteristics.

Issuers of such high-yield securities often are highly leveraged and may not
have available to them more traditional methods of financing. Therefore, the
risk associated with acquiring the securities of such issuers generally is
greater than is the case with higher rated securities. For example, during an
economic downturn or a sustained period of rising interest rates, highly
leveraged issuers of high yield securities may experience financial stress.
During such periods, such issuers may not have sufficient revenues to meet their
interest payment obligations. The issuer's ability to service its debt
obligations may also be adversely affected by specific corporate developments,
or the issuer's inability to meet specific projected business forecasts, or the
unavailability of additional financing. The risk of loss from default by the
issuer is significantly greater for the holders of high yield securities because
such securities are generally unsecured and are often subordinated to other
creditors of the issuer. Prices and yields of high yield securities will
fluctuate over time and, during periods of economic uncertainty, volatility of
high yield securities may adversely affect the Fund's net asset value. In
addition, investments in high yield zero coupon or pay-in-kind bonds, rather
than income-bearing high yield securities, may be more speculative and may be
subject to greater fluctuations in value due to changes in interest rates.

The Fund may have difficulty disposing of certain high-yield securities because
they may have a thin trading market. Because not all dealers maintain markets in
all high yield securities, the Fund anticipates that such securities could be
sold only to a limited number of dealers or institutional investors. The lack of
a liquid secondary market may have an adverse effect on the market price and the
Fund's ability to dispose of particular issues and may also make it more
difficult for the Fund to obtain accurate market quotations for purposes of
valuing the fund's assets. Market quotations generally are available on many
high yield issues only from a limited number of dealers and may not necessarily
represent firm bids of such dealers or prices for actual sales. Adverse
publicity and investor perceptions may decrease the values and liquidity of
high-yield securities. These securities may also involve special registration
responsibilities, liabilities and costs, and liquidity and valuation
difficulties.

Credit quality in the high-yield securities market can change suddenly and
unexpectedly, and even recently-issued credit ratings may not fully reflect the
actual risks posed by a particular high-yield security. For these reasons, it is
generally the policy of the Advisor not to rely exclusively on ratings issued by
established credit rating agencies, but to supplement such ratings with its own
independent and on-going review of credit quality. The achievement of the Fund's
investment objective by investment in such securities may be more dependent on
the Advisor's credit analysis than is the case for higher quality bonds. Should
the rating of a portfolio security be downgraded, the Advisor will determine
whether it is in the best interests of the Fund to retain or dispose of such
security.

Prices for high-yield securities may be affected by legislative and regulatory
developments. Also, Congress has from time to time considered legislation which
would restrict or eliminate the corporate tax deduction for interest payments in
these securities and regulate corporate restructurings. Such legislation may
significantly depress the prices of outstanding securities of this type.

A portion of the high-yield securities acquired by the Fund will be purchased
upon issuance, which may involve special risks because the securities so
acquired are new issues. In such instances the Fund may be a substantial
purchaser of the issue and therefore have the opportunity to participate in
structuring the terms of the offering. Although this may enable the Fund to seek
to protect itself against certain of such risks, the considerations discussed
herein would nevertheless remain applicable.

Illiquid Securities and Restricted Securities. The Fund may purchase securities
that are subject to legal or contractual restrictions on resale ("restricted
securities"). Generally speaking, restricted securities may be sold (i) only to
qualified institutional buyers; (ii) in a privately negotiated transaction to a
limited number of purchasers; (iii) in limited quantities after they have been
held for a specified period of time and other conditions are met pursuant to an
exemption from registration; or (iv) in a public offering for which a
registration statement is in effect under the Securities Act of 1933, as amended
(the "1933 Act"). Issuers of restricted securities may not be subject to the
disclosure and other investor protection requirements that would be applicable
if their securities were publicly traded.

Restricted securities are often illiquid, but they may also be liquid. For
example, restricted securities that are eligible for resale under Rule 144A are
often deemed to be liquid.

The Fund's Board has approved guidelines for use by the Advisor in determining
whether a security is liquid or illiquid. Among the factors the Advisor may
consider in reaching liquidity decisions relating to Rule 144A securities are:
(1) the frequency of trades and quotes for the security; (2) the number of
dealers wishing to purchase or sell the security and the number of other
potential purchasers; (3) dealer undertakings to make a market in the security;
and (4) the nature of the security and the nature of the market for the security
(i.e., the time needed to dispose of the security, the method of soliciting
offers, and the mechanics of the transfer. Issuers of restricted securities may
not be subject to the disclosure and other investor protection requirement that
would be applicable if their securities were publicly traded. Where a
registration statement is required for the resale of restricted securities, the
Fund may be required to bear all or part of the registration expenses. The Fund
may be deemed to be an "underwriter" for purposes of the Securities Act of 1933,
as amended when selling restricted securities to the public and, in such event,
the Fund may be liable to purchasers of such securities if the registration
statement prepared by the issuer is materially inaccurate or misleading.

The Fund may also purchase securities that are not subject to legal or
contractual restrictions on resale, but that are deemed illiquid. Such
securities may be illiquid, for example, because there is a limited trading
market for them.

The Fund may be unable to sell a restricted or illiquid security. In addition,
it may be more difficult to determine a market value for restricted or illiquid
securities. Moreover, if adverse market conditions were to develop during the
period between the Fund's decision to sell a restricted or illiquid security and
the point at which the Fund is permitted or able to sell such security, the Fund
might obtain a price less favorable than the price that prevailed when it
decided to sell. This investment practice, therefore, could have the effect of
decreasing the level of illiquidity of the Fund.


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




Indexed Securities. The Fund may invest in indexed securities, the value of
which is linked to currencies, interest rates, commodities, indices or other
financial indicators ("reference instruments"). Most indexed securities have
maturities of three years or less.

Indexed securities differ from other types of debt securities in which the Fund
may invest in several respects. First, the interest rate or, unlike other debt
securities, the principal amount payable at maturity of an indexed security may
vary based on changes in one or more specified reference instruments, such as an
interest rate compared with a fixed interest rate or the currency exchange rates
between two currencies (neither of which need be the currency in which the
instrument is denominated). The reference instrument need not be related to the
terms of the indexed security. For example, the principal amount of a US dollar
denominated indexed security may vary based on the exchange rate of two foreign
currencies. An indexed security may be positively or negatively indexed; that
is, its value may increase or decrease if the value of the reference instrument
increases. Further, the change in the principal amount payable or the interest
rate of an indexed security may be a multiple of the percentage change (positive
or negative) in the value of the underlying reference instrument(s).

Investment in indexed securities involves certain risks. In addition to the
credit risk of the security's issuer and the normal risks of price changes in
response to changes in interest rates, the principal amount of indexed
securities may decrease as a result of changes in the value of reference
instruments. Further, in the case of certain indexed securities in which the
interest rate is linked to a reference instrument, the interest rate may be
reduced to zero, and any further declines in the value of the security may then
reduce the principal amount payable on maturity. Finally, indexed securities may
be more volatile than the reference instruments underlying the indexed
securities.

Interfund Borrowing and Lending Program. The Fund has received exemptive relief
from the SEC, which permits the Fund to participate in an interfund lending
program among certain investment companies advised by the Advisor. The interfund
lending program allows the participating funds to borrow money from and loan
money to each other for temporary or emergency purposes. The program is subject
to a number of conditions designed to ensure fair and equitable treatment of all
participating funds, including the following: (1) no fund may borrow money
through the program unless it receives a more favorable interest rate than a
rate approximating the lowest interest rate at which bank loans would be
available to any of the participating funds under a loan agreement; and (2) no
fund may lend money through the program unless it receives a more favorable
return than that available from an investment in repurchase agreements and, to
the extent applicable, money market cash sweep arrangements. In addition, the
Fund may participate in the program only if and to the extent that such
participation is consistent with the Fund's investment objectives and policies
(for instance, money market funds would normally participate only as lenders and
tax exempt funds only as borrowers). Interfund loans and borrowings may extend
overnight, but could have a maximum duration of seven days. Loans may be called
on one day's notice. The Fund may have to borrow from a bank at a higher
interest rate if an interfund loan is called or not renewed. Any delay in
repayment to a lending fund could result in a lost investment opportunity or
additional costs. The program is subject to the oversight and periodic review of
the Boards of the participating funds. To the extent the Fund is actually
engaged in borrowing through the interfund lending program, the Fund will comply
with its respective non-fundamental policies on borrowing.

Investment-Grade Bonds. The Fund may purchase "investment-grade" bonds, which
are those rated Aaa, Aa, A or Baa by Moody's or AAA, AA, A or BBB by S&P or
Fitch or, if unrated, judged to be of equivalent quality as determined by the
Advisor. Moody's considers bonds it rates Baa to have speculative elements as
well as investment-grade characteristics. To the extent that the Fund invests in
higher-grade securities, the Fund will not be able to avail itself of
opportunities for higher income which may be available at lower grades.

Investment of Uninvested Cash Balances. The Fund may have cash balances that
have not been invested in portfolio securities ("Uninvested Cash"). Uninvested
Cash may result from a variety of sources, including dividends or interest
received from portfolio securities, unsettled securities transactions, reserves
held for investment strategy purposes, scheduled maturity of investments,
liquidation of investment securities to meet anticipated redemptions and
dividend payments, and new cash received from investors. Uninvested Cash may be
invested directly in money market instruments or other short-term debt
obligations. Pursuant to an Exemptive Order issued by the SEC, the Fund may use
Uninvested Cash to purchase shares of affiliated funds including money market
funds, short-term bond funds and Cash Management QP Trust, or one or more future
entities for which the Advisor acts as trustee or investment advisor that
operate as cash management investment vehicles and that are excluded from the
definition of investment company pursuant to section 3(c)(1) or 3(c)(7) of the
1940 Act (collectively, the "Central Funds") in excess of the limitations of
Section 12(d)(1) of the 1940 Act. Investment by the Fund in shares of the
Central Funds will be in accordance with the Fund's investment policies and
restrictions as set forth in its registration statement.

Certain of the Central Funds comply with rule 2a-7 under the 1940 Act. The other
Central Funds are or will be short-term bond funds that invest in fixed-income
securities and maintain a dollar weighted average maturity of three years or
less. Each of the Central Funds will be managed specifically to maintain a
highly liquid portfolio, and access to them will enhance the Fund's ability to
manage Uninvested Cash.

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

Lending of Portfolio Securities. The Fund may lend its investment securities to
approved institutional borrowers who need to borrow securities in order to
complete certain transactions, such as covering short sales, avoiding failures
to deliver securities or completing arbitrage operations. By lending its
investment securities, the Fund attempts to increase its net investment income
through the receipt of interest on the loan. Any gain or loss in the market
price of the securities loaned that might occur during the term of the loan
would belong to the Fund. The Fund may lend its investment securities so long as
the terms, structure and the aggregate amount of such loans are not inconsistent
with the 1940 Act or the rules and regulations or interpretations of the SEC
thereunder, which currently require that (a) the borrower pledge and maintain
with the Fund collateral consisting of liquid, unencumbered assets having a
value at all times not less than 100% of the value of the securities loaned, (b)
the borrower add to such collateral whenever the price of the securities loaned
rises (i.e., the borrower "marks to the market" on a daily basis), (c) the loan
be made subject to termination by the Fund at any time, and (d) the Fund
receives reasonable interest on the loan (which may include the Fund investing
any cash collateral in interest bearing short-term investments), and
distributions on the loaned securities and any increase in their market value.
There may be risks of delay in recovery of the securities or even loss of rights
in the collateral should the borrower of the securities fail financially.
However, loans will be made only to borrowers selected by the Fund's delegate
after a commercially reasonable review of relevant facts and circumstances,
including the creditworthiness of the borrower.

At the present time, the staff of the SEC does not object if an investment
company pays reasonable negotiated fees in connection with loaned securities, so
long as such fees are set forth in a written contract and approved by the
investment company's Board of Trustees. In addition, voting rights may pass with
the loaned securities, but if a material event occurs affecting an investment on
loan, the loan must be called and the securities voted. Pursuant to an exemptive
order granted by the SEC, cash collateral received by the Fund may be invested
in a money market fund managed by the Advisor (or one of its affiliates).

Mortgage-Backed Securities and Mortgage Pass-Through Securities. The Fund may
invest in mortgage-backed securities which are interests in pools of mortgage
loans, including mortgage loans made by savings and loan institutions, mortgage
bankers, commercial banks and others. Pools of mortgage loans are assembled as
securities for sale to investors by various governmental, government-related and
private organizations as further described below. Underlying mortgages may be of
a variety of types, including adjustable rate, conventional 30-year, graduated
payment and 15-year.

A decline in interest rates may lead to a faster rate of repayment of the
underlying mortgages, and may expose the Fund to a lower rate of return upon
reinvestment. To the extent that such mortgage-backed securities are held by the
Fund, the prepayment right will tend to limit to some degree the increase in net
asset value of the Fund because the value of the mortgage-backed securities held
by the Fund may not appreciate as rapidly as the price of non-callable debt
securities. Mortgage-backed securities are subject to the risk of prepayment and
the risk that the underlying loans will not be repaid. Because principal may be
prepaid at any time, mortgage-backed securities may involve significantly
greater price and yield volatility than traditional debt securities.

When interest rates rise, mortgage prepayment rates tend to decline, thus
lengthening the life of a mortgage-related security and increasing the price
volatility of that security, affecting the price volatility of the Fund's
shares.

Interests in pools of mortgage-backed securities differ from other forms of debt
securities, which normally provide for periodic payment of interest in fixed
amounts with principal payments at maturity or specified call dates. Instead,
these securities provide a monthly payment which consists of both interest and
principal payments. In effect, these payments are a "pass-through" of the
monthly payments made by the individual borrowers on their mortgage loans, net
of any fees paid to the issuer or guarantor of such securities. Additional
payments are caused by repayments of principal resulting from the sale of the
underlying property, refinancing or foreclosure, net of fees or costs which may
be incurred. Some mortgage-related securities (such as securities issued by the
GNMA) are described as "modified pass-through." These securities entitle the
holder to receive all interest and principal payments owed on the mortgage pool,
net of certain fees, at the scheduled payment dates regardless of whether or not
the mortgagor actually makes the payment.

The principal governmental guarantor of mortgage-related securities is the GNMA.
GNMA is a wholly-owned US Government corporation within the Department of
Housing and Urban Development. GNMA is authorized to guarantee, with the full
faith and credit of the US Government, the timely payment of principal and
interest on securities issued by institutions approved by GNMA (such as savings
and loan institutions, commercial banks and mortgage bankers) and backed by
pools of FHA-insured or VA-guaranteed mortgages. These guarantees, however, do
not apply to the market value or yield of mortgage-backed securities or to the
value of fund shares. Also, GNMA securities often are purchased at a premium
over the maturity value of the underlying mortgages. This premium is not
guaranteed and will be lost if prepayment occurs.

Government-related guarantors (i.e., not backed by the full faith and credit of
the US Government) include Fannie Mae and the Federal Home Loan Mortgage
Corporation ("FHLMC"). Fannie Mae is a government-sponsored corporation owned
entirely by private stockholders. It is subject to general regulation by the
Secretary of Housing and Urban Development. Fannie Mae purchases conventional
(i.e., not insured or guaranteed by any government agency) mortgages from a list
of approved seller/servicers which include state and federally-chartered savings
and loan associations, mutual savings banks, commercial banks and credit unions
and mortgage bankers. Pass-through securities issued by Fannie Mae are
guaranteed as to timely payment of principal and interest by Fannie Mae but are
not backed by the full faith and credit of the US Government.

FHLMC is a corporate instrumentality of the US Government and was created by
Congress in 1970 for the purpose of increasing the availability of mortgage
credit for residential housing. Its stock is owned by the twelve Federal Home
Loan Banks. FHLMC issues Participation Certificates ("PCs") which represent
interests in conventional mortgages from FHLMC's national portfolio. FHLMC
guarantees the timely payment of interest and ultimate collection of principal,
but PCs are not backed by the full faith and credit of the US Government.

Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create
pass-through pools of conventional mortgage loans. Such issuers may, in
addition, be the originators and/or servicers of the underlying mortgage loans
as well as the guarantors of the mortgage-related securities. Pools created by
such non-governmental issuers generally offer a higher rate of interest than
government and government-related pools because there are no direct or indirect
government or agency guarantees of payments. However, timely payment of interest
and principal of these pools may be supported by various forms of insurance or
guarantees, including individual loan, title, pool and hazard insurance and
letters of credit. The insurance and guarantees are issued by governmental
entities, private insurers and the mortgage poolers. Such insurance and
guarantees and the creditworthiness of the issuers thereof will be considered in
determining whether a mortgage-related security meets the Fund's investment
quality standards. There can be no assurance that the private insurers or
guarantors can meet their obligations under the insurance policies or guarantee
arrangements. The Fund may buy mortgage-related securities without insurance or
guarantees, if through an examination of the loan experience and practices of
the originators/servicers and poolers, the Advisor determines that the
securities meet the Fund's quality standards. Although the market for such
securities is becoming increasingly liquid, securities issued by certain private
organizations may not be readily marketable.

Participation Interests. The Fund may purchase from financial institutions
participation interests in securities in which the Fund may invest. A
participation interest gives the Fund an undivided interest in the security in
the proportion that the Fund's participation interest bears to the principal
amount of the security. These instruments may have fixed, floating or variable
interest rates with remaining maturities of 397 days or less. If the
participation interest is unrated, or has been given a rating below that which
is permissible for purchase by the Fund, the participation interest will be
backed by an irrevocable letter of credit or guarantee of a bank, or the payment
obligation otherwise will be collateralized by US Government securities, or, in
the case of unrated participation interest, determined by the Advisor to be of
comparable quality to those instruments in which the Fund may invest. For
certain participation interests, the Fund will have the right to demand payment,
on not more than seven days' notice, for all or any part of the Fund's
participation interests in the security, plus accrued interest. As to these
instruments, the Fund generally intends to exercise its right to demand payment
only upon a default under the terms of the security.

Privatized Enterprises. Investments in foreign securities may include securities
issued by enterprises that have undergone or are currently undergoing
privatization. The governments of certain foreign countries have, to varying
degrees, embarked on privatization programs contemplating the sale of all or
part of their interests in state enterprises. The Fund's investments in the
securities of privatized enterprises may include privately negotiated
investments in a government or state-owned or controlled company or enterprise
that has not yet conducted an initial equity offering, investments in the
initial offering of equity securities of a state enterprise or former state
enterprise and investments in the securities of a state enterprise following its
initial equity offering.

In certain jurisdictions, the ability of foreign entities, such as the Fund, to
participate in privatizations may be limited by local law, or the price or terms
on which the Fund may be able to participate may be less advantageous than for
local investors. Moreover, there can be no assurance that governments that have
embarked on privatization programs will continue to divest their ownership of
state enterprises, that proposed privatizations will be successful or that
governments will not re-nationalize enterprises that have been privatized.

In the case of the enterprises in which the Fund may invest, large blocks of the
stock of those enterprises may be held by a small group of stockholders, even
after the initial equity offerings by those enterprises. The sale of some
portion or all of those blocks could have an adverse effect on the price of the
stock of any such enterprise.

Prior to making an initial equity offering, most state enterprises or former
state enterprises go through an internal reorganization or management. Such
reorganizations are made in an attempt to better enable these enterprises to
compete in the private sector. However, certain reorganizations could result in
a management team that does not function as well as an enterprise's prior
management and may have a negative effect on such enterprise. In addition, the
privatization of an enterprise by its government may occur over a number of
years, with the government continuing to hold a controlling position in the
enterprise even after the initial equity offering for the enterprise.

Prior to privatization, most of the state enterprises in which the Fund may
invest enjoy the protection of and receive preferential treatment from the
respective sovereigns that own or control them. After making an initial equity
offering, these enterprises may no longer have such protection or receive such
preferential treatment and may become subject to market competition from which
they were previously protected. Some of these enterprises may not be able to
operate effectively in a competitive market and may suffer losses or experience
bankruptcy due to such competition.

Real Estate Investment Trusts ("REITs"). REITs are sometimes informally
characterized as equity REITs, mortgage REITs and hybrid REITs. Investment in
REITs may subject the Fund to risks associated with the direct ownership of real
estate, such as decreases in real estate values, overbuilding, increased
competition and other risks related to local or general economic conditions,
increases in operating costs and property taxes, changes in zoning laws,
casualty or condemnation losses, possible environmental liabilities, regulatory
limitations on rent and fluctuations in rental income. Equity REITs generally
experience these risks directly through fee or leasehold interests, whereas
mortgage REITs generally experience these risks indirectly through mortgage
interests, unless the mortgage REIT forecloses on the underlying real estate.
Changes in interest rates may also affect the value of the Fund's investment in
REITs. For instance, during periods of declining interest rates, certain
mortgage REITs may hold mortgages that the mortgagors elect to prepay, which
prepayment may diminish the yield on securities issued by those REITs.

Certain REITs have relatively small market capitalizations, which may tend to
increase the volatility of the market price of their securities. Furthermore,
REITs are dependent upon specialized management skills, have limited
diversification and are, therefore, subject to risks inherent in operating and
financing a limited number of projects. REITs are also subject to heavy cash
flow dependency, defaults by borrowers and the possibility of failing to qualify
for tax-free pass-through of income under the Internal Revenue Code of 1986, as
amended, and to maintain exemption from the registration requirements of the
Investment Company Act of 1940. By investing in REITs indirectly through the
Fund, a shareholder will bear not only his or her proportionate share of the
expenses of the Fund, but also, indirectly, similar expenses of the REITs. In
addition, REITs depend generally on their ability to generate cash flow to make
distributions to shareholders.

Repurchase Agreements. The Fund may invest in repurchase agreements pursuant to
its investment guidelines. In a repurchase agreement, the Fund acquires
ownership of a security and simultaneously commits to resell that security to
the seller, typically a bank or broker/dealer.

A repurchase agreement provides a means for the Fund to earn income on funds for
periods as short as overnight. It is an arrangement under which the purchaser
(i.e., the Fund) acquires a security ("Obligation") and the seller agrees, at
the time of sale, to repurchase the Obligation at a specified time and price.
Securities subject to a repurchase agreement are held in a segregated account
and, as described in more detail below, the value of such securities is kept at
least equal to the repurchase price on a daily basis. The repurchase price may
be higher than the purchase price, the difference being income to the Fund, or
the purchase and repurchase prices may be the same, with interest at a stated
rate due to the Fund together with the repurchase price upon repurchase. In
either case, the income to the Fund is unrelated to the interest rate on the
Obligation itself. Obligations will be held by the custodian or in the Federal
Reserve Book Entry System.

It is not clear whether a court would consider the Obligation purchased by the
Fund subject to a repurchase agreement 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 repurchase of the Obligation under a repurchase
agreement, the Fund may encounter delay and incur costs before being able to
sell the security. Delays may involve loss of interest or decline in price of
the Obligation. If the court characterizes the transaction as a loan and the
Fund has not perfected a security interest in the Obligation, the Fund may be
required to return the Obligation to the seller's estate and be treated as an
unsecured creditor of the seller. As an unsecured creditor, 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 Obligation purchased for the Fund, the
Advisor seeks to reduce the risk of loss through repurchase agreements by
analyzing the creditworthiness of the obligor, in this case the seller of the
Obligation. Apart from the risk of bankruptcy or insolvency proceedings, there
is also the risk that the seller may fail to repurchase the Obligation, in which
case the Fund may incur a loss if the proceeds to the Fund of the sale to a
third party are less than the repurchase price. However, if the market value of
the Obligation subject to the repurchase agreement becomes less than the
repurchase price (including interest), the Fund will direct the seller of the
Obligation to deliver additional securities so that the market value (including
interest) of all securities subject to the repurchase agreement will equal or
exceed the repurchase price.

Reverse Repurchase Agreements. The Fund may enter into "reverse repurchase
agreements," which are repurchase agreements in which the Fund, as the seller of
the securities, agrees to repurchase them at an agreed upon time and price. The
Fund maintains a segregated account in connection with outstanding reverse
repurchase agreements. Reverse repurchase agreements are deemed to be borrowings
subject to the Fund's investment restrictions applicable to that activity. The
Fund will enter into reverse repurchase agreements only when the Advisor
believes that the interest income to be earned from the investment of the
proceeds of the transaction will be greater than the interest expense of the
transaction. Such transactions may increase fluctuation in the market value of
fund assets and their yields.

Securities Backed by Guarantees. The Fund may invest in securities backed by
guarantees from banks, insurance companies and other financial institutions.
Changes in the credit quality of these institutions could have an adverse impact
on securities they have guaranteed or backed, which could cause losses to the
Fund.

Short Sales Against the Box. The Fund may make short sales of common stocks if,
at all times when a short position is open, the Fund owns the stock or owns
preferred stocks or debt securities convertible or exchangeable, without payment
of further consideration, into the shares of common stock sold short. Short
sales of this kind are referred to as short sales "against the box." The
broker/dealer that executes a short sale generally invests cash proceeds of the
sale until they are paid to the Fund. Arrangements may be made with the
broker/dealer to obtain a portion of the interest earned by the broker on the
investment of short sale proceeds. The Fund will segregate the common stock or
convertible or exchangeable preferred stock or debt securities in a special
account with the custodian. Uncertainty regarding the tax effects of short sales
of appreciated investments may limit the extent to which the Fund may enter into
short sales against the box.

Sovereign Debt. Investment in sovereign debt can involve a high degree of risk.
The governmental entity that controls the repayment of sovereign debt may not be
able or willing to repay the principal and/or interest when due in accordance
with the terms of such debt. A governmental entity's willingness or ability to
repay principal and interest due in a timely manner may be affected by, among
other factors, its cash flow situation, the extent of its foreign reserves, the
availability of sufficient foreign exchange on the date a payment is due, the
relative size of the debt service burden to the economy as a whole, the
governmental entity's policy toward the International Monetary Fund, and the
political constraints to which a governmental entity may be subject.
Governmental entities may also be dependent on expected disbursements from
foreign governments, multilateral agencies and others abroad to reduce principal
and interest arrearages on their debt. The commitment on the part of these
governments, agencies and others to make such disbursements may be conditioned
on a governmental entity's implementation of economic reforms and/or economic
performance and the timely service of such debtor's obligations. Failure to
implement such reforms, achieve such levels of economic performance or repay
principal or interest when due may result in the cancellation of such third
parties commitments to lend funds to the governmental entity, which may further
impair such debtor's ability or willingness to service its debts in a timely
manner. Consequently, governmental entities may default on their sovereign debt.
Holders of sovereign debt may be requested to participate in the rescheduling of
such debt and to extend further loans to governmental entities. There is no
bankruptcy proceeding by which sovereign debt on which governmental entities
have defaulted may be collected in whole or in part.


Impact of Sub-Prime Mortgage Market. The Fund may invest in mortgage-backed,
asset-backed and other fixed-income securities whose value and liquidity may be
adversely affected by the critical downturn in the sub-prime mortgage lending
market in the US. Sub-prime loans, which, have higher interest rates, are made
to borrowers with low credit ratings or other factors that increase the risk of
default. Concerns about widespread defaults on sub-prime loans have also created
heightened volatility and turmoil in the general credit markets. As a result,
the Fund's investments in certain fixed-income securities may decline in value,
their market value may be more difficult to determine, and the Fund may have
more difficulty disposing of them.


Strategic Transactions and Derivatives. The Fund may, but is not required to,
utilize various other investment strategies as described below for a variety of
purposes, such as hedging various market risks, managing the effective maturity
or duration of the fixed-income securities in the Fund's portfolio or enhancing
potential gain. These strategies may be executed through the use of derivative
contracts.

In the course of pursuing these investment strategies, the Fund may purchase and
sell exchange-listed and over-the-counter put and call options on securities,
equity and fixed-income indices and other instruments, purchase and sell futures
contracts and options thereon, enter into various transactions such as swaps,
caps, floors, collars, currency forward contracts, currency futures contracts,
currency swaps or options on currencies, or currency futures and various other
currency transactions (collectively, all the above are called "Strategic
Transactions"). In addition, strategic transactions may also include new
techniques, instruments or strategies that are permitted as regulatory changes
occur. Strategic Transactions may be used without limit (subject to certain
limits imposed by the 1940 Act) to attempt to protect against possible changes
in the market value of securities held in or to be purchased for the Fund's
portfolio resulting from securities markets or currency exchange rate
fluctuations, to protect the Fund's unrealized gains in the value of its
portfolio securities, to facilitate the sale of such securities for investment
purposes, to manage the effective maturity or duration of the Fund's portfolio,
or to establish a position in the derivatives markets as a substitute for
purchasing or selling particular securities. Any or all of these investment
techniques may be used at any time and in any combination, and there is no
particular strategy that dictates the use of one technique rather than another,
as use of any Strategic Transaction is a function of numerous variables
including market conditions. The ability of the Fund to utilize these Strategic
Transactions successfully will depend on the Advisor's ability to predict
pertinent market movements, which cannot be assured. The Fund will comply with
applicable regulatory requirements when implementing these strategies,
techniques and instruments. Strategic Transactions will not be used to alter
fundamental investment purposes and characteristics of the Fund, and the Fund
will segregate assets (or as provided by applicable regulations, enter into
certain offsetting positions) to cover its obligations under options, futures
and swaps to limit leveraging of the Fund.

Strategic Transactions, including derivative contracts, have risks associated
with them including possible default by the other party to the transaction,
illiquidity and, to the extent the Advisor's view as to certain market movements
is incorrect, the risk that the use of such Strategic Transactions could result
in losses greater than if they had not been used. Use of put and call options
may result in losses to the Fund, force the sale or purchase of portfolio
securities at inopportune times or for prices higher than (in the case of put
options) or lower than (in the case of call options) current market values,
limit the amount of appreciation the Fund can realize on its investments or
cause the Fund to hold a security it might otherwise sell. The use of currency
transactions can result in the Fund incurring losses as a result of a number of
factors including the imposition of exchange controls, suspension of
settlements, or the inability to deliver or receive a specified currency. The
use of options and futures transactions entails certain other risks. In
particular, the variable degree of correlation between price movements of
futures contracts and price movements in the related portfolio position of the
Fund creates the possibility that losses on the hedging instrument may be
greater than gains in the value of the Fund's position. In addition, futures and
options markets may not be liquid in all circumstances and certain
over-the-counter options may have no markets. As a result, in certain markets,
the Fund might not be able to close out a transaction without incurring
substantial losses, if at all. Although the use of futures and options
transactions for hedging should tend to minimize the risk of loss due to a
decline in the value of the hedged position, at the same time they tend to limit
any potential gain which might result from an increase in value of such
position. Finally, the daily variation margin requirements for futures contracts
would create a greater ongoing potential financial risk than would purchases of
options, where the exposure is limited to the cost of the initial premium.
Losses resulting from the use of Strategic Transactions would reduce net asset
value, and possibly income, and such losses can be greater than if the Strategic
Transactions had not been utilized.

General Characteristics of Futures. The Fund may enter into futures contracts or
purchase or sell put and call options on such futures as a hedge against
anticipated interest rate, currency or equity market changes, and for duration
management, risk management and return enhancement purposes. Futures are
generally bought and sold on the commodities exchanges where they are listed
with payment of initial and variation margin as described below. The sale of a
futures contract creates a firm obligation by the Fund, as seller, to deliver to
the buyer the specific type of financial instrument called for in the contract
at a specific future time for a specified price (or, with respect to index
futures and Eurodollar instruments, the net cash amount). Options on futures
contracts are similar to options on securities except that an option on a
futures contract gives the purchaser the right in return for the premium paid to
assume a position in a futures contract and obligates the seller to deliver such
position.

The Fund has claimed exclusion from the definition of the term "commodity pool
operator" adopted by the CFTC and the National Futures Association, which
regulate trading in the futures markets. Therefore, the Fund is not subject to
commodity pool operator registration and regulation under the Commodity Exchange
Act. Futures and options on futures may be entered into for bona fide hedging,
risk management (including duration management) or other portfolio and return
enhancement management purposes to the extent consistent with the exclusion from
commodity pool operator registration. Typically, maintaining a futures contract
or selling an option thereon requires the Fund to deposit with a financial
intermediary as security for its obligations an amount of cash or other
specified assets (initial margin) which initially is typically 1% to 10% of the
face amount of the contract (but may be higher in some circumstances).
Additional cash or assets (variation margin) may be required to be deposited
thereafter on a daily basis as the marked to market value of the contract
fluctuates. The purchase of an option on financial futures involves payment of a
premium for the option without any further obligation on the part of the Fund.
If the Fund exercises an option on a futures contract it will be obligated to
post initial margin (and potential subsequent variation margin) for the
resulting futures position just as it would for any position. Futures contracts
and options thereon are generally settled by entering into an offsetting
transaction but there can be no assurance that the position can be offset prior
to settlement at an advantageous price, nor that delivery will occur.

The Fund will not enter into a futures contract or related option (except for
closing transactions) if, immediately thereafter, the sum of the amount of its
initial margin and premiums on open futures contracts and options thereon would
exceed 5% of the Fund's total assets (taken at current value); however, in the
case of an option that is in-the-money at the time of the purchase, the
in-the-money amount may be excluded in calculating the 5% limitation. The
segregation requirements with respect to futures contracts and options thereon
are described below.

General Characteristics of Options. Put options and call options typically have
similar structural characteristics and operational mechanics regardless of the
underlying instrument on which they are purchased or sold. Thus, the following
general discussion relates to each of the particular types of options discussed
in greater detail below. In addition, many Strategic Transactions involving
options require segregation of fund assets in special accounts, as described
below under "Use of Segregated and Other Special Accounts."

A put option gives the purchaser of the option, upon payment of a premium, the
right to sell, and the writer the obligation to buy, the underlying security,
commodity, index, currency or other instrument at the exercise price. For
instance, the Fund's purchase of a put option on a security might be designed to
protect its holdings in the underlying instrument (or, in some cases, a similar
instrument) against a substantial decline in the market value by giving the Fund
the right to sell such instrument at the option exercise price. A call option,
upon payment of a premium, gives the purchaser of the option the right to buy,
and the seller the obligation to sell, the underlying instrument at the exercise
price. The Fund's purchase of a call option on a security, financial future,
index, currency or other instrument might be intended to protect the Fund
against an increase in the price of the underlying instrument that it intends to
purchase in the future by fixing the price at which it may purchase such
instrument. An American style put or call option may be exercised at any time
during the option period while a European style put or call option may be
exercised only upon expiration or during a fixed period prior thereto. The Fund
is authorized to purchase and sell exchange listed options and over-the-counter
options ("OTC options"). Exchange listed options are issued by a regulated
intermediary such as the Options Clearing Corporation ("OCC"), which guarantees
the performance of the obligations of the parties to such options. The
discussion below uses the OCC as an example, but is also applicable to other
financial intermediaries.

With certain exceptions, OCC issued and exchange listed options generally settle
by physical delivery of the underlying security or currency, although in the
future cash settlement may become available. Index options and Eurodollar
instruments are cash settled for the net amount, if any, by which the option is
"in-the-money" (i.e., where the value of the underlying instrument exceeds, in
the case of a call option, or is less than, in the case of a put option, the
exercise price of the option) at the time the option is exercised. Frequently,
rather than taking or making delivery of the underlying instrument through the
process of exercising the option, listed options are closed by entering into
offsetting purchase or sale transactions that do not result in ownership of the
new option.

The Fund's ability to close out its position as a purchaser or seller of an OCC
or exchange listed put or call option is dependent, in part, upon the liquidity
of the option market. Among the possible reasons for the absence of a liquid
option market on an exchange are: (i) insufficient trading interest in certain
options; (ii) restrictions on transactions imposed by an exchange; (iii) trading
halts, suspensions or other restrictions imposed with respect to particular
classes or series of options or underlying securities including reaching daily
price limits; (iv) interruption of the normal operations of the OCC or an
exchange; (v) inadequacy of the facilities of an exchange or OCC to handle
current trading volume; or (vi) a decision by one or more exchanges to
discontinue the trading of options (or a particular class or series of options),
in which event the relevant market for that option on that exchange would cease
to exist, although outstanding options on that exchange would generally continue
to be exercisable in accordance with their terms.

The hours of trading for listed options may not coincide with the hours during
which the underlying financial instruments are traded. To the extent that the
option markets close before the markets for the underlying financial
instruments, significant price and rate movements can take place in the
underlying markets that cannot be reflected in the option markets.

OTC options are purchased from or sold to securities dealers, financial
institutions or other parties ("Counterparties") through direct bilateral
agreement with the Counterparty. In contrast to exchange listed options, which
generally have standardized terms and performance mechanics, all the terms of an
OTC option, including such terms as method of settlement, term, exercise price,
premium, guarantees and security, are set by negotiation of the parties. The
Fund will only sell OTC options (other than OTC currency options) that are
subject to a buy-back provision permitting the Fund to require the Counterparty
to sell the option back to the Fund at a formula price within seven days. The
Fund expects generally to enter into OTC options that have cash settlement
provisions, although it is not required to do so.

Unless the parties provide for it, there is no central clearing or guaranty
function in an OTC option. As a result, if the Counterparty fails to make or
take delivery of the security, currency or other instrument underlying an OTC
option it has entered into with the Fund or fails to make a cash settlement
payment due in accordance with the terms of that option, the Fund will lose any
premium it paid for the option as well as any anticipated benefit of the
transaction. Accordingly, the Advisor must assess the creditworthiness of each
such Counterparty or any guarantor or credit enhancement of the Counterparty's
credit to determine the likelihood that the terms of the OTC option will be
satisfied. The Fund will engage in OTC option transactions only with US
government securities dealers recognized by the Federal Reserve Bank of New York
as "primary dealers" or broker/dealers, domestic or foreign banks or other
financial institutions which have received (or the guarantors of the obligation
of which have received) a short-term credit rating of A-1 from S&P or P-1 from
Moody's or an equivalent rating from any nationally recognized statistical
rating organization ("NRSRO") or, in the case of OTC currency transactions, are
determined to be of equivalent credit quality by the Advisor. The staff of the
SEC currently takes the position that OTC options purchased by the Fund, and
portfolio securities "covering" the amount of the Fund's obligation pursuant to
an OTC option sold by it (the cost of the sell-back plus the in-the-money
amount, if any) are illiquid, and are subject to the Fund's limitation on
investing no more than 15% of its net assets in illiquid securities.

If the Fund sells a call option, the premium that it receives may serve as a
partial hedge, to the extent of the option premium, against a decrease in the
value of the underlying securities or instruments in its portfolio or will
increase the Fund's income. The sale of put options can also provide income.

The Fund may purchase and sell call options on securities including US Treasury
and agency securities, mortgage-backed securities, foreign sovereign debt,
corporate debt securities, equity securities (including convertible securities)
and Eurodollar instruments that are traded on US and foreign securities
exchanges and in the over-the-counter markets, and on securities indices,
currencies and futures contracts. All calls sold by the Fund must be "covered"
(i.e., the Fund must own the securities or futures contract subject to the call)
or must meet the asset segregation requirements described below as long as the
call is outstanding. Even though the Fund will receive the option premium to
help protect it against loss, a call sold by the Fund exposes the Fund during
the term of the option to possible loss of opportunity to realize appreciation
in the market price of the underlying security or instrument and may require the
Fund to hold a security or instrument which it might otherwise have sold.

The Fund may purchase and sell put options on securities including US Treasury
and agency securities, mortgage-backed securities, foreign sovereign debt,
corporate debt securities, equity securities (including convertible securities)
and Eurodollar instruments (whether or not it holds the above securities in its
portfolio), and on securities indices, currencies and futures contracts other
than futures on individual corporate debt and individual equity securities. The
Fund will not sell put options if, as a result, more than 50% of the Fund's
total assets would be required to be segregated to cover its potential
obligations under such put options other than those with respect to futures and
options thereon. In selling put options, there is a risk that the Fund may be
required to buy the underlying security at a disadvantageous price above the
market price.

Options on Securities Indices and Other Financial Indices. The Fund also may
purchase and sell call and put options on securities indices and other financial
indices and in so doing can achieve many of the same objectives it would achieve
through the sale or purchase of options on individual securities or other
instruments. Options on securities indices and other financial indices are
similar to options on a security or other instrument except that, rather than
settling by physical delivery of the underlying instrument, they settle by cash
settlement, i.e., an option on an index gives the holder the right to receive,
upon exercise of the option, an amount of cash if the closing level of the index
upon which the option is based exceeds, in the case of a call, or is less than,
in the case of a put, the exercise price of the option (except if, in the case
of an OTC option, physical delivery is specified). This amount of cash is equal
to the excess of the closing price of the index over the exercise price of the
option, which also may be multiplied by a formula value. The seller of the
option is obligated, in return for the premium received, to make delivery of
this amount. The gain or loss on an option on an index depends on price
movements in the instruments making up the market, market segment, industry or
other composite on which the underlying index is based, rather than price
movements in individual securities, as is the case with respect to options on
securities.

Swaps, Caps, Floors and Collars. Among the Strategic Transactions into which the
Fund may enter are interest rate, credit default, currency, index and other
swaps and the purchase or sale of related caps, floors and collars. The Fund
expects to enter into these transactions primarily to preserve a return or
spread on a particular investment or portion of its portfolio, to protect
against currency fluctuations, as a duration management technique or to protect
against any increase in the price of securities the Fund anticipates purchasing
at a later date. The Fund will not sell interest rate caps or floors where it
does not own securities or other instruments providing the income stream the
Fund may be obligated to pay. Interest rate swaps involve the exchange by the
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.

The Fund will usually enter into swaps on a net basis, i.e., the two payment
streams are netted out in a cash settlement on the payment date or dates
specified in the instrument, with the Fund receiving or paying, as the case may
be, only the net amount of the two payments. Inasmuch as the 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. The 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, the 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.

Synthetic Investments. In certain circumstances, the Fund may wish to obtain the
price performance of a security without actually purchasing the security in
circumstances where, for example, the security is illiquid, or is unavailable
for direct investment or available only on less attractive terms. In such
circumstances, the Fund may invest in synthetic or derivative alternative
investments ("Synthetic Investments") that are based upon or otherwise relate to
the economic performance of the underlying securities. Synthetic Investments may
include swap transactions, notes or units with variable redemption amounts, and
other similar instruments and contracts. Synthetic Investments typically do not
represent beneficial ownership of the underlying security, usually are not
collateralized or otherwise secured by the counterparty and may or may not have
any credit enhancements attached to them. Accordingly, Synthetic Investments
involve exposure not only to the creditworthiness of the issuer of the
underlying security, changes in exchange rates and future governmental actions
taken by the jurisdiction in which the underlying security is issued, but also
to the creditworthiness and legal standing of the counterparties involved. In
addition, Synthetic Investments typically are illiquid.

Currency Transactions. The Fund may engage in currency transactions with
Counterparties primarily in order to hedge, or manage the risk of the value of
portfolio holdings denominated in particular currencies against fluctuations in
relative value. Currency transactions include forward currency contracts,
exchange listed currency futures, exchange listed and OTC options on currencies,
and currency swaps. A forward currency contract involves a privately negotiated
obligation to purchase or sell (with delivery generally required) a specific
currency at a future date, which may be any fixed number of days from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. A currency swap is an agreement to exchange cash flows based on the
notional difference among two or more currencies and operates similarly to an
interest rate swap, which is described below. The Fund may enter into currency
transactions with Counterparties which have received (or the guarantors of the
obligations which have received) a credit rating of A-1 or P-1 by S&P or
Moody's, respectively, or that have an equivalent rating from a NRSRO or (except
for OTC currency options) are determined to be of equivalent credit quality by
the Advisor.

The Fund's dealings in forward currency contracts and other currency
transactions such as futures, options, options on futures and swaps generally
will be limited to hedging involving either specific transactions or portfolio
positions except as described below. Transaction hedging is entering into a
currency transaction with respect to specific assets or liabilities of the Fund,
which will generally arise in connection with the purchase or sale of its
portfolio securities or the receipt of income therefrom. Position hedging is
entering into a currency transaction with respect to portfolio security
positions denominated or generally quoted in that currency.

The Fund generally will not enter into a transaction to hedge currency exposure
to an extent greater, after netting all transactions intended wholly or
partially to offset other transactions, than the aggregate market value (at the
time of entering into the transaction) of the securities held in its portfolio
that are denominated or generally quoted in or currently convertible into such
currency, other than with respect to proxy hedging or cross hedging as described
below.

The Fund may also cross-hedge currencies by entering into transactions to
purchase or sell one or more currencies that are expected to decline in value
relative to other currencies to which the Fund has or in which the Fund expects
to have portfolio exposure.

To reduce the effect of currency fluctuations on the value of existing or
anticipated holdings of portfolio securities, the Fund may also engage in proxy
hedging. Proxy hedging is often used when the currency to which the Fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar. Proxy
hedging entails entering into a commitment or option to sell a currency whose
changes in value are generally considered to be correlated to a currency or
currencies in which some or all of the Fund's portfolio securities are or are
expected to be denominated, in exchange for US dollars. The amount of the
commitment or option would not exceed the value of the Fund's securities
denominated in correlated currencies. Currency hedging involves some of the same
risks and considerations as other transactions with similar instruments.
Currency transactions can result in losses to the Fund if the currency being
hedged fluctuates in value to a degree or in a direction that is not
anticipated. Further, there is the risk that the perceived correlation between
various currencies may not be present or may not be present during the
particular time that the Fund is engaging in proxy hedging. If the Fund enters
into a currency hedging transaction, the Fund will comply with the asset
segregation requirements described below.

Risks of Currency Transactions. Currency transactions are subject to risks
different from those of other portfolio transactions. Because currency control
is of great importance to the issuing governments and influences economic
planning and policy, purchases and sales of currency and related instruments can
be negatively affected by government exchange controls, blockages, and
manipulations or exchange restrictions imposed by governments. These can result
in losses to the Fund if it is unable to deliver or receive currency or funds in
settlement of obligations and could also cause hedges it has entered into to be
rendered useless, resulting in full currency exposure as well as incurring
transaction costs. Buyers and sellers of currency futures are subject to the
same risks that apply to the use of futures generally. Further, settlement of a
currency futures contract for the purchase of most currencies must occur at a
bank based in the issuing nation. Trading options on currency futures is
relatively new, and the ability to establish and close out positions on such
options is subject to the maintenance of a liquid market which may not always be
available. Currency exchange rates may fluctuate based on factors extrinsic to
that country's economy.

Risks of Strategic Transactions Outside the US. When conducted outside the US,
Strategic Transactions may not be regulated as rigorously as in the US, may not
involve a clearing mechanism and related guarantees, and are subject to the risk
of governmental actions affecting trading in, or the prices of, foreign
securities, currencies and other instruments. The value of such positions also
could be adversely affected by: (i) other complex foreign political, legal and
economic factors, (ii) lesser availability than in the US of data on which to
make trading decisions, (iii) delays in the Fund's ability to act upon economic
events occurring in foreign markets during non-business hours in the US, (iv)
the imposition of different exercise and settlement terms and procedures and
margin requirements than in the US, and (v) lower trading volume and liquidity.

Use of Segregated and Other Special Accounts. Many Strategic Transactions, in
addition to other requirements, require that the Fund segregate cash or liquid
assets with its custodian to the extent fund obligations are not otherwise
"covered" through ownership of the underlying security, financial instrument or
currency. In general, either the full amount of any obligation by the Fund to
pay or deliver securities or assets must be covered at all times by the
securities, instruments or currency required to be delivered, or, subject to any
regulatory restrictions, an amount of cash or liquid assets at least equal to
the current amount of the obligation must be segregated with the custodian. The
segregated assets cannot be sold or transferred unless equivalent assets are
substituted in their place or it is no longer necessary to segregate them. For
example, a call option written by the Fund will require the Fund to hold the
securities subject to the call (or securities convertible into the needed
securities without additional consideration) or to segregate cash or liquid
assets sufficient to purchase and deliver the securities if the call is
exercised. A call option sold by the Fund on an index will require the Fund to
own portfolio securities which correlate with the index or to segregate cash or
liquid assets equal to the excess of the index value over the exercise price on
a current basis. A put option written by the Fund requires the Fund to segregate
cash or liquid assets equal to the exercise price.

Except when the Fund enters into a forward contract for the purchase or sale of
a security denominated in a particular currency, which requires no segregation,
a currency contract which obligates the Fund to buy or sell currency will
generally require the Fund to hold an amount of that currency or liquid assets
denominated in that currency equal to the Fund's obligations or to segregate
cash or liquid assets equal to the amount of the Fund's obligation.

OTC options entered into by the Fund, including those on securities, currency,
financial instruments or indices and OCC issued and exchange listed index
options, will generally provide for cash settlement. As a result, when the Fund
sells these instruments it will only segregate an amount of cash or liquid
assets equal to its accrued net obligations, as there is no requirement for
payment or delivery of amounts in excess of the net amount. These amounts will
equal 100% of the exercise price in the case of a non cash-settled put, the same
as an OCC guaranteed listed option sold by the Fund, or the in-the-money amount
plus any sell-back formula amount in the case of a cash-settled put or call. In
addition, when the Fund sells a call option on an index at a time when the
in-the-money amount exceeds the exercise price, the Fund will segregate, until
the option expires or is closed out, cash or cash equivalents equal in value to
such excess. OCC issued and exchange listed options sold by the Fund other than
those above generally settle with physical delivery, or with an election of
either physical delivery or cash settlement and the Fund will segregate an
amount of cash or liquid assets equal to the full value of the option. OTC
options settling with physical delivery, or with an election of either physical
delivery or cash settlement will be treated the same as other options settling
with physical delivery.

In the case of a futures contract or an option thereon, the Fund must deposit
initial margin and possible daily variation margin in addition to segregating
cash or liquid assets sufficient to meet its obligation to purchase or provide
securities or currencies, or to pay the amount owed at the expiration of an
index-based futures contract. Such liquid assets may consist of cash, cash
equivalents, liquid debt or equity securities or other acceptable assets.

With respect to swaps, the Fund will accrue the net amount of the excess, if
any, of its obligations over its entitlements with respect to each swap on a
daily basis and will segregate an amount of cash or liquid assets having a value
equal to the accrued excess. Caps, floors and collars require segregation of
assets with a value equal to the Fund's net obligation, if any.

Strategic Transactions may be covered by other means when consistent with
applicable regulatory policies. The Fund may also enter into offsetting
transactions so that its combined position, coupled with any segregated assets,
equals its net outstanding obligation in related options and Strategic
Transactions. For example, the Fund could purchase a put option if the strike
price of that option is the same or higher than the strike price of a put option
sold by the Fund. Moreover, instead of segregating cash or liquid assets if the
Fund held a futures or forward contract, it could purchase a put option on the
same futures or forward contract with a strike price as high or higher than the
price of the contract held. Other Strategic Transactions may also be offset in
combinations. If the offsetting transaction terminates at the time of or after
the primary transaction no segregation is required, but if it terminates prior
to such time, cash or liquid assets equal to any remaining obligation would need
to be segregated.

Combined Transactions. The Fund may enter into multiple transactions, including
multiple options transactions, multiple futures transactions, multiple currency
transactions (including forward currency contracts) and multiple interest rate
transactions and any combination of futures, options, currency and interest rate
transactions ("component" transactions), instead of a single Strategic
Transaction, as part of a single or combined strategy when, in the opinion of
the Advisor, it is in the best interests of the Fund to do so. A combined
transaction will usually contain elements of risk that are present in each of
its component transactions. Although combined transactions are normally entered
into based on the Advisor's judgment that the combined strategies will reduce
risk or otherwise more effectively achieve the desired portfolio management
goal, it is possible that the combination will instead increase such risks or
hinder achievement of the portfolio management objective.

Stripped Zero Coupon Securities. Zero coupon securities include securities
issued directly by the US Treasury, and US Treasury bonds or notes and their
unmatured interest coupons and receipts for their underlying principal
("coupons") which have been separated by their holder, typically a custodian
bank or investment brokerage firm. A holder will separate the interest coupons
from the underlying principal (the "corpus") of the US Treasury security. A
number of securities firms and banks have stripped the interest coupons and
receipts and then resold them in custodial receipt programs with a number of
different names, including "Treasury Income Growth Receipts" (TIGRS(TM)) and
Certificate of Accrual on Treasuries (CATS(TM)). The underlying US Treasury
bonds and notes themselves are held in book-entry form at the Federal Reserve
Bank or, in the case of bearer securities (i.e., unregistered securities which
are owned ostensibly by the bearer or holder thereof), in trust on behalf of the
owners thereof. The US Treasury has facilitated transfers of ownership of zero
coupon securities by accounting separately for the beneficial ownership of
particular interest coupon and corpus payments on Treasury securities through
the Federal Reserve book-entry record keeping system. The Federal Reserve
program as established by the Treasury Department is known as "STRIPS" or
"Separate Trading of Registered Interest and Principal of Securities." Under the
STRIPS program, the Fund will be able to have its beneficial ownership of zero
coupon securities recorded directly in the book-entry record-keeping system in
lieu of having to hold certificates or other evidences of ownership of the
underlying US Treasury securities.

When US Treasury obligations have been stripped of their unmatured interest
coupons by the holder, the principal or corpus is sold at a deep discount
because the buyer receives only the right to receive a future fixed payment on
the security and does not receive any rights to periodic interest (i.e. cash)
payments. Once stripped or separated, the corpus and coupons may be sold
separately. Typically, the coupons are sold separately or grouped with other
coupons with like maturity dates and sold bundled in such form. Purchasers of
stripped obligations acquire, in effect, discount obligations that are
economically identical to the zero coupon securities that the Treasury sells
itself.

Supranational Entities. Supranational entities are international organizations
designated or supported by governmental entities to promote economic
reconstruction or development and international banking institutions and related
government agencies. Examples include the International Bank for Reconstruction
and Development (the World Bank), the European Coal and Steel Community, The
Asian Development Bank and the InterAmerican Development Bank. Obligations of
supranational entities are backed by the guarantee of one or more foreign
governmental parties which sponsor the entity.

Trust Preferred Securities. The Fund may invest in Trust Preferred Securities,
which are hybrid instruments issued by a special purpose trust (the "Special
Trust"), the entire equity interest of which is owned by a single issuer. The
proceeds of the issuance to the Fund of Trust Preferred Securities are typically
used to purchase a junior subordinated debenture, and distributions from the
Special Trust are funded by the payments of principal and interest on the
subordinated debenture.

If payments on the underlying junior subordinated debentures held by the Special
Trust are deferred by the debenture issuer, the debentures would be treated as
original issue discount ("OID") obligations for the remainder of their term. As
a result, holders of Trust Preferred Securities, such as the Fund, would be
required to accrue daily for Federal income tax purposes their share of the
stated interest and the de minimis OID on the debentures (regardless of whether
the Fund receives any cash distributions from the Special Trust), and the value
of Trust Preferred Securities would likely be negatively affected. Interest
payments on the underlying junior subordinated debentures typically may only be
deferred if dividends are suspended on both common and preferred stock of the
issuer. The underlying junior subordinated debentures generally rank slightly
higher in terms of payment priority than both common and preferred securities of
the issuer, but rank below other subordinated debentures and debt securities.
Trust Preferred Securities may be subject to mandatory prepayment under certain
circumstances. The market values of Trust Preferred Securities may be more
volatile than those of conventional debt securities. Trust Preferred Securities
may be issued in reliance on Rule 144A under the Securities Act of 1933 (the
"1933 Act"), and, unless and until registered, are restricted securities; there
can be no assurance as to the liquidity of Trust Preferred Securities and the
ability of holders of Trust Preferred Securities, such as the Fund, to sell
their holdings.

US Government Securities. There are two broad categories of US
Government-related debt instruments: (a) direct obligations of the US Treasury,
and (b) securities issued or guaranteed by US Government agencies.

Examples of direct obligations of the US Treasury are Treasury Bills, Notes,
Bonds and other debt securities issued by the US Treasury. These instruments are
backed by the "full faith and credit" of the United States. They differ
primarily in interest rates, the length of maturities and the dates of issuance.
Treasury bills have original maturities of one year or less. Treasury notes have
original maturities of one to ten years and Treasury bonds generally have
original maturities of greater than ten years.

Some agency securities are backed by the full faith and credit of the United
States (such as Maritime Administration Title XI Ship Financing Bonds and Agency
for International Development Housing Guarantee Program Bonds) and others are
backed only by the rights of the issuer to borrow from the US Treasury (such as
Federal Home Loan Bank Bonds and Federal National Mortgage Association Bonds),
while still others, such as the securities of the Federal Farm Credit Bank, are
supported only by the credit of the issuer. With respect to securities supported
only by the credit of the issuing agency or by an additional line of credit with
the US Treasury, there is no guarantee that the US Government will provide
support to such agencies and such securities may involve risk of loss of
principal and interest.

US Government Securities may include "zero coupon" securities that have been
stripped by the US Government of their unmatured interest coupons and
collateralized obligations issued or guaranteed by a US Government agency or
instrumentality.

Interest rates on US Government obligations may be fixed or variable. Interest
rates on variable rate obligations are adjusted at regular intervals, at least
annually, according to a formula reflecting then current specified standard
rates, such as 91-day US Treasury bill rates. These adjustments generally tend
to reduce fluctuations in the market value of the securities.

The government guarantee of the US Government Securities in the Fund's portfolio
does not guarantee the net asset value of the shares of the Fund. There are
market risks inherent in all investments in securities and the value of an
investment in the Fund will fluctuate over time. Normally, the value of
investments in US Government Securities varies inversely with changes in
interest rates. For example, as interest rates rise the value of investments in
US Government Securities will tend to decline, and as interest rates fall the
value of the Fund's investments will tend to increase. In addition, the
potential for appreciation in the event of a decline in interest rates may be
limited or negated by increased principal prepayments with respect to certain
Mortgage-Backed Securities, such as GNMA Certificates. Prepayments of high
interest rate Mortgage-Backed Securities during times of declining interest
rates will tend to lower the return of the Fund and may even result in losses to
the Fund if some securities were acquired at a premium. Moreover, during periods
of rising interest rates, prepayments of Mortgage-Backed Securities may decline,
resulting in the extension of the Fund's average portfolio maturity. As a
result, the Fund's portfolio may experience greater volatility during periods of
rising interest rates than under normal market conditions.

Warrants. The holder of a warrant has the right, until the warrant expires, to
purchase a given number of shares of a particular issuer at a specified price.
Such investments can provide a greater potential for profit or loss than an
equivalent investment in the underlying security. Prices of warrants do not
necessarily move, however, in tandem with the prices of the underlying
securities and are, therefore, considered speculative investments. Warrants pay
no dividends and confer no rights other than a purchase option. Thus, if a
warrant held by the Fund were not exercised by the date of its expiration, the
Fund would lose the entire purchase price of the warrant.

When-Issued Securities. The Fund may from time to time purchase equity and debt
securities on a "when-issued," "delayed delivery" or "forward delivery" basis.
The price of such securities, which may be expressed in yield terms, is fixed at
the time the commitment to purchase is made, but delivery and payment for the
securities takes place at a later date. During the period between purchase and
settlement, no payment is made by the Fund to the issuer and no interest accrues
to the Fund. When the Fund purchases such securities, it immediately assumes the
risks of ownership, including the risk of price fluctuation. Failure to deliver
a security purchased on this basis may result in a loss or missed opportunity to
make an alternative investment.

To the extent that assets of the Fund are held in cash pending the settlement of
a purchase of securities, the Fund would earn no income. While such securities
may be sold prior to the settlement date, the Fund intends to purchase them with
the purpose of actually acquiring them unless a sale appears desirable for
investment reasons. At the time the Fund makes the commitment to purchase a
security on this basis, it will record the transaction and reflect the value of
the security in determining its net asset value. The market value of the
securities may be more or less than the purchase price. The Fund will establish
a segregated account in which it will maintain cash and liquid securities equal
in value to commitments for such securities.



Portfolio Holdings Information


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

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

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

Portfolio holdings information distributed by the trading desks of DeAM or a
subadvisor for the purpose of facilitating efficient trading of such securities
and receipt of relevant research is not subject to the foregoing requirements.
Non-public portfolio holding information does not include portfolio
characteristics (other than holdings or subsets of holdings) about the Fund and
information derived therefrom, including, but not limited to, how the Fund's
investments are divided among various sectors, industries, countries, value and
growth stocks, bonds, currencies and cash, types of bonds, bond maturities,
duration, bond coupons and bond credit quality ratings so long as the Fund's
holdings could not be derived from such information.




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

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

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

                             MANAGEMENT OF THE FUND

Investment Advisor


Deutsche Investment Management Americas Inc. ("DIMA" or the "Advisor"), which is
part of Deutsche Asset Management (DeAM), is the investment advisor for the
Fund. Under the supervision of the Board of Trustees of the Fund, DIMA, with
headquarters at 345 Park Avenue, New York, New York 10154, or the subadvisors
makes the Fund's investment decisions, buys and sells securities for the Fund
and conducts research that leads to these purchase and sale decisions. The
Advisor manages the Fund's daily investment and business affairs subject to the
policies established by the Trust's Board of Trustees. DIMA, together with its
predecessors, has more than 80 years of experience managing mutual funds and
provides a full range of investment advisory services to institutional and
retail clients. The Fund's investment advisor or the subadvisors are also
responsible for selecting brokers and dealers and for negotiating brokerage
commissions and dealer charges.

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.

The Board and the shareholders approved an amended and restated investment
management agreement (the "Investment Management Agreement") for the Fund.
Pursuant to the Investment Management Agreement, the Advisor provides continuing
investment management of the assets of the Fund. In addition to the investment
management of the assets of the Fund, the Advisor determines the investments to
be made for the Fund, including what portion of its assets remain uninvested in
cash or cash equivalents, and with whom the orders for investments are placed,
consistent with the Fund's policies as stated in its Prospectus and SAI, or as
adopted by the Fund's Board. The Advisor will also monitor, to the extent not
monitored by the Fund's administrator or other agent, the Fund's compliance with
its investment and tax guidelines and other compliance policies.

The Advisor provides assistance to the Board in valuing the securities and other
instruments held by the Fund, to the extent reasonably required by valuation
policies and procedures that may be adopted by the Fund.

Pursuant to the Investment Management Agreement (unless otherwise provided in
the agreement or as determined by the Fund's Board and to the extent permitted
by applicable law), the Advisor pays the compensation and expenses of all Board
members, officers, and executive employees of the Fund, including the Fund's
share of payroll taxes, who are affiliated persons of the Advisor.


The Investment Management Agreement provides that the Fund is generally
responsible for expenses that include: fees payable to the Advisor; outside
legal, accounting or auditing expenses, including with respect to expenses
related to negotiation, acquisition or distribution of portfolio investments;
maintenance of books and records that are maintained by the Fund, the Fund's
custodian, or other agents of the Fund; taxes and governmental fees; fees and
expenses of the Fund's accounting agent, custodian, sub-custodians,
depositories, transfer agents, dividend reimbursing agents and registrars;
payment for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; brokerage commissions or
other costs of acquiring or disposing of any portfolio securities or other
instruments of the Fund; and litigation expenses and other extraordinary
expenses not incurred in the ordinary course of the Fund's business.

The Investment Management Agreement allows the Advisor to delegate any of its
duties under the Agreement to a subadvisor, subject to a majority vote of the
Board of the Fund, including a majority of the Board who are not interested
persons of the Fund, and, if required by applicable law, subject to a majority
vote of the Fund's shareholders.


The Investment Management Agreement will remain in effect from year to year if
approved annually (i) by the Board or by the vote of a "majority of the
outstanding voting securities" of the Fund, and (ii) by a majority of the
Independent Board Members who are not parties to the relevant agreement, cast in
person at a meeting called for such purpose.


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


In addition, the Board and shareholders approved a subadvisor approval policy
for the Fund (the "Subadvisor Approval Policy"). The Subadvisor Approval Policy
permits the Advisor, subject to the approval of the Board, including a majority
of its independent board members, to appoint and replace subadvisors and to
amend sub-advisory contracts without obtaining shareholder approval. Under the
Subadvisor Approval Policy, the Board, including its independent board members,
will continue to evaluate and approve all new sub-advisory contracts between the
Advisor and any subadvisor, as well as all changes to any existing sub-advisory
contract. The Fund cannot implement the Subadvisor Approval Policy without the
SEC either adopting revisions to current rules (as it proposed to do in October
2003) or granting the 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 Subadvisor Approval
Policy, including any shareholder notice requirements.


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

The Fund pays the Advisor a fee at an annual rate of 0.465% on the first $250
million of average daily net assets, 0.435% on the next $750 million, 0.415% on
the next $1.5 billion, 0.395% on the next $2.5 billion, 0.365% on the next $2.5
billion, 0.345% on the next $2.5 billion, 0.325% on the next $2.5 billion, and
0.315% of such net assets thereafter, payable monthly, provided that the Fund
will make such interim payments as may be requested by the Advisor not to exceed
75% of the amount of the fee then accrued on the books of the Fund and unpaid.
Prior to June 1, 2006, the Fund paid the Advisor a fee at an annual rate of
0.500% on the first $250 million of average daily net assets, 0.520% on the next
$750 million, 0.500% on the next $1.5 billion, 0.480% on the next $2.5 billion,
0.450% on the next $2.5 billion, 0.430% on the next $2.5 billion, 0.410% on the
next $2.5 billion, and 0.400% of such net assets in excess of $12.5 billion.


For the fiscal years ended January 31, 2006, 2007 and 2008, the Fund paid fees
of $4,312,659, $3,404,810 and $3,008,141, respectively.

Through April 30, 2009, the Advisor had contractually agreed to waive all or a
portion of its management fee and reimburse or pay certain operating expenses of
the Fund so that the Fund's total operating expenses will not exceed 0.76% for
Class S shares, excluding certain expenses such as extraordinary expenses,
taxes, brokerage and interest.


Under a separate agreement between Deutsche Bank AG and the Fund, Deutsche Bank
AG has granted a license to the Fund to utilize the trademark "DWS."

Officers and employees of the Advisor from time to time may have transactions
with various banks, including the Funds' custodian bank. It is the Advisor's
opinion that the terms and conditions of those transactions which have occurred
were not influenced by existing or potential custodial or other Fund
relationships.

The Advisor may serve as advisor to other funds with investment objectives and
policies similar to those of the Fund that may have different distribution
arrangements or expenses, which may affect performance.



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.

Subadvisor. Prior to December 2, 2005, Deutsche Asset Management Investment
Services Limited ("DeAMIS"), an affiliate of the Advisor, was the subadvisor for
the Fund. DeAMIS rendered investment advisory and management services, including
services related to foreign securities, foreign currency transactions and
related investments. The Advisor managed all other assets of the Fund.

On December 1, 2005, Aberdeen Asset Management PLC ("Aberdeen PLC") acquired
from Deutsche Bank AG, the parent company of the Advisor, parts of its asset
management business and related assets based in London and Philadelphia.
Effective December 1, 2005, DeAMIS became a direct wholly-owned subsidiary of
Aberdeen PLC and was renamed Aberdeen Asset Management Investment Services
Limited ("AAMISL"), and the individuals at the Advisor's Philadelphia based
Fixed Income team who managed all or a portion of the assets of the Fund became
employees of Aberdeen Asset Management Inc. ("AAMI"). AAMI and AAMISL are each a
direct wholly-owned subsidiary of Aberdeen PLC and a registered investment
advisor under the Investment Advisers Act of 1940, as amended.

Effective December 2, 2005, and pursuant to a written contract with the Advisor,
AAMI became the subadvisor to the Fund (the "Sub-Advisory Agreement"). As the
subadvisor and pursuant to the Sub-Advisory Agreement, AAMI may delegate certain
of its duties and responsibilities with respect to the services it is contracted
to provide to the Fund. Pursuant to such authority, AAMI has entered into an
investment sub-sub-advisory agreement with AAMISL to provide investment services
to the Fund ("Sub-Sub-Advisory Agreement").

Sub-Advisory Agreement and the Sub-Sub-Advisory Agreement

Under the terms of the Sub-Advisory Agreement and the Sub-Sub-Advisory
Agreement, AAMI and AAMISL, respectively, each agree, subject to the supervision
and control of the Advisor and the Board (and, in the case of the
Sub-Sub-Advisory Agreement, also subject to the supervision and control of
AAMI), to manage the securities and assets of the DWS Core Plus Income Fund
entrusted to it by the Advisor (or, in the case of the Sub-Sub-Advisory
Agreement, entrusted to AAMISL by AAMI), in accordance with the Fund's
investment objectives, policies and restrictions. As compensation for their
services under the Sub-Advisory Agreement and the Sub-Sub-Advisory Agreement,
AAMISL and AAMI will each be paid an annual fee of 0.33% (a portion of which
(0.05%) AAMI pays to AAMISL under the Sub-Sub-Advisory Agreement) of average
daily net assets computed daily and paid monthly. AAMI is paid for its services
by the Advisor, and not the Fund, from its fee as investment advisor to the
Fund.

The Sub-Advisory Agreement and the Sub-Sub-Advisory Agreement will each have an
initial term of two years (unless sooner terminated) and will each 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 Fund, and
(ii) by a majority of the Independent Board Members who are not parties to the
relevant agreement, cast in person at a meeting called for such purpose.

AAMISL and AAMI are each obligated to pay all expenses (excluding brokerage
costs, custodian fees, fees of independent registered public accounting firms or
other expenses of the Fund to be borne by the Fund) in connection with the
performance of its services. The Fund bears certain other expenses incurred in
its operation. The services of AAMISL and AAMI are not deemed to be exclusive
and nothing in the Sub-Advisory Agreement or Sub-Sub-Advisory Agreement prevents
AAMISL and AAMI or their 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 Fund) or from engaging in
other activities.

Under the Sub-Advisory Agreement and the Sub-Sub-Advisory Agreement, AAMISL and
AAMI will each be liable (i) if it causes the 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 or the Sub-Sub-Advisory Agreement.


Compensation of Portfolio Managers


Remuneration of Personnel


The remuneration policy ("Policy") of AAMISL and AAMI (for purposes of this
section, referred to collectively as "Aberdeen") 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 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.

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 the relevant
Fund as well as in all DWS Funds as a group (i.e. those funds advised by
Deutsche Asset Management or its affiliates), including investments by their
immediate family members sharing the same household and amounts invested through
retirement and deferred compensation plans. This information is provided as of
the Fund's most recent fiscal year end.

                                                       Dollar Range of
Name of Portfolio Manager                             Fund Shares Owned
-------------------------                             -----------------


Gary W. Bartlett                                             None
Warren S. Davis, III                                         None
Thomas J. Flaherty                                           None
J. Christopher Gagnier                                       None
Daniel R. Taylor                                             None
Timothy C. Vile                                              None
William T. Lissenden                                         None
Brett Diment*                                                None
Annette Fraser*                                              None
Anthony Fletcher*                                            None
Nick Hart*                                                   None
Stephen Ilott*                                               None
Ian Winship*                                                 None
Matthew Cobon*                                               None


*        Because these portfolio managers are not resident in the US, they
         generally do not invest in US registered investment companies, such as
         the Fund, on account of US tax and other regulatory limitations
         applicable to foreign investors.

Conflicts of Interest

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

Other SEC Registered Investment Companies Managed:

<TABLE>
<CAPTION>

                               Number of                                 Number of Investment
                                Registered        Total Assets of        Company Accounts with       Total Assets of
                               Investment      Registered Investment          Performance-          Performance-Based
Name of Portfolio Manager       Companies            Companies                 Based Fee              Fee Accounts
-------------------------       ---------            ---------                 ---------              ------------
<S>                                 <C>            <C>                             <C>                     <C>
Gary W. Bartlett                    8              $3,523,243,000                  0                       $0
Warren S. Davis, III                8              $3,523,243,000                  0                       $0
Thomas J. Flaherty                  8              $3,523,243,000                  0                       $0
J. Christopher Gagnier              8              $3,523,243,000                  0                       $0
Daniel R. Taylor                    8              $3,523,243,000                  0                       $0
Timothy C. Vile                     8              $3,523,243,000                  0                       $0
William T. Lissenden                8              $3,523,243,000                  0                       $0
Brett Diment                        5                $501,836,000                  0                       $0
Annette Fraser                      2                $125,387,800                  0                       $0
Anthony Fletcher                    2                $125,387,800                  0                       $0
Nick Hart                           2                $125,387,800                  0                       $0
Stephen Ilott                       2                $125,387,800                  0                       $0
Ian Winship                         2                $125,387,800                  0                       $0
Matthew Cobon                       2                $125,387,800                  0                       $0

Other Pooled Investment Vehicles Managed:

                                                                            Number of Pooled
                                Number of                                  Investment Vehicle
                                  Pooled       Total Assets of Pooled        Accounts with           Total Assets of
                               Investment            Investment            Performance-Based          Performance-
Name of Portfolio Manager        Vehicles             Vehicles                    Fee              Based Fee Accounts
-------------------------        --------             --------                    ---              ------------------

Gary W. Bartlett                    9             $4,251,787,278                   0                       $0
Warren S. Davis, III                9             $4,251,787,278                   0                       $0
Thomas J. Flaherty                  9             $4,251,787,278                   0                       $0
J. Christopher Gagnier              9             $4,251,787,278                   0                       $0
Daniel R. Taylor                    9             $4,251,787,278                   0                       $0
Timothy C. Vile                     9             $4,251,787,278                   0                       $0
William T. Lissenden                9             $4,251,787,278                   0                       $0
Brett Diment                       103            $21,930,216,394                  0                       $0
Annette Fraser                      96            $19,857,688,880                  0                       $0
Anthony Fletcher                    96            $19,857,688,880                  0                       $0
Nick Hart                           96            $19,857,688,880                  0                       $0
Stephen Ilott                       96            $19,857,688,880                  0                       $0
Ian Winship                         96            $19,857,688,880                  0                       $0
Matthew Cobon                       96            $19,857,688,880                  0                       $0

Other Accounts Managed:

                                                                            Number of Other
                                                                             Accounts with           Total Assets of
                                Number of         Total Assets of             Performance-          Performance-Based
Name of Portfolio Manager     Other Accounts       Other Accounts              Based Fee              Fee Accounts
-------------------------     --------------       --------------              ---------              ------------

Gary W. Bartlett                   178              $29,373,780,698                      4              $478,536,000
Warren S. Davis, III               178              $29,373,780,698                      4              $478,536,000
Thomas J. Flaherty                 178              $29,373,780,698                      4              $478,536,000
J. Christopher Gagnier             178              $29,373,780,698                      4              $478,536,000
Daniel R. Taylor                   178              $29,373,780,698                      4              $478,536,000
Timothy C. Vile                    178              $29,373,780,698                      4              $478,536,000
William T. Lissenden               178              $29,373,780,698                      4              $478,536,000
Brett Diment                       414              $61,714,476,936                      0                        $0
Annette Fraser                     398              $58,646,939,893                      0                        $0
Anthony Fletcher                   398              $58,646,939,893                      0                        $0
Nick Hart                          398              $58,646,939,893                      0                        $0
Stephen Ilott                      398              $58,646,939,893                      0                        $0
Ian Winship                        398              $58,646,939,893                      0                        $0
Matthew Cobon                      398              $58,646,939,893                      0                        $0
</TABLE>


Conflicts of Interest

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 and AAMISL 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:

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

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

In some cases, an apparent conflict may arise where AAMI and AAMISL 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 and AAMISL have in place supervisory oversight processes to
periodically monitor performance deviations for accounts with like strategies.

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 interests. 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 each Fund's/Portfolio's Boards.

Codes of Ethics

The Fund, the Advisor, the subadvisor and the Fund's principal underwriter have
each adopted codes of ethics under Rule 17j-1 under the 1940 Act. Board members,
officers of the Trusts and employees of the Advisor and principal underwriter
are permitted to make personal securities transactions, including transactions
in securities that may be purchased or held by the Funds, subject to certain
requirements and restrictions set forth in the applicable Code of Ethics. The
Advisor's/subadvisor's Code of Ethics contains provisions and requirements
designed to identify and address certain conflicts of interest between personal
investment activities and the interests of the Fund. Among other things, the
Advisor's/subadvisor's Code of Ethics prohibits certain types of transactions
absent prior approval, imposes time periods during which personal transactions
may not be made in certain securities, and requires the submission of duplicate
broker confirmations and quarterly reporting of securities transactions.
Additional restrictions apply to portfolio managers, traders, research analysts
and others involved in the investment advisory process. Exceptions to these and
other provisions of the Advisor's/subadvisor's Code of Ethics may be granted in
particular circumstances after review by appropriate personnel.

                             FUND SERVICE PROVIDERS

Administrator


The Fund entered into an administrative services agreement with the Advisor (the
"Administrative Services Agreement"), pursuant to which the Advisor provides
administrative services to the Fund including, among others, providing the Fund
with personnel, preparing and making required filings on behalf of the Fund,
maintaining books and records for the Fund, and monitoring the valuation of Fund
securities. For all services provided under the Administrative Services
Agreement, the Fund pays the Advisor a fee, computed daily and paid monthly, of
0.100% of the Fund's net assets.


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



For the period from June 1, 2006 through January 31, 2007, the Advisor received
an Administration Fee of $471,281.

For the fiscal year ended January 31, 2008, the Advisor received an
Administration Fee of $674,285, of which $56,043 was unpaid at year end.




Pursuant to an agreement between the Administrator and State Street Bank and
Trust Company ("SSB"), the Administrator has delegated certain administrative
functions to SSB. The costs and expenses of such delegation are borne by the
Administrator, not by the Fund.


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

Distributor

Pursuant to an underwriting agreement (the "Underwriting Agreement") with DWS
Scudder Distributors, Inc. ("DWS-SDI"), 222 South Riverside Plaza, Chicago,
Illinois 60606 (the "Distributor"), a Massachusetts corporation, which is a
subsidiary of the Advisor, a Delaware corporation. The Trusts' Underwriting
Agreement will remain in effect year to year and only if its continuance is
approved annually by a majority of the members of the Board of Trustees who are
not parties to such agreement or interested persons of any such party and either
by vote of a majority of the Board of Trustees or a majority of the outstanding
voting securities of the Fund.


Under the Underwriting Agreement, the Fund is responsible for: the payment of
all fees and expenses in connection with the preparation and filing with the SEC
of its registration statement and prospectus and any amendments and supplements
thereto; the registration and qualification of shares for sale in the various
states, including registering the Fund as a broker or dealer in various states,
as required; the fees and expenses of preparing, printing and mailing
prospectuses annually to existing shareholders (see below for expenses relating
to prospectuses paid by the Distributor); notices, proxy statements, reports or
other communications to shareholders of the Fund; the cost of printing and
mailing confirmations of purchases of shares and any prospectuses accompanying
such confirmations; any issuance taxes and/or any initial transfer taxes; a
portion of shareholder toll-free telephone charges and expenses of shareholder
service representatives; the cost of wiring funds for share purchases and
redemptions (unless paid by the shareholder who initiates the transaction); the
cost of printing and postage of business reply envelopes; and a portion of the
cost of computer terminals used by both the Fund and the Distributor.

The Distributor will pay for printing and distributing prospectuses or reports
prepared for its use in connection with the offering of the Fund's shares to the
public and preparing, printing and mailing any other literature or advertising
in connection with the offering of shares of the Fund to the public. The
Distributor will pay all fees and expenses in connection with its qualification
and registration as a broker or dealer under federal and state laws, a portion
of the cost of toll-free telephone service and expenses of shareholder service
representatives, a portion of the cost of computer terminals, and expenses of
any activity which is primarily intended to result in the sale of shares issued
by the Fund, unless a Rule 12b-1 Plan is in effect which provides that the Fund
shall bear some or all of such expenses.


Although the Fund do not currently have a 12b-1 Plan for Class S shares, and the
Trustees have no current intention of adopting one, the Fund will also pay those
fees and expenses permitted to be paid or assumed by the Trust pursuant to a
12b-1 Plan, if any, adopted by the Trust, notwithstanding any other provision to
the contrary in the Underwriting Agreement.


The Distributor currently offers shares of the Fund on a continuous basis to
investors in all states in which shares of the Fund may from time to time be
registered or where permitted by applicable law. The Underwriting Agreement
provides that the Distributor accepts orders for shares at net asset value as no
sales commission or load is charged to the investor. The Distributor has made no
firm commitment to acquire shares of the Fund.

Independent Registered Public Accounting Firm and Reports to Shareholders

The financial highlights of the Fund included in the Fund's prospectus and the
Financial Statements incorporated by reference to this Statement of Additional
Information have been so included or incorporated by reference in reliance on
the report of, PricewaterhouseCoopers LLP, an independent registered public
accounting firm, 125 High Street, Boston, MA 02110, given on the authority of
said firm as experts in auditing and accounting.
PricewaterhouseCoopers LLP audits the financial statements of the Fund and
provides other audit, tax and related services.
Shareholders will receive annual audited financial statements and semi-annual
unaudited financial statements.

Legal Counsel

Ropes & Gray LLP, One International Place, Boston, Massachusetts, 02110, serves
as legal counsel to the Fund and its Independent Trustees.



Custodian, Transfer Agent and Shareholder Service Agent

Prior to April 1, 2007, DWS Scudder Service Corporation ("DWS-SSC") was the
transfer agent, dividend-paying agent and shareholder service agent for the
Class S shares of the Fund. On April 1, 2007, DWS Scudder Service Corporation
merged into DWS Scudder Investments Service Company ("DWS-SISC" or the "Transfer
Agent"). As a result of the merger, DWS-SISC is now the Fund's transfer agent,
dividend-paying agent and shareholder service agent.


DWS-SISC, 210 W. 10th Street, Kansas City, Missouri 64105-1614, an affiliate of
the Advisor, also serves as shareholder service agent for the Fund and provides
subaccounting and recordkeeping services for shareholder accounts in certain
retirement and employee benefit plans. The Transfer Agent receives an annual
service fee for each account of the Fund, based on the type of account. For open
retail accounts, the fee is a flat fee ranging from $20.00 to $27.50 per
account, for open wholesale money funds the fee is $32.50 per account, while for
certain retirement accounts serviced on the recordkeeping system of ADP, Inc.,
the fee is a flat fee up to $3.60 per account (as of 2007, indexed to inflation)
plus an asset based fee of up to 0.25% of average net assets. 1/12th of the
annual service charge for each account is charged and payable to the Transfer
Agent each month. A fee is charged for any account which at any time during the
month had a share balance in the Fund. Smaller fees are also charged for closed
accounts for which information must be retained on the Transfer Agent's system
for up to 18 months after closing for tax reporting purposes.

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





For the fiscal year ended January 31, 2008, the amount charged to the Class S
shares of the Fund by DWS-SSC aggregated $562,384 (of which $99,990 was waived
and $139,743 was unpaid).

For the fiscal year ended January 31, 2007, the amount charged to the Class S
shares of the Fund by DWS-SSC aggregated $639,428 (of which $130,396 was
waived).


Custodian's fees may be reduced by certain earnings credits in favor of the
Fund.


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




The Fund, or the Advisor (including any affiliate of the Advisor), or both, may
pay unaffiliated third parties for providing recordkeeping and other
administrative services with respect to accounts of participants in retirement
plans or other beneficial owners of Fund shares whose interests are generally
held in an omnibus account.

The Fund employs State Street Bank and Trust Company ("SSB"), 225 Franklin
Street, Boston, Massachusetts 02109 as custodian. SSB has entered into
agreements with foreign subcustodians approved by the Trustees of the Trust
pursuant to Rule 17f-5 of the 1940 Act. SSB uses Deutsche Bank AG, an affiliate
of the Investment Advisor, as subcustodian ("DB Subcustodian") in certain
countries. To the extent the 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.


Regulatory Matters and Legal Proceedings

On December 21, 2006, DeAM settled proceedings with the SEC and the New York
Attorney General on behalf of Deutsche Asset Management, Inc. ("DAMI") and DIMA,
the investment advisors to many of the DWS Scudder funds, regarding allegations
of improper trading of fund shares at DeAM and at the legacy Scudder and Kemper
organizations prior to their acquisition by DeAM in April 2002. These regulators
alleged that although the prospectuses for certain funds in the regulators' view
indicated that the funds did not permit market timing, DAMI and DIMA breached
their fiduciary duty to those funds in that their efforts to limit trading
activity in the funds were not effective at certain times. The regulators also
alleged that DAMI and DIMA breached their fiduciary duty to certain funds by
entering into certain market timing arrangements with investors. These trading
arrangements originated in businesses that existed prior to the currently
constituted DeAM organization, which came together as a result of various
mergers of the legacy Scudder, Kemper and Deutsche fund groups, and all of the
arrangements were terminated prior to the start of the regulatory investigations
that began in the summer of 2003. No current DeAM employee approved these
trading arrangements. Under the terms of the settlements, DAMI and DIMA neither
admitted nor denied any wrongdoing.

The terms of the SEC settlement, which identified improper trading in the legacy
Deutsche and Kemper mutual funds only, provide for payment of disgorgement in
the amount of $17.2 million. The terms of the settlement with the New York
Attorney General provide for payment of disgorgement in the amount of $102.3
million, which is inclusive of the amount payable under the SEC settlement, plus
a civil penalty in the amount of $20 million. The total amount payable by DeAM,
approximately $122.3 million, will be distributed to shareholders of the
affected funds in accordance with a distribution plan to be developed by a
distribution consultant. The funds' investment advisors do not believe these
amounts will have a material adverse financial impact on them or materially
affect their ability to perform under their investment management agreements
with the DWS funds. The above-described amounts are not material to Deutsche
Bank, and have already been reserved.

Among the terms of the settled orders, DeAM is subject to certain undertakings
regarding the conduct of its business in the future, including formation of a
Code of Ethics Oversight Committee to oversee all matters relating to issues
arising under the advisors' Code of Ethics; establishment of an Internal
Compliance Controls Committee having overall compliance oversight responsibility
of the advisors; engagement of an Independent Compliance Consultant to conduct a
comprehensive review of the advisors' supervisory compliance and other policies
and procedures designed to prevent and detect breaches of fiduciary duty,
breaches of the Code of Ethics and federal securities law violations by the
advisors and their employees; and commencing in 2008, the advisors shall undergo
a compliance review by an independent third party.

In addition, DeAM is subject to certain further undertakings relating to the
governance of the mutual funds, including that at least 75% of the members of
the Boards of Trustees/Directors overseeing the DWS Funds continue to be
independent of DeAM; the Chairmen of the DWS Funds' Boards of Trustees/Directors
continue to be independent of DeAM; DeAM maintain existing management fee
reductions for certain funds for a period of five years and not increase
management fees for these certain funds during this period; the funds retain a
senior officer (or independent consultants, as applicable) responsible for
assisting in the review of fee arrangements and monitoring compliance by the
funds and the investment advisors with securities laws, fiduciary duties, codes
of ethics and other compliance policies, the expense of which shall be borne by
DeAM; and periodic account statements, fund prospectuses and the mutual funds'
web site contain additional disclosure and/or tools that assist investors in
understanding the fees and costs associated with an investment in the funds and
the impact of fees and expenses on fund returns.

DeAM has also settled proceedings with the Illinois Secretary of State regarding
market timing matters. The terms of the Illinois settlement provide for investor
education contributions totaling approximately $4 million and a payment in the
amount of $2 million to the Securities Audit and Enforcement Fund.

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

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

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

Additional information announced by DeAM regarding the terms of the settlements
is available at www.dws-scudder.com/regulatory_settlements.

The matters alleged in the regulatory settlements described above also serve as
the general basis of a number of private class action lawsuits involving the DWS
funds. These lawsuits name as defendants various persons, including certain DWS
funds, the funds' investment advisors and their affiliates, and certain
individuals, including in some cases fund Trustees/Directors, officers, and
other parties. Each DWS fund's investment advisor has agreed to indemnify the
applicable DWS funds in connection with these lawsuits, or other lawsuits or
regulatory actions that may be filed making similar allegations.

Based on currently available information, the funds' investment advisors believe
the likelihood that the pending lawsuits will have a material adverse financial
impact on a DWS fund is remote and such actions are not likely to materially
affect their ability to perform under their investment management agreements
with the DWS funds.




                             PORTFOLIO TRANSACTIONS


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

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

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

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

The Advisor is permitted by Section 28(e) of the Securities Exchange Act of
1934, as amended ("1934 Act"), when placing portfolio transactions for a Fund,
to cause the Fund to pay brokerage commissions in excess of that which another
broker-dealer might charge for executing the same transaction in order to obtain
research and brokerage services if the Advisor determines that such commissions
are reasonable in relation to the overall services provided. The Advisor may
from time to time, in reliance on Section 28(e) of the 1934 Act, execute
portfolio transactions with broker-dealers that provide research and brokerage
services to the Advisor. Consistent with the Advisor's policy regarding best
execution, where more than one broker is believed to be capable of providing
best execution for a particular trade, the Advisor may take into consideration
the receipt of research and brokerage services in selecting the broker-dealer to
execute the trade. Although certain research and brokerage services from
broker-dealers may be useful to a Fund and to the Advisor, it is the opinion of
the Advisor that such information only supplements its own research effort since
the information must still be analyzed, weighed and reviewed by the Advisor's
staff. To the extent that research and brokerage services of value are received
by the Advisor, the Advisor may avoid expenses that it might otherwise incur.
Research and brokerage services received from a broker-dealer may be useful to
the Advisor and its affiliates in providing investment management services to
all or some of its clients, which includes a Fund. Services received from
broker-dealers that executed securities transactions for a Portfolio will not
necessarily be used by the Advisor specifically to service such Fund.

Research and brokerage services provided by broker-dealers may include, but are
not limited to, information on the economy, industries, groups of securities,
individual companies, statistical information, accounting and tax law
interpretations, political developments, legal developments affecting portfolio
securities, technical market action, pricing and appraisal services, credit
analysis, risk measurement analysis, performance analysis and measurement and
analysis of corporate responsibility issues. Research and brokerage services are
typically received in the form of written or electronic reports, access to
specialized financial publications, telephone contacts and personal meetings
with security analysts, but may also be provided in the form of access to
various computer software and meetings arranged with corporate and industry
representatives.

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

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

The Advisor may use brokerage commissions to obtain certain brokerage products
or services that have a mixed use (i.e., it also serves a function that does not
relate to the investment decision-making process). In those circumstances, the
Advisor will make a good faith judgment to evaluate the various benefits and
uses to which it intends to put the mixed use product or service and will pay
for that portion of the mixed use product or service that it reasonably believes
does not constitute research and brokerage services with its own resources.

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

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

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

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

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





For the fiscal years ended January 31, 2006, 2007 and 2008, the Fund did not pay
any brokerage commissions.

DWS Core Plus Income 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 January 31, 2008, the Fund
held the following securities of its regular brokers or dealers:

<TABLE>
<CAPTION>
Name of Regular Broker or Dealer or Parent (Issuer)               Value of Securities Owned as of January 31, 2008
---------------------------------------------------               ------------------------------------------------

<S>                                                                                        <C>
Arch Western Finance                                                                       $362,000
ICICI Bank Ltd.                                                                          $1,093,000
Aes El Salvador Trust                                                                    $1,693,000
Wachovia Capital Trust                                                                   $3,191,000
Goldman Sachs Group, Inc.                                                                $3,965,000
American General Finance Corp.                                                           $5,489,000
</TABLE>

Portfolio Turnover

Portfolio turnover rate is defined by the SEC as the ratio of the lesser of
sales or purchases to the monthly average value of such securities owned during
the year, excluding all securities whose remaining maturities at the time of
acquisition were one year or less.

A higher rate involves greater brokerage and transaction expenses to the Fund
and may result in the realization of net capital gains, which would be taxable
to shareholders when distributed. Purchases and sales are made for the Fund's
portfolio whenever necessary, in the Advisor's discretion to meet the Fund's
objective.

Portfolio turnover rates for the two most recent fiscal years for the Fund are
as follows:

150% (151% including mortgage dollar roll transactions) and 140% (150% including
mortgage dollar roll transactions) for the fiscal years ended January 31, 2007
and 2008, respectively.


                        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 be 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. Orders received by dealers or other financial services firms prior
to the determination of net asset value and received in good order by DWS-SDI
prior to the determination of net asset value will be confirmed at a price based
on the net asset value next determined after receipt by DWS-SDI ("trade date").


Additional Minimum Balance Policies. For fiduciary accounts such as IRAs, and
custodial accounts such as Uniform Gifts to Minor Act and Uniform Transfers to
Minor Act accounts, the minimum balance is $1,000 for Class S. A shareholder may
open an account with at least $1,000 ($500 for fiduciary/custodial accounts), if
an automatic investment plan (AIP) of $50/month is established. DWS Scudder
group retirement plans and certain other accounts have similar or lower minimum
share balance requirements.

Shareholders with a combined household account balance in any of the DWS Funds
of $100,000 or more, as well as group retirement and certain other accounts,
will not be subject to an automatic redemption.

Fiduciary (e.g., IRA or Roth IRA) and custodial accounts (e.g., UGMA or UTMA)
with balances below $1,000 are subject to automatic redemption following 60
days' written notice to applicable shareholders.




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

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

The Fund has authorized one or more financial service institutions, including
certain members of the NASD other than the Distributor ("financial
institutions"), to accept purchase and redemption orders for the Fund's shares.
Such financial institutions may also designate other parties, including plan
administrator intermediaries, to accept purchase and redemption orders on the
Fund's behalf. Orders for purchases or redemptions will be deemed to have been
received by the Fund when such financial institutions or, if applicable, their
authorized designees accept the orders. Subject to the terms of the contract
between the Fund and the financial institution, ordinarily orders will be priced
at the Fund's net asset value next computed after acceptance by such financial
institution or its authorized designees and accepted by the Fund. Further, if
purchases or redemptions of the Fund's shares are arranged and settlement is
made at an investor's election through any other authorized financial
institution, that financial institution may, at its discretion, charge a fee for
that service. The Board of Trustees and the Distributor, also the Fund's
principal underwriter, each has the right to limit the amount of purchases by,
and to refuse to sell to, any person. The Trustees and the Distributor may
suspend or terminate the offering of shares of the Fund at any time for any
reason.


DWS-SDI has adopted an Incentive Plan (the "Plan") covering wholesalers that are
regional vice presidents ("DWS Scudder Wholesalers"). Generally, DWS Scudder
Wholesalers market shares of the DWS funds to financial advisors, who in turn
may recommend that investors purchase shares of a DWS fund. The Plan is an
incentive program that combines a monthly incentive component with a quarterly
strategic bonus component. Under the Plan, DWS Scudder Wholesalers will receive
a monetary monthly incentive based on the amount of sales generated from their
marketing of the funds, and that incentive will differ depending on the product
category of the fund. Each fund is assigned to one of three product
categories--"Strategic," "Tactical" or "all other funds"-taking into
consideration, among other things, the following criteria, where applicable:

o        The Fund's consistency with DWS Scudder's branding and long-term
         strategy.
o        The Fund's competitive performance;
o        The Fund's Morningstar rating;
o        The length of time the Fund's Portfolio Managers have managed the
         Fund/Strategy
o        Market size for the fund category;
o        The Fund's size, including sales and redemptions of the Fund's shares;

This information and other factors are presented to a committee comprised of
representatives from various groups within DWS Scudder, who review on a
quarterly basis the funds assigned to each product category described above, and
make any changes to those assignments at that time. No one factor, whether
positive or negative, determines a fund's placement in a given category; all
these factors together are considered, and the designation of funds in the
Strategic and Tactical categories represents management's judgment based on the
above criteria. In addition, management may consider a fund's profile over the
course of several review periods before making a change to its category
assignment. These category assignments will be posted quarterly to the DWS
funds' Web site at www.dws-scudder.com, approximately one month after the end of
each quarter. DWS Scudder Wholesalers receive the highest compensation for
Strategic funds, less for Tactical funds and the lowest for all other funds. The
level of compensation among these categories may differ significantly.

The prospect of receiving, or the receipt of, additional compensation by a DWS
Scudder Wholesaler under the Plan may provide an incentive to favor marketing
the Strategic or Tactical funds over all other funds. The Plan, however, will
not change the price that investors pay for shares of a fund. The DWS Scudder
Compliance Department monitors DWS Scudder Wholesaler sales and other activity
in an effort to detect unusual activity in the context of the compensation
structure under the Plan. However, investors may wish to take the Plan and the
product category of the fund into account when considering purchasing a fund or
evaluating any recommendations relating to fund shares.





Telephone and Electronic Transaction Procedures. Shareholders have various
telephone, Internet, wire and other electronic privileges available. The Fund or
its agents will not be liable for any losses, expenses or costs arising out of
fraudulent or unauthorized instructions pursuant to these privileges if the Fund
or its agents reasonably believe, based upon reasonable verification procedures,
that the instructions were genuine. Verification procedures include recording
instructions, requiring certain identifying information before acting upon
instructions and sending written confirmations. During periods when it is
difficult to contact the Shareholder Service Agent, it may be difficult to use
telephone, wire and other privileges.





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





Share Pricing. Purchases will be filled at the net asset value per share next
computed after receipt by the Transfer Agent of the application in good order.
The net asset value of shares of the 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 FINRA, other than the
Distributor, it is the responsibility of the member broker, rather than the
Fund, to forward the purchase order to 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 DWS
Scudder's Dividend Payment Option request form. Shareholders whose predesignated
checking account of record is with a member bank of Automated Clearing House
Network (ACH) can have income and capital gain distributions automatically
deposited to their personal bank account usually within three business days
after a Fund pays its distribution. A Dividend Payment Option request form can
be obtained by visiting our Web site at: www.dws-scudder.com or calling (800)
728-3337. Confirmation Statements will be mailed to shareholders as notification
that distributions have been deposited.

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

o        Traditional, Roth and Education IRAs. This includes Savings Incentive
         Match Plan for Employees of Small Employers ("SIMPLE"), Simplified
         Employee Pension Plan ("SEP") IRA accounts and prototype documents.

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

o        Prototype money purchase pension and profit-sharing plans may be
         adopted by employers.

Brochures describing these plans as well as model defined benefit plans, target
benefit plans, 457 plans, 401(k) plans, simple 401(k) plans and materials for
establishing them are available from the Shareholder Service Agent upon request.
Additional fees and transaction policies and procedures may apply to such plans.
Investors should consult with their own tax advisors before establishing a
retirement plan.

Purchases

The 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, the Fund may temporarily suspend the offering of any class of its shares
to new investors. During the period of such suspension, persons who are already
shareholders of such class of such Fund may be permitted to continue to purchase
additional shares of such class and to have dividends reinvested.

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

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

Class S shares of the Fund will generally not be available to new investors.


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.





Revenue Sharing

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

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

The Advisor, the Distributor and/or their affiliates currently make revenue
sharing payments from their own assets in connection with the sale and/or
distribution of DWS Fund shares, or the retention and/or servicing of investors,
to financial advisors in amounts that generally range from .01% up to .50% of
assets of the Fund serviced and maintained by the financial advisor, .10% to
..25% of sales of the Fund attributable to the financial advisor, a flat fee of
$13,350 up to $500,000, or any combination thereof. These amounts are annual
figures typically paid on a quarterly basis and are subject to change at the
discretion of the Advisor, the Distributor and/or their affiliates. Receipt of,
or the prospect of receiving, this additional compensation, may influence your
financial advisor's recommendation of this Fund or of any particular share class
of the Fund. You should review your financial advisor's compensation disclosure
and/or talk to your financial advisor to obtain more information on how this
compensation may have influenced your financial advisor's recommendation of this
Fund.

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

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

Channel: Broker-Dealers and Financial Advisors

AIG Advisors Group
Ameriprise
Cadaret, Grant & Co. Inc.
Capital Analyst, Incorporated
Citigroup Global Markets, Inc. (dba Smith Barney)
Commonwealth Equity Services, LLP (dba Commonwealth Financial Network)
Deutsche Bank group
First Clearing/Wachovia Securities
Fiserv Trust Company
HD Vest Investment Securities, Inc.
ING Group
John Hancock Distributors LLC
LPL Financial
M.L. Stern & Co.
Marsh Insurance and Investment Company
Meridien Financial Group
Merrill Lynch, Pierce, Fenner & Smith Inc.
Morgan Stanley
Oppenheimer & Co., Inc.
Raymond James & Associates
Raymond James Financial Services
RBC Dain Rauscher, Inc
Securities America, Inc.
UBS Financial Services
Wachovia Securities
Wells Fargo Investments, LLC

Channel: Cash Product Platform

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
D.A. Davidson & Company
Deutsche Bank Group
Emmett A. Larkin Company
Fiduciary Trust Co. - International
First Southwest Company
Huntleigh Securities
Lincoln Investment Planning
LPL Financial
Mellon Financial Markets LLC
Penson Financial Services
Pershing Choice Platform
ProFunds Distributors, Inc.
Ridge Clearing & Outsourcing Solutions
Romano Brothers and Company
SAMCO Capital Markets
Smith Moore & Company
Sungard Institutional Brokerage Inc.
US Bancorp
UBS
William Blair & Company

Channel: Third Party Insurance Platforms

Allstate Life Insurance Company of New York
Ameritas Life Insurance Group
Annuity Investors Life Insurance Company
Columbus Life Insurance Company
Commonwealth Annuity and Life Insurance Company
Companion Life Insurance Company
Connecticut General Life Insurance Company
Farmers New World Life Insurance Company
Fidelity Security Life Insurance Company
First Allmerica Financial Life Insurance Company
First Great West Life and Annuity Company
Genworth Life Insurance Company of New York
Genworth Life and Annuity Insurance Company
Great West Life and Annuity Insurance Company
Hartford Life Insurance Company
Integrity Life Insurance Company
John Hancock Life Insurance companies
Kemper Investors Life Insurance Company
Lincoln Benefit Life Insurance Company
Lincoln Life & Annuity Company of New York
Lincoln National Life Insurance Company
Massachusetts Mutual Life Insurance Group
MetLife Group
Minnesota Life Insurance Company
National Life Insurance Company
National Integrity Life Insurance Company
Nationwide Group
New York Life Insurance and Annuity Corporation
Phoenix Life Insurance Company
Protective Life Insurance
Provident Mutual Life Insurance
Prudential Insurance Company of America
Sun Life Group
Symetra Life Insurance Company
Transamerica Life Insurance Company
Union Central Life Insurance Company
United of Omaha Life Insurance Company
United Investors Life Insurance Company
Western Southern Life Assurance Company

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

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

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

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





Automatic Investment Plan. A shareholder may purchase shares of the Fund through
an automatic investment program. With the Direct Deposit Purchase Plan ("Direct
Deposit"), investments are made automatically (minimum $1,000 and maximum
$250,000 for initial investments and a minimum of $50 and maximum of $250,000
for subsequent investments) from the shareholder's account at a bank, savings
and loan or credit union into the shareholder's Fund account. Termination by a
shareholder will become effective within thirty days after the Shareholder
Service Agent has received the request. The Fund may immediately terminate a
shareholder's Direct Deposit in the event that any item is unpaid by the
shareholder's financial institution.

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


Payroll Investment Plans. A shareholder may purchase shares through Payroll
Direct Deposit or Government Direct Deposit. Under these programs, all or a
portion of a shareholder's net pay or government check is invested each payment
period. A shareholder may terminate participation in these programs by giving
written notice to the shareholder's employer or government agency, as
appropriate. (A reasonable time to act is required.) The 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 FINRA, and banks may open an account by wire by
calling (800) 728-3337 for instructions. The investor must send a duly completed
and signed application to the Fund promptly. A subsequent purchase order may be
placed by established shareholders (except by DWS Scudder Individual Retirement
Account (IRA), DWS Scudder Profit Sharing and Money Purchase Pension Plans, DWS
Scudder 401(k) and DWS Scudder 403(b) Plan holders), members of FINRA, and
banks.




Redemptions

Redemption fee. The Fund will impose 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 (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. The Fund may suspend or postpone redemptions as permitted pursuant to
Section 22(e) of the Investment Company Act of 1940. Generally, those
circumstances are when: 1) the New York Stock Exchange is closed other than
customary weekend or holiday closings; 2) trading on the New York Stock Exchange
is restricted; 3) an emergency exists which makes the disposal of securities
owned by the Fund or the fair determination of the value of the Fund's net
assets not reasonably practicable; or 4) the SEC, by order, permits the
suspension of the right of redemption. Redemption payments by wire may also be
delayed in the event of a non-routine closure of the Federal Reserve wire
payment system.

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 are $100,000 or less and the proceeds are
payable to the shareholder of record at the address of record, normally a
telephone request or a written request by any one account holder without a
signature guarantee is sufficient for redemptions by individual or joint account
holders, and trust, executor and guardian account holders, provided the trustee,
executor or guardian is named in the account registration. Other institutional
account holders may exercise this special privilege of redeeming shares by
telephone request or written request without signature guarantee subject to the
same conditions as individual account holders, provided that this privilege has
been pre-authorized by the institutional account holder by written instruction
to the Shareholder Service Agent with signatures guaranteed. This privilege may
not be used to redeem shares held in certificated form and may not be used if
the shareholder's account has had an address change within 15 days of the
redemption request.

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

In-kind Redemptions. The Fund reserves the right to honor any request for
redemption or repurchase by making payment in whole or in part in readily
marketable securities. These securities will be chosen by the fund and valued as
they are for purposes of computing the Fund's net asset value. A shareholder may
incur transaction expenses in converting these securities to cash.

Exchanges

Shareholders may request a taxable exchange of their shares for shares of the
corresponding class of other DWS Funds without imposition of a sales charge,
subject to the provisions below. For purposes of calculating any CDSC, amounts
exchanged retain their original cost and purchase date.


Shares of money market funds that were acquired by purchase (not including
shares acquired by dividend reinvestment) are subject to the applicable sales
charge on exchange. 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, Tax-Exempt California Money Market Fund, Cash Account Trust
and Investors Cash Trust are available on exchange but only through a financial
services firm having a services agreement with DWS-SDI. All exchanges among
money funds must meet applicable investor eligibility and investment
requirements. Exchanges may only be made for funds that are available for sale
in the shareholder's state of residence. Currently, Tax-Exempt California Money
Market Fund is available for sale only in California.




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

                                    DIVIDENDS


The Fund intends to follow the practice of distributing substantially all of its
investment company taxable income (computed without regard to the dividends-paid
deduction), which includes any excess of net realized short-term capital gains
over net realized long-term capital losses. Investment company taxable income
(which is retained by the Fund) will be subject to tax at regular corporate
rates. The Fund may follow the practice of distributing its entire net capital
gain (the excess of net realized long-term capital gains over net realized
short-term capital losses). However, the Fund may retain all or part of its net
capital gain for reinvestment. If the Fund retains any net capital gain, it will
be subject to tax at regular corporate rates on the amount retained, but may
designate the retained amount as undistributed capital gains in a notice to its
shareholders who (i) will be required to include in income for federal income
tax purposes, as long-term capital gain, their shares of such undistributed
amount, and (ii) will be entitled to credit their proportionate shares of the
tax paid by the Fund on such undistributed amount against their federal income
tax liabilities, if any, and to claim refunds on a properly-filed US tax return
to the extent the credit exceeds such liabilities. For federal income tax
purposes, the tax basis of shares owned by a shareholder of the Fund will be
increased by an amount equal under current law to the difference between the
amount of undistributed capital gains included in the shareholder's gross income
and the tax deemed paid by the shareholder under clause (ii) of the preceding
sentence.


The Fund intends to declare and distribute monthly substantially all of its net
investment income (excluding short-term capital gains) resulting from investment
activity. Distributions, if any, of net realized capital gains (short-term and
long-term) will normally be made in December, or otherwise as needed.

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

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

2.       To receive income and capital gain distributions in cash.

Distributions will be reinvested in Shares of the same class of the Fund unless
shareholders indicate in writing that they wish to receive them in cash or in
shares of other DWS Funds with multiple classes of shares or DWS Funds as
provided in the prospectus. To use this privilege of investing dividends of the
Fund in shares of another DWS Fund, shareholders must maintain a minimum account
value of $1,000 in the Fund distributing the dividends. The Fund will reinvest
dividend checks (and future dividends) in shares of that same Fund and class if
checks are returned as undeliverable. Dividends and other distributions of the
Fund in the aggregate amount of $10 or less are automatically reinvested in
shares of the 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 the Fund issues to each shareholder a statement of the
federal income tax status of all distributions in the prior calendar year.

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

                                      TAXES


The following is intended to be a general summary of certain federal income tax
consequences of investing in the funds. It is not intended as a complete
discussion of all such consequences, nor does it purport to deal with all
categories of investors. Investors are therefore advised to consult with their
tax advisors before making an investment in the Fund. The summary is based on
the laws in effect on the date of this SAI and existing judicial and
administrative interpretations thereof, all of which are subject to change,
possibly with retroactive effect.

Special tax rules apply to investments through defined contribution plans and
other tax-qualified plans. Shareholders should consult their tax advisers to
determine the suitability of shares of the Fund as an investment through such
plans and the precise effect of an investment on their particular tax situation.


Taxation of the Fund.

The Fund intends to elect to be treated and to qualify each year as a regulated
investment company under Subchapter M of the Code. In order to qualify for the
special tax treatment accorded regulated investment companies and their
shareholders, the Fund must, among other things:

(a)      derive at least 90% of its gross income for each taxable year from (i)
         dividends, interest, payments with respect to certain securities loans,
         and gains from the sale or other disposition of stock, securities or
         foreign currencies, or other income (including but not limited to gains
         from options, futures, or forward contracts) derived with respect to
         its business of investing in such stock, securities, or currencies and
         (ii) net income derived from interests in "qualified publicly traded
         partnerships" (as defined below);


(b)      diversify its holdings so that, at the end of each quarter of the
         Fund's taxable year, (i) at least 50% of the market value of the Fund's
         total assets is represented by cash and cash items, US Government
         securities, securities of other regulated investment companies, and
         other securities limited in respect of any one issuer to a value not
         greater than 5% of the value of the Fund's total assets and not more
         than 10% of the outstanding voting securities of such issuer, and (ii)
         not more than 25% of the value of the Fund's total assets is invested
         (x) in the securities (other than those of the US Government or other
         regulated investment companies) of any one issuer or of two or more
         issuers which the Fund controls and which are engaged in the same,
         similar, or related trades or businesses, or (y) in the securities of
         one or more qualified publicly traded partnerships (as defined below);
         and

(c)      distribute with respect to each taxable year at least 90% of the sum of
         its investment company taxable income (as that term is defined in the
         Code without regard to the deduction for dividends paid -- generally,
         taxable ordinary income and the excess, if any, of net short-term
         capital gains over net long-term capital losses) and net tax-exempt
         interest income, for such year.

In general, for purposes of the 90% gross income requirement described in
paragraph (a) above, income derived from a partnership will be treated as
qualifying income only to the extent such income is attributable to items of
income of the partnership which would be qualifying income if realized by the
regulated investment company. However, 100% of the net income derived from an
interest in a "qualified publicly traded partnership" (defined as a partnership
(x) interests in which are traded on an established securities market or readily
tradable on a secondary market or the substantial equivalent thereof (y) that
derives at least 90% of its income from the passive income sources defined in
Code section 7704(d), and (z) that derives less than 90% of its income from the
qualifying income described in (a) (i) above) will be treated as qualifying
income. In addition, although in general the passive loss rules of the Code do
not apply to regulated investment companies, such rules do apply to a regulated
investment company with respect to items attributable to an interest in a
qualified publicly traded partnership. Finally, for purposes of paragraph (b)
above, the term "outstanding voting securities of such issuer" will include the
equity securities of a qualified publicly traded partnership.


If the Fund qualifies as a regulated investment company that is accorded special
tax treatment, such Fund will not be subject to federal income tax on income
distributed in a timely manner to its shareholders in the form of dividends
(including Capital Gain Dividends, as defined below).


In determining its net capital gain for Capital Gain Dividend (as defined below)
purposes, a regulated investment company generally must treat any net capital
loss or any net long-term capital loss incurred after October 31 as if it had
been incurred in the succeeding year. Treasury regulations permit a regulated
investment company, in determining its taxable income, to elect to treat all or
part of any net capital loss, any net long-term capital loss or any foreign
currency loss incurred after October 31 as if it had been incurred in the
succeeding year.


If for any taxable year the Fund does not qualify for the special federal income
tax treatment afforded regulated investment companies, all of its taxable income
will be subject to federal income tax at regular corporate rates (without any
deduction for distributions to its shareholders), and all distributions from
earnings and profits, including any distributions of net tax-exempt income and
net long-term capital gains, will be taxable to shareholders as ordinary income.
Such distributions would be eligible (i) to be treated as qualified dividend
income in the case of shareholders taxed as individuals and (ii) for the
dividends received deduction in the case of corporate shareholders. In addition,
the Fund could be required to recognize unrealized gains, pay substantial taxes
and interest and make substantial distributions before requalifying as a
regulated investment company that is accorded special tax treatment.


The Fund is subject to a 4% nondeductible excise tax on amounts that have been
retained rather than distributed, as required, under a prescribed formula. The
formula requires payment to shareholders during a calendar year of distributions
representing at least 98% of the Fund's taxable ordinary income for the calendar
year and at least 98% of the excess of its capital gains over capital losses
realized during the one-year period ending October 31 (in most cases) of such
year as well as amounts that were neither distributed nor taxed to the Fund
during the prior calendar year. For these purposes, the Fund will be treated as
having distributed any amount on which it has been subject to corporate income
tax in the taxable year ending within the calendar year. A dividend paid to
shareholders in January of a year generally is deemed to have been paid by the
Fund on December 31 of the preceding year, if the dividend was declared and
payable to shareholders of record on a date in October, November or December of
that preceding year. Although the Fund's distribution policies should enable it
to avoid excise tax liability, the Fund may retain (and be subject to income or
excise tax on) a portion of its capital gain or other income if it appears to be
in the interest of such Fund.


Taxation of Fund Distributions. For federal income tax purposes, distributions
of investment income are generally taxable as ordinary income. Taxes on
distributions of capital gains are determined by how long the Funds owned the
investments that generated them, rather than how long a shareholder has owned
his or her shares. Distributions of net capital gains from the sale of
investments that the Fund owned for more than one year and that are properly
designated by the Fund as capital gain dividends ("Capital Gain Dividends") will
be taxable as long-term capital gains. Distributions of gains from the sale of
investments that the Fund owned for one year or less will be taxable as ordinary
income. For taxable years beginning before January 1, 2011, distributions of
investment income designated by the Fund as derived from "qualified dividend
income" will be taxed in the hands of individuals at the rates applicable to
long-term capital gain, provided holding period and other requirements are met
at both the shareholder and Fund levels.


Distributions are taxable to shareholders even if they are paid from income or
gains earned by the Fund before a shareholder's investment (and thus were
included in the price the shareholder paid). Distributions are taxable whether
shareholders receive them in cash or reinvest them in additional shares through
the reinvestment privilege. Any gain resulting from the sale or exchange of Fund
shares generally will be taxable as capital gains. The Fund does not expect a
significant portion of Fund distributions to be derived from qualified dividend
income.


Long-term capital gain rates applicable to individuals have been temporarily
reduced -- in general, to 15% with lower rates applying to taxpayers in the 10%
and 15% rate brackets -- for taxable years beginning before January 1, 2011.


To the extent that the Fund makes a distribution of income received by the Fund
in lieu of dividends (a "substitute payment") with respect to securities on loan
pursuant to a securities lending transaction, such income will not constitute
qualified dividend income and thus will not be eligible for taxation at the
rates applicable to long-term capital gain.




Capital gains distributions may be reduced if Fund capital loss carryforwards
are available. Any capital loss carryforwards to which the Fund is entitled are
disclosed in the Fund's annual and semi-annual reports to shareholders.


If the Fund makes a distribution to a shareholder in excess of the Fund's
current and accumulated earnings and profits in any taxable year, the excess
distribution will be treated as a return of capital to the extent of such
shareholder's tax basis in its shares, and thereafter as capital gain. A return
of capital is not taxable, but it reduces a shareholder's tax basis in its
shares, thus reducing any loss or increasing any gain on a subsequent taxable
disposition by the shareholder of its shares.


All distributions by the Fund result in a reduction in the net asset value of
the Fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution would nevertheless be taxable to the
shareholder as ordinary income or capital gain as described above, even though,
from an investment standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax implications of
buying shares just prior to a distribution. The price of shares purchased at
that time includes the amount of the forthcoming distribution. Those purchasing
just prior to a distribution will receive a partial return of capital upon the
distribution, which will nevertheless be taxable to them.

Transactions in Fund Shares. The sale, exchange or redemption of shares of the
Fund may give rise to a gain or loss. In general, any gain or loss realized upon
a taxable disposition of shares will be treated as long-term capital gain or
loss if the shares have been held for more than 12 months. Otherwise, the gain
or loss on the taxable disposition of shares of the Fund will be treated as
short-term gain or loss. However, any loss realized upon a taxable disposition
of shares held for six months or less will be treated as long-term, rather than
short-term, to the extent of any long-term capital gain distributions received
(or deemed received) by the shareholder with respect to the shares. All or a
portion of any loss realized upon a taxable disposition of shares of the Fund
will be disallowed if other substantially identical shares of the Fund are
purchased within 30 days before or after the disposition. In such a case, the
basis of the newly purchased shares will be adjusted to reflect the disallowed
loss.


Foreign Taxation. Foreign withholding or other foreign taxes with respect to
income (possibly including, in some cases, capital gains) on certain foreign
securities may occur. These taxes may be reduced or eliminated under the terms
of an applicable US income tax treaty. Shareholders generally will not be
entitled to claim a credit or deduction with respect to foreign taxes incurred
by the Fund.


Taxation of Certain Investments.



The Fund's investment in zero coupon bonds and other debt obligations having
original issue discount may cause the Fund to recognize taxable income in excess
of any cash received from the investment. A portion of the difference between
the issue price of zero coupon securities and their face value ("original issue
discount") is considered to be income to the Fund each year, even though the
Fund will not receive cash interest payments from these securities. This
original issue discount imputed income will comprise a part of the investment
company taxable income of the Fund, 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's level.

In addition, if the Fund invests in certain high yield original issue discount
obligations issued by corporations (including tax-exempt obligations), a portion
of the original issue discount accruing on the obligation may be treated as
taxable dividend income. In such event, dividends of investment company taxable
income received from the Fund by its shareholders, to the extent attributable to
such portion of accrued original issue discount, would be taxable. Any such
dividends received by the Fund's corporate shareholders may be eligible for the
deduction for dividends received by corporations.




Some debt obligations with a fixed maturity date of more than one year from the
date of issuance that are acquired by the Fund in the secondary market may be
treated as having market discount. Generally, any gain recognized on the
disposition of, and any partial payment of principal on, a debt security having
market discount is treated as ordinary income to the extent the gain, or
principal payment, does not exceed the "accrued market discount" on such debt
security. Market discount generally accrues in equal daily installments. The
Fund may make one or more of the elections applicable to debt obligations having
market discount, which could affect the character and timing of recognition of
income. Some debt obligations with a fixed maturity date of one year or less
from the date of issuance that are acquired by the Fund may be treated as having
acquisition discount or OID. Generally, the Fund will be required to include the
acquisition discount or OID in income over the term of the debt security, even
though payment of that amount is not received until a later time, usually when
the debt security matures. The Fund may make one or more of the elections
applicable to debt obligations having acquisition discount or OID, which could
affect the character and timing of recognition of income.

The Fund may invest to a significant extent in debt obligations that are in the
lowest rating categories or are unrated, including debt obligations of issuers
not currently paying interest or who are in default. Investments in debt
obligations that are at risk of or in default present special tax issues for the
Fund. Tax rules are not entirely clear about issues such as when the Fund may
cease to accrue interest, original issue discount or market discount, when and
to what extent deductions may be taken for bad debts or worthless securities and
how payments received on obligations in default should be allocated between
principal and income. These and other related issues will be addressed by the
Fund when, as and if it invests in such securities, in order to seek to ensure
that it distributes sufficient income to preserve its status as a regulated
investment company and does not become subject to US federal income or excise
tax.

If the Fund holds the foregoing kinds of securities, it may be required to pay
out as an income distribution each year an amount which is greater than the
total amount of cash interest the Fund actually received. Such distributions may
be made from the cash assets of the Fund or by liquidation of portfolio
securities, if necessary. The Fund may realize gains or losses from such
liquidations. In the event the Fund realizes net capital gains from such
transactions, its shareholders may receive a larger capital gain distribution
than they would in the absence of such transactions.

The Fund's use of options, futures contracts, forward contracts (to the extent
permitted) and certain other Strategic Transactions will be subject to special
tax rules (including mark-to-market, constructive sale, straddle, wash sale,
short sale and other rules), the effect of which may be to accelerate the Fund's
income, defer losses, cause adjustments in the holding periods of portfolio
securities, convert capital gains into ordinary income and convert short-term
capital losses into long-term capital losses. These rules could therefore affect
the amount, timing and character of distributions to investors.

Tax-Exempt Shareholders. Under current law, the Fund serves to "block" (that is,
prevent the attribution to shareholders of) unrelated business taxable income
("UBTI") from being realized by tax-exempt shareholders. Notwithstanding this
"blocking" effect, a tax-exempt shareholder could realize UBTI by virtue of its
investment in the Fund if shares in the Fund constitute debt-financed property
in the hands of the tax-exempt shareholder within the meaning of Code Section
514(b).

A tax-exempt shareholder may also recognize UBTI if the Fund recognizes "excess
inclusion income" derived from direct or indirect investments in residual
interests in REMICS or TMPs if the amount of such income recognized by the Fund
exceeds the Fund's investment company taxable income (after taking into account
deductions for dividends paid by the Fund). Furthermore, any investment in
residual interests of a collateralized mortgage obligation (a "CMO") that has
elected to be treated as a REMIC can create complex tax consequences, especially
if the Fund has state or local governments or other tax-exempt organizations as
shareholders.

In addition, special tax consequences apply to charitable remainder trusts
("CRTs") that invest in RICs that invest directly or indirectly in residual
interests in REMICs or in TMPs. Under legislation enacted in December 2006, a
CRT (as defined in section 664 of the Code) that realizes any UBTI for a taxable
year must pay an excise tax annually of an amount equal to such UBTI. Under IRS
guidance issued in November 2006, a CRT will not recognize UBTI as a result of
investing in a Fund that recognizes "excess inclusion income." Rather, if at any
time during any taxable year a CRT (or one of certain other tax-exempt
shareholders, such as the United States, a state or political subdivision, or an
agency or instrumentality thereof, and certain energy cooperatives) is a record
holder of a share in a Fund that recognizes "excess inclusion income," then the
Fund will be subject to a tax on that portion of its "excess inclusion income"
for the taxable year that is allocable to such shareholders at the highest
federal corporate income tax rate. The extent to which this IRS guidance remains
applicable in light of the December 2006 legislation is unclear. To the extent
permitted under the 1940 Act, each Fund may elect to specially allocate any such
tax to the applicable CRT, or other shareholder, and thus reduce such
shareholder's distributions for the year by the amount of the tax that relates
to such shareholder's interest in the Fund. The Fund has not yet determined
whether such an election will be made. CRTs are urged to consult their tax
advisors concerning the consequences of investing in the Fund.


The Funds may take positions directly in foreign currencies and/or in various
financial instruments covering such positions. Income from direct investments in
foreign currencies currently constitutes Qualifying Income under the Code.
However, the Treasury Department has the authority to issue regulations
excluding all or a portion of such income from the definition of Qualifying
Income. Although the Treasury Department was granted this authority in 1986, it
has not exercised this authority. If the Treasury Department were to exercise
this authority in the future, there is a remote possibility that such
regulations may be applied retroactively.

Congress or the Treasury Department can change or clarify these requirements at
any time, possibly with retroactive effect. If Congress, the Treasury Department
or the Internal Revenue Service were to take any action that altered the current
understanding of these requirements, the Funds could be forced to change the
manner in which it pursues its investment strategy or could cease to qualify for
the special tax treatment accorded regulated investment companies under current
federal income tax law. In either event, such a change would result in a reduced
after-tax return to shareholders. Shareholders should consult with their tax
advisors with respect to the specific tax consequences of an investment in the
Fund.

The Fund's transactions in non-US currencies and hedging activities may give
rise to ordinary income or loss to the extent such income or loss results from
fluctuations in value of the non-US currency concerned. In addition, such
activities are likely to produce a difference between its book income and its
taxable income. If the Fund's book income exceeds its taxable income, the
distribution (if any) of such excess will be treated as (i) a dividend to the
extent of the Fund's remaining earnings and profits (including earnings and
profit arising from tax-exempt income), (ii) thereafter as a return of capital
to the extent of the recipient's basis in the shares, and (iii) thereafter as
gain from the sale or exchange of a capital asset. If the Fund's book income is
less than its taxable income, the Fund could be required to make distributions
exceeding book income to qualify as a regulated investment company that is
accorded special tax treatment.


Withholding and Other Tax Considerations. Under the backup withholding
provisions of the Code, redemption proceeds as well as distributions may be
subject to federal income tax withholding for certain shareholders, including
those who fail to furnish the Fund with their taxpayer identification numbers
and certifications as to their tax status, who have underreported dividend or
interest income, or who fail to certify to the Fund that they are not subject to
such withholding.

Non-US Shareholders. Distributions properly designated Capital Gain Dividends
and exempt-interest dividends generally will not be subject to withholding of
federal income tax. In general, dividends (other than Capital Gain Dividends)
paid by the Fund to a shareholder that is not a "US person" within the meaning
of the Code (such shareholder, a "foreign person") are subject to withholding of
US federal income tax at a rate of 30% (or lower applicable treaty rate) even if
they are funded by income or gains (such as portfolio interest, short-term
capital gains, or foreign-source dividend and interest income) that, if paid to
a foreign person directly, would not be subject to withholding. However,
effective for taxable years of the Fund beginning before January 1, 2008, the
Fund was not required to withhold any amounts (i) with respect to distributions
(other than distributions to a foreign person (w) that has not provided a
satisfactory statement that the beneficial owner is not a US person, (x) to the
extent that the dividend is attributable to certain interest on an obligation if
the foreign person is the issuer or is a 10% shareholder of the issuer, (y) that
is within certain foreign countries that have inadequate information exchange
with the United States, or (z) to the extent the dividend is attributable to
interest paid by a person that is a related person of the foreign person and the
foreign person is a controlled foreign corporation) from US-source interest
income that would not be subject to US federal income tax if earned directly by
an individual foreign person, to the extent such distributions are properly
designated by the Fund, and (ii) with respect to distributions (other than
distributions to an individual foreign person who is present in the United
States for a period or periods aggregating 183 days or more during the year of
the distribution) of net short-term capital gains in excess of net long-term
capital losses, to the extent such distributions are properly designated by the
Fund. Depending on the circumstances, the Fund may make such designations with
respect to all, some or none of its potentially eligible dividends and/or treat
such dividends, in whole or in part, as ineligible from this exemption from
withholding. Pending legislation would extend the exemption from withholding for
interest-related and short-term capital gain distributions for one year, i.e.
for taxable years beginning before January 1, 2009. At the time of this filing,
it is unclear whether the legislation will be enacted.

In order to qualify for this exemption from withholding, a foreign person will
need to comply with applicable certification requirements relating to non-US
status (including, in general, furnishing an IRS Form W-8BEN or substitute
form). In the case of shares held through an intermediary, the intermediary may
withhold even if the Fund makes a designation with respect to a payment. Foreign
persons should consult with their intermediaries with respect to the application
of these rules to their accounts. A beneficial holder of shares who is a foreign
person is not, in general, subject to US federal income tax on gains (and is not
allowed a deduction for losses) realized on the sale of shares of the Fund or on
Capital Gain Dividends unless (i) such gain or dividend is effectively connected
with the conduct of a trade or business carried on by such holder within the
United States or (ii) in the case of an individual holder, the holder is present
in the United States for a period or periods aggregating 183 days or more during
the year of the sale or the receipt of the Capital Gain Dividend and certain
other conditions are met.





In order for a foreign investor to qualify for exemption from the backup
withholding tax rates under income tax treaties, the foreign investor must
comply with special certification and filing requirements. Foreign investors in
the Fund should consult their tax advisers in this regard. Backup withholding is
not an additional tax. Any amounts withheld may be credited against the
shareholder's US federal income tax liability, provided the appropriate
information is furnished to the Internal Revenue Service.

If a shareholder is eligible for the benefits of a tax treaty, any effectively
connected income or gain will generally be subject to US federal income tax on a
net basis only if it is also attributable to a permanent establishment
maintained by the shareholder in the United States.

A beneficial holder of shares who is a foreign person may be subject to state
and local tax and to the US federal estate tax in addition to the federal tax on
income referred to above.


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


The federal income tax discussion set forth above is for general information
only. Shareholders of the Fund may be subject to state and local taxes on
distributions received from the Fund and on redemptions of the Fund's shares.
Investors are advised to consult their own tax advisors with respect to their
own circumstances regarding the above-referenced federal income taxation rules
and with respect to other federal, state, local or foreign tax consequences to
them of an investment in shares of the Fund.


                                 NET ASSET VALUE

The net asset value of shares of the 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 mean of the most recent
bid and asked quotations or evaluated price obtained from a broker-dealer. Other
debt securities are valued at prices supplied by an approved pricing agent, if
available, and otherwise at the most recent bid quotation or evaluated price, as
applicable, obtained from one or more broker-dealers. If it is not possible to
value a particular debt security pursuant to the above methods, the security is
valued on the basis of factors including (but not limited to) maturity, coupon,
creditworthiness, currency denomination, and the movement of the market in which
the security is normally traded.

An exchange-traded option contract on securities, currencies and other financial
instruments is valued at its most recent sale price on the relevant exchange.
Lacking any sales, the option contract is valued at the Calculated Mean. If it
is not possible to determine the Calculated Mean, the option contract is valued
at the most recent bid quotation in the case of a purchased option contract or
the most recent asked quotation in the case of a written option contract, in
each case as of the Value Time. An option contract on securities, currencies and
other financial instruments traded in the OTC market is valued on the Value Date
at the evaluated price provided by the broker-dealer with which it was traded.
Futures contracts (and options thereon) are valued at the most recent settlement
price, if available, on the 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 portfolio assets are not readily available or the value
of a portfolio asset as determined in accordance with Board approved procedures
does not represent the fair market value of the portfolio asset, the value of
the portfolio asset is taken to be an amount which, in the opinion of the Fund's
Pricing Committee (or, in some cases, the Board's Valuation Committee),
represents fair market value. The value of other portfolio holdings owned by the
Fund is determined in a manner which is intended to fairly reflect the fair
market value of the asset on the valuation date, based on valuation procedures
adopted by the Trust's Board and overseen primarily by the Fund's Pricing
Committee.

                              TRUSTEES AND OFFICERS


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

Independent Board Members

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth, Position                                                                   Number of Funds
 with the Trust and Length of     Business Experience and                                        in DWS Fund
 Time Served(1)                   Directorships During the Past 5 Years                          Complex Overseen
--------------------------------------------------------------------------------------------------------------------
<S>                                       <C>                                                           <C>
Dawn-Marie Driscoll (1946)        President, Driscoll Associates (consulting firm); Executive           135
Chairperson since 2004,(2) and    Fellow, Center for Business Ethics, Bentley College;
Board Member since 1987           formerly: Partner, Palmer & Dodge (1988-1990); Vice President
                                  of Corporate Affairs and General Counsel, Filene's
                                  (1978-1988); Directorships: Trustee of 8 open-end mutual
                                  funds managed by Sun Capital Advisers, Inc. (since 2007);
                                  Director of ICI Mutual Insurance Company (since 2007);
                                  Advisory Board, Center for Business Ethics, Bentley College;
                                  Trustee, Southwest Florida Community Foundation (charitable
                                  organization); former Directorships: Investment Company
                                  Institute (audit, executive, nominating committees) and
                                  Independent Directors Council (governance, executive
                                  committees)
--------------------------------------------------------------------------------------------------------------------
Paul K. Freeman                   Consultant, World Bank/Inter-American Development Bank;               133
(1950)                            formerly: Project Leader, International Institute for Applied
Vice Chairperson since 2008, and  Systems Analysis (1998-2001); Chief Executive Officer, The
Board Member since 1993           Eric Group, Inc. (environmental insurance) (1986-1998)
--------------------------------------------------------------------------------------------------------------------
John W. Ballantine (1946)         Retired; formerly: Executive Vice President and Chief Risk            135
Board Member since 1999           Management Officer, First Chicago NBD Corporation/The First
                                  National Bank of Chicago (1996-1998); Executive Vice
                                  President and Head of International Banking (1995-1996);
                                  Directorships: Healthways Inc. (provider of disease and care
                                  management services); Portland General Electric (utility
                                  company); Stockwell Capital Investments PLC (private equity);
                                  former Directorships: First Oak Brook Bancshares, Inc. and
                                  Oak Brook Bank
--------------------------------------------------------------------------------------------------------------------
 Henry P. Becton, Jr. (1943)      Vice Chair, WGBH Educational Foundation; Directorships:               135
 Board Member since               Association of Public Television Stations; Becton Dickinson
 1990                             and Company(3) (medical technology company); Belo
                                  Corporation(3) (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
--------------------------------------------------------------------------------------------------------------------
Keith R. Fox (1954)               Managing General Partner, Exeter Capital Partners (a series           135
Board Member since                of private equity funds); Directorships: Progressive Holding
1996                              Corporation (kitchen goods importer and distributor); Natural
                                  History, Inc. (magazine publisher); Box Top Media Inc.
                                  (advertising); The Kennel Shop (retailer)
--------------------------------------------------------------------------------------------------------------------
Kenneth C. Froewiss               Clinical Professor of Finance, NYU Stern School of Business           135
(1945)                            (1997-present); Member, Finance Committee, Association for
Board Member since                Asian Studies (2002-present); Director, Mitsui Sumitomo
2001                              Insurance Group (US) (2004-present); prior thereto, Managing
                                  Director, J.P. Morgan (investment banking firm) (until 1996)
--------------------------------------------------------------------------------------------------------------------
Richard J. Herring                Jacob Safra Professor of International Banking and Professor,         135
(1946)                            Finance Department, The Wharton School, University of
Board Member since                Pennsylvania (since July 1972); Co-Director, Wharton
1990                              Financial Institutions Center (since July 2000); Director,
                                  Japan Equity Fund, Inc. (since September 2007), Thai Capital
                                  Fund, Inc. (since September 2007), Singapore Fund, Inc.
                                  (since September 2007); formerly: Vice Dean and Director,
                                  Wharton Undergraduate Division (July 1995-June 2000);
                                  Director, Lauder Institute of International Management
                                  Studies (July 2000-June 2006)
--------------------------------------------------------------------------------------------------------------------
William McClayton (1944)          Chief Administrative Officer, Diamond Management & Technology         135
Board Member since 2004           Consultants, Inc. (global management consulting firm)
                                  (2001-present); Directorship: Board of Managers, YMCA of
                                  Metropolitan Chicago; formerly: Senior Partner, Arthur
                                  Andersen LLP (accounting) (1966-2001); Trustee, Ravinia
                                  Festival
--------------------------------------------------------------------------------------------------------------------
Rebecca W. Rimel                  President and Chief Executive Officer, The Pew Charitable             135
(1951)                            Trusts (charitable organization) (1994 to present); Trustee,
Board Member since                Thomas Jefferson Foundation (charitable organization) (1994
1995                              to present); Trustee, Executive Committee, Philadelphia
                                  Chamber of Commerce (2001 to 2007); Trustee, Pro Publica
                                  (2007-present) (charitable organization); formerly: Executive
                                  Vice President, The Glenmede Trust Company (investment trust
                                  and wealth management) (1983 to 2004); Board Member, Investor
                                  Education (charitable organization) (2004-2005); Director,
                                  Viasys Health Care(3) (January 2007-June 2007)
--------------------------------------------------------------------------------------------------------------------
William N. Searcy, Jr.            Private investor since October 2003; Trustee of 8 open-end            135
(1946)                            mutual funds managed by Sun Capital Advisers, Inc. (since
Board Member since                October 1998); formerly: Pension & Savings Trust Officer,
1993                              Sprint Corporation(3) (telecommunications) (November
                                  1989-September 2003)
--------------------------------------------------------------------------------------------------------------------
Jean Gleason Stromberg            Retired; formerly: Consultant (1997-2001); Director, US               135
(1943)                            Government Accountability Office (1996-1997); Partner,
Board Member since                Fulbright & Jaworski, L.L.P. (law firm) (1978-1996);
1997                              Directorships: The William and Flora Hewlett Foundation;
                                  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)
--------------------------------------------------------------------------------------------------------------------
Robert H. Wadsworth (1940)        President, Robert H. Wadsworth & Associates, Inc. (consulting         138
Board Member since 1999           firm) (1983 to present).
--------------------------------------------------------------------------------------------------------------------

Interested Board Member

--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth, Position                                                                   Number of Funds
 with the Trust and Length of     Business Experience and                                        in DWS Fund
 Time Served(1)                   Directorships During the Past 5 Years                          Complex Overseen
--------------------------------------------------------------------------------------------------------------------
 Axel Schwarzer(4)                Managing Director(5), Deutsche Asset Management; Head of              135
 (1958)                           Deutsche Asset Management Americas; CEO of DWS Scudder;
 Board Member since               formerly: board member of DWS Investments, Germany
 2006                             (1999-2005); Head of Sales and Product Management for the
                                  Retail and Private Banking Division of Deutsche Bank in
                                  Germany (1997-1999); various strategic and operational
                                  positions for Deutsche Bank Germany Retail and Private
                                  Banking Division in the field of investment funds, tax driven
                                  instruments and asset management for corporates (1989-1996)
--------------------------------------------------------------------------------------------------------------------

Officers(6)

--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth, Position
 with the Trust and Length of     Business Experience and
 Time Served(7)                   Directorships During the Past 5 Years
--------------------------------------------------------------------------------------------------------------------
 Michael G. Clark(8) (1965)       Managing Director(5), Deutsche Asset Management (2006-present); President of
 President, 2006-present          DWS family of funds; Director, ICI Mutual Insurance Company (since
                                  October 2007); formerly: Director of Fund Board Relations (2004-2006) and
                                  Director of Product Development (2000-2004), Merrill Lynch Investment Managers;
                                  Senior Vice President Operations, Merrill Lynch Asset Management (1999-2000)
--------------------------------------------------------------------------------------------------------------------
 John Millette(9) (1962)          Director(5), Deutsche Asset Management
 Vice President and Secretary,
 1999-present
--------------------------------------------------------------------------------------------------------------------
 Paul H. Schubert(8) (1963)       Managing Director(5), Deutsche Asset Management (since July 2004); formerly:
 Chief Financial Officer,         Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family
 2004-present                     of Funds (1998-2004); Vice President and Director of Mutual Fund Finance at UBS
 Treasurer, 2005-present          Global Asset Management (1994-1998)
--------------------------------------------------------------------------------------------------------------------
 Patricia DeFilippis(8) (1963)    Vice President, Deutsche Asset Management (since June 2005); formerly: Counsel,
 Assistant Secretary,             New York Life Investment Management LLC (2003-2005); legal associate, Lord,
 2005-present                     Abbett & Co. LLC (1998-2003)
--------------------------------------------------------------------------------------------------------------------
 Elisa D. Metzger(8)  (1962)      Director(5), Deutsche Asset Management (since September 2005); formerly:
 Assistant Secretary,             Counsel, Morrison and Foerster LLP (1999-2005)
 2005-present
--------------------------------------------------------------------------------------------------------------------
 Caroline Pearson(9) (1962)       Managing Director(5), Deutsche Asset Management
 Assistant Secretary,
 1997-present
--------------------------------------------------------------------------------------------------------------------
 Paul Antosca(9)                  Director(5), Deutsche Asset Management (since 2006); formerly: Vice President,
 (1957)                           The Manufacturers Life Insurance Company (U.S.A.) (1990-2006)
 Assistant Treasurer,
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Jack Clark (9)                   Director(5), Deutsche Asset Management (since 2007); formerly: Vice President,
 (1967)                           State Street Corporation (2002-2007)
 Assistant Treasurer,
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Kathleen Sullivan D'Eramo(9)     Director(5), Deutsche Asset Management
 (1957)
 Assistant Treasurer,
 2003-present
--------------------------------------------------------------------------------------------------------------------
 Diane Kenneally(9)               Director(5), Deutsche Asset Management
 (1966)
 Assistant Treasurer,
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Jason Vazquez(8) (1972)          Vice President, Deutsche Asset Management (since 2006); formerly: AML
 Anti-Money Laundering            Operations Manager for Bear Stearns (2004-2006); Supervising Compliance
 Compliance Officer,              Principal and Operations Manager for AXA Financial (1999-2004)
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Robert Kloby(8) (1962)           Managing Director(5), Deutsche Asset Management (2004-present); formerly: Chief
 Chief Compliance Officer,        Compliance Officer/Chief Risk Officer, Robeco USA (2000-2004); Vice President,
 2006-present                     The Prudential Insurance Company of America (1988-2000); E.F. Hutton and
                                  Company (1984-1988)
--------------------------------------------------------------------------------------------------------------------
 J. Christopher Jackson(8)        Director(5), Deutsche Asset Management (2006-present); formerly: Director,
 (1951)                           Senior Vice President, General Counsel, and Assistant Secretary, Hansberger
 Chief Legal Officer,             Global Investors, Inc. (1996-2006); Director, National Society of Compliance
 2006-present                     Professionals (2002-2005) (2006-2009)
--------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)      The length of time served represents the year in which the Board Member
         joined the board of one or more DWS funds currently overseen by the
         Board.

(2)      Represents the year in which Ms. Driscoll was first appointed
         Chairperson of certain DWS funds.

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

(4)      The mailing address of Axel Schwarzer is c/o Deutsche Investment
         Management Americas Inc., 345 Park Avenue, New York, New York 10154.
         Mr. Schwarzer is an interested Board Member by virtue of his positions
         with Deutsche Asset Management. As an interested person, Mr. Schwarzer
         receives no compensation from the Fund.

(5)      Executive title, not a board directorship.

(6)      As a result of their respective positions held with the Advisor, these
         individuals are considered "interested persons" of the Advisor within
         the meaning of the 1940 Act. Interested persons receive no compensation
         from the Fund.

(7)      The length of time served represents the year in which the officer was
         first elected in such capacity for one or more DWS funds.

(8)      Address:  345 Park Avenue, New York, New York 10154.

(9)      Address: Two International Place, Boston, Massachusetts 02110.

Certain officers hold similar positions for other investment companies for which
DIMA or an affiliate serves as the Advisor.

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

 Paul H. Schubert:                         Vice President
 Caroline Pearson:                         Secretary

Board Members' Responsibilities. The officers of the Trust manage its day-to-day
operations under the direction of the Board. The primary responsibility of the
Board is to represent the interests of the Fund and to provide oversight of the
management of the Fund.

Board Committees. The Board has established the following standing committees:
Audit Committee, Nominating and Governance Committee, Contract Committee, Equity
Oversight Committee, Fixed-Income and Quant Oversight Committee, Marketing and
Shareholder Services Committee, and Operations Committee. For each committee,
the Board has adopted a written charter setting forth each committee's
responsibilities. Each committee was reconstituted effective April 1, 2008.

Audit Committee: The Audit Committee, which consists entirely of Independent
Board Members, assists the Board in fulfilling its responsibility for oversight
of (1) the integrity of the financial statements, (2) the Fund's accounting and
financial reporting policies and procedures, (3) the Fund's compliance with
legal and regulatory requirements related to accounting and financial reporting
and (4) the qualifications, independence and performance of the independent
registered public accounting firm for the Fund. It also approves and recommends
to the Board the appointment, retention or termination of the independent
registered public accounting firm for the Fund, reviews the scope of audit and
internal controls, considers and reports to the Board on matters relating to the
Fund's accounting and financial reporting practices, and performs such other
tasks as the full Board deems necessary or appropriate. The Audit Committee
receives annual representations from the independent registered public
accounting firm as to its independence. The members of the Audit Committee are
William McClayton (Chair), Kenneth C. Froewiss (Vice Chair), John W. Ballantine,
Henry P. Becton, Jr., Keith R. Fox and William N. Searcy, Jr. During the
calendar year 2007, the Audit Committee of the Fund's Board held nine (9)
meetings.

Nominating and Governance Committee: The Nominating and Governance Committee,
which consists entirely of Independent Board Members, recommends individuals for
membership on the Board, nominates officers, board and committee chairs, vice
chairs and committee members, and oversees the operations of the Board. The
Nominating and Governance Committee also reviews recommendations by shareholders
for candidates for Board positions. Shareholders may recommend candidates for
Board positions by forwarding their correspondence by US mail or courier service
to Dawn-Marie Driscoll, P.O. Box 100176, Cape Coral, FL 33904. The members of
the Nominating and Governance Committee are Henry P. Becton, Jr. (Chair),
Rebecca W. Rimel (Vice Chair), Paul K. Freeman and William McClayton. During the
calendar year 2007, the Nominating/Corporate Governance Committee of the Fund's
Board performed similar functions and held three (3) meetings.

Contract Committee: The Contract Committee, which consists entirely of
Independent Board Members, reviews at least annually, (a) the Fund's financial
arrangements with DIMA and its affiliates, and (b) the Fund's expense ratios.
The members of the Contract Committee are Robert H. Wadsworth (Chair), Keith R.
Fox (Vice Chair), Henry P. Becton, Jr., Richard J. Herring, William McClayton
and Jean Gleason Stromberg.

Equity Oversight Committee: The Equity Oversight Committee reviews the
investment operations of those Funds that primarily invest in equity securities
(except for those funds managed by a quantitative investment team). The members
of the Equity Oversight Committee are John W. Ballantine (Chair), William
McClayton (Vice Chair), Henry P. Becton, Jr., Keith R. Fox, Richard J. Herring
and Rebecca W. Rimel. During the calendar year 2007, the Equity Oversight
Committee of the Fund's Board performed similar functions and held six (6)
meetings.

Fixed-Income and Quant Oversight Committee: The Fixed-Income and Quant Oversight
Committee reviews the investment operations of those Funds that primarily invest
in fixed-income securities or are managed by a quantitative investment team. The
members of the Fixed-Income and Quant Oversight Committee are William N. Searcy,
Jr. (Chair), Jean Gleason Stromberg (Vice Chair), Dawn-Marie Driscoll, Paul K.
Freeman, Kenneth C. Froewiss and Robert H. Wadsworth. During the calendar year
2007, the Fixed-Income Oversight Committee of the Fund's Board performed similar
functions and held six (6) meetings.

Marketing and Shareholder Services Committee: The Marketing and Shareholder
Services Committee reviews the Fund's marketing program, sales practices and
literature and shareholder services. The members of the Marketing and
Shareholder Services Committee are Richard J. Herring (Chair), Dawn-Marie
Driscoll (Vice Chair), Paul K. Freeman, Rebecca W. Rimel, Jean Gleason Stromberg
and Robert H. Wadsworth. During the calendar year 2007, the
Marketing/Distribution/Shareholder Service Committee of the Fund's Board
performed similar functions and held seven (7) meetings.

The Operations Committee: The Operations Committee reviews the administrative
operations, legal affairs and general compliance matters of the Fund. The
Operations Committee reviews administrative matters related to the operations of
the Fund, policies and procedures relating to portfolio transactions, custody
arrangements, fidelity bond and insurance arrangements, valuation of Fund assets
and securities and such other tasks as the full Board deems necessary or
appropriate. The Operations Committee also oversees the valuation of the Fund's
securities and other assets and determines, as needed, the fair value of Fund
securities or other assets under certain circumstances as described in the
Fund's Valuation Procedures. The Operations Committee has appointed a Valuation
Sub-Committee, which may make determinations of fair value required when the
Operations Committee is not in session. The members of the Operations Committee
are Paul K. Freeman (Chair), Dawn-Marie Driscoll (Vice Chair), John W.
Ballantine, Kenneth C. Froewiss, Rebecca W. Rimel and William N. Searcy, Jr. The
members of the Valuation Sub-Committee are Kenneth C. Froewiss (Chair), John W.
Ballantine, Dawn-Marie Driscoll (Alternate), Paul K. Freeman (Alternate),
Rebecca W. Rimel (Alternate) and William N. Searcy, Jr. (Alternate). During the
calendar year 2007, the Expenses/Operations Committee and Valuation Committee
performed similar functions and each held nine (9) meetings and six (6)
meetings, respectively.

Ad Hoc Committees. In addition to the standing committees described above, from
time to time the Board may also form ad hoc committees to consider specific
issues.

Remuneration. Each Independent Board Member receives compensation from the Fund
for his or her services, which includes 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.

Board Members who are officers, directors, employees or stockholders of Deutsche
Asset Management or its affiliates receive no direct compensation from the Fund,
although they are compensated as employees of Deutsche Asset Management, or its
affiliates, and as a result may be deemed to participate in fees paid by the
Fund. The following tables show compensation from the Fund and aggregate
compensation from all of the funds in the DWS fund complex received by each
Independent Board Member during the calendar year 2007. Mr. Schwarzer is an
interested person of the Fund and received no compensation from the Fund or any
fund in the DWS fund complex during the relevant periods.

<TABLE>
<CAPTION>
                                      Aggregate Compensation         Total Compensation
                                          from DWS Core                from Fund and
  Name of Board Member                   Plus Income Fund            DWS Fund Complex(1)
  --------------------                   ----------------            -------------------
<S>                                              <C>                       <C>
  John W. Ballantine                             $0                        $215,000
  Henry P. Becton, Jr.(2)                    $1,503                        $200,000
  Dawn-Marie Driscoll(2)(3)                  $1,887                        $253,000
  Keith R. Fox(2)                            $1,515                        $203,000
  Paul K. Freeman(4)                             $0                        $265,000
  Kenneth C. Froewiss(2)                     $1,492                        $200,000
  Richard J. Herring(2)                      $1,454                        $195,000
  William McClayton(5)                           $0                        $205,000
  Rebecca W. Rimel(2)                        $1,417                        $194,000
  William N. Searcy, Jr.(2)                  $1,492                        $200,000
  Jean Gleason Stromberg(2)                  $1,410                        $189,000
  Robert H. Wadsworth                            $0                        $245,250
</TABLE>

(1)      The DWS fund complex is composed of 138 funds as of December 31, 2007.

(2)      Aggregate compensation includes amounts paid to the Board Members for
         special meetings of ad hoc committees of the board in connection with
         the consolidation of the DWS fund boards and various funds, meetings
         for considering fund expense simplification initiatives, and
         consideration of issues specific to the Fund's direct shareholders
         (i.e., those shareholders who did not purchase shares through financial
         intermediaries). Such amounts totaled $1,000 for Mr. Becton, $1,000 for
         Ms. Driscoll, $1,000 for Mr. Fox, $1,000 for Mr. Froewiss, $1,000 for
         Dr. Herring, $5,000 for Ms. Rimel, $1,000 for Mr. Searcy and $1,000 for
         Ms. Stromberg. These meeting fees were borne by the Advisor.

(3)      Includes $50,000 in annual retainer fees received by Ms. Driscoll as
         Chairperson of certain DWS funds.

(4)      Includes $25,000 paid to Dr. Freeman for numerous special meetings of
         an ad hoc committee in connection with board consolidation initiatives
         and $50,000 in annual retainer fees received by Dr. Freeman as
         Chairperson of certain DWS funds.

(5)      Does not include $15,000 to be paid to Mr. McClayton in calendar year
         2008 for numerous special meetings of an ad hoc committee of the former
         Chicago Board in connection with board consolidation initiatives.

Dr. Freeman, prior to his service as Independent Board Member, served as a board
member of certain funds in the Deutsche Bank complex ("DB Funds"). In connection
with his resignation and the resignation of certain other board members of the
DB Funds on July 30, 2002 (the "Effective Date"), which was part of a
restructuring of the boards overseeing the DB Funds, Deutsche Asset Management,
Inc. ("DAMI") agreed to recommend, and, if necessary obtain, directors and
officers ("D&O") liability insurance coverage for the prior board members,
including Dr. Freeman, that is at least as equivalent in scope and amount to the
D&O coverage provided to the prior board members for the six-year period
following the Effective Date. In the event that D&O insurance coverage is not
available in the commercial marketplace on commercially reasonable terms from a
conventional third party insurer, DeAM reserved the right to provide
substantially equivalent protection in the form of an indemnity or financial
guarantee from an affiliate of DeAM. The D&O policy in effect prior to the
Effective Date provided aggregate coverage of $25,000,000, subject to a $250,000
per claim deductible.

Board Member Ownership in the Fund

The following table shows the dollar range of equity securities beneficially
owned by each Board Member in the Fund and DWS fund complex as of December 31,
2007.

<TABLE>
<CAPTION>
                                                                                  Aggregate Dollar Range of
                                           Dollar Range of Beneficial        Ownership in all Funds Overseen by
                                                 Ownership in                           Board Member
Board Member                               DWS Core Plus Income Fund             in the DWS Fund Complex(1)
------------                               -------------------------             --------------------------

Independent Board Member:
-------------------------
<S>                                                   <C>                                       <C>
John W. Ballantine                                    None                                 Over $100,000
Henry P. Becton, Jr.                           $10,001 - $50,000                           Over $100,000
Dawn-Marie Driscoll                               $1 - $10,000                             Over $100,000
Keith R. Fox                                          None                                 Over $100,000
Paul K. Freeman                                       None                                 Over $100,000
Kenneth C. Froewiss                                   None                                 Over $100,000
Richard J. Herring                                    None                                 Over $100,000
William McClayton                                     None                                 Over $100,000
Rebecca W. Rimel                                      None                                 Over $100,000
William N. Searcy, Jr.                                None                                 Over $100,000
Jean Gleason Stromberg                         $10,001 - $50,000                           Over $100,000
Robert H. Wadsworth                                   None                                 Over $100,000

Interested Board Member:
------------------------

Axel Schwarzer                                        None                                 Over $100,000

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

Ownership in Securities of the Advisor and Related Companies

As reported to the Fund, the information in the following table reflects
ownership by the Independent Board Members and their immediate family members of
certain securities as of December 31, 2007. Immediate family members can be a
spouse, children residing in the same household including step and adoptive
children, and any dependents. The securities represent ownership in the Advisor
or principal underwriter of the Fund and any persons (other than a registered
investment company) directly or indirectly controlling, controlled by, or under
common control with the Advisor or principal underwriter of the Fund (including
Deutsche Bank AG).

                                                                                   Value of        Percent of
                                   Owner and                                     Securities on     Class on an
Independent                     Relationship to                     Title of     an Aggregate       Aggregate
Board Member                      Board Member         Company        Class          Basis            Basis
------------                      ------------         -------        -----          -----            -----

John W. Ballantine                                      None
Henry P. Becton, Jr.                                    None
Dawn-Marie Driscoll                                     None
Keith R. Fox                                            None
Paul K. Freeman                                         None
Kenneth C. Froewiss                                     None
Richard J. Herring                                      None
William McClayton                                       None
Rebecca W. Rimel                                        None
William N. Searcy, Jr.                                  None
Jean Gleason Stromberg                                  None
Robert H. Wadsworth                                     None

Securities Beneficially Owned

As of April 8, 2008, 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 April 8, 2008, 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 Plus Income Fund

Name and Address of Investor Ownership                          Shares                      % of Total Shares
--------------------------------------                          ------                      -----------------

SANTA ROSA RANCHERIA TACHI TR                                1,294,643.50                   8.57% of Class A
TRIBAL TRUST FOR MINORS
FBO SANTA ROSA RANCHERIA
LEMOORE CA  93245-0008

MLPF&S FOR THE SOLE BENEFIT OF                                 86,748.25                    8.95% of Class C
ITS CUSTOMERS
ATTN FUND ADMINISTRATION 9E8K5
JACKSONVILLE FL  32246-6484

CITIGROUP GLOBAL MARKETS INC                                 2,639,035.41                     8% of Class S
BOOK ENTRY ACCOUNT
MUTUAL FUNDS DEPT
ATTN MATT MAESTRI
NEW YORK NY  10001-2402

DWS TRUST COMPANY TTEE                                       1,686,784.63                   5.11% of Class S
FARMERS GROUP INC
EMPLOYEES PROFIT SHARING SAVINGS
ATTN: ASSET RECON
SALEM NH  03079-1143

DEUTSCHE BANK SECURITIES INC                                 1,504,766.55             98.25% of Institutional Class
FBO XXX-XXXXX-XX
ATTN MUTUAL FUND DEPT 26TH FL
NEW YORK NY  10020-1104
</TABLE>





Agreement to Indemnify Independent Trustees for Certain Expenses

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



                               TRUST ORGANIZATION

DWS Core Plus Income Fund is a diversified series of DWS Portfolio Trust, a
Massachusetts business trust established under a Declaration of Trust dated
November 3, 1987, as amended. On November 4, 1987, the par value of the shares
of beneficial interest was changed from no par value to $0.01 par value per
share. On February 6, 2006 the name of the Trust was changed from Scudder
Portfolio Trust to DWS Portfolio Trust.

Organizational Description

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, that was approved by shareholders in the second quarter of
2006, as may be further amended from time to time (the "Declaration of Trust").
All shares issued and outstanding are fully paid and non-assessable,
transferable, have no pre-emptive or conversion rights (except as may be
determined by the Board of Trustees) and are redeemable as described in the SAI
and a Fund's prospectus. Each share has equal rights with each other share of
the same class of the Fund as to voting, dividends, exchanges, conversion
features and liquidation.
Shareholders are entitled to one vote for each full share held and fractional
votes for fractional shares held.

The 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; (e) a merger, consolidation or sale
of assets; (f) the adoption of an investment advisory or management contract;
(g) the incorporation of the Trust or any series; (h) any plan adopted pursuant
to Rule 12b-1 (or any successor rule) under the 1940 Act; and (i) such
additional matters as may be required by law, the Declaration of Trust, the
By-laws of a Fund, or any registration of a Fund with the SEC, or as the
Trustees may determine to be necessary or desirable. Shareholders also vote upon
changes in fundamental policies or restrictions.

The Declaration of Trust provides that shareholder meeting quorum requirements
shall be established in the Trust's By-laws. The By-laws currently in effect
provide that the presence in person or by proxy of the holders of thirty percent
of the shares entitled to vote at a meeting (or of an individual series or class
if required to vote separately) shall constitute a quorum for the transaction of
business at meetings of shareholders of the Trust.

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

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

Upon the termination of the Trust or any series, after paying or adequately
providing for the payment of all liabilities which may include the establishment
of a liquidating trust or similar vehicle, and upon receipt of such releases,
indemnities and refunding agreements as they deem necessary for their
protection, the Trustees may distribute the remaining Trust property or property
of the series, in cash or in kind or partly each, to the shareholders of the
Trust or the series involved, ratably according to the number of shares of the
Trust or such series held by the several shareholders of the Trust or such
series on the date of termination, except to the extent otherwise required or
permitted by the preferences and special or relative rights and privileges of
any classes of shares of a series involved, provided that any distribution to
the shareholders of a particular class of shares shall be made to such
shareholders pro rata in proportion to the number of shares of such class held
by each of them. The composition of any such distribution (e.g., cash,
securities or other assets) shall be determined by the Trust in its sole
discretion, and may be different among shareholders (including differences among
shareholders in the same series or class).

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

                             PROXY VOTING GUIDELINES

The Fund has delegated proxy voting responsibilities to its investment advisor,
subject to each Board's general oversight. The Fund has delegated proxy voting
to the Advisor with the direction that proxies should be voted consistent with
the 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 the Fund, and the interests of
the Advisor and its affiliates, including the Fund's principal underwriter. The
Guidelines set forth the Advisor's general position on various proposals, such
as:

o        Shareholder Rights -- The Advisor generally votes against proposals
         that restrict shareholder rights.

o        Corporate Governance -- The Advisor generally votes for confidential
         and cumulative voting against supermajority voting requirements for
         charter and bylaw amendments. The Advisor generally votes for proposals
         to restrict a chief executive officer from \ serving on more than three
         outside boards of directors. The Advisor generally votes against
         proposals that require a company to appoint a Chairman who is an
         independent director.

o        Anti-Takeover Matters -- The Advisor generally votes for proposals that
         require shareholder ratification of poison pills or that request boards
         to redeem poison pills, and votes against the adoption of poison pills
         if they are submitted for shareholder ratification. The Advisor
         generally votes for fair price proposals.

o        Compensation Matters -- The Advisor generally votes for executive cash
         compensation proposals, unless they are unreasonably excessive. The
         Advisor generally votes against stock option plans that do not meet the
         Advisor's criteria.

o        Routine Matters -- The Advisor generally votes for the ratification of
         auditors, procedural matters related to the annual meeting and changes
         in company name, and against bundled proposals and adjournment.

The general provisions described above do not apply to investment companies. The
Advisor generally votes proxies solicited by investment companies in accordance
with the recommendations of an independent third party, except for proxies
solicited by or with respect to investment companies for which the Advisor or an
affiliate serves as investment advisor or principal underwriter ("affiliated
investment companies"). The Advisor votes affiliated investment company proxies
in the same proportion as the vote of the investment company's other
shareholders (sometimes called "mirror" or "echo" voting). Master fund proxies
solicited from feeder funds are voted in accordance with applicable requirements
of the Investment Company Act of 1940.

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

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

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

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

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


You may obtain information about how the 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 for all other classes (click on "proxy voting"
at the bottom of the page).


                              FINANCIAL STATEMENTS


The financial statements, including the portfolio of investments, of the Fund,
together with the Report of Independent Registered Public Accounting Firm,
Financial Highlights and notes to financial statements in the Annual Report to
the Shareholders of the Fund dated January 31, 2008 for DWS Core Plus Income
Fund, are incorporated herein by reference and are hereby deemed to be a part of
this combined SAI.


                             ADDITIONAL INFORMATION

The CUSIP number of DWS Core Plus Income Fund Class S is 23337F508.

DWS Core Plus Income Fund has a fiscal year end of January 31.

Reference is hereby made to the Registration Statement which the Fund has filed
with the SEC under the 1933 Act for further information with respect to the Fund
and the securities offered hereby. This Registration Statement and its
amendments are available for inspection by the public at the SEC in Washington,
D.C.




                                    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 highest 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 safe-guarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B: Bonds which are rated B are considered speculative and 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 highly speculative.
Such issues are often in default or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds, typically are in
default and can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

Note: Moody's appends numerical modifiers 1, 2 and 3 to each generic rating
classification from Aa through Caa in its corporate bond rating system. The
modifier 1 indicates that the issue 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.

MOODY'S INVESTORS SERVICE, INC.'S -- SHORT-TERM RATINGS

Moody's short-term debt ratings are opinions of the ability of issuers to honor
short-term financial obligations. Ratings may be assigned to issuers, short-term
programs or to individual short-term debt instruments. Such obligations
generally have an original maturity not exceeding thirteen months, unless
explicitly noted.

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

o        Leading market positions in well established industries.

o        High rates of return on funds employed.

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

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

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

o        Issuers rated Prime-2 or P-2 (or supporting institutions) have a strong
         ability for repayment of 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.

MOODY'S INVESTORS SERVICE, INC.'S -- MUNICIPAL SHORT-TERM RATINGS

MIG. Moody's short-term debt ratings are opinions of the ability of issuers to
honor short-term financial obligations. Ratings may be assigned to issuers,
short-term programs or to individual short-term debt instruments. Such
obligations generally have an original maturity not exceeding thirteen months,
unless explicitly noted.

Moody's: The highest ratings for state and municipal short-term obligations are
"MIG 1," "MIG 2," and "MIG 3" (or "VMIG 1," "VMIG 2" and "VMIG 3" in the case of
an issue having a variable rate demand feature). Notes rated "MIG 1" or "VMIG 1"
are judged to be of the "best quality". Notes rated "MIG 2" or "VMIG 2" are of
"high quality," with margins or protection "ample although not as large as in
the preceding group". Notes rated "MIG 3" or "VMIG 3" are of "favorable
quality," with all security elements accounted for but lacking the strength of
the preceding grades.

STANDARD & POOR'S RATINGS SERVICES -- 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 has 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 has significant 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 may be outweighed by large
uncertainties or major exposures to adverse conditions.

BB: Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments.

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

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

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

CCC: Debt rated CCC has a current 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: Debt rated CC has a current high vulnerability to default, and is dependent
upon favorable business, financial, and economic conditions to meet timely
payment of interest and repayment of principal.

The rating CC is also 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.

R: Debt rated 'R' is under regulatory supervision owing to its financial
condition. During the pendency of the regulatory supervision, the regulators may
have the power to favor one class of obligations over others or pay some
obligations and not others.

N.R.: 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 SERVICES -- SHORT-TERM RATINGS

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.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the issuer to meet its financial commitments.

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. Bonds rated in the AAA and AA categories
are not significantly vulnerable to foreseeable events.

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 good 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.

SPECULATIVE 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 or financial alternatives may be available 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 CC may be appended by the addition
of a plus or minus sign to denote the relative status within the rating
category.

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

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 capacity for timely payment.

F-1: Very Strong Credit Quality. Issues assigned this rating reflect a capacity
for timely payment only slightly less than issues rated F-1+.

F-2: Good Credit Quality. Issues assigned this rating have a satisfactory
capacity 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 capacity for timely payment is adequate; however, near-term
adverse changes could cause these securities to be rated below investment grade.

B: Speculative. Minimal capacity for timely payment of financial commitments,
plus vulnerability to near-term adverse changes in financial and economic
conditions.


C: High default risk. Default is a real possibility. Capacity for meeting
financial commitments is solely reliant upon a sustained, favorable business and
economic environment.


D: Default. Denotes actual or imminent payment default.

<PAGE>

                            PART C. OTHER INFORMATION

                               DWS PORTFOLIO TRUST

<TABLE>
<CAPTION>
Item 23.           Exhibits:
--------           ---------
                   <S>                <C>          <C>
                   (a)                (a)(1)     Amended and Restated Declaration of Trust dated June 27, 2006 is
                                                 incorporated by reference to Post-Effective Amendment No. 99.

                                      (a)(2)     Amended and Restated Designation of Series and Classes of Shares
                                                 of Beneficial Interest, dated June 27, 2006 is incorporated by
                                                 reference to Post-Effective Amendment No. 99.

                                      (a)(3)     Amended and Restated Designation of Series and Classes of Shares
                                                 of Beneficial Interest, dated April 11, 2007 is incorporated by
                                                 reference to Post-Effective Amendment No. 100.

                   (b)                (b)(1)     By-Laws of the Registrant dated June 27, 2006 is incorporated by
                                                 reference to Post-Effective Amendment No. 99.

                   (c)                           Inapplicable.

                   (d)                (d)(1)     Amended and Restated Investment Management Agreement, dated June
                                                 1, 2006, between the Registrant and Deutsche Investment Management
                                                 Americas Inc. is incorporated by reference to Post-Effective
                                                 Amendment No. 100.

                                      (d)(2)     Sub-Advisory Agreement between Deutsche Investment Management
                                                 Americas Inc. and Aberdeen Asset Management Inc. dated December 2,
                                                 2005 is incorporated by reference to Post-Effective Amendment No.
                                                 96.

                                      (d)(3)     Sub-Sub-Advisory Agreement between Aberdeen Asset Management Inc.
                                                 and Aberdeen Asset Management Investment Services Limited dated as
                                                 of December 2, 2005 is incorporated by reference to Post-Effective
                                                 Amendment No. 99.

                   (e)                (e)(1)     Underwriting and Distribution Services Agreement between the
                                                 Registrant and DWS Scudder Distributors Inc. (formerly, Scudder
                                                 Distributors, Inc., relating to Class A, Class B, Class C and
                                                 Institutional Class shares dated April 5, 2002 is incorporated
                                                 by reference to Post-Effective Amendment No. 100.

                                      (e)(2)     Underwriting Agreement between the Registrant and DWS Scudder
                                                 Distributors Inc. (formerly, Scudder Distributors, Inc., relating
                                                 to Class S dated September 30, 2002 is incorporated by reference
                                                 to Post-Effective Amendment No. 100.

                   (f)                           Inapplicable.

                   (g)                (g)(1)     Subcustodian Agreement with fee schedule between State Street and
                                                 The Bank of New York, London office, dated December 31, 1978 is
                                                 incorporated by reference to Post-Effective Amendment No. 69.


                                       2
<PAGE>

                                      (g)(2)     Master Custodian Agreement between the Registrant and State Street
                                                 Bank and Trust Company dated March 22, 2007 is incorporated by
                                                 reference to Post-Effective Amendment No. 100.

                   (h)                (h)(1)     Agency Agreement between the Registrant and DWS Scudder
                                                 Investments Services Company, with October 1, 2006 fee schedule,
                                                 dated April 1, 2007 is incorporated by reference to Post-Effective
                                                 Amendment No. 99.

                                      (h)(2)     COMPASS Service Agreement between Scudder Trust Company and the
                                                 Registrant dated October 1, 1995 is incorporated by reference to
                                                 Post-Effective Amendment No. 61.

                                      (h)(3)     Shareholder Services Agreement between the Registrant and Charles
                                                 Schwab & Co., Inc. dated June 1, 1990 is incorporated by reference
                                                 to Post-Effective Amendment No. 69.

                                      (h)(4)     Shareholder Services Agreement between the Registrant and DWS
                                                 Scudder Distributors, Inc., (formerly, Scudder Distributors, Inc.)
                                                 dated April 5, 2002 for Class A, Class B and Class C shares is
                                                 incorporated by reference to Post-Effective Amendment No. 91.

                                      (h)(5)     Letter of Indemnity to the Scudder Funds dated October 13, 2004 is
                                                 incorporated by reference to Post-Effective Amendment No. 96.

                                      (h)(6)     Letter of Indemnity to the Scudder Funds dated October 13, 2004 is
                                                 incorporated by reference to Post-Effective Amendment No. 96.

                                      (h)(7)     Letter of Indemnity to the Independent Trustees dated October 13,
                                                 2004 is incorporated by reference to Post-Effective Amendment
                                                 No. 96.

                                      (h)(8)     Form of Mutual Fund Rule 22c-2 Information Sharing Agreement
                                                 between DWS Scudder Distributors, Inc. and certain financial
                                                 intermediaries (filed herein).

                                      (h)(9)     Amended Administrative Services Agreement, dated June 1, 2006 and
                                                 revised as of October 1, 2007, between the Registrant and Deutsche
                                                 Investment Management Americas Inc. (filed herein).

                                      (h)(10)    Form of Expense Limitation Agreement, dated October 1, 2007,
                                                 between the Registrant and Deutsche Investment Management Americas
                                                 Inc. (filed herein).

                   (i)                (i)(1)     Opinion and Consent of Legal Counsel is incorporated by
                                                 reference to Post-Effective Amendment No. 89.

                                      (i)(2)     Opinion and Consent of Legal Counsel relating to DWS Floating
                                                 Rate Plus Fund, Classes A, C, Institutional and S is
                                                 incorporated by reference to Post-Effective Amendment No. 100.

                   (j)                           Consent of Independent Registered Public Accounting Firm (filed
                                                 herein).


                   (k)                           Inapplicable.


                                       3
<PAGE>

                   (l)                           Inapplicable.

                   (m)                (m)(1)     Rule 12b-1 Plan between Scudder Income Fund and Kemper
                                                 Distributors, Inc., dated December 29, 2000 is incorporated by
                                                 reference to Post-Effective Amendment No. 85.

                                      (m)(2)     Rule 12b-1 Plan between DWS Floating Rate Plus Fund and DWS
                                                 Scudder Distributors, Inc. for Class A shares, dated June 29, 2007
                                                 is incorporated by reference to Post-Effective Amendment No. 100.

                                      (m)(3)     Rule 12b-1 Plan between DWS Floating Rate Plus Fund and DWS
                                                 Scudder Distributors, Inc. for Class C shares, dated June 29, 2007
                                                 is incorporated by reference to Post-Effective Amendment No. 100.

                   (n)                (n)(1)     Form of Amended and Restated Plan with respect to the Registrant
                                                 pursuant to Rule 18f-3 is incorporated by reference to
                                                 Post-Effective Amendment No. 99.

                   (p)                (p)(1)     Deutsche Asset Management - U.S. Code of Ethics, effective January
                                                 1, 2008 (filed herein).

                                      (p)(2)     Code of Ethics for Aberdeen Asset Management Inc., Aberdeen Asset
                                                 Management Limited, Aberdeen Asset Management Asia Limited, and
                                                 Aberdeen Asset Management Investment Services Limited is
                                                 incorporated by reference to Post-Effective Amendment No. 96.

                                      (p)(3)     Consolidated Code of Ethics dated March 14, 2006 is incorporated
                                                 by reference to Post-Effective Amendment No. 97.
</TABLE>

Item 24.          Persons Controlled by or under Common Control with Registrant.
--------          --------------------------------------------------------------

                  None

Item 25.          Indemnification.
--------          ----------------

                  Article VIII of the Registrant's Agreement and Declaration of
                  Trust (Exhibit (a)(1) hereto, which is incorporated herein by
                  reference) provides in effect that the Registrant will
                  indemnify its officers and trustees under certain
                  circumstances. However, in accordance with Section 17(h) and
                  17(i) of the Investment Company Act of 1940 and its own terms,
                  said Article of the Agreement and Declaration of Trust does
                  not protect any person against any liability to the Registrant
                  or its shareholders to which such Trustee would otherwise be
                  subject by reason of willful misfeasance, bad faith, gross
                  negligence, or reckless disregard of the duties involved in
                  the conduct of his or her office.

                  Each of the trustees who is not an "interested person" (as
                  defined under the Investment Company Act of 1940) of
                  Registrant (a "Non-interested Trustee") has entered into an
                  indemnification agreement with Registrant, which agreement
                  provides that the Registrant shall indemnify the
                  Non-interested Trustee against certain liabilities which such
                  Trustee may incur while acting in the capacity as a trustee,
                  officer or employee of the Registrant to the fullest extent
                  permitted by law, now or in the future, and requires
                  indemnification and advancement of expenses unless prohibited
                  by law. The indemnification agreement cannot be altered
                  without the consent of the Non-interested Trustee and is not
                  affected by amendment of the Agreement and Declaration of
                  Trust. In addition, the indemnification agreement adopts
                  certain presumptions and procedures which may make the process
                  of indemnification and advancement of expenses more timely,
                  efficient and certain. In accordance with Section 17(h) of the
                  Investment Company Act of 1940, the


                                       4
<PAGE>

                  indemnification agreement does not protect a Non-interested
                  Trustee against any liability to the Registrant or its
                  shareholders to which such Trustee would otherwise be subject
                  by reason of willful misfeasance, bad faith, gross negligence,
                  or reckless disregard of the duties involved in the conduct of
                  his or her office.

                  The Registrant has purchased insurance policies insuring its
                  officers and trustees against certain liabilities which such
                  officers and trustees may incur while acting in such
                  capacities and providing reimbursement to the Registrant for
                  sums which it may be permitted or required to pay to its
                  officers and trustees by way of indemnification against such
                  liabilities, subject to certain deductibles.

                  On April 5, 2002, Zurich Scudder Investments, Inc.
                  ("Scudder"), the investment adviser, now known as Deutsche
                  Investment Management Americas Inc., was acquired by Deutsche
                  Bank AG, not including certain U.K. Operations (the
                  "Transaction"). In connection with the Trustees' evaluation of
                  the Transaction, Deutsche Bank agreed to indemnify, defend and
                  hold harmless Registrant and the trustees who were not
                  "interested persons" of Scudder, Deutsche Bank or Registrant
                  (the "Non-interested Trustees") for and against any liability
                  and claims and expenses based upon or arising from, whether in
                  whole or in part, or directly or indirectly, any untrue
                  statement or alleged untrue statement of a material fact made
                  to the Independent Trustees by Deutsche Bank in connection
                  with the Non-interested Trustees' consideration of the
                  Transaction, or any omission or alleged omission of a material
                  fact necessary in order to make statements made, in light of
                  the circumstances under which they were made, not misleading.

                  Deutsche Investment Management Americas Inc. ("DIMA"), the
                  investment advisor, has agreed, subject to applicable law and
                  regulation, to indemnify and hold harmless the Registrant
                  against any loss, damage, liability and expense, including,
                  without limitation, the advancement and payment, as incurred,
                  of reasonable fees and expenses of counsel (including counsel
                  to the Registrant and counsel to the Non-interested Trustees)
                  and consultants, whether retained by the Registrant or the
                  Non-interested Trustees, and other customary costs and
                  expenses incurred by the Registrant in connection with any
                  litigation or regulatory action related to possible improper
                  market timing or other improper trading activity or possible
                  improper marketing and sales activity in the Registrant
                  ("Private Litigation and Enforcement Actions"). In the event
                  that this indemnification is unavailable to the Registrant for
                  any reason, then DIMA has agreed to contribute to the amount
                  paid or payable by the Registrant as a result of any loss,
                  damage, liability or expense in such proportion as is
                  appropriate to reflect the relative fault of DIMA and the
                  Registrant with respect to the matters which resulted in such
                  loss, damage, liability or expense, as well as any other
                  relevant equitable considerations; provided, however, if no
                  final determination is made in such action or proceeding as to
                  the relative fault of DIMA and the Registrant, then DIMA shall
                  pay the entire amount of such loss, damage, liability or
                  expense.

                  In recognition of its undertaking to indemnify the Registrant,
                  DIMA has also agreed, subject to applicable law and
                  regulation, to indemnify and hold harmless each of the
                  Non-interested Trustees against any and all loss, damage,
                  liability and expense, including without limitation the
                  advancement and payment as incurred of reasonable fees and
                  expenses of counsel and consultants, and other customary costs
                  and expenses incurred by the Non-interested Trustees, arising
                  from the Private Litigation and Enforcement, including without
                  limitation:

                  1. all reasonable legal and other expenses incurred by the
                  Non-interested Trustees in connection with the Private
                  Litigation and Enforcement Actions, and any actions that may
                  be threatened or commenced in the future by any person
                  (including any governmental authority), arising from or
                  similar to the matters alleged in the Private Litigation and
                  Enforcement Actions, including without limitation expenses
                  related to the defense of, service as a witness in, or
                  monitoring of such proceedings or actions;

                  2. all liabilities and expenses incurred by any Non-interested
                  Trustee in connection with any judgment resulting from, or
                  settlement of, any such proceeding, action or matter;


                                       5
<PAGE>

                  3. any loss or expense incurred by any Non-interested Trustee
                  as a result of the denial of, or dispute about, any insurance
                  claim under, or actual or purported rescission or termination
                  of, any policy of insurance arranged by DIMA (or by a
                  representative of DIMA acting as such, acting as a
                  representative of the Registrant or of the Non-interested
                  Trustees or acting otherwise) for the benefit of the
                  Non-interested Trustee, to the extent that such denial,
                  dispute or rescission is based in whole or in part upon any
                  alleged misrepresentation made in the application for such
                  policy or any other alleged improper conduct on the part of
                  DIMA, any of its corporate affiliates, or any of their
                  directors, officers or employees;

                  4. any loss or expense incurred by any Non-interested Trustee,
                  whether or not such loss or expense is otherwise covered under
                  the terms of a policy of insurance, but for which the
                  Non-interested Trustee is unable to obtain advancement of
                  expenses or indemnification under that policy of insurance,
                  due to the exhaustion of policy limits which is due in whole
                  or in part to DIMA or any affiliate thereof having received
                  advancement of expenses or indemnification under that policy
                  for or with respect to a matter which is the subject of the
                  indemnification agreement; provided, however, the total amount
                  which DIMA will be obligated to pay under this provision for
                  all loss or expense, will not exceed the amount that DIMA and
                  any of its affiliate actually receive under that policy or
                  insurance for or with respect to a matter which is the subject
                  of the indemnification agreement; and

                  5. all liabilities and expenses incurred by any Non-interested
                  Trustee in connection with any proceeding or action to enforce
                  his or her rights under the agreement, unless DIMA prevails on
                  the merits of any such dispute in a final, nonappealable court
                  order.

                  DIMA is not required to pay costs or expenses or provide
                  indemnification to or for any individual Non-interested
                  Trustee (i) with respect to any particular proceeding or
                  action as to which the Board of the Registrant has determined
                  that such Non-interested Trustee ultimately will not be
                  entitled to indemnification with respect thereto, or (ii) for
                  any liability of the Non-interested Trustee to the Registrant
                  or its shareholders to which such Non-interested Trustee would
                  otherwise be subject by reason of willful misfeasance, bad
                  faith, gross negligence, or reckless disregard of the
                  Non-interested Trustee's duties as a Trustee of the Registrant
                  as determined in a final adjudication in such proceeding or
                  action. In addition, to the extent that DeAM has paid costs or
                  expenses under the agreement to any individual Non-interested
                  Trustee with respect to a particular proceeding or action, and
                  there is a final adjudication in such proceeding or action of
                  the Non-interested Trustee's liability to the Registrant or
                  its shareholders by reason of willful misfeasance, bad faith,
                  gross negligence, or reckless disregard of the Non-interested
                  Trustee's duties as a Trustee of the Registrant, such
                  Non-interested Trustee has undertaken to repay such costs or
                  expenses to DIMA.

Item 26.          Business and Other Connections of Investment Advisor
--------          ----------------------------------------------------

                  During the last two fiscal years, no director or officer of
                  Deutsche Investment Management Americas Inc., the investment
                  advisor, has engaged in any other business, profession,
                  vocation or employment of a substantial nature other than that
                  of the business of investment management and, through
                  affiliates, investment banking.

Item 27.          Principal Underwriters
--------          ----------------------

                  (a)

                  DWS Scudder Distributors, Inc. acts as principal underwriter
                  of the Registrant's shares and acts as principal underwriter
                  for other registered open-end management investment companies
                  managed by Deutsche Investment Management Americas Inc.


                                       6
<PAGE>

                  (b)

                  Information on the officers and directors of DWS Scudder
                  Distributors, Inc., principal underwriter for the Registrant,
                  is set forth below. The principal business address is 222
                  South Riverside Plaza, Chicago, Illinois 60606.

<TABLE>
<CAPTION>
                      (1)                             (2)                                  (3)
          DWS Scudder
          Distributors, Inc.
          Name and Principal             Positions and Offices with               Positions and
          Business Address               DWS Scudder Distributors, Inc.           Offices with Registrant
          ----------------               ------------------------------           -----------------------
                <S>                                       <C>                             <C>
          Philipp Hensler                Director, Chairman of the Board and      None
          345 Park Avenue                CEO
          New York, NY 10154

          Michael Colon                  Director and Chief Operating Officer     None
          345 Park Avenue
          New York, NY 10154

          Thomas Winnick                 Director and President                   None
          345 Park Avenue
          New York, NY 10154

          Cliff Goldstein                Chief Financial Officer and Treasurer    None
          60 Wall Street
          New York, NY 10005

          Robert Froehlich               Vice President                           None
          222 South Riverside Plaza
          Chicago, IL 60606

          Paul Schubert                  Vice President                           Chief Financial Officer
          345 Park Avenue                                                         and Treasurer
          New York, NY 10154

          Mark Perrelli                  Vice President                           None
          222 South Riverside Plaza
          Chicago, IL 60606

          Donna White                    Chief Compliance Officer                 None
          345 Park Avenue
          New York, NY 10154

          Jason Vazquez                  Vice President and AML Compliance        Anti-Money Laundering
          345 Park Avenue                Officer                                  Compliance Officer
          New York, NY 10154

          Caroline Pearson               Secretary                                Assistant Secretary
          Two International Place
          Boston, MA 02110

          Philip J. Collora              Assistant Secretary                      None
          222 South Riverside Plaza
          Chicago, IL 60606


                                       7
<PAGE>
                      (1)                             (2)                                  (3)
          DWS Scudder
          Distributors, Inc.
          Name and Principal             Positions and Offices with               Positions and
          Business Address               DWS Scudder Distributors, Inc.           Offices with Registrant
          ----------------               ------------------------------           -----------------------

          Anjie LaRocca                  Assistant Secretary                      None
          345 Park Avenue
          New York, NY 10154
</TABLE>

         (c)      Not applicable

Item 28.          Location of Accounts and Records.
--------          ---------------------------------

                  Certain accounts, books and other documents required to be
                  maintained by Section 31(a) of the 1940 Act and the Rules
                  promulgated thereunder are maintained by Deutsche Investment
                  Management Americas Inc., 345 Park Avenue, New York, NY 10154.
                  Records relating to the duties of the Registrant's custodian
                  are maintained by State Street Bank and Trust Company, 225
                  Franklin Street, Boston, Massachusetts 02110. Records relating
                  to the duties of the Registrant's transfer agents are
                  maintained by DWS Scudder Investments Service Company, 210
                  West 10th Street, Kansas City, MO 64105-2005, or at the
                  offices of DST Systems, Inc., 333 West 11th Street, Kansas
                  City, Missouri 64105, the sub-transfer agent for the
                  Registrant.

Item 29.          Management Services.
--------          --------------------

                  Inapplicable.

Item 30.          Undertakings.
--------          -------------

                  Inapplicable.




                                       8
<PAGE>



                                   SIGNATURES
                                   ----------


         Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this amendment
to its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of New York and the State of New York on
the 15th day of April 2008.

                                              DWS PORTFOLIO TRUST

                                               By: /s/Michael G. Clark
                                                   ____________________________
                                                   Michael G. Clark

         Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to its Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
SIGNATURE                                  TITLE                                        DATE
---------                                  -----                                        ----
<S>                                               <C>                                       <C>
/s/Michael G. Clark
-------------------------------------
Michael G. Clark                           President                                    April 15, 2008

/s/Paul H. Schubert
-------------------------------------
Paul H. Schubert                           Chief Financial Officer and Treasurer        April 15, 2008

/s/John W. Ballantine
-------------------------------------
John W. Ballantine*                        Trustee                                      April 15, 2008

/s/Henry P. Becton, Jr.
-------------------------------------
Henry P. Becton, Jr.*                      Trustee                                      April 15, 2008

/s/Dawn-Marie Driscoll
-------------------------------------
Dawn-Marie Driscoll*                       Chairperson and Trustee                      April 15, 2008

/s/Keith R. Fox
-------------------------------------
Keith R. Fox*                              Trustee                                      April 15, 2008

/s/Paul K. Freeman
-------------------------------------
Paul K. Freeman*                           Vice Chairperson and Trustee                 April 15, 2008

/s/Kenneth C. Froewiss
-------------------------------------
Kenneth C. Froewiss*                       Trustee                                      April 15, 2008

/s/Richard J. Herring
-------------------------------------
Richard J. Herring*                        Trustee                                      April 15, 2008

/s/William McClayton
7-------------------------------------
William McClayton*                         Trustee                                      April 15, 2008

/s/Rebecca W. Rimel
-------------------------------------
Rebecca W. Rimel*                          Trustee                                      April 15, 2008

/s/William N. Searcy, Jr.
-------------------------------------
William N. Searcy, Jr.*                    Trustee                                      April 15, 2008

<PAGE>
SIGNATURE                                  TITLE                                        DATE
---------                                  -----                                        ----

/s/Jean Gleason Stromberg
-------------------------------------
Jean Gleason Stromberg*                    Trustee                                      April 15, 2008

/s/Robert H. Wadsworth
-------------------------------------
Robert H. Wadsworth*                       Trustee                                      April 15, 2008

/s/Axel Schwarzer
-------------------------------------
Axel Schwarzer*                            Trustee                                      April 15, 2008
</TABLE>

*By:     /s/Caroline Pearson
         ------------------------------
         Caroline Pearson**
         Assistant Secretary

** Attorney-in-fact pursuant to the powers of attorney as filed herein.


                                       2
<PAGE>
                               DWS PORTFOLIO TRUST

                                Power of Attorney

KNOW ALL PERSONS BY THESE PRESENTS, that the following persons, whose signatures
appear below, do hereby constitute and appoint Thomas Connors, John Millette and
Caroline  Pearson,  and each of them,  severally,  or if more than one  acts,  a
majority of them,  their true and lawful  attorney and agent to execute in their
name,  place and stead (in such  capacity) any and all  amendments to enable DWS
PORTFOLIO  TRUST (the  "Fund") to comply  with the  Securities  Act of 1933,  as
amended (the "1933 Act") and the Investment Company Act of 1940, as amended (the
"1940 Act"),  and any rules,  regulations or  requirements of the Securities and
Exchange   Commission  in  respect  thereof,   in  connection  with  the  Fund's
Registration  Statement on Form N-1A  pursuant to the 1933 Act and the 1940 Act,
together with any and all pre- and post-effective amendments thereto,  including
specifically,  but without  limiting the generality of the foregoing,  the power
and authority to sign in the name and on behalf of the  undersigned as a trustee
of the  Fund  such  Registration  Statement  and  any  and  all  such  pre-  and
post-effective  amendments  filed with the  Securities  and Exchange  Commission
under the 1933 Act and the 1940  Act,  and any other  instruments  or  documents
related  thereto,  and the  undersigned  does hereby ratify and confirm all that
said  attorney-in-fact  and  agent,  or  either of them or their  substitute  or
substitutes, shall lawfully do or cause to be done by virtue hereof.

<TABLE>
<CAPTION>
---------------------------------------------------------- ----------------------------- -----------------------------------
SIGNATURES                                                 TITLE                         DATE
---------------------------------------------------------- ----------------------------- -----------------------------------
<S>                                                          <C>                                <C>
/s/John W. Ballantine                                      Trustee                       April 1, 2008
John W. Ballantine
---------------------------------------------------------- ----------------------------- -----------------------------------

/s/Henry P. Becton, Jr.                                    Trustee                       April 1, 2008
Henry P. Becton, Jr.
---------------------------------------------------------- ----------------------------- -----------------------------------

/s/Dawn-Marie Driscoll                                     Trustee                       April 1, 2008
Dawn-Marie Driscoll
---------------------------------------------------------- ----------------------------- -----------------------------------

/s/Keith R. Fox                                            Trustee                       April 1, 2008
Keith R. Fox
---------------------------------------------------------- ----------------------------- -----------------------------------

/s/Paul K. Freeman                                         Trustee                       April 1, 2008
Paul K. Freeman
---------------------------------------------------------- ----------------------------- -----------------------------------

/s/Kenneth C. Froewiss                                     Trustee                       April 1, 2008
Kenneth C. Froewiss
---------------------------------------------------------- ----------------------------- -----------------------------------

/s/Richard J. Herring                                      Trustee                       April 1, 2008
Richard J. Herring
---------------------------------------------------------- ----------------------------- -----------------------------------

/s/William McClayton                                       Trustee                       April 1, 2008
William McClayton
---------------------------------------------------------- ----------------------------- -----------------------------------

/s/Rebecca W. Rimel                                        Trustee                       April 1, 2008
Rebecca W. Rimel
---------------------------------------------------------- ----------------------------- -----------------------------------

/s/William N. Searcy, Jr.                                  Trustee                       April 1, 2008
William N. Searcy, Jr.
---------------------------------------------------------- ----------------------------- -----------------------------------

/s/Jean Gleason Stromberg                                  Trustee                       April 1, 2008
Jean Gleason Stromberg
---------------------------------------------------------- ----------------------------- -----------------------------------

/s/Robert H. Wadsworth                                     Trustee                       April 1, 2008
Robert H. Wadsworth
---------------------------------------------------------- ----------------------------- -----------------------------------

/s/Axel Schwarzer                                          Trustee                       April 1, 2008
Axel Schwarzer
---------------------------------------------------------- ----------------------------- -----------------------------------
</TABLE>

<PAGE>


                                                                File No. 2-13627
                                                                 File No. 811-42


                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


                                    EXHIBITS

                                       TO

                                    FORM N-1A


                        POST-EFFECTIVE AMENDMENT NO. 101
                            TO REGISTRATION STATEMENT

                                      UNDER

                           THE SECURITIES ACT OF 1933

                                       AND

                                AMENDMENT NO. 102

                            TO REGISTRATION STATEMENT

                                      UNDER

                       THE INVESTMENT COMPANY ACT OF 1940



                               DWS PORTFOLIO TRUST



                                       9
<PAGE>


                               DWS PORTFOLIO TRUST

                                  EXHIBIT INDEX

                                     (h)(8)
                                     (h)(9)
                                     (h)(10)
                                       (j)
                                     (p)(1)







                                       10