Filed with the Securities and Exchange Commission on July 28, 2009

                                                               File No. 02-84021
                                                               File No. 811-3749

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                    FORM N-1A


             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                         Post-Effective Amendment No. 45
                                                      --
                                       and

         REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

                                Amendment No. 46
                                              --

                            DWS State Tax-Free Trust
                            ------------------------
               (Exact Name of Registrant as Specified in Charter)

                    345 Park Avenue, New York, NY 10154-0004
                    ----------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

       Registrant's Telephone Number, including Area Code: (212) 454-6778
                                                           --------------
                   John Millette, Vice President and Secretary
                  Deutsche Investment Management Americas Inc.
                    One Beacon Street, Boston, MA 02108-3107
                    ----------------------------------------
                     (Name and Address of Agent for Service)


It is proposed that this filing will become effective (check appropriate box):

|___|     Immediately upon filing pursuant to paragraph (b)
| X ||    On August 1, 2009  pursuant to paragraph (b)
|___|     60 days after filing pursuant to paragraph (a)(1)
|___|     On __________________ pursuant to paragraph (a)(1)
|___|     75 days after filing pursuant to paragraph (a)(2)
|___|     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 Massachusetts Tax-Free Fund - Classes A, B, C, and S

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>


                                 AUGUST 1, 2009








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

                        DWS MASSACHUSETTS TAX-FREE 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.




                                     RESHAPING INVESTING. [DWS INVESTMENTS LOGO]
                                                             Deutsche Bank Group

<PAGE>

CONTENTS





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


</TABLE>
<TABLE>
<S>      <C>
HOW TO INVEST IN THE FUND
 21      Choosing a Share Class
 27      How to Buy Class A, B and C
         Shares
 28      How to Exchange or Sell
         Class A, B and C Shares
 31      Policies You Should Know
         About
 42      Understanding Distributions
         and Taxes
 47      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-INVESTMENTS.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                       SQMAX      SQMBX      SQMCX
    fund number                       412        612        712

    DWS MASSACHUSETTS TAX-FREE FUND


</TABLE>

            THE FUND'S MAIN INVESTMENT STRATEGY

            The fund seeks income that is exempt from Massachusetts
            personal and federal income taxes.

            Under normal circumstances, the fund invests at least 80% of net
            assets, plus the amount of any borrowings for investment purposes,
            in Massachusetts municipal securities. For purposes of this 80%
            requirement, Massachusetts municipal securities are securities
            whose income is exempt from federal and Massachusetts personal
            income taxes, which may include securities of issuers located
            outside Massachusetts. The fund may invest up to 20% of net assets
            in securities whose income is subject to the federal alternative
            minimum tax (AMT).


            The fund can buy many types of municipal securities with no
            maturity restrictions. These may include, without limitation,
            revenue bonds (which are backed by revenues from a particular
            source) and general obligation bonds (which are typically backed by
            the issuer's ability to levy taxes). They may also include
            industrial development bonds, municipal lease obligations and
            investments representing an interest therein.

            CREDIT QUALITY POLICIES. This fund normally invests at least 75% of
            total assets in municipal securities of the top four grades of
            credit quality. The fund could invest up to 25% of total assets in
            high yield bonds (commonly referred to as "junk" bonds) of the
            fifth and sixth credit grades (i.e., as low as grade B). Compared
            to investment-grade bonds, junk bonds generally pay higher yields,
            have higher volatility and higher risk of default on payments of
            interest or principal.


            The portfolio managers look for securities that appear to offer the
            best total return potential. In making their buy and sell
            decisions, the managers typically weigh a number of factors against
            each other, from economic outlooks and possible


4 | DWS Massachusetts Tax-Free Fund
<PAGE>

            interest rate movements and yield levels across varying maturities
            to characteristics of specific securities, such as coupon, maturity
            date and call date, and changes in supply and demand within the
            municipal bond market.


            Although the managers may adjust the fund's duration (a measure of
            sensitivity to interest rates) over a wider range, they generally
            intend to keep it similar to that of the Barclays Capital Municipal
            Bond Index, generally between five and nine years.


            In addition, they may use various types of derivative instruments
            (instruments whose value is based on, for example, indexes,
            commodities or securities) for hedging purposes or to enhance
            return. Such instruments may include inverse floaters, futures
            contracts, interest rate swaps and other over-the-counter
            derivatives.


            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, debt securities will decrease in
            value when interest rates rise. The longer the duration of the
            fund's debt 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 debt securities held by the
            fund may prepay principal earlier than scheduled, forcing the fund
            to reinvest in lower-yielding debt securities and may reduce the
            fund's income. As interest rates increase, slower than expected
            principal payments may extend the average life of debt securities.
            This will have the effect of locking in a below-market interest
            rate, thereby further reducing the value of such a debt security.


            CREDIT RISK. A fund purchasing debt securities faces the risk that
            the creditworthiness of an issuer may decline, causing the value of
            the debt securities to decline. In addition, an issuer may not be
            able to make timely payments on the interest and/
            or principal on the debt security it has issued. Because the
            issuers of high-yield debt securities or junk bonds (debt
            securities rated below the fourth highest category) may be in
            uncertain financial health, the prices of their debt securities can
            be more vulnerable to bad economic news or even the


                                            DWS Massachusetts Tax-Free Fund  | 5
<PAGE>

            expectation of bad news, than investment-grade debt securities. In
            some cases, debt securities, particularly high-yield debt
            securities, 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. If banks, insurance companies or other financial
            institutions that insure certain municipal bonds suffer credit
            downgrades or cease insuring municipal bond issuances, the fund may
            be subject to a higher degree of credit risk. Industrial
            development bonds are typically backed by revenues from a given
            facility and by the credit of a private company, but are not backed
            by the taxing power of a municipality.


            FOCUSED INVESTING RISK. The fact that the fund may focus on
            investments from a single state or region of the municipal
            securities market increases risk, because factors affecting the
            state or region, such as economic or fiscal problems, could affect
            a large portion of the fund's securities in a similar manner. For
            example, a state's technology or biotech industries could
            experience a downturn or fail to develop as expected, hurting the
            local economy. States could also face severe fiscal difficulties,
            for example, an economic downturn, increased expenditures on
            domestic security or reduced monetary support from the federal
            government. Over time, these issues may have the ability to impair
            a state's ability to repay its obligations.

            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 debt securities
            or the stock market could also adversely affect the fund by
            reducing the relative attractiveness of debt securities as an
            investment. Also, to the extent that the fund emphasizes debt
            securities from any given state or region, it could be hurt if that
            state or region does not do well.


            NON-DIVERSIFICATION RISK. The fund is classified as non-diversified
            under the Investment Company Act of 1940, as amended. This means
            that the fund may invest in securities of relatively few issuers.
            Thus, the performance of one or a small number of portfolio
            holdings can affect overall performance more than if the fund
            invested in a larger number of issuers.


6 | DWS Massachusetts Tax-Free Fund
<PAGE>


            INVERSE FLOATING RATE SECURITIES RISK. Returns on inverse floating
            rate securities ("inverse floaters") generally will increase when
            short term interest rates decrease and will decrease when short
            term interest rates increase. Investments in inverse floaters may
            subject the fund to the risks of reduced interest payments and loss
            of principal. Inverse floaters are derivatives that involve
            leverage and the market value of the inverse floater typically
            changes as a multiple of the underlying bond. Consequently, the use
            of inverse floaters could magnify the fund's gains or losses. In
            addition, the fund may be unable to sell inverse floaters at
            favorable prices.


            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.

            FOR INFORMATION CONCERNING IMPORTANT TAX CONSEQUENCES of an
            investment in the fund, please see "Understanding Distributions and
            Taxes."

            Other factors that could affect performance include:


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


            -  political or legal actions could change the way the fund's
               dividends are treated for income tax purposes.

            -  at times, market conditions might make it hard to value some
               investments or to get an attractive price for them.


                                            DWS Massachusetts Tax-Free Fund  | 7
<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 the fund and the index information varies over
time. All figures assume reinvestment of dividends and distributions (in the
case of after-tax returns, reinvested net of assumed tax rates).

The table shows returns for Class A shares on a before-tax and after-tax basis.
After-tax returns are shown for Class A only and will vary for Classes B and C.
After-tax returns are estimates calculated using the historical highest
marginal individual federal 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 18, 2001. In the bar
chart, the performance figures for Class A shares 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 Classes A, B
or C and the current applicable sales charges of Class A, B or C. Class S
shares are offered in a different prospectus.

DWS Massachusetts Tax-Free Fund

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


[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]


<TABLE>
<S>        <C>        <C>       <C>        <C>       <C>       <C>       <C>       <C>     <C>
-2.55      10.61       4.05     10.63       4.89      2.99      2.74      4.14     3.49    -5.14
1999       2000       2001      2002       2003      2004      2005      2006      2007    2008
</TABLE>







<TABLE>
<CAPTION>
2009 TOTAL RETURN AS OF JUNE 30: 9.74%
<S>                                      <C>
For the periods included in the bar chart:
BEST QUARTER: 5.14%, Q3 2002             WORST QUARTER: -3.51%, Q3 2008
</TABLE>


8 | DWS Massachusetts Tax-Free Fund
<PAGE>



AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2008 (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                          -9.41         0.66         3.01
   Return after Taxes on Distributions          -9.45         0.42         2.88
   Return after Taxes on Distributions
   and Sale of Fund Shares                      -6.34*        0.82*        3.01*
 CLASS B (Return before Taxes)                  -8.60         0.64         2.67
 CLASS C (Return before Taxes)                  -5.80         0.83         2.69
 BARCLAYS CAPITAL MUNICIPAL BOND
 INDEX (reflects no deductions for fees,
 expenses or taxes)                             -2.47         2.71         4.26
</TABLE>



     Total returns would have been lower if operating expenses hadn't been
     reduced.


 *   Return after Taxes on Distributions and Sales of Fund Shares is higher
     than other return figures for the same period due to a capital loss
     occurring upon redemption resulting in an assumed tax deduction for the
     shareholder.


 The BARCLAYS CAPITAL MUNICIPAL BOND INDEX (name changed from Lehman Brothers
 Municipal Bond Index effective November 3, 2008) is an unmanaged market-value-
 weighted measure of municipal bonds issued across the United States. Index
 issues have a credit rating of at least Baa and a maturity of at least two
 years.



--------------------------------------------------------------------------------
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-investments.com.


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

Return information assumes that fund shares were sold at the end of the period.


RETURN AFTER TAXES ON DISTRIBUTIONS 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 reflects taxes on
both the fund's distributions and a shareholder's gain or loss from selling
fund shares.



                                            DWS Massachusetts Tax-Free Fund  | 9
<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)             2.75% 1         None          None
 Maximum Deferred Sales Charge (Load)
 (as % of redemption proceeds)                    None 2           4.00%         1.00%
 ANNUAL OPERATING EXPENSES, deducted from fund assets
___________________________________________________________________________________________
 Management Fee                                   0.44  %          0.44%         0.44%
 Distribution/Service (12b-1) Fee                 0.23             0.99          1.00
 Interest Expense 3                               0.43             0.43          0.43
 Other Expenses 4                                 0.24             0.25          0.23
 TOTAL ANNUAL OPERATING EXPENSES 5                1.34             2.11          2.10
</TABLE>



1    Because of rounding in the calculation of the offering price, the actual
     maximum front-end sales charge paid by an investor may be higher than the
     percentage noted (see "Choosing a Share Class - Class A shares").


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



3    Interest expense relates to the fund's liability with respect to floating
     rate notes held by third parties in conjunction with certain inverse
     floater securities transactions. However, the accounting treatment for such
     transactions includes an offsetting interest income item, and accordingly
     has no impact to net investment income, total return or net asset value.

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



5    Through September 30, 2009, the Advisor has agreed to contractually waive a
     portion of its management fees and reimburse expenses to the extent
     necessary to maintain total annual operating expenses at 0.92%, 1.67% and
     1.67% for Class A, Class B and Class C shares, respectively, excluding
     certain expenses such as extraordinary expenses, taxes, brokerage and
     interest.



10 | DWS Massachusetts Tax-Free Fund
<PAGE>

Based on the costs above, this example helps you compare the expenses of the
Fund's shares to those of other mutual funds. This example assumes the expenses
above remain the same. It also assumes that you invested $10,000, earned 5%
annual returns and reinvested all dividends and distributions and sold your
shares at the end of the 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>
 EXPENSES, assuming you sold your shares at the end of each period
_________________________________________________________________________
 Class A shares         $408         $688       $  989       $1,843
 Class B shares*         614          961        1,334        2,065
 Class C shares          313          658        1,129        2,431

 EXPENSES, assuming you kept your shares
_________________________________________________________________________
 Class A shares         $408         $688       $  989       $1,843
 Class B shares*         214          661        1,134        2,065
 Class C shares          213          658        1,129        2,431
</TABLE>



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

                                           DWS Massachusetts Tax-Free Fund  | 11
<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. However, the fund's policy of investing at
              least 80% of net assets, plus the amount of any borrowings for
              investment purposes, in Massachusetts municipal securities whose
              income is exempt from federal and Massachusetts personal income
              taxes cannot be changed without 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 bonds 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. Temporary investments may be taxable.

           -  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 investment objective.



12 | Other Policies and Risks
<PAGE>


           A complete list of the fund's portfolio holdings as of the month-end
           is posted on www.dws-investments.com on or about the 15th day of the
           following month. More frequent posting of portfolio holdings
           information may be made from time to time on
           www.dws-investments.com. The posted portfolio holdings information
           is available by fund and generally remains accessible at least until
           the date on which the fund files its Form N-CSR or N-Q with the
           Securities and Exchange Commission for the period that includes the
           date as of which the posted information is current. 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 Investments is part of Deutsche Bank's Asset Management division
           and, within the US, represents the retail asset management
           activities of Deutsche Bank AG, Deutsche Bank Trust Company
           Americas, DIMA 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  | 13
<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 Massachusetts Tax-Free Fund                  0.44%
</TABLE>




           A discussion regarding the basis for the Board's approval of the
           fund's investment management agreement is contained in the most
           recent shareholder report for the semi-annual period ended September
           30 (see "Shareholder reports" on the back cover).

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



14 | Who Manages and Oversees the Fund
<PAGE>

Portfolio management

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

DWS MASSACHUSETTS TAX-FREE FUND

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

Philip G. Condon
Managing Director of Deutsche Asset Management and Lead Portfolio Manager of
the fund.

- Head of US Retail Fixed Income Funds.

- Joined Deutsche Asset Management in 1983 and the fund in 1989.

- Over 33 years of investment industry experience.


- BA and MBA, University of Massachusetts at Amherst.


Rebecca L. Flinn
Director of Deutsche Asset Management and Portfolio Manager of the fund.
- Joined Deutsche Asset Management in 1986 and the fund in 1999.

- Over 23 years of investment industry experience.

- BA, University of Redlands, California.

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  | 15
<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).


16 | Financial Highlights
<PAGE>

DWS Massachusetts Tax-Free Fund - Class A



<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,                   2009            2008             2007             2006            2005
<S>                                 <C>            <C>              <C>              <C>              <C>
SELECTED PER SHARE DATA
---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD                             $ 14.06         $ 14.18         $  14.20         $  14.46        $  14.91
--------------------------------      -------         -------         --------         --------        --------
Income (loss) from
investment operations:
  Net investment income                   .60             .55              .55              .59             .64
________________________________      _______         _______         ________         ________        ________
  Net realized and unrealized
  gain (loss)                          (  .61)         (  .12)             .08           (  .12)         (  .37)
--------------------------------      -------         -------         --------         --------        --------
  TOTAL FROM INVESTMENT
  OPERATIONS                           (  .01)            .43              .63              .47             .27
--------------------------------      -------         -------         --------         --------        --------
Less distributions from:
  Net investment income                (  .59)         (  .55)          (  .55)          (  .58)         (  .65)
________________________________      _______         _______         ________         ________        ________
  Net realized gains                   (  .04)         (  .00)*         (  .10)          (  .15)         (  .07)
--------------------------------      -------         -------         --------         --------        --------
  TOTAL DISTRIBUTIONS                  (  .63)         (  .55)          (  .65)          (  .73)         (  .72)
--------------------------------      -------         -------         --------         --------        --------
Redemption fees                           .00*            .00*             .00*             .00*            .00*
--------------------------------      -------         -------         --------         --------        --------
NET ASSET VALUE, END OF
PERIOD                                $ 13.42         $ 14.06         $  14.18         $  14.20        $  14.46
--------------------------------      -------         -------         --------         --------        --------
Total Return (%)a                      ( 0.01)b       3.07b             4.52b            3.32b             1.56
--------------------------------      -------         -------         --------         --------        --------

RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
---------------------------------------------------------------------------------------------------------------------
Net assets, end of period
($ millions)                               15              12               12               14              20
_________________________________     _______         _______         ________         ________        ________
Ratio of expenses before
expense reductions (including
interest expense) (%)c                   1.34            1.48             1.49             1.59            1.16
_________________________________     _______         _______         ________         ________        ________
Ratio of expenses after
expense reductions (including
interest expense) (%)c                   1.34            1.47             1.48             1.59            1.16
_________________________________     _______         _______         ________         ________        ________
Ratio of expenses after
expense reductions (excluding
interest expense) (%)                     .91             .95              .98              .98             .94
_________________________________     _______         _______         ________         ________        ________
Ratio of net investment
income (%)                               4.35            3.87             3.88             4.07            4.40
_________________________________     _______         _______         ________         ________        ________
Portfolio turnover rate (%)                58              48               41               39              34
---------------------------------     -------         -------         --------         --------        --------
</TABLE>



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

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

c    Interest expense represents interest and fees on short term floating rate
     notes issued in conjunction with inverse floating rate securities. Interest
     income from such transactions is included in income from investment
     operations.

*   Amount is less than $.005.

                                                      Financial Highlights  | 17
<PAGE>

DWS Massachusetts Tax-Free Fund - Class B



<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,                   2009           2008            2007             2006            2005
<S>                                 <C>            <C>            <C>              <C>              <C>
SELECTED PER SHARE DATA
-------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD                             $ 14.05        $ 14.17        $  14.20         $  14.45        $  14.90
--------------------------------      -------        -------        --------         --------        --------
Income (loss) from
investment operations:
  Net investment income                   .49            .44             .44              .48             .53
________________________________      _______        _______        ________         ________        ________
  Net realized and unrealized
  gain (loss)                          (  .59)        (  .12)            .07           (  .10)         (  .37)
--------------------------------      -------        -------        --------         --------        --------
  TOTAL FROM INVESTMENT
  OPERATIONS                           (  .10)           .32             .51              .38             .16
--------------------------------      -------        -------        --------         --------        --------
Less distributions from:
  Net investment income                (  .49)        (  .44)         (  .44)          (  .48)         (  .54)
________________________________      _______        _______        ________         ________        ________
  Net realized gains                   (  .04)        (  .00)*        (  .10)          (  .15)         (  .07)
--------------------------------      -------        -------        --------         --------        --------
  TOTAL DISTRIBUTIONS                  (  .53)        (  .44)         (  .54)          (  .63)         (  .61)
--------------------------------      -------        -------        --------         --------        --------
Redemption fees                           .00*           .00*            .00*             .00*            .00*
--------------------------------      -------        -------        --------         --------        --------
NET ASSET VALUE, END OF
PERIOD                                $ 13.42        $ 14.05        $  14.17         $  14.20        $  14.45
--------------------------------      -------        -------        --------         --------        --------
Total Return (%)a                      (  .78)b         2.31          3.66b            2.63b              .81
--------------------------------      -------        -------        --------         --------        --------

RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------------------------------
Net assets, end of period
($ millions)                                3              5               6                7               8
_________________________________     _______        _______        ________         ________        ________
Ratio of expenses before
expense reductions (including
interest expense) (%)c                   2.11           2.21            2.25             2.36            1.91
_________________________________     _______        _______        ________         ________        ________
Ratio of expenses after
expense reductions (including
interest expense) (%)c                   2.09           2.21            2.24             2.34            1.91
_________________________________     _______        _______        ________         ________        ________
Ratio of expenses after
expense reductions (excluding
interest expense) (%)                    1.66           1.69            1.74             1.73            1.69
_________________________________     _______        _______        ________         ________        ________
Ratio of net investment
income (%)                               3.60           3.13            3.12             3.32            3.65
_________________________________     _______        _______        ________         ________        ________
Portfolio turnover rate (%)                58             48              41               39              34
---------------------------------     -------        -------        --------         --------        --------
</TABLE>



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

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

c    Interest expense represents interest and fees on short term floating rate
     notes issued in conjunction with inverse floating rate securities. Interest
     income from such transactions is included in income from investment
     operations.

*    Amount is less than $.005.

18 | Financial Highlights
<PAGE>

DWS Massachusetts Tax-Free Fund - Class C



<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,                   2009           2008            2007             2006            2005
<S>                                 <C>            <C>            <C>              <C>              <C>
SELECTED PER SHARE DATA
-------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD                             $ 14.05        $ 14.17        $  14.20         $  14.45        $  14.90
--------------------------------      -------        -------        --------         --------        --------
Income (loss) from
investment operations:
  Net investment income                   .49            .44             .44              .48             .53
________________________________      _______        _______        ________         ________        ________
  Net realized and unrealized
  gain (loss)                          (  .59)        (  .12)            .07           (  .10)         (  .37)
--------------------------------      -------        -------        --------         --------        --------
  TOTAL FROM INVESTMENT
  OPERATIONS                           (  .10)           .32             .51              .38             .16
--------------------------------      -------        -------        --------         --------        --------
Less distributions from:
  Net investment income                (  .49)        (  .44)         (  .44)          (  .48)         (  .54)
________________________________      _______        _______        ________         ________        ________
  Net realized gains                   (  .04)        (  .00)*        (  .10)          (  .15)         (  .07)
--------------------------------      -------        -------        --------         --------        --------
  TOTAL DISTRIBUTIONS                  (  .53)        (  .44)         (  .54)          (  .63)         (  .61)
--------------------------------      -------        -------        --------         --------        --------
Redemption fees                           .00*           .00*            .00*             .00*            .00*
--------------------------------      -------        -------        --------         --------        --------
NET ASSET VALUE, END OF
PERIOD                                $ 13.42        $ 14.05        $  14.17         $  14.20        $  14.45
--------------------------------      -------        -------        --------         --------        --------
Total Return (%)a                      (  .77)b         2.31          3.67b            2.63b              .81
--------------------------------      -------        -------        --------         --------        --------

RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------------------------------
Net assets, end of period
($ millions)                                5              5               5                6               6
_________________________________     _______        _______        ________         ________        ________
Ratio of expenses before
expense reductions (including
interest expense) (%)c                   2.10           2.22            2.25             2.35            1.90
_________________________________     _______        _______        ________         ________        ________
Ratio of expenses after
expense reductions (including
interest expense) (%)c                   2.09           2.22            2.23             2.34            1.90
_________________________________     _______        _______        ________         ________        ________
Ratio of expenses after
expense reductions (excluding
interest expense) (%)                    1.66           1.69            1.73             1.73            1.68
_________________________________     _______        _______        ________         ________        ________
Ratio of net investment
income (%)                               3.60           3.13            3.13             3.32            3.66
_________________________________     _______        _______        ________         ________        ________
Portfolio turnover rate (%)                58             48              41               39              34
---------------------------------     -------        -------        --------         --------        --------
</TABLE>



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

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

c    Interest expense represents interest and fees on short term floating rate
     notes issued in conjunction with inverse floating rate securities. Interest
     income from such transactions is included in income from investment
     operations.

*    Amount is less than $.005.

                                                      Financial Highlights  | 19
<PAGE>

HOW TO INVEST IN THE FUND


This prospectus offers the share classes noted on the front cover. Each class
has its own fees and expenses, offering you a choice of cost structures. The
fund offers 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 Investments, 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. You should consult with your
financial advisor to determine which class of shares is appropriate for you.




<TABLE>
<CAPTION>
 CLASSES AND FEATURES                         POINTS TO HELP YOU COMPARE
<S>                                          <C>
 CLASS A
                                              -  Some investors may be able to reduce
 -  Sales charge of up to 2.75% charged          or eliminate their sales charge; see
    when you buy shares                          "Class A shares"
 -  In most cases, no charge when you        -  Total annual expenses are lower than
    sell shares                                 those for Class B or Class C
 -  Up to 0.25% annual shareholder           -  Distributions are generally higher than
    servicing fee                               Class B or Class C

 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    -  Distributions are generally lower than
    fee                                         Class A

 CLASS C
 -  No sales charge when you buy shares       -  The first year deferred sales charge
                                                 rate 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             automatically convert to Class A, so
    bought within the last year                  annual expenses remain higher than
 -  0.75% annual distribution fee and up         Class A
    to 0.25% annual shareholder servicing     -  Distributions are generally lower than
    fee                                          Class A
</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  | 21
<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 PRICE 1,2        NET INVESTMENT 2
<S>                       <C>                       <C>
  Up to $100,000                 2.75%                     2.83%
  $100,000-$249,999              2.50                      2.56
  $250,000 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 indicate your intent in writing 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")

           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.


22 | Choosing a Share Class
<PAGE>

           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-investments.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).

           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.


                                                    Choosing a Share Class  | 23
<PAGE>

           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 $250,000 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 0.50% on any shares you
           sell within 12 months of owning them. 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.


24 | 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.


           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).


                                                    Choosing a Share Class  | 25
<PAGE>

           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 $250,000 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.



26 | Choosing a Share Class
<PAGE>

How to BUY Class A, B and C Shares




<TABLE>
<CAPTION>
 FIRST INVESTMENT                                ADDITIONAL INVESTMENTS
<S>                                             <C>
 $1,000 for most accounts                       $50 or more for most accounts and IRAs
 $500 for IRAs                                  $50 or more for an account with an
 $500 for an account with an Automatic          Automatic Investment Plan
 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 payable to "DWS
                                                   Investments" and an investment slip
 -  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                    include a letter with your name,
    Investments"                                  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 your             -  To set up regular investments from a
    application including a check for the          bank checking account call (800) 621-1048
    initial investment and a voided check          ($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-
                                                   investments.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 Investments, PO Box 219356, Kansas City, MO 64121-9356
Additional Investments: DWS Investments, PO Box 219154, Kansas City, MO
64121-9154

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

                                        How to Buy Class A, B and C Shares  | 27
<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 using the
    method that's most convenient for you          method 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-                        -  Register at www.dws-
    investments.com or log in if already           investments.com or log in if already
    registered                                     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-investments.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>



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

           Financial intermediary support payments


           The Advisor, DWS Investments 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 affiliated and unaffiliated brokers, dealers, participating
           insurance companies or other financial intermediaries ("financial
           advisors") in connection with the sale and/or distribution of fund
           shares or the retention and/or servicing of fund investors and fund
           shares ("revenue sharing"). Such revenue sharing payments are in
           addition to any distribution or service fees payable under any Rule
           12b-1 or service plan of 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  | 29
<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,
           .05% 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
           Investments 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


30 | 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  | 31
<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.


32 | Policies You Should Know About
<PAGE>


           INITIAL PURCHASE MINIMUMS. The minimum initial investment for Class
           A, B and C shares is $1,000; the minimum initial investment for IRAs
           is $500 per account. The minimum initial investment is $500 per
           account if you establish an automatic investment plan. On behalf of
           participants in certain fee-based and wrap programs offered through
           certain financial intermediaries approved by the Advisor, and group
           retirement plans, there is no minimum initial investment.

           SUB-MINIMUM BALANCES. The fund may close your account and send you
           the proceeds if your balance falls below $1,000 ($500 for accounts
           with an Automatic Investment Plan funded with $50 or more per month
           in subsequent investments) or below $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).


           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  | 33
<PAGE>


           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.


           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 funds-of-funds.

           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


34 | Policies You Should Know About
<PAGE>


           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.

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


                                            Policies You Should Know About  | 35
<PAGE>


           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 Investments. You can also use this service to make exchanges
           and to purchase and sell shares.

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

           TELEPHONE AND ELECTRONIC TRANSACTIONS. Generally, you are
           automatically entitled to telephone check redemption and exchange
           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 personal
           security 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 Investments Web site can be a valuable resource for shareholders with
Internet access. Go to WWW.DWS-INVESTMENTS.COM to get up-to-date information,
review balances or even place orders for exchanges.




36 | Policies You Should Know About
<PAGE>


           THE FUND ACCEPTS PAYMENT FOR SHARES ONLY IN US DOLLARS by a check
           drawn on a US bank, a bank or Federal Funds wire transfer or an
           electronic bank transfer. The fund does not accept third party
           checks. A third party check is a check made payable to one or more
           parties and offered as payment to one or more other parties (e.g., a
           check made payable to you that you offer as payment to someone
           else). Checks should normally be payable to DWS Investments and
           drawn by you or a financial institution on your behalf with your
           name or account number included with the check.

           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 transferred
           electronically 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. We require
           stamps from members of a medallion signature guarantee program. A
           notary cannot be accepted in lieu of a signature guarantee.


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

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

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





THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

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









                                            Policies You Should Know About  | 37
<PAGE>

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

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

           -  withdrawals related to certain retirement or benefit plans

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

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

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

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


           IF YOU SELL SHARES IN A DWS FUND AND THEN DECIDE TO INVEST WITH DWS
           INVESTMENTS 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
           net asset value and, for purposes of a sales charge, it will be
           treated as if it had never left DWS Investments.

           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.



38 | Policies You Should Know About
<PAGE>


           AUTOMATIC EXCHANGES. Shareholders may automatically exchange fund
           shares for shares of the same class of another DWS fund. In order to
           establish an automatic exchange: (i) the amount ($50 minimum) to be
           exchanged must be specified; and (ii) the originating account must
           have a minimum account balance of $5,000. Automatic exchanges will
           be made automatically until the shareholder or the fund terminates
           the privilege.

           CLASS A TO CLASS S IN THE SAME FUND EXCHANGE PRIVILEGE. Investors
           who have invested in Class A shares through a comprehensive or
           "wrap" fee program, or other fee-based program sponsored by a
           broker-dealer, bank or registered investment adviser, may become
           eligible to invest in Class S shares. Subject to the discretion of
           the Distributor, such shareholders may exchange their Class A shares
           for Class S shares of equal aggregate value of the same fund. No
           sales charges or other charges will apply to any such exchanges.
           Investors should contact their selling and/or servicing agents to
           learn more about the details of this exchange feature.


           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 the
           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."


                                            Policies You Should Know About  | 39
<PAGE>

           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 and accepted 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 and accepted by the transfer
           agent, although a CDSC may be taken out of the proceeds (see
           "Choosing a Share Class").

           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 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 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.



           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

40 | Policies You Should Know About
<PAGE>


           -  withhold a portion of your distributions and redemption proceeds
           if we have been notified by the IRS that you are subject to backup
           withholding or if you fail to provide us with the 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 (less any applicable sales charges); 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  | 41
<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 investments it holds and by
           selling investments 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 other distribution for a given period.


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


           Dividends or distributions declared and payable 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, if such dividends or distributions are actually paid
           in January of the following year.


           Income distributions that are properly designated as exempt-interest
           dividends will not be subject to regular federal income tax, but
           they may be subject to the federal individual and corporate
           alternative minimum taxes.

           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.

           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.


42 | Understanding Distributions and Taxes
<PAGE>


           The fund intends to distribute tax-exempt interest as
           exempt-interest dividends, which are generally excluded from gross
           income for regular federal income tax purposes, but may be subject
           to alternative minimum tax and state and local income taxes.
           Distributions from other sources, if any, would be taxable as
           described above.


           Dividends from the fund are generally tax-free for most
           shareholders, meaning that investors who are individuals can receive
           them without incurring federal and (for some investors) state and
           local income tax liability. However, there are a few exceptions:


           -  a portion of the fund's dividends may be taxable if it came from
              investments in taxable securities or tax-exempt market discount
              bonds


           -  because the fund can invest up to 20% of net assets in securities
              whose income is subject to the federal alternative minimum tax
              (AMT), you may owe taxes on a portion of your dividends if you
              are among those investors who must pay AMT

           -  capital gains distributions may be taxable

           If you are a Massachusetts resident, you will not be subject to
           Massachusetts personal income tax on distributions properly
           identified by the fund as consisting of (1) certain exempt-interest
           dividends consisting of interest on tax-exempt obligations of the
           Commonwealth of Massachusetts, (2) interest on certain tax-exempt
           obligations, or (3) capital gains dividends attributable to the sale
           of certain Massachusetts obligations issued pursuant to legislation
           which specifically exempts capital
           gain on the sale of such obligations from Massachusetts income
           taxation. Other distributions from the fund, including those derived
           from taxable interest income and long-term and short-term capital
           gains, generally will not be exempt from Massachusetts personal
           income taxation.

           Fund distributions will not be excluded from net income, and shares
           of the fund will not be excluded from the net worth of intangible
           property corporations, for purposes of computing the Massachusetts
           corporate excise tax. For more information, see the Statement of
           Additional Information, under "Taxes."





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  | 43
<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                            (except for tax-exempt
                                                       interest 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 affected.


           Investments in certain debt obligations or other securities may
           cause the fund to recognize taxable income in excess of the cash
           generated by them. 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 received by the fund from domestic and
           some foreign corporations. It does not include income from
           investments in debt securities  or, generally, from Real Estate
           Investment Trusts. In addition, the fund must meet certain holding
           period



44 | Understanding Distributions and Taxes
<PAGE>

           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 temporarily 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 maximum 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 pays a dividend. In tax-
           advantaged retirement accounts you generally do not need to worry
           about this.


           If the fund's distributions exceed its current and accumulated
           earnings and profits, the excess will be treated for federal income
           tax purposes as a tax-free return of capital to the extent of your
           basis in your shares and thereafter as a capital gain. Because a
           return of capital distribution reduces the basis of your shares, a
           return of capital distribution may result in a higher capital gain
           or a lower capital loss when you sell your shares.


           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.


                                     Understanding Distributions and Taxes  | 45
<PAGE>

           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.


46 | 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 historical rate of return for the fund may be
           higher or lower than 5% and, for money market funds, is typically
           less than 5%. 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  | 47
<PAGE>

                   DWS Massachusetts Tax-Free Fund - Class A




<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               2.75%                   $10,000                            5%
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER      ANNUAL FEES
              FEES AND        EXPENSE        FEES AND           FEES AND            AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        1.34%              0.81%       $ 10,080.94        $   407.70
   2           10.25%        1.34%              4.50%       $ 10,449.90        $   137.56
   3           15.76%        1.34%              8.32%       $ 10,832.36        $   142.59
   4           21.55%        1.34%             12.29%       $ 11,228.83        $   147.81
   5           27.63%        1.34%             16.40%       $ 11,639.80        $   153.22
   6           34.01%        1.34%             20.66%       $ 12,065.82        $   158.83
   7           40.71%        1.34%             25.07%       $ 12,507.43        $   164.64
   8           47.75%        1.34%             29.65%       $ 12,965.20        $   170.67
   9           55.13%        1.34%             34.40%       $ 13,439.73        $   176.97
  10           62.89%        1.34%             39.32%       $ 13,931.62        $   183.91
  TOTAL                                                                        $ 1,843.31
</TABLE>



DWS Massachusetts Tax-Free Fund - Class B





<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER        ANNUAL
              FEES AND        EXPENSE        FEES AND           FEES AND         FEES AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        2.11%              2.89%       $ 10,289.00        $   214.05
   2           10.25%        2.11%              5.86%       $ 10,586.35        $   220.23
   3           15.76%        2.11%              8.92%       $ 10,892.30        $   226.60
   4           21.55%        2.11%             12.07%       $ 11,207.09        $   233.15
   5           27.63%        2.11%             15.31%       $ 11,530.97        $   239.89
   6           34.01%        2.11%             18.64%       $ 11,864.21        $   246.82
   7           40.71%        1.34%             22.98%       $ 12,298.45        $   161.89
   8           47.75%        1.34%             27.49%       $ 12,748.57        $   167.81
   9           55.13%        1.34%             32.15%       $ 13,215.17        $   173.96
  10           62.89%        1.34%             36.99%       $ 13,698.84        $   180.32
  TOTAL                                                                        $ 2,064.72
</TABLE>




48 | Appendix
<PAGE>

                   DWS Massachusetts Tax-Free Fund - Class C




<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER      ANNUAL FEES
              FEES AND        EXPENSE        FEES AND           FEES AND            AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        2.10%              2.90%       $ 10,290.00        $   213.05
   2           10.25%        2.10%              5.88%       $ 10,588.41        $   219.22
   3           15.76%        2.10%              8.95%       $ 10,895.47        $   225.58
   4           21.55%        2.10%             12.11%       $ 11,211.44        $   232.12
   5           27.63%        2.10%             15.37%       $ 11,536.57        $   238.85
   6           34.01%        2.10%             18.71%       $ 11,871.14        $   245.78
   7           40.71%        2.10%             22.15%       $ 12,215.40        $   252.91
   8           47.75%        2.10%             25.70%       $ 12,569.64        $   260.24
   9           55.13%        2.10%             29.34%       $ 12,934.16        $   267.79
  10           62.89%        2.10%             33.09%       $ 13,309.26        $   275.56
  TOTAL                                                                        $ 2,431.10
</TABLE>




                                                                  Appendix  | 49
<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 Investments at the address listed
below. SAIs and shareholder reports are also available through the DWS
Investments Web site at www.dws-investments.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 INVESTMENTS      SEC                     DISTRIBUTOR
-----------------    --------------------    ------------------------------
<S>                  <C>                     <C>
PO Box 219151        100 F Street, N.E.      DWS Investments Distributors,
Kansas City, MO      Washington, D.C.        Inc.
64121-9151           20549-0102              222 South Riverside Plaza
WWW.DWS-             WWW.SEC.GOV             Chicago, IL 60606-5808
INVESTMENTS.COM      (800) SEC-0330          (800) 621-1148
(800) 621-1048
</TABLE>



<TABLE>
<S>                           <C>                                  <C>
SEC FILE NUMBER:
DWS State Tax-Free Trust        DWS Massachusetts Tax-Free Fund    811-3749
</TABLE>







(08/01/09) DMATF-1

[RECYCLE GRAPHIC APPEARS HERE]
                                                          [DWS INVESTMENTS LOGO]
                                                             Deutsche Bank Group
<PAGE>


                                 AUGUST 1, 2009








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

                        DWS MASSACHUSETTS TAX-FREE 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.


                                     RESHAPING INVESTING. [DWS INVESTMENTS LOGO]
                                                             Deutsche Bank Group

<PAGE>

CONTENTS





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


</TABLE>
<TABLE>
<S>      <C>
HOW TO INVEST IN THE FUND
 18      How to Buy Class S Shares
 19      How to Exchange or Sell
         Class S Shares
 22      Policies You Should Know
         About
 32      Understanding Distributions
         and Taxes
 37      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-INVESTMENTS.COM (the
Web site does not form a part of this prospectus).
<PAGE>


<TABLE>
<S>                                    <C>
                                         Class S
  ticker symbol                          SCMAX
    fund number                          2012

    DWS MASSACHUSETTS TAX-FREE FUND


</TABLE>

            THE FUND'S MAIN INVESTMENT STRATEGY

            The fund seeks income that is exempt from Massachusetts
            personal and federal income taxes.

            Under normal circumstances, the fund invests at least 80% of net
            assets, plus the amount of any borrowings for investment purposes,
            in Massachusetts municipal securities. For purposes of this 80%
            requirement, Massachusetts municipal securities are securities
            whose income is exempt from federal and Massachusetts personal
            income taxes, which may include securities of issuers located
            outside Massachusetts. The fund may invest up to 20% of net assets
            in securities whose income is subject to the federal alternative
            minimum tax (AMT).


            The fund can buy many types of municipal securities with no
            maturity restrictions. These may include, without limitation,
            revenue bonds (which are backed by revenues from a particular
            source) and general obligation bonds (which are typically backed by
            the issuer's ability to levy taxes). They may also include
            industrial development bonds, municipal lease obligations and
            investments representing an interest therein.

            CREDIT QUALITY POLICIES. This fund normally invests at least 75% of
            total assets in municipal securities of the top four grades of
            credit quality. The fund could invest up to 25% of total assets in
            high yield bonds (commonly referred to as "junk" bonds) of the
            fifth and sixth credit grades (i.e., as low as grade B). Compared
            to investment-grade bonds, junk bonds generally pay higher yields,
            have higher volatility and higher risk of default on payments of
            interest or principal.


            The portfolio managers look for securities that appear to offer the
            best total return potential. In making their buy and sell
            decisions, the managers typically weigh a number of factors against
            each other, from economic outlooks and possible


4 | DWS Massachusetts Tax-Free Fund
<PAGE>

            interest rate movements and yield levels across varying maturities
            to characteristics of specific securities, such as coupon, maturity
            date and call date, and changes in supply and demand within the
            municipal bond market.


            Although the managers may adjust the fund's duration (a measure of
            sensitivity to interest rates) over a wider range, they generally
            intend to keep it similar to that of the Barclays Capital Municipal
            Bond Index, generally between five and nine years.


            In addition, they may use various types of derivative instruments
            (instruments whose value is based on, for example, indexes,
            commodities or securities) for hedging purposes or to enhance
            return. Such instruments may include inverse floaters, futures
            contracts, interest rate swaps and other over-the-counter
            derivatives.


            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, debt securities will decrease in
            value when interest rates rise. The longer the duration of the
            fund's debt 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 debt securities held by the
            fund may prepay principal earlier than scheduled, forcing the fund
            to reinvest in lower-yielding debt securities and may reduce the
            fund's income. As interest rates increase, slower than expected
            principal payments may extend the average life of debt securities.
            This will have the effect of locking in a below-market interest
            rate, thereby further reducing the value of such a debt security.


            CREDIT RISK. A fund purchasing debt securities faces the risk that
            the creditworthiness of an issuer may decline, causing the value of
            the debt securities to decline. In addition, an issuer may not be
            able to make timely payments on the interest and/
            or principal on the debt security it has issued. Because the
            issuers of high-yield debt securities or junk bonds (debt
            securities rated below the fourth highest category) may be in
            uncertain financial health, the prices of their debt securities can
            be more vulnerable to bad economic news or even the


                                            DWS Massachusetts Tax-Free Fund  | 5
<PAGE>

            expectation of bad news, than investment-grade debt securities. In
            some cases, debt securities, particularly high-yield debt
            securities, 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. If banks, insurance companies or other financial
            institutions that insure certain municipal bonds suffer credit
            downgrades or cease insuring municipal bond issuances, the fund may
            be subject to a higher degree of credit risk. Industrial
            development bonds are typically backed by revenues from a given
            facility and by the credit of a private company, but are not backed
            by the taxing power of a municipality.


            FOCUSED INVESTING RISK. The fact that the fund may focus on
            investments from a single state or region of the municipal
            securities market increases risk, because factors affecting the
            state or region, such as economic or fiscal problems, could affect
            a large portion of the fund's securities in a similar manner. For
            example, a state's technology or biotech industries could
            experience a downturn or fail to develop as expected, hurting the
            local economy. States could also face severe fiscal difficulties,
            for example, an economic downturn, increased expenditures on
            domestic security or reduced monetary support from the federal
            government. Over time, these issues may have the ability to impair
            a state's ability to repay its obligations.

            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 debt securities
            or the stock market could also adversely affect the fund by
            reducing the relative attractiveness of debt securities as an
            investment. Also, to the extent that the fund emphasizes debt
            securities from any given state or region, it could be hurt if that
            state or region does not do well.


            NON-DIVERSIFICATION RISK. The fund is classified as non-diversified
            under the Investment Company Act of 1940, as amended. This means
            that the fund may invest in securities of relatively few issuers.
            Thus, the performance of one or a small number of portfolio
            holdings can affect overall performance more than if the fund
            invested in a larger number of issuers.


6 | DWS Massachusetts Tax-Free Fund
<PAGE>


            INVERSE FLOATING RATE SECURITIES RISK. Returns on inverse floating
            rate securities ("inverse floaters") generally will increase when
            short term interest rates decrease and will decrease when short
            term interest rates increase. Investments in inverse floaters may
            subject the fund to the risks of reduced interest payments and loss
            of principal. Inverse floaters are derivatives that involve
            leverage and the market value of the inverse floater typically
            changes as a multiple of the underlying bond. Consequently, the use
            of inverse floaters could magnify the fund's gains or losses. In
            addition, the fund may be unable to sell inverse floaters at
            favorable prices.


            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.

            FOR INFORMATION CONCERNING IMPORTANT TAX CONSEQUENCES of an
            investment in the fund, please see "Understanding Distributions and
            Taxes."

            Other factors that could affect performance include:


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


            -  political or legal actions could change the way the fund's
               dividends are treated for income tax purposes.

            -  at times, market conditions might make it hard to value some
               investments or to get an attractive price for them.


                                            DWS Massachusetts Tax-Free Fund  | 7
<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
the fund and the index information varies over time. All figures assume
reinvestment of dividends and distributions (in the case of after-tax returns,
reinvested net of assumed tax rates).

The table shows returns for Class S shares on a before-tax and after-tax basis.
After-tax returns are estimates calculated using the historical highest
marginal individual federal 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 Massachusetts Tax-Free Fund

ANNUAL TOTAL RETURN (%) AS OF 12/31 EACH YEAR - Class S


[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]

<TABLE>
<S>        <C>        <C>       <C>        <C>       <C>       <C>       <C>       <C>     <C>
-2.28      10.92       4.43     10.87       5.12      3.21      3.01      4.41     3.75    -4.94
1999       2000       2001      2002       2003      2004      2005      2006      2007    2008
</TABLE>







<TABLE>
<CAPTION>
2009 TOTAL RETURN AS OF JUNE 30: 9.88%
<S>                                      <C>
For the periods included in the bar chart:
BEST QUARTER: 5.21%, Q3 2002             WORST QUARTER: -3.47%, Q3 2008
</TABLE>




8 | DWS Massachusetts Tax-Free Fund
<PAGE>


AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2008




<TABLE>
<CAPTION>
                                               1 YEAR       5 YEARS      10 YEARS
<S>                                          <C>           <C>          <C>
 CLASS S
   Return before Taxes                          -4.94         1.83         3.74
   Return after Taxes on Distributions          -4.98         1.72         3.68
   Return after Taxes on Distributions
   and Sale of Fund Shares                      -1.76*        2.16*        3.86*
 BARCLAYS CAPITAL MUNICIPAL BOND
 INDEX (reflects no deductions for fees,
 expenses or taxes)                             -2.47         2.71         4.26
</TABLE>



     Total returns would have been lower if operating expenses hadn't been
     reduced.


 *   Return after Taxes on Distributions and Sales of Fund Shares is higher
     than other return figures for the same period due to a capital loss
     occurring upon redemption resulting in an assumed tax deduction for the
     shareholder.


 The BARCLAYS CAPITAL MUNICIPAL BOND INDEX (name changed from Lehman Brothers
 Municipal Bond Index effective November 3, 2008) is an unmanaged market-value-
 weighted measure of municipal bonds issued across the United States. Index
 issues have a credit rating of at least Baa and a maturity of at least two
 years.



--------------------------------------------------------------------------------
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-investments.com.


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

Return information assumes that fund shares were sold at the end of the period.


RETURN AFTER TAXES ON DISTRIBUTIONS 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 reflects taxes on
both the fund's distributions and a shareholder's gain or loss from selling
fund shares.



                                            DWS Massachusetts Tax-Free Fund  | 9
<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 S
<S>                                    <C>
 SHAREHOLDER FEES, paid directly from your investment
_____________________________________________________________________
 Sales Charge                                     None

 ANNUAL OPERATING EXPENSES, deducted from fund assets
_____________________________________________________________________
 Management Fee                                    0.44%
 Distribution/Service (12b-1) Fee                  None
 Interest Expense 1                                0.43
 Other Expenses 2                                  0.34
 TOTAL ANNUAL OPERATING EXPENSES                   1.21
 Less Expense Waiver/
 Reimbursement 3,4                                 0.08
 NET ANNUAL OPERATING EXPENSES 3,4                 1.13
</TABLE>




1    Interest expense relates to the fund's liability with respect to floating
     rate notes held by third parties in conjunction with certain inverse
     floater securities transactions. However, the accounting treatment for such
     transactions includes an offsetting interest income item, and accordingly
     has no impact to net investment income, total return or net asset value.



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

3    Through September 30, 2009, the Advisor has agreed to contractually waive a
     portion of its management fees and reimburse expenses to the extent
     necessary to maintain total annual operating expenses at 0.67% for Class S
     shares, excluding certain expenses such as extraordinary expenses, taxes,
     brokerage and interest.

4    For the period from October 1, 2009 through September 30, 2010, the Advisor
     has agreed to contractually waive a portion of its management fees and
     reimburse expenses to the extent necessary to maintain total annual
     operating expenses at a ratio no higher than 0.70% 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 share class to
those of other mutual funds. This example assumes the expenses above remain the
same. It also assumes that you invested $10,000, earned 5% annual returns and
reinvested all dividends and distributions and sold your shares at the end of
the 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        $115         $376         $657       $1,459
</TABLE>




10 | DWS Massachusetts Tax-Free 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. However, the fund's policy of investing at
              least 80% of net assets, plus the amount of any borrowings for
              investment purposes, in Massachusetts municipal securities whose
              income is exempt from federal and Massachusetts personal income
              taxes cannot be changed without 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 bonds 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. Temporary investments may be taxable.

           -  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 investment objective.



                                                  Other Policies and Risks  | 11
<PAGE>


           A complete list of the fund's portfolio holdings as of the month-end
           is posted on www.dws-investments.com on or about the 15th day of the
           following month. More frequent posting of portfolio holdings
           information may be made from time to time on
           www.dws-investments.com. The posted portfolio holdings information
           is available by fund and generally remains accessible at least until
           the date on which the fund files its Form N-CSR or N-Q with the
           Securities and Exchange Commission for the period that includes the
           date as of which the posted information is current. 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 Investments is part of Deutsche Bank's Asset Management division
           and, within the US, represents the retail asset management
           activities of Deutsche Bank AG, Deutsche Bank Trust Company
           Americas, DIMA 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.


12 | 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 Massachusetts Tax-Free Fund                  0.44%
</TABLE>




           A discussion regarding the basis for the Board's approval of the
           fund's investment management agreement is contained in the most
           recent shareholder report for the semi-annual period ended September
           30 (see "Shareholder reports" on the back cover).

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



                                         Who Manages and Oversees the Fund  | 13
<PAGE>

Portfolio management

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

DWS MASSACHUSETTS TAX-FREE FUND

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

Philip G. Condon
Managing Director of Deutsche Asset Management and Lead Portfolio Manager of
the fund.

- Head of US Retail Fixed Income Funds.

- Joined Deutsche Asset Management in 1983 and the fund in 1989.

- Over 33 years of investment industry experience.


- BA and MBA, University of Massachusetts at Amherst.


Rebecca L. Flinn
Director of Deutsche Asset Management and Portfolio Manager of the fund.
- Joined Deutsche Asset Management in 1986 and the fund in 1999.

- Over 23 years of investment industry experience.

- BA, University of Redlands, California.

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.


14 | 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 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).


                                                      Financial Highlights  | 15
<PAGE>

DWS Massachusetts Tax-Free Fund - Class S



<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,                   2009             2008             2007            2006           2005
<S>                                 <C>             <C>              <C>              <C>            <C>
SELECTED PER SHARE DATA
--------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD                             $  14.06         $ 14.18         $  14.20        $  14.46       $  14.90
--------------------------------      --------         -------         --------        --------       --------
Income (loss) from
investment operations:
  Net investment income                    .63             .58              .59             .62            .68
________________________________      ________         _______         ________        ________       ________
  Net realized and unrealized
  gain (loss)                           (  .61)         (  .12)             .08          (  .11)        (  .37)
--------------------------------      --------         -------         --------        --------       --------
  TOTAL FROM INVESTMENT
  OPERATIONS                               .02             .46              .67             .51            .31
--------------------------------      --------         -------         --------        --------       --------
Less distributions from:
  Net investment income                 (  .62)         (  .58)          (  .59)         (  .62)        (  .68)
________________________________      ________         _______         ________        ________       ________
  Net realized gains                    (  .04)         (  .00)*         (  .10)         (  .15)        (  .07)
--------------------------------      --------         -------         --------        --------       --------
  TOTAL DISTRIBUTIONS                   (  .66)         (  .58)          (  .69)         (  .77)        (  .75)
--------------------------------      --------         -------         --------        --------       --------
Redemption fees                            .00*            .00*             .00*            .00*           .00*
--------------------------------      --------         -------         --------        --------       --------
NET ASSET VALUE, END OF
PERIOD                                $  13.42         $ 14.06         $  14.18        $  14.20       $  14.46
--------------------------------      --------         -------         --------        --------       --------
Total Return (%)                        .20a           3.32a             4.78a             3.59           1.84
--------------------------------      --------         -------         --------        --------       --------

RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------------
Net assets, end of period
($ millions)                               344             474              416             401            431
_________________________________     ________         _______         ________        ________       ________
Ratio of expenses before
expense reductions (including
interest expense) (%)b                    1.21            1.30             1.24            1.35            .92
_________________________________     ________         _______         ________        ________       ________
Ratio of expenses after
expense reductions (including
interest expense) (%)b                    1.11            1.23             1.23            1.35            .92
_________________________________     ________         _______         ________        ________       ________
Ratio of expenses after
expense reductions (excluding
interest expense) (%)                      .68             .70              .73             .74            .70
_________________________________     ________         _______         ________        ________       ________
Ratio of net investment
income (%)                                4.58            4.11             4.13            4.32           4.63
_________________________________     ________         _______         ________        ________       ________
Portfolio turnover rate (%)                 58              48               41              39             34
---------------------------------     --------         -------         --------        --------       --------
</TABLE>



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

b    Interest expense represents interest and fees on short term floating rate
     notes issued in conjunction with inverse floating rate securities. Interest
     income from such transactions is included in income from investment
     operations.

*   Amount is less than $.005.

16 | 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 Investments, 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 Class S Shares




<TABLE>
<CAPTION>
 FIRST INVESTMENT                              ADDITIONAL INVESTMENTS
<S>                                            <C>
 $2,500 for most accounts $1,000 for           $50 or more for most accounts and IRAs
 IRAs and UTMAs/UGMAs                          $50 or more for an account with an
 $1,000 for an account with an Automatic       Automatic Investment Plan
 Investment Plan

 BY MAIL OR EXPRESS MAIL (SEE BELOW)
                                               Send a DWS Investments investment
 -  Complete an application and mail it to     slip or a written request that includes:
    the appropriate address along with a
    personal check or cashier's check          -  fund and class name
    made payable to "DWS Investments"          -  account number
                                               -  check made payable to "DWS
                                                  Investments"

 BY WIRE
 -  Call (800) 728-3337 for instructions       -  Call (800) 728-3337 for instructions

 BY PHONE
 Not available                                 -  Call (800) 728-3337 for instructions

 WITH AN AUTOMATIC INVESTMENT PLAN
 -  Fill in the information on your            -  To initiate 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                                -  Call (800) 728-3337 to ensure you have
    www.dws-investments.com or log in if          electronic services
    already registered                         -  Register at www.dws-
 -  Print out a prospectus and a new              investments.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 Investments, PO Box 219356, Kansas City, MO 64121-9356
Additional Investments: DWS Investments, PO Box 219154, Kansas City, MO
64121-9154

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


18 | How to Buy Class S Shares
<PAGE>

How to EXCHANGE or SELL Class S 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-                        -  Register at www.dws-
    investments.com or log in if already           investments.com or log in if already
    registered                                     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-investments.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 Class S Shares  | 19
<PAGE>

           Financial intermediary support payments


           The Advisor, DWS Investments 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 affiliated and unaffiliated brokers, dealers, participating
           insurance companies or other financial intermediaries ("financial
           advisors") in connection with the sale and/or distribution of fund
           shares or the retention and/or servicing of fund investors and fund
           shares ("revenue sharing"). Such revenue sharing payments are in
           addition to any distribution or service fees payable under any Rule
           12b-1 or service plan of 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.


20 | How to Sell or Exchange Class S 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,
           .05% 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
           Investments 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 Class S Shares  | 21
<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 Investments representative between 9 a.m.
     and 6 p.m. Eastern time on any fund business day by calling (800) 728-3337.



22 | 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 MINIMUMS. The minimum initial investment is $2,500.
           The minimum initial investment is $1,000 per account for fiduciary
           accounts such as IRAs and custodial accounts such as Uniform Gifts
           to Minors Act and Uniform Transfers to Minors Act accounts. In
           addition, the minimum initial investment is



                                            Policies You Should Know About  | 23
<PAGE>


           $1,000 if an automatic investment plan of $50 per month is
           established. On behalf of participants in certain fee-based and wrap
           programs offered through certain financial intermediaries approved
           by the Advisor, and group retirement plans, there is no minimum
           initial investment.

           SUB-MINIMUM 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 does not apply to: (i) accounts with an automatic
           investment plan; (ii) accounts held in an omnibus account through a
           financial services firm; (iii) accounts maintained on behalf of
           participants in certain fee based and wrap programs offered through
           certain financial intermediaries approved by the Advisor; (iv)
           participant level accounts in group retirement plans held on the
           records of a retirement plan record keeper and (v) accounts held by
           shareholders who maintain $100,000 or more in aggregate assets in
           DWS fund shares.

           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).


           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.


24 | 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.


           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.



                                            Policies You Should Know About  | 25
<PAGE>

           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 funds-of-funds.


           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


26 | Policies You Should Know About
<PAGE>

           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.

           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 Investments. You can also use this service to make exchanges
           and to purchase and sell shares.

           QUICKBUY AND QUICKSELL allow you to set up an electronic 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 check redemption and
           exchange 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 personal
           security 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 FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

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




                                            Policies You Should Know About  | 27
<PAGE>

           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 a check
           drawn on a US bank, a bank or Federal Funds wire transfer or an
           electronic bank transfer. The fund does not accept third party
           checks. A third party check is a check made payable to one or more
           parties and offered as payment to one or more other parties (e.g., a
           check made payable to you that you offer as payment to someone
           else). Checks should normally be payable to DWS Investments and
           drawn by you or a financial institution on your behalf with your
           name or account number included with the check.

           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 transferred
           electronically 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 guaran-
           tor program. We require stamps from members of a medallion signature
           guarantee program. A notary cannot be accepted in lieu of a
           signature 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.





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.









28 | Policies You Should Know About
<PAGE>


           AUTOMATIC EXCHANGES. Shareholders may automatically exchange fund
           shares for shares of the same class of another DWS fund. In order to
           establish an automatic exchange: (i) the amount ($50 minimum) to be
           exchanged must be specified; and (ii) the originating account must
           have a minimum account balance of $5,000. Automatic exchanges will
           be made automatically until the shareholder or the fund terminates
           the privilege.


           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 the
           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>



                                            Policies You Should Know About  | 29
<PAGE>


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

           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 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 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.



           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
              if we have been notified by the IRS that you are subject to
              backup withholding or if you fail to provide us with the 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

30 | 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; 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  | 31
<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 investments it holds and by
           selling investments 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 other distribution for a given period.


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


           Dividends or distributions declared and payable 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, if such dividends or distributions are actually paid
           in January of the following year.


           Income distributions that are properly designated as exempt-interest
           dividends will not be subject to regular federal income tax, but
           they may be subject to the federal individual and corporate
           alternative minimum taxes.

           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.

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





THE 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.



32 | Understanding Distributions and Taxes
<PAGE>


           The fund intends to distribute tax-exempt interest as
           exempt-interest dividends, which are generally excluded from gross
           income for regular federal income tax purposes, but may be subject
           to alternative minimum tax and state and local income taxes.
           Distributions from other sources, if any, would be taxable as
           described above.


           Dividends from the fund are generally tax-free for most
           shareholders, meaning that investors who are individuals can receive
           them without incurring federal and (for some investors) state and
           local income tax liability. However, there are a few exceptions:


           -  a portion of the fund's dividends may be taxable if it came from
              investments in taxable securities or tax-exempt market discount
              bonds


           -  because the fund can invest up to 20% of net assets in securities
              whose income is subject to the federal alternative minimum tax
              (AMT), you may owe taxes on a portion of your dividends if you
              are among those investors who must pay AMT

           -  capital gains distributions may be taxable

           If you are a Massachusetts resident, you will not be subject to
           Massachusetts personal income tax on distributions properly
           identified by the fund as consisting of (1) certain exempt-interest
           dividends consisting of interest on tax-exempt obligations of the
           Commonwealth of Massachusetts, (2) interest on certain tax-exempt
           obligations, or (3) capital gains dividends attributable to the sale
           of certain Massachusetts obligations issued pursuant to legislation
           which specifically exempts capital gain on the sale of such
           obligations from Massachusetts income taxation. Other distributions
           from the fund, including those derived from taxable interest income
           and long-term and short-term capital gains, generally will not be
           exempt from Massachusetts personal income taxation.

           Fund distributions will not be excluded from net income, and shares
           of the fund will not be excluded from the net worth of intangible
           property corporations, for purposes of computing the Massachusetts
           corporate excise tax. For more information, see the Statement of
           Additional Information, under "Taxes."


                                     Understanding Distributions and Taxes  | 33
<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      (except for tax-exempt
                                                       interest 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 affected.


           Investments in certain debt obligations or other securities may
           cause the fund to recognize taxable income in excess of the cash
           generated by them. 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 received by the fund from domestic and
           some foreign corporations. It does not include income from
           investments in debt securities  or, generally, from Real Estate
           Investment Trusts. In addition, the fund must meet certain holding
           period



34 | Understanding Distributions and Taxes
<PAGE>

           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 temporarily 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 maximum 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 pays a dividend. In tax-
           advantaged retirement accounts you generally do not need to worry
           about this.


           If the fund's distributions exceed its current and accumulated
           earnings and profits, the excess will be treated for federal income
           tax purposes as a tax-free return of capital to the extent of your
           basis in your shares and thereafter as a capital gain. Because a
           return of capital distribution reduces the basis of your shares, a
           return of capital distribution may result in a higher capital gain
           or a lower capital loss when you sell your shares.


           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.


                                     Understanding Distributions and Taxes  | 35
<PAGE>

           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.


36 | 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 historical rate of return for the fund may be
           higher or lower than 5% and, for money market funds, is typically
           less than 5%. 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  | 37
<PAGE>

                   DWS Massachusetts Tax-Free 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%        1.13%              3.87%       $ 10,387.00        $   115.19
   2           10.25%        1.21%              7.81%       $ 10,780.67        $   128.06
   3           15.76%        1.21%             11.89%       $ 11,189.25        $   132.92
   4           21.55%        1.21%             16.13%       $ 11,613.33        $   137.96
   5           27.63%        1.21%             20.53%       $ 12,053.47        $   143.18
   6           34.01%        1.21%             25.10%       $ 12,510.30        $   148.61
   7           40.71%        1.21%             29.84%       $ 12,984.44        $   154.24
   8           47.75%        1.21%             34.77%       $ 13,476.55        $   160.09
   9           55.13%        1.21%             39.87%       $ 13,987.31        $   166.16
  10           62.89%        1.21%             45.17%       $ 14,517.43        $   172.45
  TOTAL                                                                        $ 1,458.86
</TABLE>




38 | 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 Investments at the address listed
below. SAIs and shareholder reports are also available through the DWS
Investments Web site at www.dws-investments.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 INVESTMENTS      SEC                     DISTRIBUTOR
-----------------    --------------------    ------------------------------
<S>                  <C>                     <C>
PO Box 219151        100 F Street, N.E.      DWS Investments Distributors,
Kansas City, MO      Washington, D.C.        Inc.
64121-9151           20549-0102              222 South Riverside Plaza
WWW.DWS-             WWW.SEC.GOV             Chicago, IL 60606-5808
INVESTMENTS.COM      (800) SEC-0330          (800) 621-1148
(800) 728-3337
</TABLE>



<TABLE>
<S>                           <C>                                  <C>
SEC FILE NUMBER:
DWS State Tax-Free Trust        DWS Massachusetts Tax-Free Fund    811-3749
</TABLE>







(08/01/09) 12-2
[RECYCLE GRAPHIC APPEARS HERE]
                                                          [DWS INVESTMENTS LOGO]
                                                             Deutsche Bank Group
<PAGE>



                            DWS STATE TAX-FREE TRUST

                         DWS Massachusetts Tax-Free Fund

                            (Class A, B and C Shares)




                       STATEMENT OF ADDITIONAL INFORMATION



                                 August 1, 2009




This Statement of Additional Information is not a prospectus and should be read
in conjunction with the prospectus for DWS Massachusetts Tax-Free Fund (the
"Fund"), a series of DWS State Tax Free Trust (the "Trust") dated August 1,
2009, as amended from time to time, a copy of which may be obtained without
charge by calling (800) 621-1048, through the DWS Investments Web site at
www.dws-investments.com or from the firm from which this Statement of Additional
Information was obtained. This information is also available along with other
related 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 dated March 31, 2009, are
incorporated 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 Statement of Additional Information ("SAI") is incorporated by reference
into the corresponding prospectuses for each class of shares of the Fund.



                                TABLE OF CONTENTS

                                                                          Page
                                                                          ----

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

INVESTMENT POLICIES AND TECHNIQUES..........................................23
   Portfolio Holdings.......................................................43

MANAGEMENT OF THE FUND......................................................44
   Investment Advisor.......................................................44

FUND SERVICE PROVIDERS......................................................55
   Administrator............................................................55
   Distributor..............................................................56
   Custodian................................................................60
   Transfer Agent and Shareholder Service Agent.............................60
   Independent Registered Public Accounting Firm............................61
   Legal Counsel............................................................61

PORTFOLIO TRANSACTIONS......................................................62

PURCHASE AND REDEMPTION OF SHARES...........................................64

DIVIDENDS...................................................................88

TAXES.......................................................................90

NET ASSET VALUE............................................................108

BOARD MEMBERS AND OFFICERS.................................................109

FUND ORGANIZATION..........................................................128

PROXY VOTING GUIDELINES....................................................129

FINANCIAL STATEMENTS.......................................................130

ADDITIONAL INFORMATION.....................................................130

APPENDIX A -- PROXY VOTING GUIDELINES......................................132

APPENDIX B -- RATINGS OF INVESTMENTS.......................................158



                             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.

DWS Massachusetts Tax-Free Fund has elected to be classified as a
non-diversified series of an open-end investment management company.

A non-diversified fund may invest a greater proportion of its assets in the
obligations of a small number of issuers, and may be subject to greater risk and
substantial losses as a result of changes in the financial condition or the
market's assessment of the issuers. While not limited by the Investment Company
Act of 1940, as amended (the "1940 Act") as to the proportion of its assets that
it may invest in obligations of a single issuer, the Fund will comply with the
diversification requirements imposed by the Internal Revenue Code of 1986, as
amended (the "Code") for qualification as a regulated investment company.

As a matter of fundamental policy, the Fund may not:

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

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

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

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

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

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

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

A fundamental policy may not be changed without the approval of a majority of
the outstanding voting securities of the Fund which, under the 1940 Act and the
rules thereunder and as used in this Statement of Additional Information, means
the lesser of (1) 67% or more of the voting securities present at such meeting,
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.
Nonfundamental 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 nonfundamental 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); and

(f)      lend portfolio securities in an amount greater than 5% of its total
         assets.

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.

If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage beyond the specified limit resulting from a
change in values or net assets will not be considered a violation.


As a matter of fundamental policy, at least 80% of the Fund's net assets, plus
the amount of any borrowings for investment purposes, will normally be invested
in Massachusetts municipal securities. All income distributed by the Fund is
expected to be exempt from federal and Massachusetts personal income taxes,
which may include securities of issuers located outside Massachusetts.
Ordinarily, the Fund expects that 100% of its portfolio securities will be in
federally tax-exempt securities although a small portion of its income may be
subject to federal, alternative minimum tax (AMT) or state and local taxes.



For temporary defensive purposes or if an unusual disparity between after-tax
income on taxable and municipal securities makes it advisable, up to 20% of the
Fund's assets may be held in cash or invested in short-term taxable investments,
including US Government obligations and money market instruments. It is
impossible to accurately predict how long such an alternative strategy may be
utilized.

The Fund's distributions from interest on certain municipal securities may be
subject to the AMT depending upon investors' particular situations. However, no
more than 20% of the Fund's net assets will normally be invested in municipal
securities whose interest income, when distributed to shareholders, is subject
to the individual AMT. In addition, state and local taxes may apply, depending
on your state tax laws.

There is no current intention to invest more than 5% of the Fund's net assets in
reverse repurchase agreements.


Moreover, although the Fund does not currently intend to do so on a regular
basis, it may invest more than 25% of its assets in municipal securities that
are repayable out of revenue streams generated from economically related
projects or facilities, if such investment is deemed necessary or appropriate by
the Fund's investment advisor. To the extent that the Fund's assets are
concentrated in municipal securities payable from revenues on economically
related projects and facilities, the Fund will be subject to the risks presented
by such projects to a greater extent than it would be if the Fund's assets were
not so concentrated. For purposes of the Fund's investment limitation regarding
concentration of investments in any one industry, industrial development or
other private activity bonds ultimately payable by companies within the same
industry will be considered as if they were issued by issuers in the same
industry.

Although there is no current intention to do so, the Fund may invest more than
25% of its total assets in industrial development or other private activity
bonds, subject to the Fund's fundamental investment policies. Because these
bonds are frequently subject to regular federal income tax and AMT, investment
in these types of bonds is also subject to the Fund's limitation on investing
municipal securities whose investment income is subject to these taxes. The Fund
does not currently consider private activity bonds to be municipal securities
for purposes of the 80% requirement.

The Fund is designed for persons who are seeking a high level of income exempt
from federal income taxes and from personal income taxes of Massachusetts.
Through a single investment in shares of the Fund, investors receive the
benefits of professional management and liquidity. Additionally, the Fund offers
the economic advantages of block purchases of securities and relief from
administrative details such as accounting for distributions and the safekeeping
of securities. The tax exemption of Fund dividends for federal income tax
purposes and, if applicable, Massachusetts or local personal income tax purposes
does not necessarily result in exemption under the income or other tax laws of
any other state or local taxing authority. The laws of the several states and
local taxing authorities vary with respect to the taxation of interest income
and investments, and shareholders are advised to consult their own tax advisors
as to the status of their accounts under state and local tax laws. The Fund may
not be an appropriate investment for qualified retirement plans and Individual
Retirement Accounts.

The following information as to certain risk factors is given to investors
because the Fund concentrates its investments in municipal securities of
Massachusetts. Such information constitutes only a summary, does not purport to
be a complete description and is based upon information from official statements
relating to securities offerings of state issuers. Investors should remember
that rating agencies do change ratings periodically so that ratings mentioned
here may have changed.


The Fund invests principally in "Municipal Securities," which are debt
obligations issued to obtain funds for various public purposes, including the
construction of a wide range of public facilities such as airports, bridges,
highways, housing, hospitals, mass transportation, schools, streets and water
and sewer works. Other public purposes for which Municipal Securities may be
issued include:

o    to refund outstanding obligations

o    to obtain funds for general operating expenses

o    to obtain funds to loan to other public institutions and facilities.

The two general classifications of Municipal Securities are "general obligation"
and "revenue" bonds. General obligation bonds are secured by the issuer's pledge
of its faith, credit and taxing power for the payment of principal and interest.
Revenue bonds are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise or other specific revenue source.


The yields on Municipal Securities are dependent on a variety of factors,
including general conditions of the Municipal Securities market, size of a
particular offering, the maturity of the obligation and rating of the issue. The
ratings of Moody's, S&P and Fitch represent their opinions as to the quality of
the Municipal Securities which they undertake to rate. It should be emphasized,
however, that ratings are relative and subjective and are not absolute standards
of quality. Consequently, Municipal Securities with the same maturity, coupon
and rating may have different yields while Municipal Securities of the same
maturity and coupon with different ratings may have the same yield.


The Fund may invest in tax-exempt leases. A tax-exempt lease is an obligation,
often a lease purchase or installment contract, pursuant to which a governmental
user of a capital asset, such as an item of equipment, agrees to make payments
of the purchase price plus interest over a period of years, normally with the
right to purchase the asset at the termination of the lease for a nominal
amount. Tax-exempt leases normally have a term of only two to seven years, a
relatively short period of time, and often have a higher interest rate than
tax-exempt investments of a comparable term.

Provisions of the federal bankruptcy statutes relating to the adjustment of
debts of political subdivisions and authorities of states of the United States
provide that, in certain circumstances, such subdivisions or authorities may be
authorized to initiate bankruptcy proceedings without prior notice to or consent
of creditors, which proceedings could result in material and adverse
modification or alteration of the rights of holders of obligations issued by
such subdivisions or authorities.

Litigation challenging the validity under state constitutions of present systems
of financing public education has been initiated or adjudicated in a number of
states, and legislation has been introduced to effect changes in public school
finances in some states. In other instances there has been litigation
challenging the issuance of pollution control revenue bonds or the validity of
their issuance under state or federal law which litigation could ultimately
affect the validity of those Municipal Securities or the tax-free nature of the
interest thereon.

STATE SPECIFIC RISK FACTORS

The Fund will invest in bonds issued by the Commonwealth of Massachusetts or its
political subdivisions. The Fund is therefore subject to various statutory,
political and economic factors unique to Massachusetts. Discussed below are some
of the more significant factors that could affect the ability of the bond
issuers to repay interest and principal on Massachusetts securities owned by the
Fund. The information is derived from various public sources, all of which are
available to investors generally, and which the Fund believes to be accurate.

DWS Massachusetts Tax-Free Fund


The following information as to certain Massachusetts risk factors is given to
investors in view of the Fund's policy of concentrating its investments in
Massachusetts issuers. Such information constitutes only a brief summary, does
not purport to be a complete description and is based on information from
official statements relating to securities offerings of Massachusetts issuers
and other sources believed to be reliable. No independent verification has been
made of the following information.

The Fund is more susceptible to factors adversely affecting issuers of
Massachusetts municipal securities than comparable municipal bond funds that do
not focus on investments in Massachusetts issuers.

Commonwealth Employment and Income Rates. The unemployment rate for the
Commonwealth was 5.2% in 2004, 4.8% in 2005, 4.8% in 2006, and 4.5% in 2007. The
national unemployment rate was 5.5% in 2004, 5.1% in 2005, 4.6% in 2006, and
4.6% in 2007. In 2008, the unemployment rate in the Commonwealth was 5.3%,
compared with a national rate of 5.8%. As of February, 2009, the unemployment
rate was 7.8% in Massachusetts and 8.1% nationally. Real per capita income in
Massachusetts grew at a rate of 2.2% in 2004, 1.2% in 2005, 3.7% in 2006, and
3.8% in 2007. Nationally, real per capita income grew at a rate of 2.4% in 2004,
1.2% in 2005, 2.8% in 2006, and 2.0% in 2007. In 2008, real per capita income
remained consistent with 2007 rates in the Commonwealth and decreased 0.9%
nationally. From 2004 to 2008 both real and nominal income levels in
Massachusetts were above the national average.

Major Obligations. The fiscal viability of the Commonwealth's authorities and
municipalities is linked to that of the Commonwealth. Certain authorities, such
as the Massachusetts Convention Center Authority, the Massachusetts Development
Finance Agency, the Massachusetts Turnpike Authority and the Massachusetts Water
Pollution Abatement Trust benefit from contract assistance agreements with the
Commonwealth. Such agreements constitute general obligations of the Commonwealth
for which its full faith and credit are pledged. The Commonwealth also
guarantees the debt of two authorities, the Massachusetts State College Building
Authority and the University of Massachusetts Building Authority. Their ratings
are based on the Commonwealth guarantee and can be expected to move in tandem
with ratings on Commonwealth general obligation debt. The Commonwealth funds
several other authorities in part or in whole and their debt ratings may be
adversely affected by a negative change in those of the Commonwealth. As of June
2009, the Commonwealth's general obligation bonds were rated "Aa2" by Moody's
Investors Service, Inc., "AA/Stable" by Standard & Poor's Ratings Services and
"AA/Stable" by Fitch Ratings. From time to time, the rating agencies may change
their ratings.

Certain of the Commonwealth's tax receipts are pledged to debt service on $686.7
million of special obligation bonds issued in 2004 to finance construction of
the Boston Convention and Exhibition Center, renovation of the Springfield Civic
and Convention Center, and reimbursement to the City of Worcester for
construction of a new civic center. Tax receipts from various car rental
surcharges, hotel taxes and sales taxes in businesses located in and around the
facilities are required to be credited to the Convention Center Fund. This fund
is not included in the Commonwealth's budgeted revenues discussed below.

Beginning in fiscal 2001, the finances of the Massachusetts Bay Transportation
Authority (MBTA) were restructured and its financial relationship to the
Commonwealth changed materially. The MBTA finances and operates mass transit
facilities in eastern Massachusetts. Beginning July 1, 2000, the Commonwealth is
obligated to provide the MBTA with a portion of the revenues raised by the
Commonwealth's sales tax, generally the amount raised by a 1% sales tax with an
inflation-adjusted floor. (For fiscal 2009 the floor is $767.1 million.) This
amount is dedicated to the MBTA under a trust fund. The dedicated revenue stream
is disbursed to the MBTA without state appropriation to be used to meet the
Commonwealth's debt service contract assistance obligations relating to
outstanding MBTA debt and to meet the MBTA's other operating and debt service
needs. The MBTA is authorized to assess a portion of its costs on 175 cities and
towns in eastern Massachusetts; after a five-year phase-in of reduced
assessments, the cities and towns are required by law to pay assessments equal
to at least $136 million in the aggregate, as adjusted in each year after fiscal
2006 for inflation (with no annual increase to exceed 2.5% per year).

In 2001, the Massachusetts Turnpike Authority (Turnpike Authority) entered into
certain contracts with UBS AG (UBS), giving UBS the right to enter into five
separate interest rate swap agreements with the Turnpike Authority with an
aggregate notional value of $800 million. UBS has exercised its rights to enter
into all five swap agreements and, pursuant to such agreements, the Turnpike
Authority is required to make fixed-rate payments to UBS in exchange for
variable-rate payments from UBS. As of March 26, 2009, the Turnpike Authority's
aggregate termination costs for these interest rate swap agreements with UBS
were approximately $371.3 million. Additionally, due to recent market
volatility, the Turnpike Authority was required to post collateral in the
notional amount of $100 million with respect to a basis swap (a
floating-floating interest rate swap under which the floating rate payments are
referenced to different bases) it entered into in 1999 with JPMorgan Chase Bank
(JPMorgan). The Turnpike Authority's estimated termination costs for the
JPMorgan basis swap are $16.5 million.

In July 2004, Governor Mitt Romney signed three separate pieces of legislation
that reform the Commonwealth's school building assistance (SBA) program.
Historically, financial assistance was provided in the form of annual contract
assistance payments to municipalities to subsidize a portion of local debt
issues for such purposes. Assistance was appropriated annually through the
Commonwealth's operating budget, reaching $401.4 million in fiscal 2004. The
legislation moved the SBA program off-budget, establishing the Massachusetts
School Building Authority (MSBA), an independent state authority, to administer
and manage the program. The legislation transfers the liabilities associated
with the SBA program from the Commonwealth to the MSBA and places certain limits
on the grant making of the MSBA for new projects. The legislation also switches
borrowing responsibility from local governments to the MSBA for the state's
share of waiting list projects and future school project costs, although
contract assistance payments will continue for previously funded projects.

The legislation dedicates one percent of the Commonwealth's sales tax excluding
certain meals and special financing district sales taxes (the "Dedicated Sales
Tax") to fund the MSBA and to pay for its transferred and future liabilities.
Funding is phased in through 2011, providing $395.7 million in fiscal 2005, 70%
of the Dedicated Sales Tax or at least $488.7 million in fiscal 2006, 78% of the
Dedicated Sales Tax or at least $557.4 million in fiscal 2007, 85% of the
Dedicated Sales Tax or at least $634.7 million in fiscal 2008, 90% of the
Dedicated Sales Tax or at least $702.3 million in fiscal 2009, 95% of the
Dedicated Sales Tax in fiscal 2010, and 100% of the Dedicated Sales Tax
thereafter. In addition to Dedicated Sales Tax revenues, the legislation
authorizes the Commonwealth to issue $1.0 billion of general obligation bonds to
help the MSBA fund, in part, its liabilities. The Commonwealth issued these
bonds during fiscal 2005 and 2006. The legislation also transferred $150.0
million from the fiscal 2004 surplus to the MSBA as start-up funding. The MSBA
is expected to finance a substantial portion of its liabilities through the
issuance of revenue bonds.

The sales tax revenues provided to the MBTA and MSBA by the Commonwealth are not
included in the tax figures in the following paragraphs. Total tax revenue
transferred to the MBTA amounted to $684.3 million in fiscal 2004, $704.8
million in fiscal 2005, $712.6 million in fiscal 2006, $734.0 million in fiscal
2007, $756.0 million in fiscal 2008, and an estimated $767.1 million in fiscal
2009. Total tax revenue provided to the MSBA was $395.7 million in fiscal 2005,
$488.7 million in fiscal 2006, $557.4 million in fiscal 2007, $634.7 million in
fiscal 2008, and an estimated $702.3 million in fiscal 2009.

Commonwealth Budget. The Commonwealth's revenues increased each year from fiscal
1999 to fiscal 2001, decreased significantly in fiscal 2002, and increased again
in 2003 through 2007. During fiscal 2002, tax revenue receipts declined sharply
from $16.075 billion the previous year to $13.623 billion. The Commonwealth
incurred a $1.625 billion deficit in fiscal 2002 and ended fiscal 2002 with a
positive balance in its budgeted funds, as required by statute, primarily by
using reserve funds, including $833 million from the Stabilization Fund (a
reserve of surplus revenues to be used for the purposes of: (1) covering revenue
shortfalls, (2) covering state or local losses of federal funds, or (3) for any
event which threatens the health, safety or welfare of the people or the fiscal
stability of the Commonwealth or any of its political subdivisions). In fiscal
2003, the Legislature enacted a tax increase and tax revenues increased to
$14.280 billion. While the Commonwealth still incurred a $451.9 million deficit,
it ended fiscal 2003 with a positive balance in its budgeted funds, as required
by statute, by using reserve funds, including $641.3 million from the
Stabilization Fund. Tax revenues for fiscal year 2004 were $15.269 billion and
resulted in a surplus of $1.140 billion for the fiscal year. Tax revenues for
fiscal year 2005 were $15.987 billion and resulted in a surplus of $594.4
million for the fiscal year. Tax revenues for fiscal year 2006 were $17.286
billion and resulted in a surplus of $720.9 million for the fiscal year. Tax
revenues for fiscal year 2007 were $18.445 billion and resulted in a deficiency
of $307.1 million for the fiscal year. Tax revenues for fiscal year 2008 were
$19.489 billion and resulted in a deficiency of $495.2 million for the fiscal
year. Tax revenues for fiscal year 2009 are projected by the Executive Office
for Administration and Finance to be $16.967 billion and result in a deficiency
of $1.642 billion for the fiscal year.

The budgeted operating funds of the Commonwealth ended fiscal 2002 with a
deficiency of revenues and other sources over expenditures and other uses of
$1.625 billion and aggregate ending fund balances in the budgeted operating
funds of the Commonwealth of approximately $1.388 billion. Budgeted revenues and
other sources for fiscal 2002 totaled approximately $21.175 billion, including
tax revenues of $13.623 billion. Commonwealth budgeted expenditures and other
uses in fiscal 2002 totaled $22.800 billion.

The budgeted operating funds of the Commonwealth ended fiscal 2003 with a
deficiency of revenues and other sources over expenditures and other uses of
$451.9 million and aggregate ending fund balances in the budgeted operating
funds of the Commonwealth of $936.1 million. Budgeted revenues and other sources
for fiscal 2003 totaled approximately $21.987 billion, including tax revenues of
$14.280 billion. Commonwealth budgeted expenditures and other uses in fiscal
2003 totaled $22.439 billion.

The budgeted operating funds of the Commonwealth ended fiscal 2004 with a
surplus of revenues and other sources over expenditures and other uses of $1.140
billion and aggregate ending fund balances in the budgeted operating funds of
the Commonwealth of approximately $1.893 billion. Budgeted revenues and other
sources for fiscal 2004 totaled approximately $23.988 billion, including tax
revenues of $15.269 billion. Commonwealth budgeted expenditures and other uses
in fiscal 2004 totaled $22.843 billion. At the end of fiscal 2004, the
Stabilization Fund's ending balance was $1.137 billion.

The budgeted operating funds of the Commonwealth ended fiscal 2005 with a
surplus of revenues and other sources over expenditures and other uses of $594.4
million and aggregate ending fund balances in the budgeted operating funds of
the Commonwealth of approximately $2.487 billion. Budgeted revenues and other
sources for fiscal 2005 totaled approximately $24.374 billion, including tax
revenues of $15.987 billion. Commonwealth budgeted expenditures and other uses
in fiscal 2005 totaled $23.779 billion. At the end of fiscal 2005, the
Stabilization Fund's ending balance was $1.728 billion.

The budgeted operating funds of the Commonwealth ended fiscal 2006 with a
surplus of revenues and other sources over expenditures and other uses of $720.9
million and aggregate ending fund balances in the budgeted operating funds of
the Commonwealth of approximately $3.208 billion. Budgeted revenues and other
sources for fiscal 2006 totaled approximately $26.306 billion, including tax
revenues of $17.286 billion. Commonwealth budgeted expenditures and other uses
in fiscal 2006 totaled $25.585 billion. At the end of fiscal 2006, the
Stabilization Fund's ending balance was $2.155 billion.

The budgeted operating funds of the Commonwealth ended fiscal 2007 with a
deficit of revenues and other sources over expenditures and other uses of $307.1
million and aggregate ending fund balances in the budgeted operating funds of
the Commonwealth of approximately $2.901 billion. Budgeted revenues and other
sources for fiscal 2007 totaled approximately $28.616 billion, including tax
revenues of $18.445 billion. Commonwealth budgeted expenditures and other uses
in fiscal 2007 totaled $28.923 billion. At the end of fiscal 2007, the
Stabilization Fund's ending balance was $2.335 billion.

The budgeted operating funds of the Commonwealth ended fiscal 2008 with a
deficiency of revenues and other sources over expenditures and other uses of
$495.2 million and aggregate ending fund balances in the budgeted operating
funds of the Commonwealth of approximately $2.406 billion. Budgeted revenues and
other sources for fiscal 2008 totaled approximately $30.313 billion, including
tax revenues of $19.489 billion. Commonwealth budgeted expenditures and other
uses in fiscal 2008 totaled $30.808 billion. At the end of fiscal 2008, the
Stabilization Fund's ending balance was $2.119 billion. The Commonwealth used
approximately $200.8 million from the Stabilization Fund during fiscal 2008.

The budgeted operating funds of the Commonwealth are projected to end fiscal
2009 with a deficiency of revenues and other sources over expenditures and other
uses of $1.642 billion and aggregate ending fund balances in the budgeted
operating funds of the Commonwealth of approximately $899 million. Budgeted
revenues and other sources for fiscal 2009 are projected to total approximately
$30.853 billion, including tax revenues of $16.967 billion. Commonwealth
budgeted expenditures and other uses in fiscal 2009 are projected to total
$32.495 billion. At the end of fiscal 2009, the Stabilization Fund's ending
balance is projected to be $766 million. The Commonwealth is projected to use
approximately $1.353 billion from the Stabilization Fund during fiscal 2009. All
projections were compiled by the Commonwealth's Executive Office of
Administration and Finance.

On January 28, 2009, Governor Deval Patrick submitted his budget proposal for
fiscal 2010. The Governor's budget is based upon a gross tax estimate of $19.530
billion. On May 6, 2009, the Secretary of Administration and Finance and the
chairs of the House and Senate Committees on Ways and Means revised the fiscal
2010 revenue estimate to $17.989 billion. The following day the Governor filed a
supplemental budget legislation containing several solutions to close the budget
shortfall, which, in part, involved accessing federal funds to be received under
the American Recovery and Reinvestment Act of 2009 and an additional transfer
from the Stabilization Fund. As of May 19, 2009, the House and Senate had each
voted, by veto proof margins, to approve a proposal to increase the state sales
tax from 5% to 6.25%. This proposal would also lift the sales tax exemption on
alcohol, and allow cities and towns to raise meals and hotel taxes as other
means of generating revenue for the Commonwealth. On June 29, 2009, Governor
Patrick signed a $27 billion state budget, which includes the sales tax
increase.

Limitations on Tax Revenues. Growth of tax revenues is limited by law in the
Commonwealth to the average positive rate of growth in total wages and salaries
in the Commonwealth, as reported by the federal government, during the three
calendar years immediately preceding the end of such fiscal year. The law also
requires that allowable state tax revenues be reduced by the aggregate amount
received by local governmental units from any newly authorized or increased
local option taxes or excises. Any excess in state tax revenue collections for a
given fiscal year over the prescribed limit, as determined by the State Auditor,
is to be applied as a credit against the then current personal income tax
liability of all taxpayers in the Commonwealth in proportion to the personal
income tax liability of all taxpayers in the Commonwealth for the immediately
preceding tax year. The law does not exclude principal and interest payments on
Commonwealth debt obligations from the scope of its tax limit. However, the
preamble to the law containing the limitation provides that "although not
specifically required by anything contained in this chapter, it is assumed that
from allowable state tax revenues as defined herein the Commonwealth will give
priority attention to the funding of state financial assistance to local
governmental units, obligations under the state governmental pension systems and
payment of principal and interest on debt and other obligations of the
Commonwealth." Tax revenues in fiscal 2004 through 2008 were lower than the
allowable state tax revenue limit set by state law and are projected to be lower
than the allowable limit again in fiscal 2009.

Debt Limits and Types of Debt. Legislation enacted in December 1989 imposes a
limit on the amount of outstanding "direct" bonds of the Commonwealth. The law
set a fiscal 1991 limit of $6.8 billion and provided that the limit for each
subsequent fiscal year was to be 105% of the previous fiscal year's limit. The
limit is calculated under the statutory basis of accounting, which differs from
GAAP in that the principal amount of outstanding bonds is measured net of
underwriters' discount and costs of issuance. The law further provides that
bonds to be refunded from the proceeds of Commonwealth refunding bonds are to be
excluded from outstanding "direct" bonds upon the issuance of the refunding
bonds. Pursuant to special legislation enacted over the years, certain
outstanding Commonwealth debt obligations are not counted in computing the
amount of bonds subject to the limit. The statutory limit on "direct" bonds
during fiscal 2009 is $15.6 billion.

In January 1990, legislation was enacted to impose a limit on debt service
appropriations in Commonwealth budgets beginning in fiscal 1991. The law
provides that no more than 10% of the total appropriations in any fiscal year
may be expended for payment of interest and principal on general obligation debt
of the Commonwealth. The debt service relating to bonds that are excluded from
the debt limit on direct debt is not included in the limit on debt service
appropriations. The law is subject to amendment or repeal by the Legislature at
any time and may be superseded in the annual appropriations act for any year.

The Commonwealth is authorized to issue three types of debt directly - general
obligation debt, special obligation debt and federal grant anticipation notes.
General obligation debt is secured by the full faith and credit of the
Commonwealth. Special obligation debt may be secured by either a pledge of
receipts credited to the Highway Fund (a fund used to finance highway
maintenance and safety services, and provide matching funds for federally
sponsored highway projects as required) or by a pledge of receipts credited to
the Boston Convention and Exhibition Center Fund. Federal grant anticipation
notes are secured by a pledge of federal highway construction reimbursements. In
addition, certain independent authorities and agencies within the Commonwealth
are statutorily authorized to issue debt for which the Commonwealth is either
directly, in whole or in part, or indirectly, liable.

Local Aid. The Commonwealth makes substantial Local Aid payments to its cities,
towns and regional school districts to mitigate the impact of local property tax
limits on local programs and services. Local Aid payments to cities, towns and
regional school districts take the form of both direct and indirect assistance.
Direct Local Aid consists of general revenue sharing funds and specific program
funds sent directly to local governments and regional school districts as
reported on the so-called "cherry sheet" prepared by the Department of Revenue,
excluding certain pension funds and non-appropriated funds. In fiscal 2009,
approximately 16% of the Commonwealth's projected budgeted spending is estimated
to be allocated to direct Local Aid.

As a result of comprehensive education reform legislation enacted in June 1993,
a large portion of general revenue sharing funds are earmarked for public
education and are distributed through a formula designed to provide more aid to
the Commonwealth's poorer communities. The legislation requires the Commonwealth
to distribute aid to ensure that each district reaches at least a minimum level
of spending per public education pupil. Since fiscal 1994, the Commonwealth has
fully funded the requirements imposed by this legislation in each of its annual
budgets. For fiscal 2009, the Commonwealth will provide a total of $3.949
billion of state aid. The Lottery and Additional Assistance programs, which
comprise the other major components of direct Local Aid, provide unrestricted
funds for municipal use.

A statute adopted by voter initiative petition at the November 1990 statewide
election regulates the distribution of Local Aid to cities and towns. As enacted
in 1992 and subsequently amended, this statute requires that, subject to annual
appropriation, no less than 40% of collections from personal income taxes,
corporate excise taxes and lottery fund proceeds and 32% of collections from
sales and use taxes be distributed to cities and towns. By its terms, the new
formula would have provided for a substantial increase in direct Local Aid in
fiscal 1992 and subsequent years. Nonetheless, Local Aid payments remain subject
to annual appropriation by the Legislature, and the appropriations for Local Aid
since the enactment of the initiative law have not met the levels set forth in
the initiative law.

Reductions in, failure to fund or delays in the payment of Local Aid may create
financial difficulties for certain municipalities or other local government
entities. From fiscal 2004 through 2008, expenditures for Direct Local Aid,
exclusive of school building assistance, were $4.149 billion, $4.224 billion, $
4.430 billion, $4.805 billion, and $5.041 billion, respectively. The fiscal 2004
final supplemental appropriations act signed into law on September 17, 2004
appropriated $75.0 million in one-time local aid payments to be distributed in
fiscal 2005. The Commonwealth was able to avoid further cuts in fiscal 2005 and
restored much of the funding in fiscal 2006. For fiscal 2009, expenditures for
Direct Local Aid are projected to total $4.724 billion.

The Commonwealth maintains a $1.000 billion commercial paper program supported
by credit lines and a letter of credit from commercial banks. The program allows
for the periodic issuance of commercial paper as either bond anticipation notes
or revenue anticipation notes (RANS) for operating purposes to meet cash flow
needs. In particular, the Commonwealth makes local aid payments of approximately
$1 billion to its cities and towns at the end of each calendar quarter, which
often result in short-term cash flow borrowings. All short-term cash flow
borrowings, including both commercial paper and revenue anticipation notes, must
be repaid by the end of the fiscal year (June 30). As of approximately March 26,
2009, the state has liquidity support for a $1 billion tax-exempt commercial
paper program for general obligation notes, through five $200 million credit
lines due to expire in January 2010, June 2010, December 2010 (two lines) and
September 2011, respectively. The Commonwealth has relied upon this $1 billion
commercial paper capacity for additional liquidity since 2002.

In November 1980, voters in the Commonwealth approved a statewide tax limitation
initiative petition, commonly known as Proposition 2 1/2, to constrain levels of
property taxation and to limit the charges and fees imposed on cities and towns
by certain governmental entities, including county governments. Proposition 2
1/2 is not a provision of the state constitution and accordingly is subject to
amendment or repeal by the Legislature. Proposition 2 1/2, as amended to date,
limits the property taxes that may be levied by any city or town in any fiscal
year to the lesser of (i) 2.5% of the full and fair cash valuation of the real
estate and personal property therein, and (ii) 2.5% over the previous year's
levy limit plus any growth in the tax base from certain new construction and
parcel subdivisions. Proposition 2 1/2 also limits any increase in the charges
and fees assessed by certain governmental entities, including county
governments, on cities and towns to the sum of (i) 2.5% of the total charges and
fees imposed in the preceding fiscal year, and (ii) any increase in charges for
services customarily provided locally or services obtained by the city or town
at its option. The law contains certain override provisions and, in addition,
permits debt service on specific bonds and notes and expenditures for identified
capital projects to be excluded from the limits by a majority vote at a general
or special election. At the time Proposition 2 1/2 was enacted, many cities and
towns had property tax levels in excess of the limit and were therefore required
to roll back property taxes with a concurrent loss of revenues. Between fiscal
1981 and fiscal 2008, the aggregate property tax levy grew from $3.347 billion
to $10.992 billion, a compound annual growth rate of 4.46%.

Many communities have responded to the limitation imposed by Proposition 2 1/2
through statutorily permitted overrides and exclusions. There are three types of
referenda questions (override of levy limit, exclusion of debt service, or
exclusion of capital expenditures) that permit communities to exceed the limits
of Proposition 2 1/2.

Certain of the Commonwealth's cities and towns have at times experienced and are
currently experiencing serious financial difficulties, which have and may
further adversely affect their credit standing. The recurrence of such financial
difficulties, or financial difficulties of the Commonwealth, including further
reductions of direct local aid payments, could adversely affect the market
values and marketability or result in default in payment on, outstanding
obligations issued by the Commonwealth or its public authorities or
municipalities. In addition, Massachusetts statutes which limit the taxing
authority of the Commonwealth or certain Massachusetts governmental entities may
impair the ability of issuers of some Massachusetts obligations to maintain debt
service on their obligations.

Medicaid. The Medicaid program (also referred to as MassHealth) provides health
care to low-income children and families, certain low-income adults, disabled
individuals, and low-income elders. The program, which is administered by the
Executive Office of Health and Human Services, receives 50% in federal
reimbursement on most expenditures and, beginning in fiscal 1999, payments for
some children's benefits are 65% federally reimbursable under the State
Children's Health Insurance Program ("SCHIP").

Nearly 30% of the Commonwealth's budget is devoted to Medicaid. It is the
largest item in the Commonwealth's budget and has been one of the fastest
growing budget items. Medicaid spending from fiscal 2005 to fiscal 2009 is
estimated to have grown by 7.4% on a compound annual basis. During the same
period, Medicaid enrollment is estimated to have increased 4.8% on a compound
annual basis. The projected increase in enrollment is largely a result of
eligibility expansions authorized in 2006 health care reform legislation.

Based on enactment of legislation filed by the Governor in January, 2009 to
close fiscal 2009 budget shortfalls, the fiscal 2009 budget includes $8.579
billion for Medicaid programs and administrative expenses (after certain
spending reductions by the Governor (known as "9C spending reductions") totaling
$238.5 million, partially offset by $177 million in spending adjustments to fund
certain program deficiencies). This amount is a 3.9% increase in spending over
fiscal year 2008 levels. These spending levels are supported in part by
increases in the federal medical assistance percentage (FMAP) made available
through the American Recovery and Reinvestment Act of 2009. The Executive Office
for Administration and Finance initially estimated that the Commonwealth would
receive $533 million in additional funding in fiscal 2009 through this FMAP
increase.

Revised estimates based on the final version of the American Recovery and
Reinvestment Act of 2009 suggest that the Commonwealth will in fact receive
greater amounts of additional federal revenue through increases in the FMAP. As
a result, the Commonwealth expects to receive $806 million in fiscal 2009 and
over $1.1 billion in fiscal 2010 in additional Medicaid matching funds. On March
25, 2009, the Governor proposed a framework for using the additional revenues
beyond its original estimates of FMAP receipts ($273 million in additional FMAP
funds in fiscal 2009 and $406 million in fiscal 2010) to help fund additional,
high-priority Medicaid spending and address other potential health care-related
needs. As a result of a mid-year review, fiscal 2009 spending for the Medicaid
program is now projected to be $8.626 billion. This figure reflects potential
spending shortfalls as well as Medicaid spending priorities supported through
updated estimates of FMAP receipts. Among other things, the additional funding
will allow for the Medicaid program to address some remaining shortfalls in the
program and protect key safety net services.

The Division of Health Care Finance and Policy administers the Health Safety Net
(formerly the Uncompensated Care Pool), which reimburses acute care hospitals
and community health centers in Massachusetts for eligible services provided to
low-income uninsured and underinsured residents of the Commonwealth. The
Division monitors utilization and costs paid from the Health Safety Net.
According to the Division, Health Safety Net service volume for hospitals and
community health centers decreased by 36% during the six-month period of April,
2008 through September, 2008, as compared to the same six-month period during
the prior year. Total costs declined by 38%, comparing Health Safety Net fiscal
2008 to the prior year. (The Health Safety Net's fiscal year runs from October 1
through September 30.)

Pending finalization of claims data review, Health Safety Net expenditures for
un-reimbursed care provided to low-income uninsured and underinsured individuals
at acute care hospitals and community health centers were $415.6 million in the
Health Safety Net's fiscal 2008. The General Fund (the Commonwealth's primary
governmental fund) contributed $49.6 million in funding for the Health Safety
Net in fiscal 2008, while $344 million is expected to be generated from hospital
and insurer assessments and surplus funds transferred from prior-year balances.
In addition, $60 million in reimbursement for care provided to low-income
uninsured and underinsured individuals provided at acute hospitals is expected
to be funded by supplemental payments made from other sources. This results in a
projected $38 million surplus for Health Safety Net in its fiscal 2008, which
has been accounted for on the Commonwealth's fiscal 2009 balance sheet.

The fiscal 2009 budget authorizes $453 million in payments made during the
Health Safety Net's fiscal 2009 for care provided to low-income uninsured and
underinsured individuals at acute care hospitals and community health centers.

Health Care Reform Legislation. In April 2006, legislation was enacted to reform
health care by mandating that individuals 18 years and older purchase insurance,
while offering subsidized coverage to uninsured residents whose income is less
than 300% of the federal poverty level and providing new, affordable products
for uninsured residents whose income exceeds this threshold. The reform asks
employers to play a role by requiring that businesses with 11 or more full-time
employees either contribute to coverage or pay an assessment. These businesses
must also establish a mechanism wherein employees can pay for health insurance
coverage on a pre-tax basis. Businesses that are subject to this requirement but
do not comply may potentially face a surcharge. The legislation also created the
Commonwealth Health Insurance Connector Authority (Connector), charged with
linking uninsured residents to affordable, and in some cases subsidized,
coverage.

The health care reform legislation expanded eligibility for MassHealth, restored
certain MassHealth benefits and services that had been cut during prior fiscal
crises and created new MassHealth programs. Eligibility for the SCHIP program
was increased to 300% of the federal poverty level, as was eligibility for
MassHealth's Insurance Partnership program. The legislation also increased or
eliminated enrollment caps for MassHealth Essential (which offers benefits to
long-term unemployed adults), MassHealth HIV Family Assistance (which covers
individuals up to 200% of the federal poverty level who are HIV-positive) and
CommonHealth (which covers disabled individuals). Enrollment caps for all of
these programs have since been eliminated. Moreover, optional MassHealth
benefits that were discontinued in fiscal 2002 have been restored by the
legislation. The legislation also created new smoking cessation and wellness
programs within MassHealth.

Additionally, the health care reform legislation provided for rate increases for
acute care hospitals, physicians and managed care organizations. To reflect the
need to maintain support for safety net institutions after the sunsetting of
previous mechanisms for making supplemental payments to these health systems,
Section 122 of the health care reform legislation requires the Commonwealth to
make transitional supplemental payments to certain safety net providers through
fiscal 2009. MassHealth spending attributable to health care reform is divided
between the MassHealth spending totals listed above and certain amounts
distributed through the Commonwealth Care Trust Fund.

The health care reform legislation also created the Connector Authority to
administer the new Commonwealth Care program, a subsidized health insurance
coverage program for adults whose income is up to 300% of the federal poverty
level and who do not have access to employer-sponsored insurance. Commonwealth
Care began enrolling individuals on October 1, 2006. As of March 1, 2009, over
165,000 residents with incomes up to 300% of the federal poverty level were
enrolled in Commonwealth Care.

The fiscal 2009 budget includes $869 million for Commonwealth Care, based on
prior cost and enrollment projections anticipating that the program would grow
to 225,000 members by the end of fiscal 2009. As of approximately March 26,
2009, Commonwealth Care was projected to cost approximately $788 million in
fiscal year 2009. Although costs for Commonwealth Care are lower than expected
in fiscal 2009, program financing remains a challenge, given the significant
decline in state tax revenues. The program is expected to be fully funded in
fiscal 2009 and fiscal 2010. The Connector Authority continues to monitor cost
and enrollment trends for fiscal 2009 and will revise estimates based on updated
information. The cost estimates discussed above represent projections of gross
funding needs for Commonwealth Care (net of enrollee contributions) and do not
account for federal reimbursement under the Commonwealth's Medicaid waiver.

Through the Commonwealth Choice program, the Connector Authority is also
responsible for offering unsubsidized, affordable health insurance plans to
individuals whose income exceeds 300% of the federal poverty level but who do
not currently have access to health coverage. Commonwealth Choice also allows
small businesses to offer their employees a choice of health insurance plans. As
of March 1, 2009, more than 21,000 individuals have enrolled in health plans
through the Commonwealth Choice program.

Transportation. The $14.808 billion Central Artery/Ted Williams Tunnel Project
was substantially completed on January 13, 2006. The Transportation Finance
Commission, established by state legislation in 2004, published a report in 2007
analyzing the Commonwealth's future funding needs and anticipated funding gaps
related to maintaining the Commonwealth's transportation system over the next 20
years. For state-controlled roads and bridges and state environmental transit
commitments related to the Central Artery/Ted Williams Tunnel project, the
report identified funding needs of $25.670 billion and expected available state
and federal funding of $16.820 billion, leaving a funding gap of $8.849 billion.
The report also identified funding gaps related to the Massachusetts turnpike
system, local roads and bridges, MBTA operations and capital needs and the Tobin
Bridge. The report estimated a funding gap for all of these transportation
assets of between $15 billion and $19 billion over the next 20 years. The report
also included several transportation proposals that the Transportation Finance
Commission estimated could generate more than $18.7 billion to fund
transportation and infrastructure improvements over the next 20 years.

On February 5, 2009, the Senate Chairman of the Joint Committee on
Transportation filed legislation to establish a new Massachusetts Surface
Transportation Authority (MSTA) that would assume responsibility for operating,
maintaining and financing the Commonwealth's roads, bridges and transit
operations. On March 25, 2009, the Senate approved a revised version of the
legislation that would transfer the state highway system, the western turnpike,
the Tobin Bridge, the Massachusetts Highway System, and the public transit
system to the new MSTA over the next two years. Under this proposal, a new
Surface Transportation Trust Fund would be established to receive all
transportation-related revenues, and expenditures from that fund would be made
by the MSTA. The MSTA would be authorized to issue bonds payable from revenues
allocated to the Trust Fund and other resources available to it, subject to a
ceiling of $10 billion of bonds outstanding at any time. Except under certain
circumstances, the MSTA's debt would not be a debt of the Commonwealth or
secured by a pledge of the Commonwealth's full faith and credit. Among the
revenues that would be deposited in the Surface Transportation Trust Fund would
be the gasoline tax receipts that are pledged to the payment of outstanding
Commonwealth special obligation bonds, and the MSTA would become responsible for
paying the debt service on those bonds. On June 26, 2009, Governor Patrick
signed the transportation overhaul bill into law.

Pensions. The Commonwealth is responsible for the payment of pension benefits
for Commonwealth employees (members of the state employees' retirement system)
and for teachers of the cities, towns and regional school districts throughout
the state (including members of the teachers' retirement system and teachers in
the Boston public schools, who are members of the State-Boston retirement system
but whose pensions are also the responsibility of the Commonwealth). The state
employees' and teachers' retirement systems are partially funded by employee
contributions of regular compensation. Legislation approved in 1997 provided,
subject to legislative approval, for annual increases in cost-of-living
allowances equal to the lesser of 3% or the previous year's percentage increase
in the United States Consumer Price Index on the first $12,000 of benefits for
members of the state employees' and teachers' retirement systems, to be funded
by the investment income of the systems. The Commonwealth pension funding
schedule assumes that annual increases of 3% will be approved.

Employees of certain independent authorities and agencies, such as the
Massachusetts Water Resources Authority and of counties, cities and towns (other
than teachers) are covered by 104 separate retirement systems. The Commonwealth
assumed responsibility, beginning in fiscal 1982, for payment of cost of living
adjustments for the 104 local retirement systems, in accordance with the
provisions of Proposition 2 1/2. However, the 1997 legislation removed from the
Commonwealth the cost of future cost-of-living adjustments for these local
retirement systems and provided that local retirement systems fund future
cost-of-living adjustments. Local retirement systems that have established
pension funding schedules may opt in to 3% annual increases in cost-of-living
allowances as well, with the costs and actuarial liabilities attributable to the
cost-of-living allowances required to be reflected in such systems' funding
schedules. Legislation approved in 1999 allows local retirement systems to
increase the cost-of-living allowance up to 3% during years that the previous
year's percentage increase in the United States Consumer Price Index is less
than 3%. The fiscal 2006 general appropriation act ("GAA") included a 3% cost of
living increase. The state employees' and state teachers' retirement systems
were originally established as "pay-as-you-go" systems, meaning that amounts
were appropriated each year to pay current benefits, and no provision was made
to fund currently the future liabilities already incurred. In fiscal 1978 the
Commonwealth began to address the unfunded liabilities of the two state systems
by making appropriations to pension reserves. Comprehensive pension funding
legislation approved in January 1988, as subsequently amended, requires the
Commonwealth to fund future pension liabilities currently and to amortize the
Commonwealth's accumulated unfunded liability to zero by June 30, 2023.

July 1997 legislation required the Secretary of Administration and Finance to
prepare a funding schedule providing for both the normal cost of Commonwealth
benefits (normal cost being that portion of the actuarial present value of
pension benefits which is allocated to a valuation year by an actuarial cost
method) and the amortization of the unfunded actuarial liability of the
Commonwealth for its pension obligations. The funding schedule was required to
be updated periodically on the basis of new actuarial valuation reports prepared
under the direction of the Secretary of Administration and Finance. The
Secretary was also required to conduct experience investigations every six
years. Funding schedules are to be filed with the Legislature triennially by
January 15 and were subject to legislative approval. Under the July 1997 pension
legislation, if a schedule was not approved by the Legislature, payments were to
be made in accordance with the most recently approved schedule; such payments,
however, would be required to be at least equal to the prior year's payments.

In fiscal 2005, Governor Romney and legislative leaders agreed to an updated
funding schedule that incorporated a January 1, 2004 actuarial valuation. The
assumptions underlying the new funding schedule retain the 2023 date for fully
amortizing the unfunded liability (as was used in prior versions of the funding
schedule) and utilize an amortization growth rate of 4.5% per year.

Actuarial valuations of the Commonwealth's pension obligation were calculated as
of January 1, 2008. The unfunded actuarial accrued liability as of that date for
the total obligation was approximately $12.105 billion, including approximately
$2.420 billion for the State Employees' Retirement System, $8.072 billion for
the Massachusetts Teachers' Retirement System, $1.237 billion for Boston
Teachers and $376 million for cost-of-living increases reimbursable to local
systems. The valuation study estimated the total actuarial accrued liability as
of January 1, 2008 to be approximately $56.637 billion (comprised of $22.821
billion for state employees, $30.955 billion for state teachers, $2.485 billion
for Boston Teachers and $376 million for cost-of-living increases reimbursable
to local systems). Total assets were valued at approximately $44.532 billion
based on a five-year average valuation method, which equaled 90.4% of the
January 1, 2008 total asset market value. The valuation method was the same as
the method used in the 2007 valuation.

Accounting standards promulgated in 2004 by the Governmental Accounting
Standards Board (GASB) required the Commonwealth to begin disclosing its
liability for other post-employment benefits (commonly referred to as "OPEB") in
its fiscal 2008 financial reports. An initial valuation report by an independent
actuarial firm of the Commonwealth's liability for these health care and life
insurance benefits was released in June, 2006. The January 1, 2008 valuation
report was released on December 4, 2008.

According to the December, 2008 report, assuming no pre-funding, the actuarial
accrued liability of the Commonwealth for OPEB obligations earned through
January 1, 2008 was $15.637 billion. If partial pre-funding was assumed, the
actuarial accrued liability was reduced to $11.649 billion. This difference is
solely attributable to the standards requirement that a lower discount rate must
be used without pre-funding. Under partial pre-funding, the annual required
contribution was calculated in December, 2008 to commence at $981.4 million for
fiscal 2009 and projected to increase to $1.65 billion for fiscal 2018.

Should the Commonwealth not fully fund the amortization of the actuarial
liability, a liability for the difference between the amount funded and the
actuarially required contribution will be reflected on the Commonwealth's
statement of net assets, as presented on a GAAP basis. The liability will
increase or decrease each year depending on the amount funded, investment return
and changes in amortization and assumptions. This change in liability will be
reflected either as a revenue or expense item in the Commonwealth's statement of
activities as presented on a GAAP basis, dependent on these factors.

In making these calculations, the independent actuarial firm utilized employment
and other data provided by the Commonwealth and assumed annual claims growth
initially at 10.5% in 2006 (used for initial valuation) declining to 9.5% in the
current valuation and ultimately to 5% after ten years and continuation of
current benefit levels and current retiree contribution requirements.

The independent actuarial report covered only the Commonwealth's OPEB
obligations for Commonwealth employees and their survivors. Municipalities and
authorities of the Commonwealth, even if their health care coverage is
administered by the Group Insurance Commission, will perform their own
valuations, as the Commonwealth acts only as an agent for these entities with
respect to OPEB and does not assume the risk or financial burden of their health
care costs.

The difference between the value of pre-funded and non-pre-funded OPEB
liabilities is due to the discount rate used in the calculation. In the absence
of pre-funding, the discount rate must approximate the Commonwealth's rate of
return on non-pension (liquid) investments over the long term, estimated at 4.5%
for the purpose of this study. In the event of pre-funding, the discount rate
would increase to a standard return on long-term investments, estimated at 6.40%
for the purpose of this study. In order to qualify its OPEB liabilities as
pre-funded, the Commonwealth must deposit annual contributions in a qualifying
trust in accordance with the requirements of GASB Statement No. 45 (and similar
to the program for funding the Commonwealth's unfunded actuarial liability for
pensions).

GASB Statement No. 45 requires that OPEB obligations be recalculated at two-year
intervals. Such calculations may be affected by many factors, including changing
experience and assumptions regarding future health care claims, by whether or
not the Commonwealth enacts legislation that qualifies its OPEB obligations to
be calculated on a pre-funded basis, by changes in the Commonwealth's employee
profile and possibly by changes in OPEB coverage levels and retiree contribution
requirements. Accordingly, it should be anticipated that the actuarial accrued
liability of the Commonwealth for OPEB liabilities may fluctuate.

The executive and legislative branches have been working to develop a short- and
long- term strategy for addressing the Commonwealth's OPEB liability. The State
Retiree Benefits Trust Fund was created, and in fiscal 2008 spending for current
retirees' healthcare occurred from the State Retiree Benefits Trust Fund,
helping to consolidate the state's retiree funding efforts and better project
future liabilities. In fiscal 2008, the State Retiree Benefits Trust Fund
benefited from a one-time transfer of approximately $400 million from the Health
Care Security Trust. The fiscal 2008 budget also established a special
commission, consisting of representatives of the executive and legislative
branches, to study the Commonwealth's liability for paying retiree health care
and other non-pension benefits.

The special commission released its report in July, 2008. In its report, the
special commission recommends that the Commonwealth develop a strategy to
pre-fund the Commonwealth's OPEB liability. The commission identifies three
funding sources -- tobacco settlement funds, unanticipated budgetary surpluses
and annual legislative appropriations -- and recommends funneling funds from all
three sources to the State Retiree Benefits Trust Fund in order to address the
unfunded OPEB liability. With regard to tobacco settlement funds, the commission
advises a phased-in approach, whereby a specified percentage of the settlement
funds (increasing from 25% of such funds in year one to 90% of such funds in
year four and thereafter) would be transferred to the State Retiree Benefits
Trust Fund. In addition to using the tobacco settlement funds, the commission
further recommends that the Commonwealth allocate 50% of any unanticipated
surplus funds in a budget surplus year to the Trust Fund. Finally, the
commission recommends that annual appropriations to the Trust Fund be included
in each annual budget so as to eliminate the unfunded liability by 2038.

The fiscal 2009 budget does not include any of the special commission's
recommendations for addressing the Commonwealth's OPEB liability.

The Governor's fiscal 2010 budget recommendations would require adoption of a
funding schedule for the Commonwealth's unfunded OPEB liability. Under the
Governor's proposal, funding would be phased in, starting as early as fiscal
2011, using tobacco settlement proceeds and a portion of budget surpluses. The
Governor, in the legislation he filed on January 28, 2009, also included a
number technical sections that related to the administration and management of
the State Retiree Benefits Trust fund. Both the provisions included in the
Governor's fiscal 2010 budget recommendation and the accompanying legislation
filed on January 28, 2009 are consistent with recommendations put forth by the
commission.



                       INVESTMENT POLICIES AND TECHNIQUES


Descriptions in this Statement of Additional Information of a particular
investment practice or technique in which the Fund may engage are meant to
describe the spectrum of investments that 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 techniques described herein may not be available, permissible,
economically feasible or effective for their intended purposes in all markets.
Certain practices, techniques or instruments may not be principal activities of
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 include the one-year, three-year and five-year constant maturity
Treasury rates, the three-month Treasury bill rate, the 180-day Treasury bill
rate, rates on longer-term Treasury securities, the 11th District Federal Home
Loan Bank Cost of Funds, the National Median Cost of Funds, the one-month,
three-month, six-month or one-year London Interbank Offered Rate ("LIBOR"), the
prime rate of a specific bank or commercial paper rates. Some indices, such as
the one-year constant maturity Treasury rate, closely mirror changes in market
interest rate levels. Others, such as the 11th District Home Loan Bank Cost of
Funds index, tend to lag behind changes in market rate levels and tend to be
somewhat less volatile.

The mortgage-backed securities either issued or guaranteed by GNMA, FHLMC or
FNMA ("Certificates") are called pass-through Certificates because a pro rata
share of both regular interest and principal payments (less GNMA's, FHLMC's or
FNMA's fees and any applicable loan servicing fees), as well as unscheduled
early prepayments on the underlying mortgage pool, are passed through monthly to
the holder of the Certificate (i.e., a fund). The principal and interest on GNMA
securities are guaranteed by GNMA and backed by the full faith and credit of the
US Government. FNMA guarantees full and timely payment of all interest and
principal, while FHLMC guarantees timely payment of interest and ultimate
collection of principal. Mortgage-backed securities from FNMA and FHLMC are not
backed by the full faith and credit of the United States; however, they are
generally considered to offer minimal credit risks. The yields provided by these
mortgage-backed securities have historically exceeded the yields on other types
of US Government Securities with comparable maturities in large measure due to
the prepayment risk discussed below.

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 Segregation. Certain investment transactions expose the Fund to an
obligation to make future payments to third parties. Examples of these types of
transactions, include, but are not limited to, reverse repurchase agreements,
short sales, dollar rolls, when-issued, delayed-delivery or forward commitment
transactions and certain derivatives such as swaps, futures, forwards, and
options. To the extent that the Fund engages in such transactions, the Fund will
(to the extent required by applicable law) either (1) segregate cash or liquid
assets in the prescribed amount or (2) otherwise "cover" its future obligations
under the transaction, such as by holding an offsetting investment. If the Fund
segregates sufficient cash or other liquid assets or otherwise "covers" its
obligations under such transactions, the Fund will not consider the transactions
to be borrowings for purposes of its investment restrictions or "senior
securities" under the 1940 Act, and therefore, such transactions will not be
subject to the 300% asset coverage requirement under the 1940 Act otherwise
applicable to borrowings by the Fund.

In some cases (e.g., with respect to futures and forwards that are contractually
required to "cash-settle"), the Fund will segregate cash or other liquid assets
with respect to the amount of the daily net (marked-to-market) obligation
arising from the transaction, rather than the notional amount of the underlying
contract. By segregating assets in an amount equal to the net obligation rather
than the notional amount, the Fund will have the ability to employ leverage to a
greater extent than if it set aside cash or other liquid assets equal to the
notional amount of the contract, which may increase the risk associated with
such transactions.

The Fund may utilize methods of segregating assets or otherwise "covering"
transactions that are currently or in the future permitted under the 1940 Act,
the rules and regulation thereunder, or orders issued by the Securities and
Exchange Commission ("SEC") thereunder. For these purposes, interpretations and
guidance provided by the SEC staff may be taken into account when deemed
appropriate by the Fund.

Assets used as segregation or cover cannot be sold while the position in the
corresponding transaction is open, unless they are replaced with other
appropriate assets. As a result, the commitment of a large portion of a Fund's
assets for segregation and cover purposes could impede portfolio management or
the Fund's ability to meet redemption requests or other current obligations.

Segregating assets or otherwise "covering" for these purposes does not
necessarily limit the percentage of the assets of the Fund that may be at risk
with respect to certain derivative transactions.


Bank and Savings and Loan Obligations. These obligations include negotiable
certificates of deposit, bankers' acceptances, deposit notes, fixed time
deposits or other short-term bank obligations. Certificates of deposit are
negotiable certificates evidencing the obligations of a bank to repay funds
deposited with it for a specified period of time. The Fund may invest in
certificates of deposit of large domestic banks and their foreign branches,
large US regulated subsidiaries of large foreign banks (i.e., banks which at the
time of their most recent annual financial statements show total assets in
excess of $1 billion), and of smaller banks as described below. Although the
Fund recognizes that the size of a bank is important, this fact alone is not
necessarily indicative of its creditworthiness. Investment in certificates of
deposit issued by foreign branches of domestic banks involves investment risks
that are different in some respects from those associated with investment in
certificates of deposit issued by domestic branches of domestic banks, including
the possible imposition of withholding taxes on interest income, the possible
adoption of foreign governmental restrictions which might adversely affect the
payment of principal and interest on such certificates of deposit, or other
adverse political or economic developments. In addition, it might be more
difficult to obtain and enforce a judgment against a foreign branch of a
domestic bank.

Certificates of Participation. The Fund may purchase Certificates of
Participation in trusts that hold Municipal Securities. A Certificate of
Participation gives the Fund an undivided interest in the Municipal Security in
the proportion that the Fund's interest bears to the total principal amount of
the Municipal Security. Certificates of Participation may be variable rate or
fixed rate. Because Certificates of Participation are interests in Municipal
Securities that are generally funded through government appropriations, they are
subject to the risk that sufficient appropriations as to the timely payment of
principal and interest on the underlying Municipal Securities may not be made. A
Certificate of Participation may be backed by a guarantee of a financial
institution that satisfies rating agencies as to the credit quality of the
Municipal Security supporting the payment of principal and interest on the
Certificate of Participation. Payments of principal and interest would be
dependent upon the underlying Municipal Security and may be guaranteed under a
letter of credit to the extent of such credit. The quality rating by a rating
service of an issue of Certificates of Participation is based primarily upon the
rating of the Municipal Security held by the Trust and the credit rating of the
issuer of any letter of credit and of any other guarantor providing credit
support to the issue. The Fund's Advisor considers these factors as well as
others, such as any quality ratings issued by the rating services identified
above, in reviewing the credit risk presented by a Certificate of Participation
and in determining whether the Certificate of Participation is appropriate for
investment by the Fund. It is anticipated by the Fund's Advisor that, for most
publicly offered Certificates of Participation, there will be a liquid secondary
market or there may be demand features enabling the Fund to readily sell its
Certificates of Participation prior to maturity to the issuer or a third party.

Commercial Paper. Commercial paper consists of short-term, unsecured promissory
notes issued to finance short-term credit needs. The commercial paper purchased
by the Fund will consist only of direct obligations issued by domestic and
foreign entities.

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.



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.

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 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 "Ratings of
Investments" for a more complete description of the ratings assigned by 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 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 requirements 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 1933 Act 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
increasing 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.

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.

Industrial Development and Pollution Control Bonds. Industrial Development and
Pollution Control Bonds (which are types of private activity bonds), although
nominally issued by municipal authorities, are generally not secured by the
taxing power of the municipality but are secured by the revenues of the
authority derived from payments by the industrial user. Under federal tax
legislation, certain types of Industrial Development Bonds and Pollution Control
Bonds may no longer be issued on a tax-exempt basis, although previously-issued
bonds of these types and certain refundings of such bonds are not affected. For
the purposes of the Fund's investment limitation regarding concentration of
investments in any one industry, industrial development or other private
activity bonds ultimately payable by companies within the same industry will be
considered as if they were issued by issuers in the same industry.

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, such borrowings will
comply with the Fund's nonfundamental policies.

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. Purchase and sales of shares of Central Funds are made at net
asset value.

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.


Inverse Floaters. The Fund may invest in inverse floaters. Inverse floaters are
debt instruments with a floating rate of interest that bears an inverse
relationship to changes in short-term market interest rates. Investments in this
type of security involve special risks as compared to investments in, for
example, a fixed rate municipal security. The debt instrument in which the Fund
invests may be a tender option bond trust (the "trust"), which can be
established by a fund, a financial institution or a broker, consisting of
underlying municipal obligations with intermediate to long maturities and a
fixed interest rate. Other investors in the trust usually consist of money
market fund investors receiving weekly floating interest rate payments who have
put options with the financial institutions. The Fund may enter into shortfall
and forbearance agreements by which the Fund agrees to reimburse the trust, in
certain circumstances, for the difference between the liquidation value of the
fixed rate municipal security held by the trust and the liquidation value of the
floating rate notes. The Fund could lose money and its NAV could decline as a
result of investments in inverse floaters if movements in interest rates are
incorrectly anticipated. Moreover, the markets for inverse floaters may be less
developed and may have less liquidity than the markets for more traditional
municipal securities, especially during periods of instability during the credit
markets. The Fund's investments in inverse floaters will not be considered
borrowing within the meaning of the Investment Company Act of 1940 or for
purposes of the Fund's investment restrictions on borrowing.

Investment-Grade Bonds. The Fund may purchase "investment-grade" bonds, which
are those rated Aaa, Aa, A or Baa by Moody's; AAA, AA, A or BBB by S&P; or F1,
F2 or F3 by Fitch's or 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.


Letters of Credit. Municipal obligations, including certificates of
participation, commercial paper and other short-term obligations, may be backed
by an irrevocable letter of credit of a bank which assumes the obligation for
payment of principal and interest in the event of default by the issuer. Only
banks which, in the opinion of the Advisor, are of investment quality comparable
to other permitted investments of the Fund may be used for letter of credit
backed investments.

Municipal Securities. Municipal obligations are issued by or on behalf of
states, territories and possessions of the United States and their political
subdivisions, agencies and instrumentalities and the District of Columbia to
obtain funds for various public purposes. The interest on these obligations is
generally exempt from federal income tax in the hands of most investors. The two
principal classifications of municipal obligations are "notes" and "bonds."

Municipal notes are generally used to provide for short-term capital needs and
generally have maturities of one year or less. Municipal notes include Tax
Anticipation Notes, Revenue Anticipation Notes, Bond Anticipation Notes and
Construction Loan Notes. Tax Anticipation Notes are sold to finance working
capital needs of municipalities. They are generally payable from specific tax
revenues expected to be received at a future date. Revenue Anticipation Notes
are issued in expectation of receipt of other types of revenue. Tax Anticipation
Notes and Revenue Anticipation Notes are generally issued in anticipation of
various seasonal revenue such as income, sales, use and business taxes. Bond
Anticipation Notes are sold to provide interim financing and Construction Loan
Notes are sold to provide construction financing. These notes are generally
issued in anticipation of long-term financing in the market. In most cases,
these monies provide for the repayment of the notes. After the projects are
successfully completed and accepted, many projects receive permanent financing
through the Federal Housing Administration under "Fannie Mae" (the Federal
National Mortgage Association) or GNMA (the Government National Mortgage
Association). There are, of course, a number of other types of notes issued for
different purposes and secured differently than those described above.

Municipal bonds, which meet longer-term capital needs and generally have
maturities of more than one year when issued, have two principal
classifications: "general obligation" bonds and "revenue" bonds. Issuers of
general obligation bonds include states, counties, cities, towns and regional
districts. The proceeds of these obligations are used to fund a wide range of
public projects including the construction or improvement of schools, highways
and roads, water and sewer systems and a variety of other public purposes. The
basic security behind general obligation bonds is the issuer's pledge of its
full faith, credit, and taxing power for the payment of principal and interest.
The taxes that can be levied for the payment of debt service may be limited or
unlimited as to rate or amount or special assessments.

The principal security for a revenue bond is generally the net revenues derived
from a particular facility or group of facilities or, in some cases, from the
proceeds of a special excise or other specific revenue source. Revenue bonds
have been issued to fund a wide variety of capital projects including: electric,
gas, water and sewer systems; highways, bridges and tunnels; port and airport
facilities; colleges and universities; and hospitals. Although the principal
security behind these bonds varies widely, many provide additional security in
the form of a debt service reserve fund whose monies may also be used to make
principal and interest payments on the issuer's obligations. Housing finance
authorities have a wide range of security including partially or fully-insured,
rent-subsidized and/or collateralized mortgages, and/or the net revenues from
housing or other public projects. In addition to a debt service reserve fund,
some authorities provide further security in the form of a state's ability
(without obligation) to make up deficiencies in the debt reserve fund. Lease
rental bonds issued by a state or local authority for capital projects are
secured by annual lease rental payments from the state or locality to the
authority sufficient to cover debt service on the authority's obligations.

Some issues of municipal bonds are payable from United States Treasury bonds and
notes held in escrow by a trustee, frequently a commercial bank. The interest
and principal on these US Government securities are sufficient to pay all
interest and principal requirements of the municipal securities when due. Some
escrowed Treasury securities are used to retire municipal bonds at their
earliest call date, while others are used to retire municipal bonds at their
maturity.

Securities purchased for the Fund may include variable/floating rate
instruments, variable mode instruments, put bonds, and other obligations which
have a specified maturity date but also are payable before maturity after notice
by the holder ("demand obligations"). Demand obligations are considered for the
Fund's purposes to mature at the demand date.

There are, in addition, a variety of hybrid and special types of municipal
obligations as well as numerous differences in the security of municipal
obligations both within and between the two principal classifications (i.e.,
notes and bonds) discussed above.

An entire issue of municipal securities may be purchased by one or a small
number of institutional investors such as the Fund. Thus, such an issue may not
be said to be publicly offered. Unlike the equity securities of operating
companies or mutual funds which must be registered under the 1933 Act prior to
offer and sale unless an exemption from such registration is available,
municipal securities, whether publicly or privately offered, may nevertheless be
readily marketable. A secondary market exists for municipal securities which
have been publicly offered as well as securities which have not been publicly
offered initially but which may nevertheless be readily marketable. Municipal
securities purchased for the Fund are subject to the limitations on holdings of
securities which are not readily marketable based on whether it may be sold in a
reasonable time consistent with the customs of the municipal markets (usually
seven days) at a price (or interest rate) which accurately reflects its recorded
value. The Fund believes that the quality standards applicable to their
investments enhance marketability. In addition, stand-by commitments,
participation interests and demand obligations also enhance marketability.

Provisions of the federal bankruptcy statutes relating to the adjustment of
debts of political subdivisions and authorities of states of the United States
provide that, in certain circumstances, such subdivisions or authorities may be
authorized to initiate bankruptcy proceedings without prior notice to or consent
of creditors, which proceedings could result in material and adverse
modification or alteration of the rights of holders of obligations issued by
such subdivisions or authorities.

Litigation challenging the validity under state constitutions of present systems
of financing public education has been initiated or adjudicated in a number of
states, and legislation has been introduced to effect changes in public school
finances in some states. In other instances there has been litigation
challenging the issuance of pollution control revenue bonds or the validity of
their issuance under state or federal law which litigation could ultimately
affect the validity of those Municipal Securities or the tax-free nature of the
interest thereon.

For the purpose of the Fund's investment restrictions, the identification of the
"issuer" of municipal obligations which are not general obligation bonds is made
by the Advisor on the basis of the characteristics of the obligation as
described above, the most significant of which is the source of funds for the
payment of principal and interest on such obligations.

Municipal Lease Obligations and Participation Interests. Participation interests
represent undivided interests in municipal leases, installment purchase
contracts, conditional sales contracts or other instruments. These are typically
issued by the Trust or other entity which has received an assignment of the
payments to be made by the state or political subdivision under such leases or
contracts. They may be variable rate or fixed rate.

The Fund may purchase from banks participation interests in all or part of
specific holdings of municipal obligations, provided the participation interest
is fully insured. Each participation is backed by an irrevocable letter of
credit or guarantee of the selling bank that the Advisor has determined meets
the prescribed quality standards of the Fund. Therefore, either the credit of
the issuer of the municipal obligation or the selling bank, or both, will meet
the quality standards of the particular fund. The Fund has the right to sell the
participation back to the bank after seven days' notice for the full principal
amount of the Fund's interest in the municipal obligation plus accrued interest,
but only (i) as required to provide liquidity to the Fund, (ii) to maintain a
high quality investment portfolio or (iii) upon a default under the terms of the
municipal obligation. The selling bank will receive a fee from the Fund in
connection with the arrangement. The Fund will not purchase participation
interests unless in the opinion of bond counsel, counsel for the issuers of such
participations or counsel selected by the Advisor, the interest from such
participations is exempt from regular federal income tax and state income tax
for the Fund.

A municipal lease obligation may take the form of a lease, installment purchase
contract or conditional sales contract which is issued by a state or local
government and authorities to acquire land, equipment and facilities. Income
from such obligations is generally exempt from state and local taxes in the
state of issuance. Municipal lease obligations frequently involve special risks
not normally associated with general obligations or revenue bonds. Leases and
installment purchase or conditional sale contracts (which normally provide for
title in the leased asset to pass eventually to the governmental issuer) have
evolved as a means for governmental issuers to acquire property and equipment
without meeting the constitutional and statutory requirements for the issuance
of debt. The debt issuance limitations are deemed to be inapplicable because of
the inclusion in many leases or contracts of "non-appropriation" clauses that
relieve the governmental issuer of any obligation to make future payments under
the lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis. In addition,
such leases or contracts may be subject to the temporary abatement of payments
in the event the issuer is prevented from maintaining occupancy of the leased
premises or utilizing the leased equipment. Although the obligations may be
secured by the leased equipment or facilities, the disposition of the property
in the event of nonappropriation or foreclosure might prove difficult, time
consuming and costly, and result in a delay in recovery or the failure to fully
recover the Fund's original investment.

Certain municipal lease obligations and participation interests may be deemed
illiquid for the purpose of the Fund's limitation on investments in illiquid
securities. Other municipal lease obligations and participation interests
acquired by the Fund may be determined by the Advisor to be liquid securities
for the purpose of such limitation. In determining the liquidity of municipal
lease obligations and participation interests, the Advisor will consider a
variety of factors including: (1) the willingness of dealers to bid for the
security; (2) the number of dealers willing to purchase or sell the obligation
and the number of other potential buyers; (3) the frequency of trades or quotes
for the obligation; and (4) the nature of the marketplace trades. In addition,
the Advisor will consider factors unique to particular lease obligations and
participation interests affecting the marketability thereof. These include the
general creditworthiness of the issuer, the importance to the issuer of the
property covered by the lease and the likelihood that the marketability of the
obligation will be maintained throughout the time the obligation is held by the
Fund.

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

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 Code and to maintain exemption
from the registration requirements of the 1940 Act, as amended. 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, subject 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 the account 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
(including interest) 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 such securities at an agreed time and
price. The Fund maintains a segregated account in connection with outstanding
reverse repurchase agreements. 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 fluctuations
in the market value of fund assets and its yield and may be viewed as a form of
leverage.

Securities Backed by Guarantees. The Fund may invest in securities backed by
guarantees from banks, insurance companies and other financial institutions.
Consequently, 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 and affect its share price.

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 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,
fixed-income indices and other financial instruments, purchase and sell futures
contracts and options thereon, and enter into various transactions such as
swaps, caps, floors or collars (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 (except to the
extent that 80% of the Fund's net assets are required to be invested in
tax-exempt municipal securities, and as limited by the Fund's other investment
restrictions and 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
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 temporary substitute
for purchasing or selling particular securities. Some Strategic Transactions may
also be used to enhance potential gain although no more than 5% of the Fund's
assets will be committed to certain Strategic Transactions entered into for
non-hedging purposes. 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 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 that 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 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 a Fund's assets in special accounts, as described
in the section entitled "Asset Segregation."

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 may not 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 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 other 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 any 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, but not
limited to, US Treasury and agency securities, mortgage-backed securities,
foreign sovereign debt, corporate debt securities, equity securities (including
convertible securities), 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, and municipal obligations.
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, but not
limited to, US Treasury and agency securities, mortgage-backed securities,
foreign sovereign debt, corporate debt securities, equity securities (including
convertible securities), 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, and municipal obligations. 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.



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 or fixed-income 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" under the regulations of the Commodity Futures Trading Commission.
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 management and
return enhancement 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 mark to market value of the contract
fluctuates. The purchase of options 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.

Options on Securities Indices and Other Financial Indices. The Fund 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.

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.

Swaps, Caps, Floors and Collars. Among the Strategic Transactions into which the
Fund may enter are interest rate, 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, 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. 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 an 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.

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 return may experience greater volatility during periods of
rising interest rates than under normal market conditions.



Stand-by Commitments. A stand-by commitment is a right acquired by the Fund,
when it purchases a municipal obligation from a broker, dealer or other
financial institution ("seller"), to sell up to the same principal amount of
such securities back to the seller, at the Fund's option, at a specified price.
Stand-by commitments are also known as "puts." The exercise by the Fund of a
stand-by commitment is subject to the ability of the other party to fulfill its
contractual commitment.

Stand-by commitments acquired by the Fund will have the following features: (1)
they will be in writing and will be physically held by the Fund's custodian; (2)
the Fund's right to exercise them will be unconditional and unqualified; (3)
they will be entered into only with sellers which in the Advisor's opinion
present a minimal risk of default; (4) although stand-by commitments will not be
transferable, municipal obligations purchased subject to such commitments may be
sold to a third party at any time, even though the commitment is outstanding;
and (5) their exercise price will be (i) the Fund's acquisition cost (excluding
any accrued interest which the Fund paid on their acquisition), less any
amortized market premium or plus any amortized original issue discount during
the period the Fund owned the securities, plus (ii) all interest accrued on the
securities since the last interest payment date.

The Fund expects that stand-by commitments generally will be available without
the payment of any direct or indirect consideration. However, if necessary or
advisable, the Fund will pay for stand-by commitments, either separately in cash
or by paying a higher price for portfolio securities which are acquired subject
to the commitments.

It is difficult to evaluate the likelihood of use or the potential benefit of a
stand-by commitment. Therefore, it is expected that the Advisor will determine
that stand-by commitments ordinarily have a "fair value" of zero, regardless of
whether any direct or indirect consideration was paid. However, if the market
price of the security subject to the stand-by commitment is less than the
exercise price of the stand-by commitment, such security will ordinarily be
valued at such exercise price. Where the Fund has paid for a stand-by
commitment, its cost will be reflected as unrealized depreciation for the period
during which the commitment is held.


The Advisor understands that the Internal Revenue Service (the "IRS") has issued
a favorable revenue ruling to the effect that, under specified circumstances, a
regulated investment company will be the owner of tax-exempt municipal
obligations acquired subject to a put option. The IRS has also issued private
letter rulings to certain taxpayers (which do not serve as precedent for other
taxpayers) to the effect that tax-exempt interest received by a regulated
investment company with respect to such obligations will be tax-exempt in the
hands of the company and may be distributed to its shareholders as
exempt-interest dividends. The IRS has subsequently announced that it will not
ordinarily issue advance ruling letters as to the identity of the true owner of
property in cases involving the sale of securities or participation interests
therein if the purchaser has the right to cause the security, or the
participation interest therein, to be purchased by either the seller or a third
party. The Fund intends to take the position that it owns any municipal
obligations acquired subject to a stand-by commitment and that tax-exempt
interest earned with respect to such municipal obligations will be tax-exempt in
its hands. There is no assurance that the IRS will agree with such position in
any particular case.


Variable Rate Demand Instruments. The Fund may purchase variable rate demand
instruments, which are obligations providing for a periodic adjustment in the
interest rate paid on the instrument according to changes in interest rates
generally. These instruments also permit the Fund to demand payment of the
unpaid principal balance plus accrued interest upon a specified number of days'
notice to the issuer or its agent. The demand feature may be backed by a bank
letter of credit or guarantee issued with respect to such instrument. The Fund
generally intends to exercise the demand only (1) upon a default under the terms
of the obligation, (2) as needed to provide liquidity to the Fund, (3) to
maintain a high quality investment portfolio or (4) to maximize the Fund's
yield. A bank that issues a repurchase commitment may receive a fee from the
Fund for this arrangement. The issuer of a variable rate demand instrument may
have a corresponding right to prepay in its discretion the outstanding principal
of the instrument plus accrued interest upon notice comparable to that required
for the holder to demand payment.

The variable rate demand instruments that the Fund may purchase are payable on
demand on not more than seven calendar days' notice. The terms of the
instruments provide that interest rates are adjustable at intervals ranging from
daily up to six months, and the adjustments are based upon the current interest
rate environment as provided in the respective instruments. The Fund will
determine the variable rate demand instruments that it will purchase in
accordance with procedures designed to minimize credit risks.

The Advisor may determine that an unrated variable rate demand instrument meets
the Fund's quality criteria by reason of being backed by a letter of credit or
guarantee issued by a bank that meets the quality criteria for the Fund. Thus,
either the credit of the issuer of the obligation or the guarantor bank or both
will meet the quality standards of the Fund. The Advisor will reevaluate each
unrated variable rate demand instrument held by the Fund on a quarterly basis to
determine that it continues to meet the Fund's quality criteria.

The interest rate of the underlying variable rate demand instruments may change
with changes in interest rates generally, but the variable rate nature of these
instruments should decrease changes in value due to interest rate fluctuations.
Accordingly, as interest rates decrease or increase, the potential for capital
gain and the risk of capital loss on the disposition of portfolio securities are
less than would be the case with a comparable portfolio of fixed income
securities. The Fund may purchase variable rate demand instruments on which
stated minimum or maximum rates, or maximum rates set by state law, limit the
degree to which interest on such variable rate demand instruments may fluctuate;
to the extent it does, increases or decreases in value of such variable rate
demand notes may be somewhat greater than would be the case without such limits.
Because the adjustment of interest rates on the variable rate demand instruments
is made in relation to movements of the applicable rate adjustment index, the
variable rate demand instruments are not comparable to long-term fixed interest
rate securities. Accordingly, interest rates on the variable rate demand
instruments may be higher or lower than current market rates for fixed rate
obligations of comparable quality with similar final maturities.

The maturity of the variable rate demand instruments held by the Fund will
ordinarily be deemed to be the longer of (1) the notice period required before
the Fund is entitled to receive payment of the principal amount of the
instrument or (2) the period remaining until the instrument's next interest rate
adjustment.

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.

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.

Portfolio Holdings

In addition to the public disclosure of Fund portfolio holdings through required
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 certain third parties, such as
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 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.


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, alpha, beta, tracking
error, default rate, portfolio turnover, and risk and style characteristics so
long as the identity of 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 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, 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 and its predecessors have more than 80 years of experience managing mutual
funds. DIMA provides a full range of investment advisory services to
institutional and retail clients. The Advisor is 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. DWS Investments is part of Deutsche Bank's Asset Management division
and, within the US, represents the retail asset management activities of
Deutsche Bank AG, Deutsche Bank Trust Company Americas, Deutsche Investment
Management Americas Inc. and DWS Trust Company.

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

In certain cases, the investments for the Fund are managed by the same
individuals who manage one or more other mutual funds advised by the Advisor
that have similar names, objectives and investment styles. You should be aware
that the Fund is likely to differ from these other mutual funds in size, cash
flow pattern and tax matters. Accordingly, the holdings and performance of the
Fund can be expected to vary from those of these other mutual funds.

Certain investments may be appropriate for the Fund and also for other clients
advised by the Advisor. 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. Frequently, a
particular security may be bought or sold for only one client or in different
amounts and at different times for more than one but less than all clients.
Likewise, a particular security may be bought for one or more clients when one
or more other clients are selling the security. In addition, purchases or sales
of the same security may be made for two or more clients on the same day. In
such event, such transactions will be allocated among the clients in a manner
believed by the Advisor to be equitable to each. In some cases, this procedure
could have an adverse effect on the price or amount of the securities purchased
or sold by the Fund. Purchase and sale orders for the Fund may be combined with
those of other clients of the Advisor in the interest of achieving the most
favorable net results to the Fund.

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

Investment Management Agreement

The Board and the shareholders 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 Fund's 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 the
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 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.


From time to time, Deutsche Bank or an affiliate (collectively, "DB") may at its
sole discretion invest its own assets in shares of the Fund ("proprietary
investment") for such purposes it deems appropriate, including investments
designed to assist in the management of the Fund's portfolio. Any proprietary
investment may be hedged and, in that event, the return on the proprietary
investment, net of the effect of the hedge, would be expected to differ from the
return of the Fund. DB has no obligation to make any proprietary investments and
the amount of any proprietary investment this is made may or may not be
significant in comparison to the level of assets of the Fund. In the event that
a proprietary investment is made, except as otherwise required under the
Investment Company Act of 1940, DB would be permitted to redeem the investment
at such time that it deems appropriate provided.


In addition, the Board and shareholders approved a new 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 Fund pays the Advisor an annual advisory fee equal to 0.450% for the first
$250 million of average daily net assets, 0.420% on the next $750 million of net
assets, 0.400% on the next $1.5 billion of net assets, 0.380% of the next $2.5
billion, 0.350% of the next $2.5 billion, 0.330% of the next $2.5 billion,
0.310% of the next $2.5 billion and 0.300% thereafter. The fee is accrued daily
and 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. All of the Fund's expenses are paid
out of gross investment income.

For fiscal years ended March 31, 2009, 2008 and 2007, the Fund paid advisory
fees aggregating $1,902,986, $2,156,013, and $2,336,477, respectively.

Through September 30, 2009, the Advisor has agreed to contractually waive a
portion of its management fees and reimburse expenses to the extent necessary to
maintain total annual operating expenses at 0.92%, 1.67% and 1.67% for Class A,
Class B and Class C shares, respectively, excluding certain expenses such as
extraordinary expenses, taxes, brokerage and interest.




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

Compensation of Portfolio Managers


Portfolio managers are eligible for total compensation comprised of base salary
and variable compensation.

Base Salary - Base salary is linked to job functions, responsibilities and
financial services industry peer comparison through the use of extensive market
data surveys.

Variable Compensation - Generally, variable compensation comprises a greater
proportion of total compensation as a portfolio manager's seniority and
compensation levels increase. Variable compensation may include a cash bonus
incentive, and potential participation in long-term incentive programs including
but not limited to, Deutsche Bank equity, equity linked vehicle, and restricted
cash. Variable compensation is determined based on an analysis of a number of
factors, including among other things, the performance of Deutsche Bank, the
performance of the Asset Management division, and the portfolio manager's
individual contribution. In evaluating individual contribution, management will
consider a combination of quantitative and qualitative factors. Top performing
investment professionals earn a total compensation package that is highly
competitive. As variable compensation increases, the percentage awarded in
long-term incentives also increases. Long-term incentives are subject to a
clawback provision for unvested portions only during the three-year life of the
plan should the individual engage in any conduct that is a significant breach of
DB policies and procedures.

o    The quantitative  analysis of a portfolio manager's individual  performance
     is based  on,  among  other  factors,  performance  of all of the  accounts
     managed by the  portfolio  manager  (which  includes the fund and any other
     accounts  managed  by the  portfolio  manager)  over a  one-,  three-,  and
     five-year  period relative to the  appropriate  Morningstar and Lipper peer
     group universes  and/or  benchmark  index(es) with respect to each account.
     Additionally,  the portfolio  manager's  retail/institutional  asset mix is
     weighted,  as appropriate for evaluation purposes.  Generally the benchmark
     index used is a benchmark index set forth in the fund's prospectus to which
     the fund's  performance  is compared.  Additional or different  appropriate
     peer group or benchmark  indices may also be used.  Primary weight is given
     to pre-tax portfolio performance over three-year and five-year time periods
     (adjusted as appropriate if the portfolio  manager has served for less than
     five years) with lesser consideration given to portfolio performance over a
     one-year  period.  The  increase or decrease in a fund's  assets due to the
     purchase or sale of fund shares is not considered a material factor.

o    The qualitative analysis of a portfolio manager's individual performance is
     based on,  among  other  things,  the results of an annual  management  and
     internal  peer  review  process,  and  management's  assessment  of overall
     portfolio  manager  contributions  to investor  relations,  the  investment
     process  and  overall  performance  (distinct  from fund and other  account
     performance). Other factors, including contributions made to the investment
     team,  as well as adherence to  Compliance  Policies and  Procedures,  Risk
     Management procedures, the firm's Code of Ethics and "living the values" of
     the Advisor are also factors.

The quantitative analysis of a portfolio manager's performance is given more
weight in determining variable compensation than the qualitative portion.

Fund Ownership of Portfolio Managers

The following table shows the dollar range of shares owned beneficially and of
record by each member of the Fund's portfolio management team in the 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.

<TABLE>
<CAPTION>
                                                     Dollar Range of                  Dollar Range of All DWS
Name of Portfolio Manager                           Fund Shares Owned                    Fund Shares Owned
-------------------------                           -----------------                    -----------------

<S>                                                 <C>                                   <C>
Philip Condon                                       $10,001 - $50,000                     Over $1,000,000
Rebecca Flinn                                       $50,001 - $100,000                  $100,001 - $500,000
</TABLE>

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. Total assets attributed to
each portfolio manager in the tables below include total assets of each account
managed by them, although the manager may only manage a portion of such
account's assets. 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 as of the Fund's
most recent fiscal year end.

Other SEC Registered Investment Companies Managed:


<TABLE>
<CAPTION>
                                                                                Number of
                                       Number of        Total Assets of         Investment          Total Assets of
                                      Registered          Registered         Company Accounts        Performance-
                                      Investment          Investment         with Performance-         Based Fee
Name of Portfolio Manager              Companies           Companies             Based Fee             Accounts
-------------------------              ---------           ---------             ---------             --------

<S>                                    <C>              <C>                          <C>                  <C>
Philip Condon                          8                $6,725,854,908               0                    $0
Rebecca Flinn                          2                $1,013,561,533               0                    $0

Other Pooled Investment Vehicles Managed:


                                                                              Number of Pooled
                                                                                 Investment
                                     Number of                               Vehicle Accounts       Total Assets of
                                       Pooled          Total Assets of             with               Performance-
                                     Investment       Pooled Investment         Performance-           Based Fee
Name of Portfolio Manager             Vehicles             Vehicles              Based Fee             Accounts
-------------------------             --------             --------              ---------             --------

Philip Condon                             0                   $0                     0                    $0
Rebecca Flinn                             0                   $0                     0                    $0

Other Accounts Managed:


                                                                                 Number of
                                                                               Other Accounts      Total Assets of
                                     Number of                                     with             Performance-
                                        Other          Total Assets of         Performance-           Based Fee
Name of Portfolio Manager             Accounts          Other Accounts           Based Fee             Accounts
-------------------------             --------          --------------           ---------             --------

Philip Condon                             0                   $0                     0                    $0
Rebecca Flinn                             0                   $0                     0                    $0
</TABLE>

In addition to the accounts above, an investment professional may manage
accounts in a personal capacity that may include holdings that are similar to,
or the same as, those of the Fund. The Advisor has in place a Code of Ethics
that is designed to address conflicts of interest and that, among other things,
imposes restrictions on the ability of portfolio managers and other "access
persons" to invest in securities that may be recommended or traded in the Fund
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 the Advisor,  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 the Advisor may
     have differing investment  strategies,  a particular security may be bought
     for one or more  clients  when one or more other  clients  are  selling the
     security.  The investment results achieved for the Fund may differ from the
     results achieved for other clients of the Advisor.  In addition,  purchases
     or sales of the same  security  may be made for two or more  clients on the
     same day. In such event,  such  transactions  will be  allocated  among the
     clients in a manner  believed by the Advisor to be most  equitable  to each
     client,  generally  utilizing a pro rata  allocation  methodology.  In some
     cases, the allocation procedure could potentially have an adverse effect or
     positive effect on the price or amount of the securities  purchased or sold
     by the Fund.  Purchase  and sale orders for the Fund may be  combined  with
     those of other clients of the Advisor 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.

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

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

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




Codes of Ethics

The Fund, the Advisor, 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 requirements and
restrictions set forth in the applicable Code of Ethics. The Advisor's Code of
Ethics contains provisions and requirements designed to identify and address
certain conflicts of interest between personal investment activities and the
interests of the Fund. Among other things, the Advisor's Code of Ethics
prohibits certain types of transactions absent prior approval, imposes time
periods during which personal transactions may not be made in certain
securities, and requires the submission of duplicate broker confirmations and
quarterly reporting of securities transactions. Additional restrictions apply to
portfolio managers, traders, research analysts and others involved in the
investment advisory process. Exceptions to these and other provisions of the
Advisor's Code of Ethics may be granted in particular circumstances after review
by appropriate personnel.

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 Investments 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 overseeing the DWS Funds continue to be independent of
DeAM; the Chairmen of the DWS Funds' Boards of Trustees 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 the Financial Industry Regulatory Authority, or
"FINRA") announced final agreements in which Deutsche Investment Management
Americas Inc. ("DIMA"), Deutsche Asset Management, Inc. ("DAMI") and DWS Scudder
Distributors, Inc. (now known as DWS Investments Distributors, Inc. ("DIDI"))
settled administrative proceedings regarding disclosure of brokerage allocation
practices in connection with sales of the DWS Funds' (now known as the DWS
Investments 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 DIDI'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 DWS Fund shares. These directed brokerage
practices were discontinued in October 2003.




Under the terms of the settlements, in which DIMA, DAMI and DIDI neither
admitted nor denied any of the regulators' findings, DIMA, DAMI and DIDI 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 DIDI 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-investments.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, 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.

                             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 all
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 of 0.100% of the Fund's average daily
net assets.


For the period from June 1, 2006 through March 31, 2007, DIMA received an
administrative services fee from the Fund of $373,806. For the year ended March
31, 2008, DIMA received an administrative services fee of $458,140. For the year
ended March 31, 2009, DIMA received an administrative services fee of $435,235,
of which $30,868 was unpaid as of March 31, 2009.

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 party 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.

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 ("Distribution
Agreement"), DWS Investments Distributors, Inc. ("DWS-DIDI"), 222 South
Riverside Plaza, Chicago, Illinois 60606, an affiliate of the Advisor, is the
principal underwriter, distributor and administrator for the Class A, Class B
and Class C shares of the Fund and acts as agent of the Fund in the continuous
offering of its Shares. 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 Distribution 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-DIDI 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 Agreement. The provisions concerning continuation, amendment and
termination of a Distribution Agreement are on a series by series and
class-by-class basis.

DWS-DIDI 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-DIDI, as principal underwriter, pays for the
printing and distribution of copies thereof used in connection with the offering
of shares to prospective investors. DWS-DIDI also pays for supplementary sales
literature and advertising costs. As indicated under "Purchase of Shares,"
DWS-DIDI retains the sales charge upon the purchase of Class A shares and pays
or allows concessions or discounts to firms for the sale of the Funds' shares.
DWS-DIDI receives no compensation from the Fund as principal underwriter for
Class A shares. DWS-DIDI receives compensation from the Fund as principal
underwriter for Class B and Class C shares.

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-DIDI. 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 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-DIDI upon 60 days' notice.
Termination with respect to the Class A, B or C shares of a Fund may be by a
vote of (i) the majority of the Board members of the Fund who are not interested
persons of the Fund and who have no direct or indirect financial interest in the
Services Agreement, or (ii) a "majority of the outstanding voting securities" of
the Class A, B or C shares, 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-DIDI may provide or appoint various
broker-dealer firms and other service or administrative firms ("firms") to
provide information and services to investors in a Fund. Typically, DWS-DIDI
appoints firms that provide services and facilities for their customers or
clients who are investors in the Fund. Firms appointed by DWS-DIDI 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-DIDI 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 "Rule 12b-1 Plans" below, DWS-DIDI receives
compensation from the Funds for its services under the Services Agreement.

Rule 12b-1 Plans

The Fund has adopted a plan pursuant to Rule 12b-1 under the 1940 Act (the "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-DIDI to pay for distribution services
for those classes. Pursuant to the Rule 12b-1 Plan, shareholder and
administrative services are provided to the Fund on behalf of its Class A, B and
C shareholders under the Fund's Services Agreement with DWS-DIDI. 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-DIDI 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-DIDI 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 applicable Fund to make payments to DWS-DIDI pursuant to the Rule 12b-1
Plan will cease and the Fund will not be required to make any payments not
previously accrued past the termination date. Thus, there is no legal obligation
for a Fund to pay any expenses incurred by DWS-DIDI 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-DIDI for its expenses
incurred. On the other hand, under certain circumstances, DWS-DIDI might collect
in the aggregate over certain periods more in fees under the Rule 12b-1 Plan
than it has expended over that same period in providing distribution services
for a Fund. In connection with Class B shares, for example, if shares of a Fund
were to appreciate (resulting in greater asset base against which Rule 12b-1
fees are charged) and sales of the Fund's shares were to decline (resulting in
lower expenditures by DWS-DIDI 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-DIDI that is not matched to the timing of revenues received (e.g., a sales
commission may be paid by DWS-DIDI related to an investment in year 1, while the
Rule 12b-1 fee to DWS-DIDI 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-DIDI's expenses are less than the Rule 12b-1 fees, DWS-DIDI 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-DIDI receives a fee from the Fund under its Rule 12b-1 Plan, payable
monthly, at the annual rate of 0.75% of average daily net assets of the Fund
attributable to its Class B shares. This fee is accrued daily as an expense of
Class B shares. DWS-DIDI also receives any contingent deferred sales charges
paid with respect to Class B shares. DWS-DIDI currently compensates firms for
sales of Class B shares at a commission rate of 3.75%.

For its services under the Distribution Agreement, DWS-DIDI receives a fee from
the Fund under its Rule 12b-1 Plan, payable monthly, at the annual rate of 0.75%
of average daily net assets of the Fund attributable to Class C shares. This fee
is accrued daily as an expense of Class C shares. DWS-SDI currently advances to
firms the first year distribution fee at a rate of 0.75% of the purchase price
of Class C shares except, DWS-DIDI does not advance the first year distribution
fee to firms for sales for Class C shares to employer-sponsored employee
benefits plans using the OmniPlus subaccount record keeping system made
available through ADP, Inc. under the alliance with DWS-DIDI and it affiliates.
For periods after the first year, DWS-DIDI 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-DIDI or the applicable Fund.
DWS-DIDI 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-DIDI
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 the Fund.

With respect to Class A Shares of the Fund, DWS-DIDI 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-DIDI currently advances to firms the
first-year service fee at a rate of up to 0.25% of the purchase price of such
shares except, DWS-DIDI does not advance the first year service fee to firms for
sales of Class C shares to employer-sponsored employee benefit plans using the
OmniPlus subaccount record keeping system made available through ADP, Inc. under
an alliance with DWS-DIDI and its affiliates. For periods after the first year,
DWS-DIDI currently intends to pay firms a service fee at a rate of up to 0.25%
(calculated monthly and paid quarterly) of the net assets attributable to Class
B and Class C shares of the Fund maintained and serviced by the firm. Firms to
which service fees may be paid include affiliates of DWS-DIDI. In addition
DWS-DIDI may, from time to time, pay certain firms from it own resources
additional amounts for ongoing administrative services and assistance provided
to their customers and clients who are shareholders of the Fund.

DWS-DIDI 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-DIDI 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-DIDI) listed on a 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 provides shareholder services. The Board of the Fund,
in its discretion, may approve basing the fee to DWS-DIDI 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.


<TABLE>
<CAPTION>
                    12b-1 Compensation to Underwriter and Firms for the           Other Expenses Paid by Underwriter for the
                             Fiscal Year Ended March 31, 2009                          Fiscal Year Ended March 31, 2009
                             --------------------------------                          --------------------------------


                                                                        Advertising,
                                                                    Sales, Literature
                           12b-1         12b-1           12b-1            and                                     Postage
                       Distribution   Shareholder    Compensation      Promotional  Prospectus   Marketing and      and     Imputed
                           Fees      Services Fees   Paid to Firms      Materials    Printing   Sales Expenses    Mailing   Interest
                           ----      -------------   -------------      ---------    --------   --------------    -------   --------


<S>              <C>       <C>           <C>            <C>              <C>            <C>          <C>           <C>           <C>
 DWS             Class A        $0       $33,042             $0         $48,289        $2,600       $231,734      $3,640         $0
 Massachusetts   Class B   $26,615        $9,061        $14,264            $794           $45         $2,288         $82    $11,297
 Tax-Free Fund   Class C   $36,350       $13,074        $34,578          $6,581          $357        $27,632        $740         $0

</TABLE>



The following table shows, for Class A shares, the aggregate amount of
underwriting commissions paid to DIDI, the amount in commissions it paid out to
brokers and the amount of underwriting commissions retained by DIDI.


<TABLE>
<CAPTION>
                                                                                                           Aggregate
                                              Aggregate       Aggregate            Aggregate              Commissions
                                  Fiscal        Sales        Commissions      Commissions Paid to        Retained by
Fund                                Year     Commissions    Paid to Firms       Affiliated Firms             DIDI
----                                ----     -----------    -------------       ----------------             ----


<S>                                 <C>          <C>                 <C>             <C>                   <C>
DWS Massachusetts Tax-Free          2009         $8,000              $0              $0                    $8,000
Fund                                2008         $2,536              $0              $0                      $0
                                    2007         $6,000              $0            $3,000                  $3,000

</TABLE>


Certain trustees or officers of the Funds are also trustees or officers of the
Advisor or DIDI, as indicated under "Officers and Trustees."



Custodian


SSB, Lafayette Corporate Center, 2 Avenue De Lafayette, Boston, MA 02111, as
custodian, has custody of all securities and cash of the Fund. SSB attends to
the collection of principal and income, and payment for and collection of
proceeds of securities bought and sold by the Fund.


Transfer Agent and Shareholder Service Agent


DWS Investments Service Company ("DISC" or the "Transfer Agent"), 210 West 10th
Street, Kansas City, Missouri 64105-1614, an affiliate of the Advisor, is the
transfer agent, dividend-paying agent and shareholder service agent for all
classes of the Fund. 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 $20.99 to $24.09 per account, for open wholesale
money funds the fee is $35.55 per account, while for certain retirement accounts
serviced on the recordkeeping system of ExpertPlan, Inc., the fee is a flat fee
up to $3.91 per account (as of February 2009, 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
fees in excess of 0.25%, and processing of proxy statements, may only be
reimbursed by the Fund with the prior approval of the Fund's Board.





For the year ended March 31, 2009, the amount charged to the Fund for Classes A,
B and C by the Transfer Agent in total aggregated $114,704, of which $109,088
was waived and $455 was unpaid as of March 31, 2009. For the year ended March
31, 2008, the amount charged to the Fund for Classes A, B and C by the Transfer
Agent in total aggregated $8,948, of which $328 was waived. For the year ended
March 31, 2007, the amount charged to the Fund for Classes A, B and C by the
Transfer Agent in total aggregated $11,082, of which $2,364 was waived. 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.


Pursuant to a sub-transfer agency agreement between DISC and DST Systems, Inc.
("DST"), DISC 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 DISC, not by the Funds.


Independent Registered Public Accounting Firm


The financial highlights of the Fund included in the Fund's prospectus and the
Financial Statements incorporated by reference in this Statement of Additional
Information have been so included or incorporated by reference in reliance on
the report of PricewaterhouseCoopers LLP, 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, MA 02110-2624, serves as
legal counsel to the Fund and to the Independent Trustees.




                             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. Provided a
Subadvisor is acting in accordance with any instructions and directions of the
Advisor or the Board, the Subadvisor is authorized to pay to a broker or dealer
who provides third party brokerage and research services a commission for
executing a portfolio transaction for the Fund, if the Subadvisor determines in
good faith that such commission was reasonable in relation to the value of the
third party brokerage and research services provided by such broker or dealer.




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 March 31, 2009, 2008 and 2007, the Fund did not pay
brokerage commissions.

Securities of Regular Broker-Dealers. 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
March 31, 2009, the Fund did not hold any securities of its regular broker
dealers.


Portfolio Turnover

Portfolio turnover rate is defined by the SEC as the ratio of the lesser of
sales or purchases to the monthly average value of such securities owned during
the year, excluding all securities whose remaining maturities at the time of
acquisition were one year or less.

Higher levels of activity by the Fund result in higher transaction costs and may
also result in taxes on realized capital gains to be borne by the Fund's
shareholders. Purchases and sales are made whenever necessary, in the Advisor's
discretion, to meet the Fund's objective.


Portfolio turnover rates for the two most recent fiscal years for the Fund were
58% and 48% for the fiscal years ended March 31, 2009 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 DIDI 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 DIDI 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 DIDI ("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, DISC (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 DIDI, may receive compensation from a 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.


DIDI has adopted an Incentive Plan (the "Plan") covering wholesalers that are
regional vice presidents ("DWS Investments Wholesalers"). Generally, DWS
Investments 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 Investments 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 -- "Focus list funds," "Extended list funds" or "Index funds" --
taking into consideration, among other things, the following criteria, where
applicable:

o    The  Fund's  consistency  with  DWS  Investments'  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 Investments, 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 on the Focus
list and Extended list 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-investments.com, approximately one month after the end of each
quarter. DWS Investments Wholesalers receive the highest compensation for Focus
list funds, less for Extended list funds and the lowest for Index funds. The
level of compensation among these categories may differ significantly.

In the normal course of business, DWS Investments will from time to time
introduce new funds into the DWS family of funds. As a general rule, new funds
will be assigned to the Focus list compensation category. As described above,
the fund category assignments are reviewed periodically and are subject to
change.

The prospect of receiving, or the receipt of, additional compensation by a DWS
Investments Wholesaler under the Plan may provide an incentive to favor
marketing the Focus list or Extended list funds over Index funds. The Plan,
however, will not change the price that investors pay for shares of a fund. The
DWS Investments Compliance Department monitors DWS Investments 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.

Dividend Payment Option. Investors may have dividends and distributions
automatically deposited to their predesignated bank account through DWS
Investments' 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-investments.com or calling (800) 621-1048. Confirmation Statements will
be mailed to shareholders as notification that distributions have been
deposited.

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, a Fund may temporarily suspend the offering of any class of its shares to
new investors. During the period of such suspension, persons who are already
shareholders of such class of such Fund may be permitted to continue to purchase
additional shares of such class and to have dividends reinvested.

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

Financial Services Firms' Compensation. Banks and other financial services firms
may provide administrative services related to order placement and payment to
facilitate transactions in shares of a Fund for their clients, and DIDI may pay
them a transaction fee up to the level of the discount or commission allowable
or payable to dealers.

In addition to the discounts or commissions described herein and the prospectus,
DIDI, the Advisor or its affiliates may pay or allow additional discounts,
commissions or promotional incentives, in the form of cash, to firms that sell
shares of a Fund. In some instances, such amounts may be offered only to certain
firms that sell or are expected to sell during specified time periods certain
minimum amounts of shares of the Fund, or other Funds underwritten by DIDI.

Upon notice to all dealers, DIDI 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.


DIDI may at its discretion compensate investment dealers or other financial
services firms in connection with the sale of Class A shares of the Funds in
accordance with the Large Order NAV Purchase Privilege and one of the two
compensation schedules up to the following amounts:


<TABLE>
<CAPTION>
                  Compensation Schedule #1:                                Compensation Schedule #2:
               Retail Sales and DWS Flex Plan(1)                            DWS Retirement Plans(2)
               ---------------------------------                            -----------------------

Amount of                                As a Percentage of         Amount of         As a Percentage of Net
Purchase                                   Net Asset Value          Purchase               Asset Value
--------                                   ---------------          --------               -----------

<C>                                             <C>                   <C>                 <C>     <C>
$250,000 but less than $50 million              0.50%            Over $3 million          0.00% - 0.50%
$50 million and over                            0.25%                   --                       --
</TABLE>

(1)       For purposes of determining the appropriate commission percentage to
          be applied to a particular sale under the foregoing schedule, DIDI
          will consider the cumulative amount invested by the purchaser in a
          Fund and other Funds listed under "Special Features -- Class A Shares
          -- Combined Purchases," 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 DIDI and its
          affiliates.



DIDI 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. DIDI
is compensated by the Fund for services as distributor and principal underwriter
for Class B shares. Except as provided below, for sales of Class C shares, DIDI
advances to firms the first year distribution fee at a rate of 0.75% of the
purchase price of such shares, and, for periods after the first year, DIDI
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 DIDI and
its affiliates, DIDI does not advance the first year distribution fee and for
periods after the date of sale, DIDI 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. DIDI is compensated by the Fund for services as distributor and
principal underwriter for Class C shares.


Revenue Sharing

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

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

The Advisor, the Distributor and/or their affiliates currently make revenue
sharing payments from their own assets in connection with the sale and/or
distribution of DWS fund shares, or the retention and/or servicing of investors,
to financial advisors in amounts that generally range from .01% up to .50% of
assets of the Fund serviced and maintained by the financial advisor, .05% 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 Investments 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
Ensemble Financial Services
First Allied Securities
First Clearing/Wachovia Securities
HD Vest Investment Securities, Inc.
ING Advisors Network
John Hancock Distributors LLC
LPL Financial
M.L. Stern & Co.
Meridien Financial Group
Merrill Lynch, Pierce, Fenner & Smith Inc.
Morgan Stanley
Oppenheimer & Co., Inc.
PlanMember Services
Prime Capital Inc.
Raymond James & Associates
Raymond James Financial Services
RBC Dain Rauscher, Inc
Securities America, Inc.
UBS Financial Services
Wells Fargo Investments, LLC

Channel: Cash Product Platform
Allegheny Investments LTD
Bank of America
Bank of New York (Hare & Co.)
BMO Capital Markets
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
J.P. Morgan Clearing Corp.
Legent Clearing LLC
Lincoln Investment Planning
LPL Financial
Mellon Financial Markets LLC
Mesirow Financial, Inc.
Penson Financial Services
Pershing Choice Platform
ProFunds Distributors, Inc.
Ridge Clearing & Outsourcing Solutions
Robert W. Baird & Co.
Romano Brothers and Company
SAMCO Capital Markets
Smith Moore & Company
Sungard Institutional Brokerage Inc.
Treasury Curve LLC
US Bancorp
UBS Financial Services
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
EquiTrust Life Insurance Company
Farm Bureau 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.





DIDI may at its discretion compensate investment dealers or other financial
services firms in connection with the sale of Class A shares of the Funds in
accordance with the Large Order NAV Purchase Privilege and one of the two
compensation schedules up to the following amounts:


<TABLE>
<CAPTION>
                 Compensation Schedule #1:                               Compensation Schedule #2:
              Retail Sales and DWS Flex Plan(1)                           DWS Retirement Plans(2)
              ---------------------------------                           -----------------------

Amount of                                As a Percentage of         Amount of         As a Percentage of Net
Purchase                                   Net Asset Value          Purchase               Asset Value
--------                                   ---------------          --------               -----------

<C>                                              <C>                   <C>                 <C>     <C>
$250,000 but less than $50 million              0.50%            Over $3 million          0.00% - 0.50%
$50 million and over                            0.25%                   --                       --
</TABLE>

(1)       For purposes of determining the appropriate commission percentage to
          be applied to a particular sale under the foregoing schedule, DIDI
          will consider the cumulative amount invested by the purchaser in a
          Fund and other Funds listed under "Special Features -- Class A Shares
          -- Combined Purchases," 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 DIDI and its
          affiliates.

Class A Purchases. The public offering price of Class A shares for purchasers
choosing the initial sales charge alternative is the net asset value plus a
sales charge, as set forth below.

<TABLE>
<CAPTION>
                                                            Sales Charge
                                                                                 Allowed to Dealers
                                   As a Percentage of    As a Percentage of     as a Percentage of
Amount of Purchase                   Offering Price       Net Asset Value*        Offering Price
------------------                   --------------       ----------------        --------------

<S>                                       <C>                   <C>                   <C>
Less than $100,000                        2.75%                 2.83%                 2.25%
$100,000 but less than $250,000           2.50%                 2.56%                 2.00%
$250,000 and over                         0.00**                0.00**                0.00***
</TABLE>

*    Rounded to the nearest one-hundredth percent.

**   Redemption of shares may be subject to a contingent  deferred  sales charge
     as discussed below.

***  Commission is payable by DIDI as discussed below.




Class A Quantity Discounts. An investor or the investor's dealer or other
financial services firm must notify the Shareholder Service Agent or DIDI
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.

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.

Letter of Intent. The reduced sales charges for Class A shares, as shown in the
applicable prospectus, also apply to the aggregate amount of purchases of Class
A shares of DWS Funds that bear a sales charge made by any purchaser within a
24-month period under a written Letter of Intent ("Letter") provided by DIDI.
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 DIDI and its affiliates may have special provisions regarding payment of
any increased sales charge resulting from a failure to complete the intended
purchase under the Letter. A shareholder may include the value (at the maximum
offering price, which is determined by adding the maximum applicable sales load
charged to the net asset value) of all Class A shares of such DWS Funds held of
record as of the initial purchase date under the Letter as an "accumulation
credit" toward the completion of the Letter, but no price adjustment will be
made on such shares.


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 DIDI 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 $250,000 threshold, a later decline in
assets below the $250,000 threshold will not affect the plan's ability to
continue to purchase Class A shares at net asset value.



Class A NAV Sales. Class A shares may be sold at net asset value to:

(a)  a current or former director or trustee of Deutsche or DWS mutual funds;

(b)  an employee (including the employee's spouse or life partner and children
     or stepchildren age 21 or younger) of Deutsche Bank or its affiliates or of
     a subadvisor to any fund in the DWS family of funds or of a broker-dealer
     authorized to sell shares of the Fund or service agents of the Funds;

(c)  certain professionals who assist in the promotion of DWS mutual funds
     pursuant to personal services contracts with DIDI, for themselves or
     members of their families. DIDI 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 DIDI 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
     DIDI, 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 DIDI 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 $250,000 or more, either as a lump sum or through the
     "Combined Purchases," "Letter of Intent" and "Cumulative Discount" features
     referred to above (collectively, the "Large Order NAV Purchase Privilege").
     The Large Order NAV Purchase Privilege is not available if another net
     asset value purchase privilege is available;



(k)  defined contribution investment only plans with a minimum of $1,000,000 in
     plan assets regardless of the amount allocated to the DWS funds;

In addition, Class A shares may be sold at net asset value in connection with:

(l)  the acquisition of the assets of or merger or consolidation with another
     investment company, or to shareholders in connection with the investment or
     reinvestment of income and capital gain dividends, and under other
     circumstances deemed appropriate by DIDI 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 DIDI and its affiliates into a DWS Investments 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, DIDI 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 DIDI. The
privilege of purchasing Class A shares of the Fund at net asset value under this
privilege is not available if another net asset value purchase privilege also
applies.

Class B Purchases. Class B shares of 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
prospectuses and SAIs. Class B shares automatically convert to Class A shares
after six years.

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
Fund's prospectuses and SAIs.


Multi-Class Suitability. DIDI 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 $250,000 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 Investments-branded plans on record
keeping systems made available through ADP, Inc. under an alliance with DIDI and
its affiliate ("DWS Flex Plans").



The following provisions apply to DWS Investments Flex Plans.

a.   Class B Share DWS Investments Flex Plans. Class B shares have not been sold
     to DWS Investments Flex Plans that were established on the System after
     October 1, 2003. Orders to purchase Class B shares for a DWS Investments
     Flex Plan established on the System prior to October 1, 2003 that has
     regularly been purchasing Class B shares will be invested instead in Class
     A shares at net asset value when the combined subaccount value in DWS Funds
     or other eligible assets held by the plan is $100,000 or more. This
     provision will be imposed for the first purchase after eligible plan assets
     reach the $100,000 threshold. A later decline in assets below the $100,000
     threshold will not affect the plan's ability to continue to purchase Class
     A shares at net asset value.

b.   Class C Share DWS Investments Flex Plans. Orders to purchase Class C shares
     for a DWS Investments Flex Plan, regardless of when such plan was
     established on the System, will be invested instead in Class A shares at
     net asset value when the combined subaccount value in DWS Funds or other
     eligible assets held by the plan is $1,000,000 or more. This provision will
     be imposed for the first purchase after eligible plan assets reach the
     $1,000,000 threshold. A later decline in assets below the $1,000,000
     threshold will not affect the plan's ability to continue to purchase Class
     A shares at net asset value.

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 plan. Investments are made automatically (minimum $500
and maximum $250,000 for initial investments and a minimum of $50 and maximum
$250,000 for subsequent investments) from the shareholder's account at a bank,
savings and loan or credit union into the shareholder's Fund account.
Termination by a shareholder will become effective within thirty days after the
Shareholder Service Agent has received the request. The Fund may immediately
terminate a shareholder's automatic investment plan 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.

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

It is our policy to offer purchase privileges to current or former directors or
trustees of the Deutsche or DWS mutual funds, employees, their spouses or life
partners and children or step-children age 21 or younger of Deutsche Bank or its
affiliates or a sub-adviser to any fund in the DWS family of funds or a
broker-dealer authorized to sell shares of the funds. Qualified individuals will
generally be allowed to purchase shares in the class with the lowest expense
ratio, usually the Institutional Class shares. If a fund does not offer
Institutional Class shares, these individuals will be allowed to buy Class A
shares at NAV. The funds also reserve the right to waive the minimum account
balance requirement for employee and director accounts. Fees generally charged
to IRA accounts will be charged to accounts of employees and directors.

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 Investments Individual
Retirement Account (IRA), DWS Simplified Profit Sharing and Money Purchase
Pension Plans, DWS Investments 401(k) and DWS Investments 403(b) Plan holders),
members of FINRA, and banks.

Redemptions




General. Policies and procedures affecting transactions in Fund shares can be
changed at any time without notice, subject to applicable law. Transactions may
be contingent upon proper completion of application forms and other documents by
shareholders and their receipt by 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 (including any
applicable sales charge) of the Fund next determined after receipt in good order
by DIDI of the order accompanied by payment. However, orders received by dealers
or other financial services firms prior to the determination of net asset value
and received in good order by DIDI prior to the close of its business day will
be confirmed at a price based on the net asset value effective on that day
("trade date").

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 DIDI, which firms must promptly
submit orders to be effective.

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

If the proceeds of the redemption (prior to the imposition of any contingent
deferred sales charge) are $100,000 or less and the proceeds are payable to the
shareholder of record at the address of record, normally a telephone request or
a written request by any one account holder without a signature guarantee is
sufficient for redemptions by individual or joint account holders, and trust,
executor and guardian account holders, provided the trustee, executor or
guardian is named in the account registration. Other institutional account
holders may exercise this special privilege of redeeming shares by telephone
request or written request without signature guarantee subject to the same
conditions as individual account holders, provided that this privilege has been
pre-authorized by the institutional account holder by written instruction to the
Shareholder Service Agent with signatures guaranteed. This privilege may not be
used to redeem shares held in certificated form and may not be used if the
shareholder's account has had an address change within 15 days of the redemption
request.

Wires. Delivery of the proceeds of a wire redemption of $250,000 or more may be
delayed by 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 on the first of the month. Investors using this Plan must
reinvest Fund distributions.

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.
DIDI 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 DIDI 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 DIDI that the dealer waives the discretionary commission
     applicable to such Large Order NAV Purchase; and

(g)  redemptions for certain loan advances, hardship provisions or returns of
     excess contributions from retirement plans.

The Class B CDSC will be waived for the circumstances set forth in items (c),
(d), (e) and (g) for Class A shares. In addition, this CDSC will be waived:

(h)  for redemptions made pursuant to any IRA systematic withdrawal based on the
     shareholder's life expectancy including, but not limited to, substantially
     equal periodic payments described in Internal Revenue Code Section
     72(t)(2)(A)(iv) prior to age 59 1/2;

(i)  for redemptions to satisfy required minimum distributions after age 70 1/2
     from an IRA account (with the maximum amount subject to this waiver being
     based only upon the shareholder's DWS Investments 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 DIDI 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 Investments 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.

In-kind Redemptions. A Fund reserves the right to honor any request for
redemption or repurchase by making payment in whole or in part in readily
marketable securities. These securities will be chosen by the fund and valued as
they are for purposes of computing the fund's net asset value. A shareholder may
incur transaction expenses in converting these securities to cash.

Checkwriting. The checkwriting privilege is only open to those shareholders who
were shareholders of the Scudder Massachusetts Limited Term Tax Free Fund, which
merged into the DWS Massachusetts Tax-Free Fund on July 31, 2000. Checks may be
used to pay any person, provided that each check is for at least $100 and not
more than $5 million. By using the checks, the shareholder will receive daily
dividend credit on his or her shares until the check has cleared the banking
system. Investors who purchased shares by check may write checks against those
shares only after they have been on a Fund's book for seven business days.
Shareholders who use this service may also use other redemption procedures. No
shareholder may write checks against certificated shares. A Fund pays the bank
charges for this service. However, the Fund will review the cost of operation
periodically and reserve the right to determine if direct charges to the persons
who avail themselves of this service would be appropriate. The Fund, DWS
Investments Service Corporation and State Street Bank and Trust Company reserve
the right at any time to suspend or terminate the Checkwriting procedure.

Exchanges


Shareholders may request a taxable exchange of their shares for shares of the
corresponding class of certain 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.

Shareholders who exchange their shares out of a DWS money market fund (not
including shares acquired by dividend reinvestment or by exchange from Class A
shares of another DWS fund) into Class A shares of certain other DWS funds, will
generally be subject to the applicable sales charge.

Certain DWS funds may not be available to shareholders on an exchange. To learn
more about which DWS funds may be available on exchange, please contact your
financial services firm or visit our Web site at: www.dws-investments.com or
call (800) 621-1048.

Shareholders may obtain prospectus(es) of the DWS fund they are exchanging into
from dealers, other firms or DIDI.





Class A to Class S in the Same Fund Exchange Privilege. Investors who have
invested in Class A shares through a comprehensive or "wrap" fee program, or
other fee-based program sponsored by a broker-dealer, bank or registered
investment adviser may become eligible to invest in Class S shares. Subject to
the discretion of DWS Investments Distributors, Inc., such shareholders may
exchange their Class A shares for Class S shares of equal aggregate value of the
same fund. No sales charge or other charges will apply to any such exchanges.
Investors should contact their selling and/or servicing agents to learn more
about the details of this exchange feature.



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 declare daily 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 November or December or
otherwise as needed. If the Fund does not distribute the amount of capital gain
and/or ordinary income required to be distributed by an excise tax provision of
the Code, the Fund may be subject to that excise tax on the undistributed
amounts. In certain circumstances, the Fund may determine that it is in the
interest of shareholders to distribute less than the required amount and pay any
necessary Fund-level income and/or excise taxes. See "Taxes" below for more
information.

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

Dividends paid by 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 dividends 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 dividends 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 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 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 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 advisors 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 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 its taxable
     year, (i) at least 50% of the market value of the Fund's 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 of such other securities to a value not greater
     than 5% of the value of the Fund's total assets and to not more than 10% of
     the outstanding voting securities of such issuer, and (ii) not more than
     25% of the value of its 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 (i)
     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 (ii) the excess, if any, of its
     interest income excludable from gross income under section 103(a) over its
     deductions disallowed under sections 265 and 171(a)(2), for such year.

In general, for purposes of the 90% gross income requirement described in (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 directly by the
regulated investment company. However, 100% of the net income derived from an
interest in a "qualified publicly traded partnership" (generally, a partnership
(x) the interests in which are traded on an established securities market or are
readily tradable on a secondary market or the substantial equivalent thereof,
and (y) that derives less than 90% of its income from the qualifying income
described in paragraph (a)(i) above) will be treated as qualifying income. In
general, such entities will be treated as partnerships for federal income tax
purposes because they meet the passive income requirement under Code section
7704(c)(2). For purposes of meeting the diversification test in (b) above, the
term "outstanding voting securities of such issuer" will include the equity
securities of a qualified publicly traded partnership. Also for purposes of the
diversification test in (b) above, the identification of the issuer (or, in some
cases, issuers) of a particular Fund investment can depend on the terms and
conditions of that investment. In some cases, identification of the issuer (or
issuers) is uncertain under current law, and an adverse determination or future
guidance by the IRS with respect to issuer identification for a particular type
of investment may adversely affect the Fund's ability to meet the
diversification test in (b) above.

If the Fund qualifies as a regulated investment company that is accorded special
tax treatment, the Fund will not be subject to federal income tax on income
distributed in a timely manner to its shareholders in the form of dividends
(including Capital Gain Dividends, as defined below).

If for any taxable year the Fund were not to qualify for the special federal
income tax treatment accorded regulated investment companies, all of its taxable
income would 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, would be taxable to
shareholders as ordinary income. Such distributions may be eligible (i) to be
treated as "qualified dividend income," in the case of individual and other
noncorporate shareholders, subject to reduced rates of federal income taxation
for taxable years beginning before January 1, 2011 and (ii) for the 70%
dividends received deduction in the case of corporate shareholders, provided, in
both cases, the shareholder meets certain holding period and other requirements
in respect of the Fund shares. In addition, the Fund could be required to
recognize unrealized gains, pay substantial taxes and interest and make
substantial distributions before re-qualifying as a regulated investment company
that is accorded special tax treatment.

As described in "Dividends" above, the Fund intends to distribute monthly to its
shareholders substantially all of its net investment income (excluding
short-term capital gain), and at least annually its short-term and long-term net
realized capital gains. Any taxable income including net capital gain (that is,
the excess of net realized long-term capital gains over net realized short-term
capital losses) retained by the Fund will be subject to tax at the Fund level at
regular corporate rates. The Fund may also retain for investment its net capital
gain. 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 timely 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 against
their federal income tax liabilities, if any, 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 liability, if any, and to
claim refunds on a properly-filed US tax return to the extent the credit exceeds
such liabilities. If the Fund makes this designation, for federal income tax
purposes, the tax basis of shares owned by a shareholder of the Fund would 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
under clause (i) of the preceding sentence and the tax deemed paid by the
shareholder under clause (ii) of the preceding sentence.

In determining its net capital gain for Capital Gain Dividend 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.

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 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, as discussed in "Dividends" above, the Fund may
retain (and be subject to Fund-level income and/or excise tax on) a portion of
its capital gain or other income if it appears to be in the interest of the
Fund.

Taxation of Fund Distributions. Distributions on the Fund's shares are generally
subject to US federal income tax as described herein to the extent they do not
exceed the Fund's realized income and gains, even though such distributions may
economically represent a return of capital of a particular shareholder's
investment. Such distributions are likely to occur in respect of shares
purchased at a time when the Fund's net asset value reflects gains that are
either unrealized, or realized but not distributed, that were therefore included
in the price the shareholder paid. Such distributions may reduce the fair market
value of the Fund's shares below the shareholder's cost basis in those shares.
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 may nevertheless be taxable to them.

The Fund intends to pay dividends that pass through to shareholders the
tax-exempt character of exempt interest earned by the Fund ("exempt-interest
dividends") for US federal income tax purposes. As discussed further below, the
Fund intends that most of its distributions to shareholders will be
exempt-interest dividends, which are exempt from federal income tax, but may be
subject to state and local taxes. In addition, an investment in the Fund may
result in liability for the federal alternative minimum tax, both for individual
and corporate shareholders.

 For US federal income tax purposes, distributions of investment income other
than exempt-interest dividends 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. In general, the Fund will recognize long-term capital gain or
loss on investments it has owned (or is deemed to have owned) for more than one
year, and short-term capital gain or loss on investments it has owned (or is
deemed to have owned) for one year or less. Distributions of net capital gain
that are properly designated by the Fund as capital gain dividends ("Capital
Gain Dividends") will be taxable to shareholders as long-term capital gains.
Distributions from capital gains are generally made after applying any available
capital loss carryovers. 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. It is currently unclear whether Congress will extend this
provision for tax years beginning on or after January 1, 2011. Distributions of
net short-term capital gain (as reduced by any net long-term capital loss for
the taxable year) will be taxable to shareholders as ordinary income.
Distributions are taxable as described herein whether shareholders receive them
in cash or reinvest them in additional shares of the Fund or another DWS Fund
through the reinvestment privilege.

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.

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 level; however, the Fund does not expect a significant
portion of Fund distributions to be derived from qualified dividend income. It
is currently unclear whether Congress will extend this provision for tax years
beginning on or after January 1, 2011.

Any distribution of income that is attributable to (i) income received by the
Fund in lieu of dividends with respect to securities on loan pursuant to a
securities lending transaction or (ii) dividend income received by the Fund on
securities it temporarily purchased from a counterparty pursuant to a repurchase
agreement that is treated for U.S. federal income tax purposes as a loan by the
Fund, such distribution may not constitute qualified dividend income to
individual shareholders and may not be eligible for the dividends-received
deduction for corporate shareholders. Similarly, any distribution of income that
is attributable to (i) income received by the Fund in lieu of tax-exempt
interest with respect to securities on loan or (ii) tax-exempt interest received
by the Fund on tax-exempt securities it temporarily purchased from a
counterparty pursuant to a repurchase agreement that is treated for U.S. federal
income tax purposes as a loan by the Fund, may not constitute an exempt-interest
dividend to shareholders.

Special Rules for Debt Obligations. Some debt obligations with a fixed maturity
date of more than one year from the date of issuance (and zero-coupon debt
obligations with a fixed maturity date of more than one year from the date of
issuance) that are acquired by the Fund will be treated as debt obligations that
are issued originally at a discount. Generally, the amount of the original issue
discount ("OID") is treated as interest income and is included in the Fund's
income (and required to be distributed by the Fund) 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. OID of a state or municipal obligation
(whether interest bearing or not) is exempt from tax if stated interest on the
obligation is exempt under Code section 103(a) or would be exempt were the
obligation interest-bearing.

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." Very generally, market discount is the
excess of the stated redemption price of a debt obligation over the purchase
price of such obligation (or in the case of an obligation issued with OID, its
"revised issue price"). 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. Alternatively,
the Fund may elect to accrue market discount currently, in which case the
discount accrues (as ordinary income) ratably in equal daily installments or, if
the Fund so elects, at a constant (compound) interest rate. Either election will
affect the character and timing of recognition of income by the Fund.

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 OID, or
in certain cases, "acquisition discount" (very generally, the excess of the
stated redemption price over the purchase price). The Fund will be required to
include the OID or acquisition discount in income (as ordinary 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 OID or
acquisition discount accrues ratably in equal daily installments or, if the Fund
so elects, at a constant (compound) interest rate. If the Fund elects the
constant interest rate method, the character and timing of recognition of income
by the Fund will differ from what they would have been under the default pro
rata method.

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 Dividend than
they would in the absence of such transactions.

A portion of the OID accrued on certain high yield discount obligations may not
be deductible to the issuer and will instead be treated as a dividend paid by
the issuer for purposes of the dividends received deduction. In such cases, if
the issuer of the high yield discount obligations is a domestic corporation,
dividend payments by the Fund may be eligible for the dividends received
deduction to the extent attributable to the deemed dividend portion of such OID.

At-Risk or Defaulted Securities. 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 whether or to what extent the Fund should
recognize market discount on a debt obligation, when the Fund may cease to
accrue interest, OID or market discount, when and to what extent the Fund may
take deductions for bad debts or worthless securities and how the Fund should
allocate payments received on obligations in default 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 U.S. federal income or excise tax.

A Fund may invest directly or indirectly in residual interests in real estate
mortgage investment conduits ("REMICs") or equity interests in taxable mortgage
pools ("TMPs"). Under a notice issued by the IRS in October 2006 and Treasury
regulations that have yet to be issued but may apply retroactively, a portion of
a Fund's income (including income allocated to the Fund from a REIT or other
pass-through entity) that is attributable to a residual interest in a REMIC or
an equity interest in a TMP (referred to in the Code as an "excess inclusion")
will be subject to U.S. federal income tax in all events. This notice also
provides, and the regulations are expected to provide, that excess inclusion
income of a regulated investment company will be allocated to shareholders of
the regulated investment company in proportion to the dividends received by such
shareholders, with the same consequences as if the shareholders held the related
interest directly. As a result, a Fund investing in such interests may not be a
suitable investment for charitable remainder trusts, as noted below.

In general, excess inclusion income allocated to shareholders (i) cannot be
offset by net operating losses (subject to a limited exception for certain
thrift institutions), (ii) will constitute unrelated business taxable income
("UBTI") to entities (including a qualified pension plan, an individual
retirement account, a 401(k) plan, a Keogh plan or other tax-exempt entity)
subject to tax on UBTI, thereby potentially requiring such an entity that is
allocated excess inclusion income, and otherwise might not be required to file a
tax return, to file a tax return and pay tax on such income, and (iii) in the
case of a non-U.S. shareholder, will not qualify for any reduction in U.S.
federal withholding tax.

Derivatives, Hedging and Other Related Transactions. The Fund's transactions in
certain derivative instruments (e.g., forward contracts and swap agreements),
options, and other hedging, short sale or similar transactions, if any, may be
subject to one or more special tax rules (e.g., mark-to-market, notional
principal contract, straddle, constructive sale, wash sale and short sale
rules). These rules may affect whether gains and losses recognized by the Fund
are treated as ordinary or capital or as short-term or long-term, accelerate the
recognition of income or gains to the Fund, defer losses to the Fund, and cause
adjustments in the holding periods of the Fund's securities. These rules could
therefore affect the amount, timing and/or character of distributions to
shareholders. Because the tax rules applicable to these types of transactions
are in some cases uncertain under current law, an adverse determination or
future guidance by the IRS with respect to these rules (which determination or
guidance could be retroactive) may affect whether the Fund has made sufficient
distributions, and otherwise satisfied the relevant requirements, to maintain
its qualification as a regulated investment company and avoid a Fund-level tax.

 In general, option premiums received by the Fund are not immediately included
in the income of the Fund. Instead, the premiums are recognized when the option
contract expires, the option is exercised by the holder, or the Fund transfers
or otherwise terminates the option (e.g., through a closing transaction). If an
option written by the Fund is exercised and the Fund sells or delivers the
underlying stock, the Fund generally will recognize capital gain or loss equal
to (a) sum of the strike price and the option premium received by the Fund minus
(b) the Fund's basis in the stock. Such gain or loss generally will be
short-term or long-term depending upon the holding period of the underlying
stock. If securities are purchased by the Fund pursuant to the exercise of a put
option written by it, the Fund generally will subtract the premium received from
its cost basis in the securities purchased. The gain or loss with respect to any
termination of the Fund's obligation under an option other than through the
exercise of the option and related sale or delivery of the underlying stock
generally will be short-term gain or loss depending on whether the premium
income received by the Fund is greater or less than the amount paid by the Fund
(if any) in terminating the transaction. Thus, for example, if an option written
by the Fund expires unexercised, the Fund generally will recognize short-term
gain equal to the premium received.

The tax treatment of certain futures contracts entered into by the Fund as well
as listed non-equity options written or purchased by the Fund on U.S. exchanges
(including options on futures contracts, equity indices and debt securities)
will be governed by section 1256 of the Code ("section 1256 contracts"). Gains
or losses on section 1256 contracts generally are considered 60% long-term and
40% short-term capital gains or losses ("60/40"). Also, section 1256 contracts
held by the Fund at the end of each taxable year (and, for purposes of the 4%
excise tax, on certain other dates as prescribed under the Code) are "marked to
market" with the result that unrealized gains or losses are treated as though
they were realized and the resulting gain or loss is treated as ordinary or
60/40 gain or loss, as applicable.

Book-Tax Differences. Certain of the Fund's investments in derivative
instruments and hedging activities are likely to produce a difference between
its book income and its taxable income. If there are differences between the
Fund's book income and the sum of its taxable income and net tax-exempt income,
the Fund may be required to distribute amounts in excess of its book income or a
portion of Fund distributions may be treated as a return of capital to
shareholders. If the Fund's book income exceeds the sum of its taxable income
(including realized capital gains) and net tax-exempt income, the distribution
(if any) of such excess generally will be treated as (i) a dividend to the
extent of the Fund's remaining earnings and profits (including earnings and
profits arising from tax-exempt income), (ii) thereafter, as a return of capital
to the extent of the recipient's basis in its shares, and (iii) thereafter as
gain from the sale or exchange of a capital asset. If the Fund's book income is
less than the sum of its taxable income and net tax-exempt 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.

Sale, Exchange or Redemption of Shares. The sale, exchange or redemption of Fund
shares will generally 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 will be treated
as short-term capital gain or loss. However, any loss realized upon a taxable
disposition of Fund 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. In addition, any loss realized upon a taxable disposition of Fund
shares held by a shareholder for six months or less will be disallowed, to the
extent of any exempt-interest dividends received by the shareholder with respect
to the shares. Further, all or a portion of any loss realized upon a taxable
disposition of Fund shares will be disallowed under the Code's "wash-sale" rule
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.

Backup Withholding. Under the backup withholding provisions of the Code,
redemption proceeds as well as distributions may be subject to federal income
tax withholding for certain individual shareholders if (i) the shareholder fails
to furnish the Fund with a correct "taxpayer identification number" (TIN), (ii)
the shareholder underreports dividend or interest income, or (iii) the
shareholder has not certified to the Fund that withholding does not apply. The
backup withholding rules may also apply to distributions that are properly
designated as exempt-interest dividends. The backup withholding tax rate is 28%
for amounts paid through 2010. This rate will expire and the backup withholding
rate will be 31% for amounts paid after December 31, 2010, unless Congress
enacts tax legislation providing otherwise.

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 IRS.

Non-US Shareholders. Distributions properly designated as Capital Gain Dividends
and exempt-interest dividends generally will not be subject to withholding of
federal income tax. However, exempt-interest dividends may be subject to backup
withholding (as discussed above). In general, dividends other than Capital Gain
Dividends and exempt-interest dividends paid by the Fund to a shareholder that
is not a "US person" within the meaning of the Code (a "foreign shareholder")
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 shareholder directly, would not be
subject to withholding. However, effective for taxable years of the Fund
beginning before January 1, 2010, the Fund is not required to withhold any
amounts (i) with respect to distributions (other than distributions to a foreign
shareholder (A) that has not provided a satisfactory statement that the
beneficial owner is not a US person, (B) to the extent that the dividend is
attributable to certain interest on an obligation if the foreign shareholder is
the issuer or is a 10% shareholder of the issuer, (C) that is within certain
foreign countries that have inadequate information exchange with the United
States, or (D) to the extent the dividend is attributable to interest paid by a
person that is a related person of the foreign shareholder and the foreign
shareholder is a controlled foreign corporation) from US-source interest income
of types similar to those not subject to US federal income tax if earned
directly by an individual foreign shareholder, to the extent such distributions
are properly designated by the Fund ("interest-related dividends"), and (ii)
with respect to distributions (other than (A) distributions to an individual
foreign shareholder who is present in the United States for a period or periods
aggregating 183 days or more during the year of the distribution and (B)
distributions subject to special rules regarding the disposition of US real
property interests 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 ("short-term capital gain dividends"). Depending on the circumstances, the
Fund may make designations of interest-related and/or short-term capital gain
dividends with respect to all, some or none of its potentially eligible
dividends and/or treat such dividends, in whole or in part, as ineligible for
these exemptions from withholding. The Fund does not currently intend to make
designations of interest-related dividends. Absent legislation extending these
exemptions for taxable years beginning on or after January 1, 2010, these
special withholding exemptions for interest-related and short-term capital gain
dividends will expire and these dividends generally will be subject to
withholding as described above. It is currently unclear whether Congress will
extend the exemptions for tax years beginning on or after January 1, 2010.

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
shareholders should contact their intermediaries regarding the application of
these rules to their accounts.

A foreign shareholder 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 or exempt-interest dividends unless (i)
such gain or dividend is effectively connected with the conduct by the foreign
shareholder of a trade or business within the United States, (ii) in the case of
a foreign shareholder that is an individual, the shareholder 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. If a foreign 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 foreign shareholder in the United
States.

Special rules would apply if the Fund were either a "U.S. real property holding
corporation" ("USRPHC") or would be a USRPHC but for the operation of certain
exceptions to the definition thereof. Very generally, a USRPHC is a domestic
corporation that holds USRPIs the fair market value of which equals or exceeds
50% of the sum of the fair market values of the corporation's USPRIs, interests
in real property located outside the United States, and other assets. USRPIs are
generally defined as any interest in U.S. real property and any interest (other
than solely as a creditor) in a USRPHC or former USRPHC.

If the Fund were a USRPHC or would be a USRPHC but for the exceptions referred
to above, any distributions by the Fund to a foreign shareholder (including, in
certain cases, distributions made by the Fund in redemption of its shares) that
are attributable to gains realized by the Fund on the disposition of USRPIs or
to distributions received by the Fund from a lower-tier RIC or REIT that the
Fund is required to treat as USRPI gain in its hands generally will be subject
to U.S. tax withholding. In addition, such distributions may result in the
foreign shareholder being required to file a U.S. tax return and pay tax on the
distributions at regular U.S. federal income tax rates. The consequences to a
foreign shareholder, including the rate of such withholding and character of
such distributions (e.g., as ordinary income or USRPI gain), will vary depending
upon the extent of the foreign shareholder's current and past ownership of the
Fund. Absent legislation, after December 31, 2009, this "look-through" USRPI
treatment for distributions by the Fund, if it were either a USRPHC or would be
a USRPHC but for the operation of the exceptions referred to above, to foreign
shareholders will only apply to those distributions that, in turn, are
attributable to distributions received by the Fund from a lower-tier REIT that
the Fund is required to treat as USRPI gain in its hands.

In addition, if the Fund were a USRPHC or former USRPHC, it may be required to
withhold U.S. tax on the proceeds of a share redemption by a greater-than-5%
foreign shareholder, in which case such foreign shareholder generally would also
be required to file U.S. tax returns and pay any additional taxes due in
connection with the redemption.

The Fund generally does not expect that it will be a USRPHC or would be a USRPHC
but for the operation of the special exceptions referred to above. Foreign
shareholders should consult their tax advisors concerning the application of
these rules to their investment in the Fund.

In order to qualify for any exemptions from withholding described above or for
lower withholding tax rates under income tax treaties, or to establish an
exemption from backup withholding, a foreign shareholder must comply with
special certification and filing requirements relating to its non-US status
(including, in general, furnishing an IRS Form W-8BEN or substitute form).

A foreign shareholder may be subject to state and local tax and to the US
federal estate tax in addition to the US federal income tax referred to above.

Tax Shelter Reporting Regulations. Under Treasury regulations, if a shareholder
recognizes with respect to the Fund's shares a loss of $2 million or more for an
individual shareholder or $10 million or more for a corporate shareholder, the
shareholder must file with the IRS a disclosure statement on Form 8886. Direct
shareholders of portfolio securities are in many cases 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.

Tax Effects of the Fund's Main Investment Strategy

Exempt-Interest Dividends. The Fund is eligible to pay exempt-interest dividends
to its shareholders only for taxable years in which, at the close of each
quarter, at least 50% of the total value of the Fund's assets consists of
securities generating interest that is exempt from federal income tax under Code
section 103(a). The Fund intends to satisfy this requirement. Fund distributions
properly designated as exempt-interest dividends are not generally taxable to
Fund shareholders for US federal income tax purposes, but they may be subject to
state and local taxes. You are advised to consult with your tax advisor about
state and local tax matters. In addition, an investment in the Fund may result
in liability for the federal alternative minimum tax, both for individual and
corporate shareholders. For example, if the Fund invests in "private activity
bonds," certain shareholders may become subject to alternative minimum tax on
the part of the Fund's distributions derived from interest on such bonds. If the
Fund intends to be eligible to pay exempt-interest dividends, the Fund may be
limited in its ability to enter into taxable transactions involving forward
commitments, repurchase agreements, financial futures and options contracts on
financial futures, tax-exempt bond indices and other assets.

In general, exempt-interest dividends, if any, attributable to interest received
on certain private activity obligations and certain industrial development bonds
will not be tax-exempt to any shareholders who are "substantial users" of the
facilities financed by such obligations or bonds or who are "related persons" of
such substantial users.

A shareholder who receives Social Security or railroad retirement benefits,
should consult his or her tax advisor to determine what effect, if any, an
investment in the Fund may have on the federal taxation of such benefits.
Exempt-interest dividends are included in income for purposes of determining the
amount of benefits that are taxable.

Part or all of the interest on indebtedness, if any, incurred or continued by a
shareholder to purchase or carry shares of the Fund paying exempt-interest
dividends is not deductible. The portion of interest that is not deductible is
equal to the total interest paid or accrued on the indebtedness, multiplied by
the percentage of the Fund's total distributions (not including distributions
from net long-term capital gains) paid to the shareholder that are
exempt-interest dividends. Under rules used by the IRS to determine when
borrowed Funds are considered used for the purpose of purchasing or carrying
particular assets, the purchase of shares may be considered to have been made
with borrowed funds even though such Funds are not directly traceable to the
purchase of shares.

The Fund, which intends to be eligible to pay exempt-interest dividends, will
inform investors within 60 days of the Fund's fiscal year-end of the percentage
of its income distributions designated as exempt-interest dividends. The
percentage is applied uniformly to all distributions made during the year. The
percentage of income designated as exempt-interest dividends for any particular
distribution may be substantially different from the percentage of the Fund's
income that was tax-exempt during the period covered by the distribution.

Information  for  Massachusetts   Residents.   Individual  shareholders  of  DWS
Massachusetts  Tax-Free  Fund resident in  Massachusetts  will not be subject to
Massachusetts personal income tax on distributions received from the Fund to the
extent such distributions  constitute (1)  exempt-interest  dividends under Code
section  852(b)(5) which the Fund properly  identifies as consisting of interest
on tax-exempt  obligations of the Commonwealth of Massachusetts or its political
subdivisions or any agency or instrumentality of the foregoing, (2) Capital Gain
Dividends  under Code section  852(b)(3)  which the Fund properly  identifies as
capital gains  attributable  to tax-exempt  obligations of the  Commonwealth  of
Massachusetts or its political  subdivisions or any agency or instrumentality of
the  foregoing,   or  (3)  dividends  which  the  Fund  properly  identifies  as
attributable  to interest on  tax-exempt  obligations  of the United  States and
instrumentalities  or obligations issued by the Commonwealth of Puerto Rico, its
subdivisions or authorities,  or the governments of the Virgin Islands and Guam.
From time to time,  legislation  may be introduced or litigation  may arise that
would change the tax treatment of exempt-interest  dividends. Such litigation or
legislation  may have the effect of raising the state or other taxes  payable by
shareholders on such dividends.  Shareholders  should consult their tax advisors
for the current law on exempt-interest dividends.

Other distributions from the Fund, including those derived from taxable interest
income and long-term and short-term capital gains, generally will not be exempt
from Massachusetts personal income taxation except for distributions which
qualify as capital gain dividends under Code section 852(b)(3), and are properly
identified by the Fund as attributable to the sale of certain Massachusetts
obligations issued pursuant to legislation which specifically exempts capital
gain on the sale of such obligations from Massachusetts income taxation.

Fund distributions will not be excluded from net income, and shares of the Fund
will not be excluded from the net worth of intangible property corporations, for
purposes of computing the Massachusetts corporate excise tax.

General Considerations. Tax legislation in recent years has included several
provisions that may affect the supply of, and the demand for, tax-exempt bonds.
It is not possible to predict with certainty the effect of these recent tax law
changes upon the tax-exempt bond market, including the availability of
obligations appropriate for investment, nor is it possible to predict any
additional restrictions that may be enacted in the future.

The federal income tax discussion set forth above is for general information
only. Prospective investors should consult their tax advisors regarding the
specific federal tax consequences of purchasing, holding, and disposing of
shares of the Fund, as well as the effects of state, local and foreign tax law
and any proposed tax law changes.

Tax-Equivalent Yield

Tax-equivalent yield is the net annualized taxable yield needed to produce a
specified tax-exempt yield at a given tax rate based on a specified 30 day (or
one month) period assuming semiannual compounding of income. Tax-equivalent
yield is calculated by dividing that portion of a Fund's yield (as computed in
the yield description above) which is tax-exempt by one minus a stated income
tax rate and adding the product to that portion, if any, of the yield of the
Fund that is not tax-exempt.

Tax-Exempt Versus Taxable Yield. You may want to determine which investment --
tax-exempt or taxable -- will provide you with a higher after-tax return. To
determine the taxable equivalent yield, simply divide the yield from the
tax-exempt investment by the sum of 1 minus your marginal tax rate. The tables
below are provided for your convenience in making this calculation for selected
tax-exempt yields and taxable income levels. These yields are presented for
purposes of illustration only and are not representative of any yield the Fund
may generate. The tables are based upon current law as to the 2009 tax rates
schedules.






MASSACHUSETTS



<TABLE>
<CAPTION>
Tax Equivalent Yields
DWS Investments 2009

                                                                                                                          Combined
                                    Effective     Combined                                              Effective      Massachusetts
                        Effective   Federal    Massachusetts and                          Effective       Federal        and Federal
Taxable Income Single  State Rate    Rate      Federal Tax Bracket  Taxable Income Joint  State Rate      Rate           Tax Bracket

<C>                      <C>             <C>          <C>             <C>                   <C>             <C>              <C>
$33,950-$82,250        5.30%        25.00%         28.98%           $67,900-$137,050        5.30%          25.00%          28.98%
$82,250-$171,550       5.30%        28.00%         31.82%           $137,050-$208,850       5.30%          28.00%          31.82%
$171,550-$372,950      5.30%        33.00%         36.55%           $208,850-$372,950       5.30%          33.00%          36.55%
over $372,950          5.30%        35.00%         38.45%           over $372,950           5.30%          35.00%          38.45%

                    If your combined federal and state effective tax rate in 2008 is:

                    28.98%          31.82%       36.55%         38.45%              28.98%       31.82%        36.55%        38.45%

To match these
tax-free yields:    Your taxable investment would have to earn the following yield:

2.00%               2.82%           2.93%        3.15%          3.25%               2.82%        2.93%         3.15%          3.25%
3.00%               4.22%           4.40%        4.73%          4.87%               4.22%        4.40%         4.73%          4.87%
4.00%               5.63%           5.87%        6.30%          6.50%               5.63%        5.87%         6.30%          6.50%
5.00%               7.04%           7.33%        7.88%          8.12%               7.04%        7.33%         7.88%          8.12%
6.00%               8.45%           8.80%        9.46%          9.75%               8.45%        8.80%         9.46%          9.75%
7.00%               9.86%           10.27%       11.03%         11.37%              9.86%        10.27%        11.03%        11.37%
8.00%               11.26%          11.73%       12.61%         13.00%              11.26%       11.73%        12.61%        13.00%
9.00%               12.67%          13.20%       14.18%         14.62%              12.67%       13.20%        14.18%        14.62%

</TABLE>



Please note:

1)       This chart does not take into consideration any local or city tax
         rates.

2)       The effective state and federal tax rates are calculated using the
         highest marginal tax rate within the applicable tax bracket.

3)       The combined effective tax rate reflects a deduction for state income
         taxes on the federal return.

4)       Taxable income amounts represent taxable income as defined in the
         Internal Revenue Code. It is assumed that the definition of taxable
         income is the same under Massachusetts Personal Income Tax law;
         however, Massachusetts taxable income may vary due to differences in
         exemptions, itemized deductions, and other items.




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


                           BOARD MEMBERS 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.

<TABLE>
<CAPTION>
Independent Board Members
-------------------------

--------------------------------------------------------------------------------------------------------------------
<S>                               <C>                                                            <C>
 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
--------------------------------------------------------------------------------------------------------------------
Paul K. Freeman                   Consultant, World Bank/Inter-American Development Bank;               125
(1950)                            Governing Council of the Independent Directors Council
Chairperson since 2009, and       (governance, executive committees); formerly: Project Leader,
Board Member since 1993           International Institute for Applied Systems Analysis
                                  (1998-2001); Chief Executive Officer, The Eric Group, Inc.
                                  (environmental insurance) (1986-1998)
--------------------------------------------------------------------------------------------------------------------
John W. Ballantine (1946)         Retired; formerly: Executive Vice President and Chief Risk            125
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:               125
 Board Member since               Association of Public Television Stations; Becton Dickinson
 1990                             and Company(2) (medical technology company); Belo
                                  Corporation(2) (media company); Boston Museum of Science;
                                  Public Radio International; PRX, The Public Radio Exchange;
                                  The PBS Foundation; former Directorships: American Public
                                  Television; Concord Academy; New England Aquarium; Mass.
                                  Corporation for Educational Telecommunications; Committee for
                                  Economic Development; Public Broadcasting Service
--------------------------------------------------------------------------------------------------------------------
Dawn-Marie Driscoll (1946)        President, Driscoll Associates (consulting firm); Executive           125
Board Member since 1987           Fellow, Center for Business Ethics, Bentley University;
                                  formerly: Partner, Palmer & Dodge (1988-1990); Vice President
                                  of Corporate Affairs and General Counsel, Filene's
                                  (1978-1988); Directorships: Trustee of 20 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
                                  University; Trustee, Southwest Florida Community Foundation
                                  (charitable organization); former Directorships: Investment
                                  Company Institute (audit, executive, nominating committees)
                                  and Independent Directors Council (governance, executive
                                  committees)
--------------------------------------------------------------------------------------------------------------------
Keith R. Fox (1954)               Managing General Partner, Exeter Capital Partners (a series           125
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           125
(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,         125
(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)          Managing Director, Diamond Management & Technology                    125
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             125
(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); Director,
                                  CardioNet, Inc.(2) (2009-present) (health care); 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(2) (January
                                  2007-June 2007)
--------------------------------------------------------------------------------------------------------------------
William N. Searcy, Jr.            Private investor since October 2003; Trustee of 20 open-end           125
(1946)                            mutual funds managed by Sun Capital Advisers, Inc. (since
Board Member since                October 1998); formerly: Pension & Savings Trust Officer,
1993                              Sprint Corporation(2) (telecommunications) (November
                                  1989-September 2003)
--------------------------------------------------------------------------------------------------------------------
Jean Gleason Stromberg            Retired; formerly: Consultant (1997-2001); Director, US               125
(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;
                                  Business Leadership Council, Wellesley College; former
                                  Directorships: Service Source, Inc., 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         128
Board Member since 1999           firm) (1983 to present); Director, The Phoenix Boys Choir
                                  Association
--------------------------------------------------------------------------------------------------------------------

Interested Board Member
-----------------------

--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth, Position    Business Experience and                                        Number of Funds
 with the Trust and Length of                                                                    in DWS Fund
 Time Served(1)                   Directorships During the Past 5 Years                          Complex Overseen
--------------------------------------------------------------------------------------------------------------------
 Axel Schwarzer(3)                Managing Director(4), Deutsche Asset Management; Head of              125
 (1958)                           Deutsche Asset Management Americas; CEO of DWS Investments;
 Board Member since               relocated to Germany in July 2009 as Vice Chairman(4) of
 2006                             Deutsche Asset Management and Member of the Management Board
                                  of DWS Investments, responsible for Global Relationship
                                  Management; formerly: board member of DWS Investments,
                                  Germany (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(5)
-------------

--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth, Position    Business Experience and
 with the Trust and Length of
 Time Served(6)                   Directorships During the Past 5 Years
--------------------------------------------------------------------------------------------------------------------
 Michael G. Clark(7) (1965)       Managing Director(4), 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(8) (1962)          Director(4), Deutsche Asset Management
 Vice President and Secretary,
 1999-present
--------------------------------------------------------------------------------------------------------------------
 Paul H. Schubert(7) (1963)       Managing Director(4), 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)
--------------------------------------------------------------------------------------------------------------------
 Caroline Pearson(8) (1962)       Managing Director(4), Deutsche Asset Management
 Assistant Secretary,
 1997-present
--------------------------------------------------------------------------------------------------------------------
 Rita Rubin(9) (1970)             Vice President and Counsel, Deutsche Asset Management (since October 2007);
 Assistant Secretary,             formerly, Vice President, Morgan Stanley Investment Management (2004-2007);
 2009-present                     Attorney, Shearman & Sterling LLP (2004); Vice President and Associate General
                                  Counsel, UBS Global Asset Management (2001-2004)
--------------------------------------------------------------------------------------------------------------------
 Paul Antosca(8)                  Director(4), 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 (8)                   Director(4), Deutsche Asset Management (since 2007); formerly: Vice President,
 (1967)                           State Street Corporation (2002-2007)
 Assistant Treasurer,
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Diane Kenneally(8)               Director(4), Deutsche Asset Management
 (1966)
 Assistant Treasurer,
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Jason Vazquez(9) (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(9) (1962)           Managing Director(4), 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(9)        Director(4), 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)      A publicly held company with securities registered pursuant to
         Section 12 of the Securities Exchange Act of 1934.

(3)      The mailing address of Axel Schwarzer is DWS Investment GmbH, Mainzer
         Landstr. 178-190, Floor 5C, 60327 Frankfurt am Main, Germany. 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.

(4)      Executive title, not a board directorship.

(5)      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.

(6)      The length of time served  represents  the year in which the officer
         was first  elected in such  capacity  for one or more DWS funds.

(7)      Address:  345 Park Avenue, New York, New York 10154.

(8)      Address:  One Beacon Street, Boston, Massachusetts 02108.

(9)      Address:  280 Park Avenue, New York, New York 10017.

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 Investments Distributors, Inc.

 Paul H. Schubert:                Vice President
 Jason Vazquez:                   Vice President and AML Compliance Officer
 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 2008, the Audit Committee of the Fund's Board held six (6)
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 2008, the Nominating and Governance Committee of the Fund's Board
held four (4) 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. During the calendar year 2008, the Contract Review
Committee of the Fund's Board held seven (7) meetings.

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 2008, the Equity Oversight
Committee of the Fund's Board held five (5) 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, Kenneth
C. Froewiss and Robert H. Wadsworth. During the calendar year 2008, the
Fixed-Income Oversight Committee of the Fund's Board held five (5) 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 Marketing and Shareholder Services
Committee also considers matters relating to fund mergers and liquidations and
the organization of new funds. The members of the Marketing and Shareholder
Services Committee are Richard J. Herring (Chair), Dawn-Marie Driscoll (Vice
Chair), Rebecca W. Rimel, Jean Gleason Stromberg and Robert H. Wadsworth. During
the calendar year 2008, the Marketing/Distribution/Shareholder Service Committee
of the Fund's Board held four (4) 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 Dawn-Marie Driscoll (Chair), John W. Ballantine (Vice Chair), 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), Rebecca W. Rimel (Alternate) and William N.
Searcy, Jr. (Alternate). During the calendar year 2008, the Operations Committee
held four (4) meetings and the Valuation Sub-Committee held no meetings.

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 retainer fees and specified amounts for
various committee services and for the Board Chairperson. 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 2008. 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.

                                  Aggregate Compensation    Total Compensation
                                 from DWS Massachusetts        from Fund and
  Name of Board Member                Tax-Free Fund         DWS Fund Complex(1)
  --------------------                -------------         -------------------

  John W. Ballantine                       $744                    $237,500
  Henry P. Becton, Jr.(2)                 $1,753                   $246,000
  Dawn-Marie Driscoll(2)((3))             $2,065                   $292,500
  Keith R. Fox((2))                       $1,633                   $229,500
  Paul K. Freeman                          $790                    $255,000
  Kenneth C. Froewiss                     $1,608                   $226,750
  Richard J. Herring(2)                   $1,699                   $240,000
  William McClayton((4))                   $772                    $257,500
  Rebecca W. Rimel(2)                     $1,670                   $233,500
  William N. Searcy, Jr.                  $1,680                   $238,000
  Jean Gleason Stromberg                  $1,597                   $225,500
  Robert H. Wadsworth                      $772                    $273,500

(1)      The DWS fund complex is composed of 136 funds as of December 31, 2008.

(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 $8,000 for Mr. Becton, $2,000 for
         Ms. Driscoll, $2,000 for Mr. Fox, $2,000 for Dr. Herring and $8,000 for
         Ms. Rimel. These meeting fees were borne by the funds.

(3)      Includes $70,000 in annual retainer fees received by Ms. Driscoll as
         Chairperson of DWS funds.

(4)      Includes $15,000 paid to Mr. McClayton for numerous special meetings of
         an ad hoc committee of the former Chicago Board in connection with
         board consolidation initiatives.

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,
2008.

<TABLE>
<CAPTION>
                               Dollar Range of Beneficial            Aggregate Dollar Range of
                                        Ownership               Ownership in all Funds Overseen by
                                  in DWS Massachusetts                     Board Member
Board Member                          Tax-Free Fund                in the DWS Fund Complex((1))
------------                          -------------                ----------------------------

Independent Board Member:

<S>                                  <C>                                      <C>
John W. Ballantine                        None                                Over $100,000
Henry P. Becton, Jr.                 $1-$10,000                               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                    None                                Over $100,000
Robert H. Wadsworth                       None                                Over $100,000

Interested Board Member:

Axel Schwarzer                            None                                Over $100,000
</TABLE>

(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, 2008. 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).


<TABLE>
<CAPTION>
                                                                                Value of         Percent of
                              Owner and                                         Securities on    Class on an
Independent                   Relationship to                      Title of     an Aggregate     Aggregate
Board Member                  Board Member          Company        Class        Basis            Basis
------------                  ------------          -------        -----        -----            -----
<S>                             <C>                     <C>         <C>          <C>              <C>

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
</TABLE>

Securities Beneficially Owned

As of July 7, 2009, 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 July 7, 2009, no person owned of
record or beneficially 5% or more of any class of the Fund's outstanding shares,
except as noted below.

<TABLE>
<CAPTION>
DWS Massachusetts Tax Free Fund
-------------------------------

Name and Address of Investor Ownership                          Shares                      % of Total Shares
--------------------------------------                          ------                      -----------------

<S>                                                           <C>                           <C>
NFS LLC FBO                                                   105,066.30                    8.22% of Class A
JOYCE BUSH TTEE
JOYCE BUSH TR
U/W 11/8/02
EAST HARWICH MA  02645-1518

MORGAN STANLEY & CO.                                           92,688.76                    7.25% of Class A
HARBORSIDE FINANCIAL CENTER
PLAZA II 3RD FLOOR
JERSEY CITY NJ  07311

CHARLES SCHWAB & CO INC                                        84,115.59                    6.58% of Class A
SPECIAL CUSTODY ACCOUNT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMERS
ATTN MUTUAL FUNDS
SAN FRANCISCO CA  94104-4151

MORGAN STANLEY & CO.                                           18,809.53                    12.9% of Class B
HARBORSIDE FINANCIAL CENTER
PLAZA II 3RD FLOOR
JERSEY CITY NJ  07311

RALPH J CHISHOLM                                               14,306.15                    9.81% of Class B
WILMINGTON MA  01887-2209

LORRAINE E KETCHEN &                                           11,209.98                    7.69% of Class B
LESLIE A LEVESQUE JTWROS
SPRINGFIELD MA  01118-1876

LPL FINANCIAL SERVICES                                         8,424.45                     5.78% of Class B
SAN DIEGO CA  92121-1968

BEATRICE E GRANT TTEE                                          8,238.07                     5.65% of Class B
BEATRICE E GRANT TRUST
U/A 09/27/1991
SOMERSET MA  02726-3822

NFS LLC FEBO                                                   7,363.84                     5.05% of Class B
EDWARD F CALLAHAN
JOAN R CALLAHAN
WALTHAM MA  02451-0832

MORGAN STANLEY & CO.                                           76,022.69                    16.85% of Class C
HARBORSIDE FINANCIAL CENTER
PLAZA II 3RD FLOOR
JERSEY CITY NJ  07311

</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.

                                FUND ORGANIZATION

The DWS Massachusetts Tax-Free Fund is a non-diversified series of DWS State
Tax-Free 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
that was approved by shareholders in 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; and (d)
such additional matters as may be required by law 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 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.

                             PROXY VOTING GUIDELINES


The Fund has delegated proxy voting responsibilities to the Advisor, subject to
the Board's general oversight. The Advisor votes proxies pursuant to the proxy
voting policy and guidelines set forth in Appendix A to this SAI).

You may obtain information about how a fund voted proxies related to its
portfolio securities during the 12-month period ended June 30 by visiting the
Securities and Exchange Commission's Web site at www.sec.gov or by visiting our
Web site at: www.dws-investments.com (click on "proxy voting" at the bottom of
the page).




                              FINANCIAL STATEMENTS


The financial statements, including the investment portfolio, of DWS
Massachusetts Tax-Free 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 March 31, 2009, are
incorporated herein by reference and are hereby deemed to be a part of this
Statement of Additional Information.


                             ADDITIONAL INFORMATION

The CUSIP number of DWS Massachusetts Tax-Free Fund, Class A is 23337J104.

The CUSIP number of DWS Massachusetts Tax-Free Fund, Class B is 23337J203.

The CUSIP number of DWS Massachusetts Tax-Free Fund, Class C is 23337J302.

The Fund has a fiscal year end of March 31.

The Fund's prospectuses and this Statement of Additional Information omit
certain information contained in the Registration Statement which the Fund has
filed with the SEC under the Securities Act of 1933 and reference is hereby made
to the Registration Statement for further information with respect to 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 A -- PROXY VOTING GUIDELINES

       Deutsche Asset Management ("AM") Proxy Voting Policy and Guidelines


I.       INTRODUCTION

AM has adopted and implemented the following policies and procedures, which it
believes are reasonably designed to ensure that proxies are voted in the best
economic interest of clients, in accordance with its fiduciary duties and local
regulation. These Proxy Voting Policies, Procedures and Guidelines shall apply
to all accounts managed by US domiciled advisers and to all US client accounts
managed by non US regional offices. Non US regional offices are required to
maintain procedures and to vote proxies as may be required by law on behalf of
their non US clients. In addition, AM's proxy policies reflect the fiduciary
standards and responsibilities for ERISA accounts.

The attached guidelines represent a set of global recommendations that were
determined by the Global Proxy Voting Sub-Committee ("the GPVSC"). These
guidelines were developed to provide AM with a comprehensive list of
recommendations that represent how AM will generally vote proxies for its
clients. The recommendations derived from the application of these guidelines
are not intended to influence the various AM legal entities either directly or
indirectly by parent or affiliated companies. In addition, the organizational
structures and documents of the various AM legal entities allows, where
necessary or appropriate, the execution by individual AM subsidiaries of the
proxy voting rights independently of any DB parent or affiliated company. This
applies in particular to non U.S. fund management companies. The individuals
that make proxy voting decisions are also free to act independently, subject to
the normal and customary supervision by the management/boards of these AM legal
entities.


II.      AM'S PROXY VOTING RESPONSIBILITIES

Proxy votes are the property of AM's advisory clients.(1) As such, AM's
authority and responsibility to vote such proxies depend upon its contractual
relationships with its clients. AM has delegated responsibility for effecting
its advisory clients' proxy votes to Institutional Shareholder Services ("ISS"),
an independent third-party proxy voting specialist. ISS votes AM's advisory
clients' proxies in accordance with AM's proxy guidelines or AM's specific
instructions. Where a client has given specific instructions as to how a proxy
should be voted, AM will notify ISS to carry out those instructions. Where no
specific instruction exists, AM will follow the procedures in voting the proxies
set forth in this document. Certain Taft-Hartley clients may direct AM to have
ISS vote their proxies in accordance with Taft Hartley voting Guidelines

_____________________

(1)      For purposes of these Policies and Procedures, "clients" refers to
         persons or entities: for which AM serves as investment adviser or
         sub-adviser; for which AM votes proxies; and that have an economic or
         beneficial ownership interest in the portfolio securities of issuers
         soliciting such proxies.

Clients may in certain instances contract with their custodial agent and notify
AM that they wish to engage in securities lending transactions. In such cases,
it is the responsibility of the custodian to deduct the number of shares that
are on loan so that they do not get voted twice.


III.     POLICIES

1.       Proxy voting activities are conducted in the best economic interest of
         clients

AM has adopted the following policies and procedures to ensure that proxies are
voted in accordance with the best economic interest of its clients, as
determined by AM in good faith after appropriate review.

2.       The Global Proxy Voting Sub-Committee

The Global Proxy Voting Sub-Committee (the "GPVSC") is an internal working group
established by the applicable AM's Investment Risk Oversight Committee pursuant
to a written charter. The GPVSC is responsible for overseeing AM's proxy voting
activities, including:

(i)    adopting, monitoring and updating guidelines, attached as Exhibit A (the
       "Guidelines"), that provide how AM will generally vote proxies pertaining
       to a comprehensive list of common proxy voting matters;

(ii)   voting proxies where (A) the issues are not covered by specific client
       instruction or the Guidelines; (B) the Guidelines specify that the issues
       are to be determined on a case-by-case basis; or (C) where an exception
       to the Guidelines may be in the best economic interest of AM's clients;
       and

(iii)  monitoring the Proxy Vendor Oversight's proxy voting activities (see
       below).

AM's Proxy Vendor Oversight, a function of AM's Operations Group, is responsible
for coordinating with ISS to administer AM's proxy voting process and for voting
proxies in accordance with any specific client instructions or, if there are
none, the Guidelines, and overseeing ISS' proxy responsibilities in this regard.

3.       Availability of Proxy Voting Policies and Procedures and proxy voting
         record

Copies of these Policies and Procedures, as they may be updated from time to
time, are made available to clients as required by law and otherwise at AM's
discretion. Clients may also obtain information on how their proxies were voted
by AM as required by law and otherwise at AM's discretion; however, AM must not
selectively disclose its investment company clients' proxy voting records. The
Proxy Vendor Oversight will make proxy voting reports available to advisory
clients upon request. The investment companies' proxy voting records will be
disclosed to shareholders by means of publicly-available annual filings of each
company's proxy voting record for 12-month periods ended June 30 (see
"Recordkeeping" below), if so required by relevant law.


IV.      PROCEDURES

The key aspects of AM's proxy voting process are as follows:

1.       The GPVSC's Proxy Voting Guidelines

The Guidelines set forth the GPVSC's standard voting positions on a
comprehensive list of common proxy voting matters. The GPVSC has developed, and
continues to update the Guidelines based on consideration of current corporate
governance principles, industry standards, client feedback, and the impact of
the matter on issuers and the value of the investments.

The GPVSC will review the Guidelines as necessary to support the best economic
interests of AM's clients and, in any event, at least annually. The GPVSC will
make changes to the Guidelines, whether as a result of the annual review or
otherwise, taking solely into account the best economic interests of clients.
Before changing the Guidelines, the GPVSC will thoroughly review and evaluate
the proposed change and the reasons therefore, and the GPVSC Chair will ask
GPVSC members whether anyone outside of the AM organization (but within Deutsche
Bank and its affiliates) or any entity that identifies itself as a AM advisory
client has requested or attempted to influence the proposed change and whether
any member has a conflict of interest with respect to the proposed change. If
any such matter is reported to the GPVSC Chair, the Chair will promptly notify
the Conflicts of Interest Management Sub-Committee (see below) and will defer
the approval, if possible. Lastly, the GPVSC will fully document its rationale
for approving any change to the Guidelines.

The Guidelines may reflect a voting position that differs from the actual
practices of the public company(ies) within the Deutsche Bank organization or of
the investment companies for which AM or an affiliate serves as investment
adviser or sponsor. Investment companies, particularly closed-end investment
companies, are different from traditional operating companies. These differences
may call for differences in voting positions on the same matter. Further, the
manner in which AM votes investment company proxies may differ from proposals
for which a AM-advised or sponsored investment company solicits proxies from its
shareholders. As reflected in the Guidelines, proxies solicited by closed-end
(and open-end) investment companies are generally voted in accordance with the
pre-determined guidelines of ISS. See Section IV.3.B.

Funds ("Underlying Funds") in which Topiary Fund Management Fund of Funds (each,
a "Fund") invest, may from time to time seek to revise their investment terms
(i.e. liquidity, fees, etc.) or investment structure. In such event, the
Underlying Funds may require approval/consent from its investors to effect the
relevant changes. Topiary Fund Management has adopted Proxy Voting Procedures
which outline the process for these approvals.

2.       Specific proxy voting decisions made by the GPVSC

The Proxy Vendor Oversight will refer to the GPVSC all proxy proposals (i) that
are not covered by specific client instructions or the Guidelines; or (ii) that,
according to the Guidelines, should be evaluated and voted on a case-by-case
basis.

Additionally, if, the Proxy Vendor Oversight, the GPVSC Chair or any member of
the GPVSC, a portfolio manager, a research analyst or a sub-adviser believes
that voting a particular proxy in accordance with the Guidelines may not be in
the best economic interests of clients, that individual may bring the matter to
the attention of the GPVSC Chair and/or the Proxy Vendor Oversight.(2)

_____________________

(2)      The Proxy Vendor Oversight generally monitors upcoming proxy
         solicitations for heightened attention from the press or the industry
         and for novel or unusual proposals or circumstances, which may prompt
         the Proxy Vendor Oversight to bring the solicitation to the attention
         of the GPVSC Chair. AM portfolio managers, AM research analysts and
         sub-advisers also may bring a particular proxy vote to the attention of
         the GPVSC Chair, as a result of their ongoing monitoring of portfolio
         securities held by advisory clients and/or their review of the periodic
         proxy voting record reports that the GPVSC Chair distributes to AM
         portfolio managers and AM research analysts.

If the Proxy Vendor Oversight refers a proxy proposal to the GPVSC or the GPVSC
determines that voting a particular proxy in accordance with the Guidelines is
not in the best economic interests of clients, the GPVSC will evaluate and vote
the proxy, subject to the procedures below regarding conflicts.

The GPVSC endeavors to hold meetings to decide how to vote particular proxies
sufficiently before the voting deadline so that the procedures below regarding
conflicts can be completed before the GPVSC's voting determination.

3.       Certain proxy votes may not be cast

In some cases, the GPVSC may determine that it is in the best economic interests
of its clients not to vote certain proxies. If the conditions below are met with
regard to a proxy proposal, AM will abstain from voting:

o        Neither the Guidelines nor specific client instructions cover an issue;

o        ISS does not make a recommendation on the issue;

o        The GPVSC cannot convene on the proxy proposal at issue to make a
         determination as to what would be in the client's best interest. (This
         could happen, for example, if the Conflicts of Interest Management
         Sub-committee found that there was a material conflict or if despite
         all best efforts being made, the GPVSC quorum requirement could not be
         met).

In addition, it is AM's policy not to vote proxies of issuers subject to laws of
those jurisdictions that impose restrictions upon selling shares after proxies
are voted, in order to preserve liquidity. In other cases, it may not be
possible to vote certain proxies, despite good faith efforts to do so. For
example, some jurisdictions do not provide adequate notice to shareholders so
that proxies may be voted on a timely basis. Voting rights on securities that
have been loaned to third-parties transfer to those third-parties, with loan
termination often being the only way to attempt to vote proxies on the loaned
securities. Lastly, the GPVSC may determine that the costs to the client(s)
associated with voting a particular proxy or group of proxies outweighs the
economic benefits expected from voting the proxy or group of proxies.

The Proxy Vendor Oversight will coordinate with the GPVSC Chair regarding any
specific proxies and any categories of proxies that will not or cannot be voted.
The reasons for not voting any proxy shall be documented.

4.       Conflict of Interest Procedures

A. Procedures to Address Conflicts of Interest and Improper Influence

Overriding Principle. In the limited circumstances where the GPVSC votes
proxies,(3) the GPVSC will vote those proxies in accordance with what it, in
good faith, determines to be the best economic interests of AM's clients.(4)

_____________________

(3)      As mentioned above, the GPVSC votes proxies (i) where neither a
         specific client instruction nor a Guideline directs how the proxy
         should be voted, (ii) where the Guidelines specify that an issue is to
         be determined on a case by case basis or (iii) where voting in
         accordance with the Guidelines may not be in the best economic
         interests of clients.

(4)      The Proxy Vendor Oversight, who serves as the non-voting secretary of
         the GPVSC, may receive routine calls from proxy solicitors and other
         parties interested in a particular proxy vote. Any contact that
         attempts to exert improper pressure or influence shall be reported to
         the Conflicts of Interest Management Sub-Committee.

Independence of the GPVSC. As a matter of Compliance policy, the GPVSC and the
Proxy Vendor Oversight are structured to be independent from other parts of
Deutsche Bank. Members of the GPVSC and the employee responsible for Proxy
Vendor Oversight are employees of AM. As such, they may not be subject to the
supervision or control of any employees of Deutsche Bank Corporate and
Investment Banking division ("CIB"). Their compensation cannot be based upon
their contribution to any business activity outside of AM without prior approval
of Legal and Compliance. They can have no contact with employees of Deutsche
Bank outside of the Private Client and Asset Management division ("PCAM")
regarding specific clients, business matters or initiatives without the prior
approval of Legal and Compliance. They furthermore may not discuss proxy votes
with any person outside of AM (and within AM only on a need to know basis).

Conflict Review Procedures. There will be a committee (the "Conflicts of
Interest Management Sub-Committee") established within AM that will monitor for
potential material conflicts of interest in connection with proxy proposals that
are to be evaluated by the GPVSC. Promptly upon a determination that a vote
shall be presented to the GPVSC, the GPVSC Chair shall notify the Conflicts of
Interest Management Sub-Committee. The Conflicts of Interest Management
Sub-Committee shall promptly collect and review any information deemed
reasonably appropriate to evaluate, in its reasonable judgment, if AM or any
person participating in the proxy voting process has, or has the appearance of,
a material conflict of interest. For the purposes of this policy, a conflict of
interest shall be considered "material" to the extent that a reasonable person
could expect the conflict to influence, or appear to influence, the GPVSC's
decision on the particular vote at issue. GPVSC should provide the Conflicts of
Interest Management Sub-Committee a reasonable amount of time (no less than 24
hours) to perform all necessary and appropriate reviews. To the extent that a
conflicts review can not be sufficiently completed by the Conflicts of Interest
Management Sub-Committee the proxies will be voted in accordance with the
standard guidelines.

The information considered by the Conflicts of Interest Management Sub-Committee
may include without limitation information regarding (i) AM client
relationships; (ii) any relevant personal conflict known by the Conflicts of
Interest Management Sub-Committee or brought to the attention of that
sub-committee; (iii) and any communications with members of the GPVSC (or anyone
participating or providing information to the GPVSC) and any person outside of
the AM organization (but within Deutsche Bank and its affiliates) or any entity
that identifies itself as a AM advisory client regarding the vote at issue. In
the context of any determination, the Conflicts of Interest Management
Sub-Committee may consult with, and shall be entitled to rely upon, all
applicable outside experts, including legal counsel.

Upon completion of the investigation, the Conflicts of Interest Management
Sub-Committee will document its findings and conclusions. If the Conflicts of
Interest Management Sub-Committee determines that (i) AM has a material conflict
of interest that would prevent it from deciding how to vote the proxies
concerned without further client consent or (ii) certain individuals should be
recused from participating in the proxy vote at issue, the Conflicts of Interest
Management Sub-Committee will so inform the GPVSC chair.

If notified that AM has a material conflict of interest as described above, the
GPVSC chair will obtain instructions as to how the proxies should be voted
either from (i) if time permits, the effected clients, or (ii) in accordance
with the standard guidelines. If notified that certain individuals should be
recused from the proxy vote at issue, the GPVSC Chair shall do so in accordance
with the procedures set forth below.

Note: Any AM employee who becomes aware of a potential, material conflict of
interest in respect of any proxy vote to be made on behalf of clients shall
notify Compliance. Compliance shall call a meeting of the conflict review
committee to evaluate such conflict and determine a recommended course of
action.

Procedures to be followed by the GPVSC. At the beginning of any discussion
regarding how to vote any proxy, the GPVSC Chair (or his or her delegate) will
inquire as to whether any GPVSC member (whether voting or ex officio) or any
person participating in the proxy voting process has a personal conflict of
interest or has actual knowledge of an actual or apparent conflict that has not
been reported to the Conflicts of Interest Management Sub-Committee.

The GPVSC Chair also will inquire of these same parties whether they have actual
knowledge regarding whether any director, officer or employee outside of the AM
organization (but within Deutsche Bank and its affiliates) or any entity that
identifies itself as a AM advisory client, has: (i) requested that AM, the Proxy
Vendor Oversight (or any member thereof) or a GPVSC member vote a particular
proxy in a certain manner; (ii) attempted to influence AM, the Proxy Vendor
Oversight (or any member thereof), a GPVSC member or any other person in
connection with proxy voting activities; or (iii) otherwise communicated with a
GPVSC member or any other person participating or providing information to the
GPVSC regarding the particular proxy vote at issue, and which incident has not
yet been reported to the Conflicts of Interest Management Sub- Committee.

If any such incidents are reported to the GPVSC Chair, the Chair will promptly
notify the Conflicts of Interest Management Sub-Committee and, if possible, will
delay the vote until the Conflicts of Interest Management Sub-Committee can
complete the conflicts report. If a delay is not possible, the Conflicts of
Interest Management Sub-Committee will instruct the GPVSC whether anyone should
be recused from the proxy voting process, or whether AM should vote the proxy in
accordance with the standard guidelines, seek instructions as to how to vote the
proxy at issue from ISS or, if time permits, the effected clients. These
inquiries and discussions will be properly reflected in the GPVSC's minutes.

Duty to Report. Any AM employee, including any GPVSC member (whether voting or
ex officio), that is aware of any actual or apparent conflict of interest
relevant to, or any attempt by any person outside of the AM organization (but
within Deutsche Bank and its affiliates) or any entity that identifies itself as
a AM advisory client to influence, how AM votes its proxies has a duty to
disclose the existence of the situation to the GPVSC Chair (or his or her
designee) and the details of the matter to the Conflicts of Interest Management
Sub-Committee. In the case of any person participating in the deliberations on a
specific vote, such disclosure should be made before engaging in any activities
or participating in any discussion pertaining to that vote.

Recusal of Members. The GPVSC will recuse from participating in a specific proxy
vote any GPVSC members (whether voting or ex officio) and/or any other person
who (i) are personally involved in a material conflict of interest; or (ii) who,
as determined by the Conflicts of Interest Management Sub-Committee, have actual
knowledge of a circumstance or fact that could effect their independent
judgment, in respect of such vote. The GPVSC will also exclude from
consideration the views of any person (whether requested or volunteered) if the
GPVSC or any member thereof knows, or if the Conflicts of Interest Management
Sub-Committee has determined, that such other person has a material conflict of
interest with respect to the particular proxy, or has attempted to influence the
vote in any manner prohibited by these policies.

If, after excluding all relevant GPVSC voting members pursuant to the paragraph
above, there are three or more GPVSC voting members remaining, those remaining
GPVSC members will determine how to vote the proxy in accordance with these
Policies and Procedures. If there are fewer than three GPVSC voting members
remaining, the GPVSC Chair will vote the proxy in accordance with the standard
guidelines, will obtain instructions as to how to have the proxy voted from, if
time permits, the effected clients and otherwise from ISS.

B.       Investment Companies and Affiliated Public Companies

Investment Companies. As reflected in the Guidelines, all proxies solicited by
open-end and closed-end investment companies are voted in accordance with the
pre-determined guidelines of ISS, unless the investment company client directs
AM to vote differently on a specific proxy or specific categories of proxies.
However, regarding investment companies for which AM or an affiliate serves as
investment adviser or principal underwriter, such proxies are voted in the same
proportion as the vote of all other shareholders (i.e., "mirror" or "echo"
voting). Master fund proxies solicited from feeder funds are voted in accordance
with applicable provisions of Section 12 of the Investment Company Act of 1940.

Subject to participation agreements with certain Exchange Traded Funds ("ETF")
issuers that have received exemptive orders from the U.S. Securities and
Exchange Commission allowing investing DWS funds to exceed the limits set forth
in Section 12(d)(1)(A) and (B) of the Investment Company Act of 1940, DeAM will
echo vote proxies for ETFs in which Deutsche Bank holds more than 25% of
outstanding voting shares globally when required to do so by participation
agreements and SEC orders.

Affiliated Public Companies. For proxies solicited by non-investment company
issuers of or within the Deutsche Bank organization, e.g., Deutsche bank itself,
these proxies will be voted in the same proportion as the vote of other
shareholders (i.e., "mirror" or "echo" voting).

Note: With respect to the QP Trust (not registered under the Investment Company
Act of 1940), the Fund is not required to engage in echo voting and the
investment adviser will use these Guidelines, and may determine, with respect to
the QP Trust, to vote contrary to the positions in the Guidelines, consistent
with the Fund's best interest.

C.       Other Procedures That Limit Conflicts of Interest

AM and other entities in the Deutsche Bank organization have adopted a number of
policies, procedures and internal controls that are designed to avoid various
conflicts of interest, including those that may arise in connection with proxy
voting, including:

o        Deutsche Bank Americas Restricted Activities Policy. This policy
         provides for, among other things, independence of AM employees from
         CIB, and information barriers between AM and other affiliates.
         Specifically, no AM employee may be subject to the supervision or
         control of any employee of CIB. No AM employee shall have his or her
         compensation based upon his or her contribution to any business
         activity within the Bank outside of the business of AM, without the
         prior approval of Legal or Compliance. Further, no employee of CIB
         shall have any input into the compensation of a AM employee without the
         prior approval of Legal or Compliance. Under the information barriers
         section of this policy, as a general rule, AM employees who are
         associated with the investment process should have no contact with
         employees of Deutsche Bank or its affiliates, outside of PCAM,
         regarding specific clients, business matters, or initiatives. Further,
         under no circumstances should proxy votes be discussed with any
         Deutsche Bank employee outside of AM (and should only be discussed on a
         need-to-know basis within AM).

Other relevant internal policies include the Deutsche Bank Americas Code of
Professional Conduct, the Deutsche Asset Management Information Sharing
Procedures, the Deutsche Asset Management Code of Ethics, the Sarbanes-Oxley
Senior Officer Code of Ethics, and the Deutsche Bank Group Code of Conduct. The
GPVSC expects that these policies, procedures and internal controls will greatly
reduce the chance that the GPVSC (or, its members) would be involved in, aware
of or influenced by, an actual or apparent conflict of interest.


V.       RECORDKEEPING

At a minimum, the following types of records must be properly maintained and
readily accessible in order to evidence compliance with this policy.

o        AM will maintain a record of each vote cast by AM that includes among
         other things, company name, meeting date, proposals presented, vote
         cast and shares voted.

o        The Proxy Vendor Oversight maintains records for each of the proxy
         ballots it votes. Specifically, the records include, but are not
         limited to:

         -        The proxy statement (and any additional solicitation
                  materials) and relevant portions of annual statements.

         -        Any additional information considered in the voting process
                  that may be obtained from an issuing company, its agents or
                  proxy research firms.

         -        Analyst worksheets created for stock option plan and share
                  increase analyses.

         -        Proxy Edge print-screen of actual vote election.

o        AM will retain these Policies and Procedures and the Guidelines; will
         maintain records of client requests for proxy voting information; and
         will retain any documents the Proxy Vendor Oversight or the GPVSC
         prepared that were material to making a voting decision or that
         memorialized the basis for a proxy voting decision.

o        The GPVSC also will create and maintain appropriate records documenting
         its compliance with these Policies and Procedures, including records of
         its deliberations and decisions regarding conflicts of interest and
         their resolution.

o        With respect to AM's investment company clients, ISS will create and
         maintain records of each company's proxy voting record for 12-month
         periods ended June 30. AM will compile the following information for
         each matter relating to a portfolio security considered at any
         shareholder meeting held during the period covered by the report and
         with respect to which the company was entitled to vote:

         -        The name of the issuer of the portfolio security;

         -        The exchange ticker symbol of the portfolio security (if
                  symbol is available through reasonably practicable means);

         -        The Council on Uniform Securities Identification Procedures
                  number for the portfolio security (if the number is available
                  through reasonably practicable means);

         -        The shareholder meeting date;

         -        A brief identification of the matter voted on;

         -        Whether the matter was proposed by the issuer or by a security
                  holder;

         -        Whether the company cast its vote on the matter;

         -        How the company cast its vote (e.g., for or against proposal,
                  or abstain; for or withhold regarding election of directors);
                  and

         -        Whether the company cast its vote for or against management.

Note: This list is intended to provide guidance only in terms of the records
that must be maintained in accordance with this policy. In addition, please note
that records must be maintained in accordance with the applicable AM Records
Management Policy.

With respect to electronically stored records, "properly maintained" is defined
as complete, authentic (unalterable) usable and backed-up. At a minimum, records
should be retained for a period of not less than six years (or longer, if
necessary to comply with applicable regulatory requirements), the first three
years in an appropriate AM office.


VI.      THE GPVSC'S OVERSIGHT ROLE

In addition to adopting the Guidelines and making proxy voting decisions on
matters referred to it as set forth above, the GPVSC will monitor the proxy
voting process by reviewing summary proxy information presented by ISS. The
GPVSC will use this review process to determine, among other things, whether any
changes should be made to the Guidelines. This review will take place at least
quarterly and will be documented in the GPVSC's minutes.


Attachment A - Global Proxy Voting Guidelines







                            Deutsche Asset Management

                         Global Proxy Voting Guidelines



                             As Amended October 2008


                                [GRAPHIC OMITTED]
Table of contents

I        Board Of Directors And Executives

         A        Election Of Directors

         B        Classified Boards Of Directors

         C        Board And Committee Independence

         D        Liability And Indemnification Of Directors

         E        Qualifications Of Directors

         F        Removal Of Directors And Filling Of Vacancies

         G        Proposals To Fix The Size Of The Board

         H        Proposals to Restrict Chief Executive Officer's Service on

                  Multiple Boards

         I        Proposals to Restrict Supervisory Board Members Service on

                  Multiple Boards

         J        Proposals to Establish Audit Committees

II       Capital Structure

         A        Authorization Of Additional Shares

         B        Authorization Of "Blank Check" Preferred Stock

         C        Stock Splits/Reverse Stock Splits

         D        Dual Class/Supervoting Stock

         E        Large Block Issuance

         F        Recapitalization Into A Single Class Of Stock

         G        Share Repurchases

         H        Reductions In Par Value

III      Corporate Governance Issues

         A        Confidential Voting

         B        Cumulative Voting

         C        Supermajority Voting Requirements

         D        Shareholder Right To Vote

IV       Compensation

         A        Establishment of a Remuneration Committee

         B        Executive And Director Stock Option Plans

         C        Employee Stock Option/Purchase Plans

         D        Golden Parachutes

         E        Proposals To Limit Benefits Or Executive Compensation

         F        Option Expensing

         G        Management board election and motion

         H        Remuneration (variable pay)

         I        Long-term incentive plans

         J        Shareholder Proposals Concerning "Pay For Superior
                  Performance"

         K        Executive Compensation Advisory

V        Anti-Takeover Related Issues

         A        Shareholder Rights Plans ("Poison Pills")

         B        Reincorporation

         C        Fair-Price Proposals

         D        Exemption From State Takeover Laws

         E        Non-Financial Effects Of Takeover Bids

VI       Mergers & Acquisitions

VII      Social & Political Issues

         A        Labor & Human Rights

         B        Diversity & Equality

         C        Health & Safety

         D        Government/Military

         E        Tobacco

VIII     Environmental Issues

IX       Miscellaneous Items

         A        Ratification Of Auditors

         B        Limitation Of Non-Audit Services Provided By Independent
                  Auditor

         C        Audit Firm Rotation

         D        Transaction Of Other Business

         E        Motions To Adjourn The Meeting

         F        Bundled Proposals

         G        Change Of Company Name

         H        Proposals Related To The Annual Meeting

         I        Reimbursement Of Expenses Incurred From Candidate Nomination

         J        Investment Company Proxies

         K        International Proxy Voting


These Guidelines may reflect a voting position that differs from the actual
practices of the public company (ies) within the Deutsche Bank organization or
of the investment companies for which AM or an affiliate serves as investment
adviser or sponsor.

NOTE: Because of the unique structure and regulatory scheme applicable to
closed-end investment companies, the voting guidelines (particularly those
related to governance issues) generally will be inapplicable to holdings of
closed-end investment companies. As a result, determinations on the appropriate
voting recommendation for closed-end investment company shares will be made on a
case-by-case basis.


I.       Board of Directors and Executives

A.       Election of Directors

Routine: AM Policy is to vote "for" the uncontested election of directors. Votes
for a director in an uncontested election will be withheld in cases where a
director has shown an inability to perform his/her duties in the best interests
of the shareholders.

Proxy contest: In a proxy contest involving election of directors, a
case-by-case voting decision will be made based upon analysis of the issues
involved and the merits of the incumbent and dissident slates of directors. AM
will incorporate the decisions of a third party proxy research vendor,
currently, Institutional Shareholder Services ("ISS") subject to review by the
Proxy Voting Sub-Committee (GPVSC) as set forth in the AM's Proxy Voting
Policies and Procedures.

Rationale: The large majority of corporate directors fulfill their fiduciary
obligation and in most cases support for management's nominees is warranted. As
the issues relevant to a contested election differ in each instance, those cases
must be addressed as they arise.

B.       Classified Boards of Directors

AM policy is to vote against proposals to classify the board and for proposals
to repeal classified boards and elect directors annually.

Rationale: Directors should be held accountable on an annual basis. By
entrenching the incumbent board, a classified board may be used as an
anti-takeover device to the detriment of the shareholders in a hostile take-over
situation.

C.       Board and Committee Independence

AM policy is to vote:

1.       "For" proposals that require that a certain percentage (majority up to
         66 2/3%) of members of a board of directors be comprised of independent
         or unaffiliated directors.

2.       "For" proposals that require all members of a company's compensation,
         audit, nominating, or other similar committees be comprised of
         independent or unaffiliated directors.

3.       "Against" shareholder proposals to require the addition of special
         interest, or constituency, representatives to boards of directors.

4.       "For" separation of the Chairman and CEO positions.

5.       "Against" proposals that require a company to appoint a Chairman who is
         an independent director.

Rationale: Board independence is a cornerstone of effective governance and
accountability. A board that is sufficiently independent from management assures
that shareholders' interests are adequately represented. However, the Chairman
of the board must have sufficient involvement in and experience with the
operations of the company to perform the functions required of that position and
lead the company.

No director qualifies as 'independent' unless the board of directors
affirmatively determines that the director has no material relationship with the
listed company (either directly or as a partner, shareholder or officer of an
organization that has a relationship with the company).

Whether a director is in fact not "independent" will depend on the laws and
regulations of the primary market for the security and the exchanges, if any, on
which the security trades.

D.       Liability and Indemnification of Directors

AM policy is to vote "for" management proposals to limit directors' liability
and to broaden the indemnification of directors, unless broader indemnification
or limitations on directors' liability would effect shareholders' interests in
pending litigation.

Rationale: While shareholders want directors and officers to be responsible for
their actions, it is not in the best interests of the shareholders for them to
be to risk averse. If the risk of personal liability is too great, companies may
not be able to find capable directors willing to serve. We support expanding
coverage only for actions taken in good faith and not for serious violations of
fiduciary obligation or negligence.

E.       Qualifications of Directors

AM policy is to follow management's recommended vote on either management or
shareholder proposals that set retirement ages for directors or require specific
levels of stock ownership by directors.

Rationale: As a general rule, the board of directors, and not the shareholders,
is most qualified to establish qualification policies.

F.       Removal of Directors and Filling of Vacancies

AM policy is to vote "against" proposals that include provisions that directors
may be removed only for cause or proposals that include provisions that only
continuing directors may fill board vacancies.

Rationale: Differing state statutes permit removal of directors with or without
cause. Removal of directors for cause usually requires proof of self-dealing,
fraud or misappropriation of corporate assets, limiting shareholders' ability to
remove directors except under extreme circumstances. Removal without cause
requires no such showing.

Allowing only incumbent directors to fill vacancies can serve as an
anti-takeover device, precluding shareholders from filling the board until the
next regular election.

G.       Proposals to Fix the Size of the Board

AM policy is to vote:

1.       "For" proposals to fix the size of the board unless: (a) no specific
         reason for the proposed change is given; or (b) the proposal is part of
         a package of takeover defenses.

2.       "Against" proposals allowing management to fix the size of the board
         without shareholder approval.

Rationale: Absent danger of anti-takeover use, companies should be granted a
reasonable amount of flexibility in fixing the size of its board.

H.       Proposals to Restrict Chief Executive Officer's Service on Multiple
         Boards

AM policy is to vote "For" proposals to restrict a Chief Executive Officer from
serving on more than three outside boards of directors.

Rationale: Chief Executive Officer must have sufficient time to ensure that
shareholders' interests are represented adequately.

Note: A director's service on multiple closed-end fund boards within a fund
complex are treated as service on a single Board for the purpose of the proxy
voting guidelines.

I.       Proposals to Restrict Supervisory Board Members Service on Multiple
         Boards (For FFT Securities)

AM policy is to vote "for" proposals to restrict a Supervisory Board Member from
serving on more than five supervisory boards.

Rationale: We consider a strong, independent and knowledgeable supervisory board
as important counter-balance to executive management to ensure that the
interests of shareholders are fully reflected by the company.

Full information should be disclosed in the annual reports and accounts to allow
all shareholders to judge the success of the supervisory board controlling their
company.

Supervisory Board Member must have sufficient time to ensure that shareholders'
interests are represented adequately.

Note: A director's service on multiple closed-end fund boards within a fund
complex are treated as service on a single Board for the purpose of the proxy
voting guidelines.

J.       Proposals to Establish Audit Committees (For FFT and U.S. Securities)

AM policy is to vote "for"  proposals  that require the  establishment  of audit
committees.

Rationale: The audit committee should deal with accounting and risk management
related questions, verifies the independence of the auditor with due regard to
possible conflicts of interest. It also should determine the procedure of the
audit process.


II.      Capital Structure

A.       Authorization of Additional Shares (For U.S. Securities)

AM policy is to vote "for" proposals to increase the authorization of existing
classes of stock that do not exceed a 3:1 ratio of shares authorized to shares
outstanding for a large cap company, and do not exceed a 4:1 ratio of shares
authorized to shares outstanding for a small-midcap company (companies having a
market capitalization under one billion U.S. dollars.).

Rationale: While companies need an adequate number of shares in order to carry
on business, increases requested for general financial flexibility must be
limited to protect shareholders from their potential use as an anti-takeover
device. Requested increases for specifically designated, reasonable business
purposes (stock split, merger, etc.) will be considered in light of those
purposes and the number of shares required.

B.       Authorization of "Blank Check" Preferred Stock (For U.S. Securities)

AM policy is to vote:

1.   "Against" proposals to create blank check preferred stock or to increase
     the number of authorized shares of blank check preferred stock unless the
     company expressly states that the stock will not be used for anti-takeover
     purposes and will not be issued without shareholder approval.

2.   "For" proposals mandating shareholder approval of blank check stock
     placement.

Rationale: Shareholders should be permitted to monitor the issuance of classes
of preferred stock in which the board of directors is given unfettered
discretion to set voting, dividend, conversion and other rights for the shares
issued.

C.       Stock Splits/Reverse Stock Splits

AM policy is to vote "for" stock splits if a legitimate business purpose is set
forth and the split is in the shareholders' best interests. A vote is cast "for"
a reverse stock split only if the number of shares authorized is reduced in the
same proportion as the reverse split or if the effective increase in authorized
shares (relative to outstanding shares) complies with the proxy guidelines for
common stock increases (see, Section II.A, above.)

Rationale: Generally, stock splits do not detrimentally effect shareholders.
Reverse stock splits, however, may have the same result as an increase in
authorized shares and should be analyzed accordingly.

D.       Dual Class/Supervoting Stock

AM policy is to vote "against" proposals to create or authorize additional
shares of super-voting stock or stock with unequal voting rights.

Rationale: The "one share, one vote" principal ensures that no shareholder
maintains a voting interest exceeding their equity interest in the company.

E.       Large Block Issuance (For U.S. Securities)

AM policy is to address large block issuances of stock on a case-by-case basis,
incorporating the recommendation of an independent third party proxy research
firm (currently ISS) subject to review by the GPVSC as set forth in AM's Proxy
Policies and Procedures.

Additionally, AM supports proposals requiring shareholder approval of large
block issuances.

Rationale: Stock issuances must be reviewed in light of the business
circumstances leading to the request and the potential impact on shareholder
value.

F.       Recapitalization into a Single Class of Stock

AM policy is to vote "for" recapitalization plans to provide for a single class
of common stock, provided the terms are fair, with no class of stock being
unduly disadvantaged.

Rationale: Consolidation of multiple classes of stock is a business decision
that may be left to the board and/management if there is no adverse effect on
shareholders.

G.       Share Repurchases

AM policy is to vote "for" share repurchase plans provided all shareholders are
able to participate on equal terms.

Rationale: Buybacks are generally considered beneficial to shareholders because
they tend to increase returns to the remaining shareholders.

H.       Reductions in Par Value

AM policy is to vote "for" proposals to reduce par value, provided a legitimate
business purpose is stated (e.g., the reduction of corporate tax
responsibility.)

Rationale: Usually, adjustments to par value are a routine financial decision
with no substantial impact on shareholders.


III.     Corporate Governance Issues

A.       Confidential Voting

AM policy is to vote "for" proposals to provide for confidential voting and
independent tabulation of voting results and to vote "against" proposals to
repeal such provisions.

Rationale: Confidential voting protects the privacy rights of all shareholders.
This is particularly important for employee-shareholders or shareholders with
business or other affiliations with the company, who may be vulnerable to
coercion or retaliation when opposing management. Confidential voting does not
interfere with the ability of corporations to communicate with all shareholders,
nor does it prohibit shareholders from making their views known directly to
management.

B.       Cumulative Voting (For U.S. Securities)

AM policy is to vote "against" shareholder proposals requesting cumulative
voting and "for" management proposals to eliminate it. The protections afforded
shareholders by cumulative voting are not necessary when a company has a history
of good performance and does not have a concentrated ownership interest.
Accordingly, a vote is cast "against" cumulative voting and "for" proposals to
eliminate it if:

a)       The company has a five year return on investment greater than the
         relevant industry index,

b)       All directors and executive officers as a group beneficially own less
         than 10% of the outstanding stock, and

c)       No shareholder (or voting block) beneficially owns 15% or more of the
         company.

Thus, failure of any one of the three criteria results in a vote for cumulative
voting in accordance with the general policy.

Rationale: Cumulative voting is a tool that should be used to ensure that
holders of a significant number of shares may have board representation;
however, the presence of other safeguards may make their use unnecessary.

C.       Supermajority Voting Requirements

AM policy is to vote "against" management proposals to require a supermajority
vote to amend the charter or bylaws and to vote "for" shareholder proposals to
modify or rescind existing supermajority requirements.

*Exception made when company holds a controlling position and seeks to lower
threshold to maintain control and/or make changes to corporate by-laws.

Rationale: Supermajority voting provisions violate the democratic principle that
a simple majority should carry the vote. Setting supermajority requirements may
make it difficult or impossible for shareholders to remove egregious by-law or
charter provisions. Occasionally, a company with a significant insider held
position might attempt to lower a supermajority threshold to make it easier for
management to approve provisions that may be detrimental to shareholders. In
that case, it may not be in the shareholders interests to lower the
supermajority provision.

D.       Shareholder Right to Vote

AM policy is to vote "against" proposals that restrict the right of shareholders
to call special meetings, amend the bylaws, or act by written consent. Policy is
to vote "for" proposals that remove such restrictions.

Rationale: Any reasonable means whereby shareholders can make their views known
to management or effect the governance process should be supported.


IV.      Compensation

Annual Incentive Plans or Bonus Plans are often submitted to shareholders for
approval. These plans typically award cash to executives based on company
performance. Deutsche Bank believes that the responsibility for executive
compensation decisions rest with the board of directors and/or the compensation
committee, and its policy is not to second-guess the board's award of cash
compensation amounts to executives unless a particular award or series of awards
is deemed excessive. If stock options are awarded as part of these bonus or
incentive plans, the provisions must meet Deutsche Bank's criteria regarding
stock option plans, or similar stock-based incentive compensation schemes, as
set forth below.

A.       Establishment of a Remuneration Committee (For FFT Securities)

AM policy is to vote "for" proposals that require the establishment of a
remuneration committee.

Rationale: Corporations should disclose in each annual report or proxy statement
their policies on remuneration. Essential details regarding executive
remuneration including share options, long-term incentive plans and bonuses,
should be disclosed in the annual report, so that investors can judge whether
corporate pay policies and practices meet the standard.

The remuneration committee shall not comprise any board members and should be
sensitive to the wider scene on executive pay. It should ensure that
performance-based elements of executive pay are designed to align the interests
of shareholders.

B.       Executive and Director Stock Option Plans

AM policy is to vote "for" stock option plans that meet the following criteria:

(1)      The resulting dilution of existing shares is less than (a) 15 percent
         of outstanding shares for large capital corporations or (b) 20 percent
         of outstanding shares for small-mid capital companies (companies having
         a market capitalization under one billion U.S. dollars.)

(2)      The transfer of equity resulting from granting options at less than FMV
         is no greater than 3% of the over-all market capitalization of large
         capital corporations, or 5% of market cap for small-mid capital
         companies.

(3)      The plan does not contain express repricing provisions and, in the
         absence of an express statement that options will not be repriced; the
         company does not have a history of repricing options.

(4)      The plan does not grant options on super-voting stock.

AM will support performance-based option proposals as long as a) they do not
mandate that all options granted by the company must be performance based, and
b) only certain high-level executives are subject to receive the performance
based options.

AM will support proposals to eliminate the payment of outside director pensions.

Rationale: Determining the cost to the company and to shareholders of
stock-based incentive plans raises significant issues not encountered with
cash-based compensation plans. These include the potential dilution of existing
shareholders' voting power, the transfer of equity out of the company resulting
from the grant and execution of options at less than FMV and the authority to
reprice or replace underwater options. Our stock option plan analysis model
seeks to allow reasonable levels of flexibility for a company yet still protect
shareholders from the negative impact of excessive stock compensation.
Acknowledging that small mid-capital corporations often rely more heavily on
stock option plans as their main source of executive compensation and may not be
able to compete with their large capital competitors with cash compensation, we
provide slightly more flexibility for those companies.

C.       Employee Stock Option/Purchase Plans

AM policy is to vote for employee stock purchase plans (ESPP's) when the plan
complies with Internal Revenue Code 423, allowing non-management employees to
purchase stock at 85% of FMV.

AM policy is to vote "for" employee stock option plans (ESOPs) provided they
meet the standards for stock option plans in general. However, when computing
dilution and transfer of equity, ESOPs are considered independently from
executive and director option plans.

Rationale: ESOPs and ESPP's encourage rank-and-file employees to acquire an
ownership stake in the companies they work for and have been shown to promote
employee loyalty and improve productivity.

D.       Golden Parachutes

AM policy is to vote "for" proposals to require shareholder approval of golden
parachutes and for proposals that would limit golden parachutes to no more than
three times base compensation. Policy is to vote "against" more restrictive
shareholder proposals to limit golden parachutes.

Rationale: In setting a reasonable limitation, AM considers that an effective
parachute should be less attractive than continued employment and that the IRS
has opined that amounts greater than three times annual salary, are excessive.

E.       Proposals to Limit Benefits or Executive Compensation

AM policy is to vote "against"

1.   Proposals to limit benefits, pensions or compensation and

2.   Proposals that request or require disclosure of executive compensation
     greater than the disclosure required by Securities and Exchange Commission
     (SEC) regulations.

Rationale: Levels of compensation and benefits are generally considered to be
day-to-day operations of the company, and are best left unrestricted by
arbitrary limitations proposed by shareholders.

F.       Option Expensing

AM policy is to support proposals requesting companies to expense stock options.

Rationale: Although companies can choose to expense options voluntarily, the
Financial Accounting Standards Board (FASB) does not yet require it, instead
allowing companies to disclose the theoretical value of options as a footnote.
Because the expensing of stock options lowers earnings, most companies elect not
to do so. Given the fact that options have become an integral component of
compensation and their exercise results in a transfer of shareholder value, AM
agrees that their value should not be ignored and treated as "no cost"
compensation. The expensing of stock options would promote more modest and
appropriate use of stock options in executive compensation plans and present a
more accurate picture of company operational earnings.

G.        Management board election and motion (For FFT Securities)

AM policy is to vote "against":

o        the election of board members with positions on either remuneration or
         audit committees;

o        the election of supervisory board members with too many supervisory
         board mandates;

o        "automatic" election of former board members into the supervisory
         board.

Rationale: Management as an entity, and each of its members, are responsible for
all actions of the company, and are - subject to applicable laws and regulations
- accountable to the shareholders as a whole for their actions.

Sufficient information should be disclosed in the annual company report and
account to allow shareholders to judge the success of the company.

H.       Remuneration (variable pay): (For FFT Securities)

Executive remuneration for Management Board

AM policy is to vote "for" remuneration for Management Board that is transparent
and linked to results.

Rationale: Executive compensation should motivate management and align the
interests of management with the shareholders. The focus should be on criteria
that prevent excessive remuneration; but enable the company to hire and retain
first-class professionals.

Shareholder interests are normally best served when management is remunerated to
optimise long-term returns. Criteria should include suitable measurements like
return on capital employed or economic value added.

Interests should generally also be correctly aligned when management own shares
in the company - even more so if these shares represent a substantial portion of
their own wealth.

Its disclosure shall differentiate between fixed pay, variable (performance
related) pay and long-term incentives, including stock option plans with
valuation ranges as well as pension and any other significant arrangements.

Executive remuneration for Supervisory Board

AM policy is to vote "for" remuneration for Supervisory Board that is at least
50% in fixed form.

Rationale: It would normally be preferable if performance linked compensation
were not based on dividend payments, but linked to suitable result based
parameters. Consulting and procurement services should also be published in the
company report.

I.       Long-term incentive plans (For FFT Securities)

AM policy is to vote "for" long-term incentive plans for members of a management
board that reward for above average company performance.

Rationale: Incentive plans will normally be supported if they:

o        directly align the interests of members of management boards with those
         of shareholders;

o        establish challenging performance criteria to reward only above average
         performance;

o        measure performance by total shareholder return in relation to the
         market or a range of comparable companies;

o        are long-term in nature and encourage long-term ownership of the shares
         once exercised through minimum holding periods;

o        do not allow a repricing of the exercise price in stock option plans.

J.       Shareholder Proposals Concerning "Pay for Superior Performance"

AM policy is to address pay for superior performance proposals on a case-by-case
basis, incorporating the recommendation of an independent third party proxy
research firm (currently ISS) subject to review by the GPVSC as set forth in
AM's Proxy Policies and Procedures.

Rationale: While AM agrees that compensation issues are better left to the
discretion of management, they appreciate the need to monitor for excessive
compensation practices on a case by case basis. If, after a review of the ISS
metrics, AM is comfortable with ISS's applying this calculation and will vote
according to their recommendation.

K.       Executive Compensation Advisory

AM policy is to follow management's recommended vote on shareholder proposals to
propose an advisory resolution seeking to ratify the compensation of the
company's named executive officers (NEOs) on an annual basis.

Rationale: AM believes that controls exist within senior management and
corporate compensation committees, ensuring fair compensation to executives.
This might allow shareholders to require approval for all levels of management's
compensation.

V.       Anti-Takeover Related Issues

A.       Shareholder Rights Plans ("Poison Pills")

AM policy is to vote "for" proposals to require shareholder ratification of
poison pills or that request boards to redeem poison pills, and to vote
"against" the adoption of poison pills if they are submitted for shareholder
ratification.

Rationale: Poison pills are the most prevalent form of corporate takeover
defenses and can be (and usually are) adopted without shareholder review or
consent. The potential cost of poison pills to shareholders during an attempted
takeover outweighs the benefits.

B.       Reincorporation

AM policy is to examine reincorporation proposals on a case-by-case basis. The
voting decision is based on: (1) differences in state law between the existing
state of incorporation and the proposed state of incorporation; and (2)
differences between the existing and the proposed charter/bylaws/articles of
incorporation and their effect on shareholder rights. If changes resulting from
the proposed reincorporation violate the corporate governance principles set
forth in these guidelines, the reincorporation will be deemed contrary to
shareholder's interests and a vote cast "against."

Rationale: Reincorporations can be properly analyzed only by looking at the
advantages and disadvantages to their shareholders. Care must be taken that
anti-takeover protection is not the sole or primary result of a proposed change.

C.       Fair-Price Proposals

AM policy is to vote "for" management fair-price proposals, provided that: (1)
the proposal applies only to two-tier offers; (2) the proposal sets an objective
fair-price test based on the highest price that the acquirer has paid for a
company's shares; (3) the supermajority requirement for bids that fail the
fair-price test is no higher than two-thirds of the outstanding shares; (4) the
proposal contains no other anti-takeover provisions or provisions that restrict
shareholders rights.

A vote is cast for shareholder proposals that would modify or repeal existing
fair-price requirements that do not meet these standards.

Rationale: While fair price provisions may be used as anti-takeover devices, if
adequate provisions are included, they provide some protection to shareholders
who have some say in their application and the ability to reject those
protections if desired.

D.       Exemption from state takeover laws

AM policy is to vote "for" shareholder proposals to opt out of state takeover
laws and to vote "against" management proposals requesting to opt out of state
takeover laws.

Rationale: Control share statutes, enacted at the state level, may harm
long-term share value by entrenching management. They also unfairly deny certain
shares their inherent voting rights.

E.       Non-financial Effects of Takeover Bids

Policy is to vote "against" shareholder proposals to require consideration of
non-financial effects of merger or acquisition proposals.

Rationale: Non-financial effects may often be subjective and are secondary to
AM's stated purpose of acting in its client's best economic interest.


VI.      Mergers & Acquisitions

Evaluation of mergers, acquisitions and other special corporate transactions
(i.e., takeovers, spin-offs, sales of assets, reorganizations, restructurings
and recapitalizations) are performed on a case-by-case basis incorporating
information from an independent proxy research source (currently ISS.)
Additional resources including portfolio management and research analysts may be
considered as set forth in AM's Policies and Procedures.


VII.     Social, Environmental & Political Issues

Social and environmental issues are becoming increasingly important to corporate
success. We incorporate social and environmental considerations into both our
investment decisions and our proxy voting decisions - particularly if the
financial performance of the company could be impacted.

With increasing frequency, shareholder proposals are submitted relating to
social and political responsibility issues. Almost universally, the company
management will recommend a vote "against" these proposals. These types of
proposals cover an extremely wide range of issues. Many of the issues tend to be
controversial and are subject to more than one reasonable, yet opposing, theory
of support. More so than with other types of proxy proposals, social and
political responsibility issues may not have a connection to the economic and
corporate governance principles effecting shareholders' interests. AM's policy
regarding social and political responsibility issues, as with any other issue,
is designed to protect our client shareholders' economic interests.

Occasionally, a distinction is made between a shareholder proposal requesting
direct action on behalf of the board and a request for a report on (or
disclosure of) some information. In order to avoid unduly burdening any company
with reporting requirements, AM's policy is to vote against shareholder
proposals that demand additional disclosure or reporting than is required by the
Securities and Exchange Commission unless it appears there is a legitimate issue
and the company has not adequately addressed shareholders' concerns.

A.       Labor & Human Rights

AM policy is to vote "against" adopting global codes of conduct or workplace
standards exceeding those mandated by law.

Rationale: Additional requirements beyond those mandated by law are deemed
unnecessary and potentially burdensome to companies

B.       Diversity & Equality

1.       AM policy is to vote "against" shareholder proposals to force equal
         employment opportunity, affirmative action or board diversity.

Rationale: Compliance with State and Federal legislation along with information
made available through filings with the EEOC provides sufficient assurance that
companies act responsibly and make information public.

2.       AM policy is also to vote "against" proposals to adopt the Mac Bride
         Principles. The Mac Bride Principles promote fair employment,
         specifically regarding religious discrimination.

Rationale: Compliance with the Fair Employment Act of 1989 makes adoption of the
Mac Bride Principles redundant. Their adoption could potentially lead to charges
of reverse discrimination.

C.       Health & Safety

1.       AM policy is to vote "against" adopting a pharmaceutical price
         restraint policy or reporting pricing policy changes.

Rationale: Pricing is an integral part of business for pharmaceutical companies
and should not be dictated by shareholders (particularly pursuant to an
arbitrary formula.) Disclosing pricing policies may also jeopardize a company's
competitive position in the marketplace.

2.       AM policy is to vote "against" shareholder proposals to control the use
         or labeling of and reporting on genetically engineered products.

Rationale: Additional requirements beyond those mandated by law are deemed
unnecessary and potentially burdensome to companies.

D.       Government/Military

1.       AM policy is to vote against shareholder proposals regarding the
         production or sale of military arms or nuclear or space-based weapons,
         including proposals seeking to dictate a company's interaction with a
         particular foreign country or agency.

Rationale: Generally, management is in a better position to determine what
products or industries a company can and should participate in. Regulation of
the production or distribution of military supplies is, or should be, a matter
of government policy.

2.       AM policy is to vote "against" shareholder proposals regarding
         political contributions and donations.

Rationale: The Board of Directors and Management, not shareholders, should
evaluate and determine the recipients of any contributions made by the company.

3.       AM policy is to vote "against" shareholder proposals regarding
         charitable contributions and donations.

Rationale: The Board of Directors and Management, not shareholders, should
evaluate and determine the recipients of any contributions made by the company.

E.       Tobacco

1.       AM policy is to vote "against" shareholder proposals requesting
         additional standards or reporting requirements for tobacco companies as
         well as "against" requesting companies to report on the intentional
         manipulation of nicotine content.

Rationale: Where a tobacco company's actions meet the requirements of legal and
industry standards, imposing additional burdens may detrimentally effect a
company's ability to compete. The disclosure of nicotine content information
could affect the company's rights in any pending or future litigation.

2.       Shareholder requests to spin-off or restructure tobacco businesses will
         be opposed.

Rationale: These decisions are more appropriately left to the Board and
management, and not to shareholder mandate.


VIII.    Environmental Issues

AM policy is to follow management's recommended vote on CERES Principles or
other similar environmental mandates (e.g., those relating to Greenhouse gas
emissions or the use of nuclear power).

Rationale: Environmental issues are extensively regulated by outside agencies
and compliance with additional requirements often involves significant cost to
companies.


IX.      Miscellaneous Items

A.       Ratification of Auditors

AM policy is to vote "for" a) the management recommended selection of auditors
and b) proposals to require shareholder approval of auditors.

Rationale: Absent evidence that auditors have not performed their duties
adequately, support for management's nomination is warranted.

B.       Limitation of non-audit services provided by independent auditor

AM policy is to support proposals limiting non-audit fees to 50% of the
aggregate annual fees earned by the firm retained as a company's independent
auditor.

Rationale: In the wake of financial reporting problems and alleged audit
failures at a number of companies, AM supports the general principle that
companies should retain separate firms for audit and consulting services to
avoid potential conflicts of interest. However, given the protections afforded
by the recently enacted Sarbanes-Oxley Act of 2002 (which requires Audit
Committee pre-approval for non-audit services and prohibits auditors from
providing specific types of services), and the fact that some non-audit services
are legitimate audit-related services, complete separation of audit and
consulting fees may not be warranted. A reasonable limitation is appropriate to
help ensure auditor independence and it is reasonable to expect that audit fees
exceed non-audit fees.

C.       Audit firm rotation

AM policy is to support proposals seeking audit firm rotation unless the
rotation period sought is less than five years.

Rationale: While the Sarbanes-Oxley Act mandates that the lead audit partner be
switched every five years, AM believes that rotation of the actual audit firm
would provide an even stronger system of checks and balances on the audit
function.

D.       Transaction of Other Business

AM policy is to vote against "transaction of other business" proposals.

Rationale: This is a routine item to allow shareholders to raise other issues
and discuss them at the meeting. As the nature of these issues may not be
disclosed prior to the meeting, we recommend a vote against these proposals.
This protects shareholders voting by proxy (and not physically present at a
meeting) from having action taken at the meeting that they did not receive
proper notification of or sufficient opportunity to consider.

E.       Motions to Adjourn the Meeting

AM Policy is to vote against proposals to adjourn the meeting.

Rationale: Management may seek authority to adjourn the meeting if a favorable
outcome is not secured. Shareholders should already have had enough information
to make a decision. Once votes have been cast, there is no justification for
management to continue spending time and money to press shareholders for
support.

F.       Bundled Proposals

AM policy is to vote against bundled proposals if any bundled issue would
require a vote against it if proposed individually.

Rationale: Shareholders should not be forced to "take the good with the bad" in
cases where the proposals could reasonably have been submitted separately.

G.       Change of Company Name

AM policy is to support management on proposals to change the company name.

Rationale: This is generally considered a business decision for a company.

H.       Proposals Related to the Annual Meeting

AM Policy is to vote in favor of management for proposals related to the conduct
of the annual meeting (meeting time, place, etc.)

Rationale: These are considered routine administrative proposals.

I.       Reimbursement of Expenses Incurred from Candidate Nomination

AM policy is to follow management's recommended vote on shareholder proposals
related to the amending of company bylaws to provide for the reimbursement of
reasonable expenses incurred in connection with nominating one or more
candidates in a contested election of directors to the corporation's board of
directors.

Rationale: Corporations should not be liable for costs associated with
shareholder proposals for directors.

J.       Investment Company Proxies

Proxies solicited by investment companies are voted in accordance with the
recommendations of an independent third party, currently ISS. However, regarding
investment companies for which AM or an affiliate serves as investment adviser
or principal underwriter, such proxies are voted in the same proportion as the
vote of all other shareholders. Proxies solicited by master funds from feeder
funds will be voted in accordance with applicable provisions of Section 12 of
the Investment Company Act of 1940.

Investment companies, particularly closed-end investment companies, are
different from traditional operating companies. These differences may call for
differences in voting positions on the same matter. For example, AM could vote
"for" staggered boards of closed-end investment companies, although AM generally
votes "against" staggered boards for operating companies. Further, the manner in
which AM votes investment company proxies may differ from proposals for which a
AM-advised investment company solicits proxies from its shareholders. As
reflected in the Guidelines, proxies solicited by closed-end (and open-end)
investment companies are voted in accordance with the pre-determined guidelines
of an independent third-party.

Subject to participation agreements with certain Exchange Traded Funds ("ETF")
issuers that have received exemptive orders from the U.S. Securities and
Exchange Commission allowing investing DWS funds to exceed the limits set forth
in Section 12(d)(1)(A) and (B) of the Investment Company Act of 1940, DeAM will
echo vote proxies for ETFs in which Deutsche Bank holds more than 25% of
outstanding voting shares globally when required to do so by participation
agreements and SEC orders.

Note: With respect to the QP Trust (not registered under the Investment Company
Act of 1940), the Fund is not required to engage in echo voting and the
investment adviser will use these Guidelines, and may determine, with respect to
the QP Trust, to vote contrary to the positions in the Guidelines, consistent
with the Fund's best interest.


K.       International Proxy Voting

The above guidelines pertain to issuers organized in the United States, Canada
and Germany. Proxies solicited by other issuers are voted in accordance with
international guidelines or the recommendation of ISS and in accordance with
applicable law and regulation.


                      APPENDIX B -- RATINGS OF INVESTMENTS


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:

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.

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>









                            DWS STATE TAX-FREE TRUST


                         DWS Massachusetts Tax-Free Fund
                                    (Class S)










                       STATEMENT OF ADDITIONAL INFORMATION



                                 August 1, 2009


This Statement of Additional  Information is not a prospectus and should be read
in  conjunction  with the prospectus  for DWS  Massachusetts  Tax-Free Fund (the
"Fund"),  a series of DWS State Tax Free Trust  (the  "Trust")  dated  August 1,
2009,  as amended  from time to time,  a copy of which may be  obtained  without
charge by  calling  (800)  728-3337,  through  the DWS  Investments  Web site at
www.dws-investments.com or from the firm from which this Statement of Additional
Information  was obtained.  This  information is also available along with other
related  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  dated  March 31,  2009,  are
incorporated  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 Statement of Additional  Information  ("SAI") is  incorporated by reference
into the corresponding prospectuses for each class of shares of the Fund.


<PAGE>




                            TABLE OF CONTENTS

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


INVESTMENT POLICIES AND TECHNIQUES............................................23
   Portfolio Holdings.........................................................43


MANAGEMENT OF THE FUND........................................................44
   Investment Advisor.........................................................44


FUND SERVICE PROVIDERS........................................................55
Administrator.................................................................55
   Distributor................................................................56
   Custodian, Transfer Agent and Shareholder Service Agent....................57
   Independent Registered Public Accounting Firm .............................58
   Legal Counsel..............................................................58

PORTFOLIO TRANSACTIONS........................................................59

PURCHASE AND REDEMPTION OF SHARES.............................................61

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

TAXES.........................................................................81

NET ASSET VALUE...............................................................98

BOARD MEMBERS AND OFFICERS....................................................99

FUND ORGANIZATION............................................................116

PROXY VOTING GUIDELINES......................................................118

FINANCIAL STATEMENTS.........................................................119

ADDITIONAL INFORMATION.......................................................119

APPENDIX A -- PROXY VOTING GUIDELINES........................................120


<PAGE>
                                       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 non-diversified series of an open-end
investment  management  company.

A non-diversified fund may invest a greater proportion of its assets in the
obligations of a small number of issuers, and may be subject to greater risk and
substantial losses as a result of changes in the financial condition or the
market's assessment of the issuers. While not limited by the Investment Company
Act of 1940, as amended (the "1940 Act") as to the proportion of its assets that
it may invest in obligations of a single issuer, the Fund will comply with the
diversification requirements imposed by the Internal Revenue Code of 1986, as
amended (the "Code") for qualification as a regulated investment company.

As a matter of fundamental policy, the Fund may not:

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

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

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

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

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

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

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

A  fundamental  policy may not be changed  without the approval of a majority of
the outstanding  voting securities of 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 such meeting, 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.
Nonfundamental 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); and

(f)      lend portfolio securities in an amount greater than 5% of its total
         assets.

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.

If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage beyond the specified limit resulting from a
change in values or net assets will not be considered a violation.


As a matter of fundamental policy, at least 80% of the Fund's net assets, plus
the amount of any borrowings for investment purposes, will normally be invested
in Massachusetts municipal securities. All income distributed by the Fund is
expected to be exempt from federal and Massachusetts personal income taxes,
which may include securities of issuers located outside Massachusetts.
Ordinarily, the Fund expects that 100% of its portfolio securities will be in
federally tax-exempt securities although a small portion of its income may be
subject to federal, alternative minimum tax (AMT) or state and local taxes.


For temporary defensive purposes or if an unusual disparity between after-tax
income on taxable and municipal securities makes it advisable, up to 20% of the
Fund's assets may be held in cash or invested in short-term taxable investments,
including US Government obligations and money market instruments. It is
impossible to accurately predict how long such an alternative strategy may be
utilized.

The Fund's distributions from interest on certain municipal securities may be
subject to the AMT depending upon investors' particular situations. However, no
more than 20% of the Fund's net assets will normally be invested in municipal
securities whose interest income, when distributed to shareholders, is subject
to the individual AMT. In addition, state and local taxes may apply, depending
on your state tax laws.

There is no current intention to invest more than 5% of the Fund's net assets in
reverse repurchase agreements.


Moreover, although the Fund does not currently intend to do so on a regular
basis, it may invest more than 25% of its assets in municipal securities that
are repayable out of revenue streams generated from economically related
projects or facilities, if such investment is deemed necessary or appropriate by
the Fund's investment advisor. To the extent that the Fund's assets are
concentrated in municipal securities payable from revenues on economically
related projects and facilities, the Fund will be subject to the risks presented
by such projects to a greater extent than it would be if the Fund's assets were
not so concentrated. For purposes of the Fund's investment limitation regarding
concentration of investments in any one industry, industrial development or
other private activity bonds ultimately payable by companies within the same
industry will be considered as if they were issued by issuers in the same
industry.

Although there is no current intention to do so, the Fund may invest more than
25% of its total assets in industrial development or other private activity
bonds, subject to the Fund's fundamental investment policies. Because these
bonds are frequently subject to regular federal income tax and AMT, investment
in these types of bonds is also subject to the Fund's limitation on investing
municipal securities whose investment income is subject to these taxes. The Fund
does not currently consider private activity bonds to be municipal securities
for purposes of the 80% requirement.


The Fund is designed for persons who are seeking a high level of income exempt
from federal income taxes and from personal income taxes of a particular state.
Through a single investment in shares of the Fund, investors receive the
benefits of professional management and liquidity. Additionally, the Fund offers
the economic advantages of block purchases of securities and relief from
administrative details such as accounting for distributions and the safekeeping
of securities. The tax exemption of Fund dividends for federal income tax
purposes and, if applicable, particular state or local personal income tax
purposes does not necessarily result in exemption under the income or other tax
laws of any other state or local taxing authority. The laws of the several
states and local taxing authorities vary with respect to the taxation of
interest income and investments, and shareholders are advised to consult their
own tax advisors as to the status of their accounts under state and local tax
laws. The Fund may not be an appropriate investment for qualified retirement
plans and Individual Retirement Accounts.


The following information as to certain risk factors is given to investors
because the Fund concentrates its investments in municipal securities of
Massachusetts. Such information constitutes only a summary, does not purport to
be a complete description and is based upon information from official statements
relating to securities offerings of state issuers. Investors should remember
that rating agencies do change ratings periodically so that ratings mentioned
here may have changed.


The Fund invests principally in "Municipal Securities," which are debt
obligations issued to obtain funds for various public purposes, including the
construction of a wide range of public facilities such as airports, bridges,
highways, housing, hospitals, mass transportation, schools, streets and water
and sewer works. Other public purposes for which Municipal Securities may be
issued include:

o       to refund outstanding obligations

o       to obtain funds for general operating expenses

o       to obtain funds to loan to other public institutions and facilities.

The two general classifications of Municipal Securities are "general obligation"
and "revenue" bonds. General obligation bonds are secured by the issuer's pledge
of its faith, credit and taxing power for the payment of principal and interest.
Revenue bonds are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise or other specific revenue source.


The yields on Municipal Securities are dependent on a variety of factors,
including general conditions of the Municipal Securities market, size of a
particular offering, the maturity of the obligation and rating of the issue. The
ratings of Moody's, S&P and Fitch represent their opinions as to the quality of
the Municipal Securities which they undertake to rate. It should be emphasized,
however, that ratings are relative and subjective and are not absolute standards
of quality. Consequently, Municipal Securities with the same maturity, coupon
and rating may have different yields while Municipal Securities of the same
maturity and coupon with different ratings may have the same yield.


The Fund may invest in tax-exempt leases. A tax-exempt lease is an obligation,
often a lease purchase or installment contract, pursuant to which a governmental
user of a capital asset, such as an item of equipment, agrees to make payments
of the purchase price plus interest over a period of years, normally with the
right to purchase the asset at the termination of the lease for a nominal
amount. Tax-exempt leases normally have a term of only two to seven years, a
relatively short period of time, and often have a higher interest rate than
tax-exempt investments of a comparable term.

Provisions of the federal bankruptcy statutes relating to the adjustment of
debts of political subdivisions and authorities of states of the United States
provide that, in certain circumstances, such subdivisions or authorities may be
authorized to initiate bankruptcy proceedings without prior notice to or consent
of creditors, which proceedings could result in material and adverse
modification or alteration of the rights of holders of obligations issued by
such subdivisions or authorities.

Litigation challenging the validity under state constitutions of present systems
of financing public education has been initiated or adjudicated in a number of
states, and legislation has been introduced to effect changes in public school
finances in some states. In other instances there has been litigation
challenging the issuance of pollution control revenue bonds or the validity of
their issuance under state or federal law which litigation could ultimately
affect the validity of those Municipal Securities or the tax-free nature of the
interest thereon.

STATE SPECIFIC RISK FACTORS

The Fund will invest in bonds issued by the Commonwealth of Massachusetts or its
political subdivisions. The Fund is therefore subject to various statutory,
political and economic factors unique to Massachusetts. Discussed below are some
of the more significant factors that could affect the ability of the bond
issuers to repay interest and principal on Massachusetts securities owned by the
Fund. The information is derived from various public sources, all of which are
available to investors generally, and which the Fund believes to be accurate.

DWS Massachusetts Tax-Free Fund


The following information as to certain Massachusetts risk factors is given to
investors in view of the Fund's policy of concentrating its investments in
Massachusetts issuers. Such information constitutes only a brief summary, does
not purport to be a complete description and is based on information from
official statements relating to securities offerings of Massachusetts issuers
and other sources believed to be reliable. No independent verification has been
made of the following information.

The Fund is more susceptible to factors adversely affecting issuers of
Massachusetts municipal securities than comparable municipal bond funds that do
not focus on investments in Massachusetts issuers.

Commonwealth Employment and Income Rates. The unemployment rate for the
Commonwealth was 5.2% in 2004, 4.8% in 2005, 4.8% in 2006, and 4.5% in 2007. The
national unemployment rate was 5.5% in 2004, 5.1% in 2005, 4.6% in 2006, and
4.6% in 2007. In 2008, the unemployment rate in the Commonwealth was 5.3%,
compared with a national rate of 5.8%. As of February, 2009, the unemployment
rate was 7.8% in Massachusetts and 8.1% nationally. Real per capita income in
Massachusetts grew at a rate of 2.2% in 2004, 1.2% in 2005, 3.7% in 2006, and
3.8% in 2007. Nationally, real per capita income grew at a rate of 2.4% in 2004,
1.2% in 2005, 2.8% in 2006, and 2.0% in 2007. In 2008, real per capita income
remained consistent with 2007 rates in the Commonwealth and decreased 0.9%
nationally. From 2004 to 2008 both real and nominal income levels in
Massachusetts were above the national average.

Major Obligations. The fiscal viability of the Commonwealth's authorities and
municipalities is linked to that of the Commonwealth. Certain authorities, such
as the Massachusetts Convention Center Authority, the Massachusetts Development
Finance Agency, the Massachusetts Turnpike Authority and the Massachusetts Water
Pollution Abatement Trust benefit from contract assistance agreements with the
Commonwealth. Such agreements constitute general obligations of the Commonwealth
for which its full faith and credit are pledged. The Commonwealth also
guarantees the debt of two authorities, the Massachusetts State College Building
Authority and the University of Massachusetts Building Authority. Their ratings
are based on the Commonwealth guarantee and can be expected to move in tandem
with ratings on Commonwealth general obligation debt. The Commonwealth funds
several other authorities in part or in whole and their debt ratings may be
adversely affected by a negative change in those of the Commonwealth. As of June
2009, the Commonwealth's general obligation bonds were rated "Aa2" by Moody's
Investors Service, Inc., "AA/Stable" by Standard & Poor's Ratings Services and
"AA/Stable" by Fitch Ratings. From time to time, the rating agencies may change
their ratings.

Certain of the Commonwealth's tax receipts are pledged to debt service on $686.7
million of special obligation bonds issued in 2004 to finance construction of
the Boston Convention and Exhibition Center, renovation of the Springfield Civic
and Convention Center, and reimbursement to the City of Worcester for
construction of a new civic center. Tax receipts from various car rental
surcharges, hotel taxes and sales taxes in businesses located in and around the
facilities are required to be credited to the Convention Center Fund. This fund
is not included in the Commonwealth's budgeted revenues discussed below.

Beginning in fiscal 2001, the finances of the Massachusetts Bay Transportation
Authority (MBTA) were restructured and its financial relationship to the
Commonwealth changed materially. The MBTA finances and operates mass transit
facilities in eastern Massachusetts. Beginning July 1, 2000, the Commonwealth is
obligated to provide the MBTA with a portion of the revenues raised by the
Commonwealth's sales tax, generally the amount raised by a 1% sales tax with an
inflation-adjusted floor. (For fiscal 2009 the floor is $767.1 million.) This
amount is dedicated to the MBTA under a trust fund. The dedicated revenue stream
is disbursed to the MBTA without state appropriation to be used to meet the
Commonwealth's debt service contract assistance obligations relating to
outstanding MBTA debt and to meet the MBTA's other operating and debt service
needs. The MBTA is authorized to assess a portion of its costs on 175 cities and
towns in eastern Massachusetts; after a five-year phase-in of reduced
assessments, the cities and towns are required by law to pay assessments equal
to at least $136 million in the aggregate, as adjusted in each year after fiscal
2006 for inflation (with no annual increase to exceed 2.5% per year).

In 2001, the Massachusetts Turnpike Authority (Turnpike Authority) entered into
certain contracts with UBS AG (UBS), giving UBS the right to enter into five
separate interest rate swap agreements with the Turnpike Authority with an
aggregate notional value of $800 million. UBS has exercised its rights to enter
into all five swap agreements and, pursuant to such agreements, the Turnpike
Authority is required to make fixed-rate payments to UBS in exchange for
variable-rate payments from UBS. As of March 26, 2009, the Turnpike Authority's
aggregate termination costs for these interest rate swap agreements with UBS
were approximately $371.3 million. Additionally, due to recent market
volatility, the Turnpike Authority was required to post collateral in the
notional amount of $100 million with respect to a basis swap (a
floating-floating interest rate swap under which the floating rate payments are
referenced to different bases) it entered into in 1999 with JPMorgan Chase Bank
(JPMorgan). The Turnpike Authority's estimated termination costs for the
JPMorgan basis swap are $16.5 million.

In July 2004, Governor Mitt Romney signed three separate pieces of legislation
that reform the Commonwealth's school building assistance (SBA) program.
Historically, financial assistance was provided in the form of annual contract
assistance payments to municipalities to subsidize a portion of local debt
issues for such purposes. Assistance was appropriated annually through the
Commonwealth's operating budget, reaching $401.4 million in fiscal 2004. The
legislation moved the SBA program off-budget, establishing the Massachusetts
School Building Authority (MSBA), an independent state authority, to administer
and manage the program. The legislation transfers the liabilities associated
with the SBA program from the Commonwealth to the MSBA and places certain limits
on the grant making of the MSBA for new projects. The legislation also switches
borrowing responsibility from local governments to the MSBA for the state's
share of waiting list projects and future school project costs, although
contract assistance payments will continue for previously funded projects.

The legislation dedicates one percent of the Commonwealth's sales tax excluding
certain meals and special financing district sales taxes (the "Dedicated Sales
Tax") to fund the MSBA and to pay for its transferred and future liabilities.
Funding is phased in through 2011, providing $395.7 million in fiscal 2005, 70%
of the Dedicated Sales Tax or at least $488.7 million in fiscal 2006, 78% of the
Dedicated Sales Tax or at least $557.4 million in fiscal 2007, 85% of the
Dedicated Sales Tax or at least $634.7 million in fiscal 2008, 90% of the
Dedicated Sales Tax or at least $702.3 million in fiscal 2009, 95% of the
Dedicated Sales Tax in fiscal 2010, and 100% of the Dedicated Sales Tax
thereafter. In addition to Dedicated Sales Tax revenues, the legislation
authorizes the Commonwealth to issue $1.0 billion of general obligation bonds to
help the MSBA fund, in part, its liabilities. The Commonwealth issued these
bonds during fiscal 2005 and 2006. The legislation also transferred $150.0
million from the fiscal 2004 surplus to the MSBA as start-up funding. The MSBA
is expected to finance a substantial portion of its liabilities through the
issuance of revenue bonds.

The sales tax revenues provided to the MBTA and MSBA by the Commonwealth are not
included in the tax figures in the following paragraphs. Total tax revenue
transferred to the MBTA amounted to $684.3 million in fiscal 2004, $704.8
million in fiscal 2005, $712.6 million in fiscal 2006, $734.0 million in fiscal
2007, $756.0 million in fiscal 2008, and an estimated $767.1 million in fiscal
2009. Total tax revenue provided to the MSBA was $395.7 million in fiscal 2005,
$488.7 million in fiscal 2006, $557.4 million in fiscal 2007, $634.7 million in
fiscal 2008, and an estimated $702.3 million in fiscal 2009.

Commonwealth Budget. The Commonwealth's revenues increased each year from fiscal
1999 to fiscal 2001, decreased significantly in fiscal 2002, and increased again
in 2003 through 2007. During fiscal 2002, tax revenue receipts declined sharply
from $16.075 billion the previous year to $13.623 billion. The Commonwealth
incurred a $1.625 billion deficit in fiscal 2002 and ended fiscal 2002 with a
positive balance in its budgeted funds, as required by statute, primarily by
using reserve funds, including $833 million from the Stabilization Fund (a
reserve of surplus revenues to be used for the purposes of: (1) covering revenue
shortfalls, (2) covering state or local losses of federal funds, or (3) for any
event which threatens the health, safety or welfare of the people or the fiscal
stability of the Commonwealth or any of its political subdivisions). In fiscal
2003, the Legislature enacted a tax increase and tax revenues increased to
$14.280 billion. While the Commonwealth still incurred a $451.9 million deficit,
it ended fiscal 2003 with a positive balance in its budgeted funds, as required
by statute, by using reserve funds, including $641.3 million from the
Stabilization Fund. Tax revenues for fiscal year 2004 were $15.269 billion and
resulted in a surplus of $1.140 billion for the fiscal year. Tax revenues for
fiscal year 2005 were $15.987 billion and resulted in a surplus of $594.4
million for the fiscal year. Tax revenues for fiscal year 2006 were $17.286
billion and resulted in a surplus of $720.9 million for the fiscal year. Tax
revenues for fiscal year 2007 were $18.445 billion and resulted in a deficiency
of $307.1 million for the fiscal year. Tax revenues for fiscal year 2008 were
$19.489 billion and resulted in a deficiency of $495.2 million for the fiscal
year. Tax revenues for fiscal year 2009 are projected by the Executive Office
for Administration and Finance to be $16.967 billion and result in a deficiency
of $1.642 billion for the fiscal year.

The budgeted operating funds of the Commonwealth ended fiscal 2002 with a
deficiency of revenues and other sources over expenditures and other uses of
$1.625 billion and aggregate ending fund balances in the budgeted operating
funds of the Commonwealth of approximately $1.388 billion. Budgeted revenues and
other sources for fiscal 2002 totaled approximately $21.175 billion, including
tax revenues of $13.623 billion. Commonwealth budgeted expenditures and other
uses in fiscal 2002 totaled $22.800 billion.

The budgeted operating funds of the Commonwealth ended fiscal 2003 with a
deficiency of revenues and other sources over expenditures and other uses of
$451.9 million and aggregate ending fund balances in the budgeted operating
funds of the Commonwealth of $936.1 million. Budgeted revenues and other sources
for fiscal 2003 totaled approximately $21.987 billion, including tax revenues of
$14.280 billion. Commonwealth budgeted expenditures and other uses in fiscal
2003 totaled $22.439 billion.

The budgeted operating funds of the Commonwealth ended fiscal 2004 with a
surplus of revenues and other sources over expenditures and other uses of $1.140
billion and aggregate ending fund balances in the budgeted operating funds of
the Commonwealth of approximately $1.893 billion. Budgeted revenues and other
sources for fiscal 2004 totaled approximately $23.988 billion, including tax
revenues of $15.269 billion. Commonwealth budgeted expenditures and other uses
in fiscal 2004 totaled $22.843 billion. At the end of fiscal 2004, the
Stabilization Fund's ending balance was $1.137 billion.

The budgeted operating funds of the Commonwealth ended fiscal 2005 with a
surplus of revenues and other sources over expenditures and other uses of $594.4
million and aggregate ending fund balances in the budgeted operating funds of
the Commonwealth of approximately $2.487 billion. Budgeted revenues and other
sources for fiscal 2005 totaled approximately $24.374 billion, including tax
revenues of $15.987 billion. Commonwealth budgeted expenditures and other uses
in fiscal 2005 totaled $23.779 billion. At the end of fiscal 2005, the
Stabilization Fund's ending balance was $1.728 billion.

The budgeted operating funds of the Commonwealth ended fiscal 2006 with a
surplus of revenues and other sources over expenditures and other uses of $720.9
million and aggregate ending fund balances in the budgeted operating funds of
the Commonwealth of approximately $3.208 billion. Budgeted revenues and other
sources for fiscal 2006 totaled approximately $26.306 billion, including tax
revenues of $17.286 billion. Commonwealth budgeted expenditures and other uses
in fiscal 2006 totaled $25.585 billion. At the end of fiscal 2006, the
Stabilization Fund's ending balance was $2.155 billion.

The budgeted operating funds of the Commonwealth ended fiscal 2007 with a
deficit of revenues and other sources over expenditures and other uses of $307.1
million and aggregate ending fund balances in the budgeted operating funds of
the Commonwealth of approximately $2.901 billion. Budgeted revenues and other
sources for fiscal 2007 totaled approximately $28.616 billion, including tax
revenues of $18.445 billion. Commonwealth budgeted expenditures and other uses
in fiscal 2007 totaled $28.923 billion. At the end of fiscal 2007, the
Stabilization Fund's ending balance was $2.335 billion.

The budgeted operating funds of the Commonwealth ended fiscal 2008 with a
deficiency of revenues and other sources over expenditures and other uses of
$495.2 million and aggregate ending fund balances in the budgeted operating
funds of the Commonwealth of approximately $2.406 billion. Budgeted revenues and
other sources for fiscal 2008 totaled approximately $30.313 billion, including
tax revenues of $19.489 billion. Commonwealth budgeted expenditures and other
uses in fiscal 2008 totaled $30.808 billion. At the end of fiscal 2008, the
Stabilization Fund's ending balance was $2.119 billion. The Commonwealth used
approximately $200.8 million from the Stabilization Fund during fiscal 2008.

The budgeted operating funds of the Commonwealth are projected to end fiscal
2009 with a deficiency of revenues and other sources over expenditures and other
uses of $1.642 billion and aggregate ending fund balances in the budgeted
operating funds of the Commonwealth of approximately $899 million. Budgeted
revenues and other sources for fiscal 2009 are projected to total approximately
$30.853 billion, including tax revenues of $16.967 billion. Commonwealth
budgeted expenditures and other uses in fiscal 2009 are projected to total
$32.495 billion. At the end of fiscal 2009, the Stabilization Fund's ending
balance is projected to be $766 million. The Commonwealth is projected to use
approximately $1.353 billion from the Stabilization Fund during fiscal 2009. All
projections were compiled by the Commonwealth's Executive Office of
Administration and Finance.

On January 28, 2009, Governor Deval Patrick submitted his budget proposal for
fiscal 2010. The Governor's budget is based upon a gross tax estimate of $19.530
billion. On May 6, 2009, the Secretary of Administration and Finance and the
chairs of the House and Senate Committees on Ways and Means revised the fiscal
2010 revenue estimate to $17.989 billion. The following day the Governor filed a
supplemental budget legislation containing several solutions to close the budget
shortfall, which, in part, involved accessing federal funds to be received under
the American Recovery and Reinvestment Act of 2009 and an additional transfer
from the Stabilization Fund. As of May 19, 2009, the House and Senate had each
voted, by veto proof margins, to approve a proposal to increase the state sales
tax from 5% to 6.25%. This proposal would also lift the sales tax exemption on
alcohol, and allow cities and towns to raise meals and hotel taxes as other
means of generating revenue for the Commonwealth. On June 29, 2009, Governor
Patrick signed a $27 billion state budget, which includes the sales tax
increase.

Limitations on Tax Revenues. Growth of tax revenues is limited by law in the
Commonwealth to the average positive rate of growth in total wages and salaries
in the Commonwealth, as reported by the federal government, during the three
calendar years immediately preceding the end of such fiscal year. The law also
requires that allowable state tax revenues be reduced by the aggregate amount
received by local governmental units from any newly authorized or increased
local option taxes or excises. Any excess in state tax revenue collections for a
given fiscal year over the prescribed limit, as determined by the State Auditor,
is to be applied as a credit against the then current personal income tax
liability of all taxpayers in the Commonwealth in proportion to the personal
income tax liability of all taxpayers in the Commonwealth for the immediately
preceding tax year. The law does not exclude principal and interest payments on
Commonwealth debt obligations from the scope of its tax limit. However, the
preamble to the law containing the limitation provides that "although not
specifically required by anything contained in this chapter, it is assumed that
from allowable state tax revenues as defined herein the Commonwealth will give
priority attention to the funding of state financial assistance to local
governmental units, obligations under the state governmental pension systems and
payment of principal and interest on debt and other obligations of the
Commonwealth." Tax revenues in fiscal 2004 through 2008 were lower than the
allowable state tax revenue limit set by state law and are projected to be lower
than the allowable limit again in fiscal 2009.

Debt Limits and Types of Debt. Legislation enacted in December 1989 imposes a
limit on the amount of outstanding "direct" bonds of the Commonwealth. The law
set a fiscal 1991 limit of $6.8 billion and provided that the limit for each
subsequent fiscal year was to be 105% of the previous fiscal year's limit. The
limit is calculated under the statutory basis of accounting, which differs from
GAAP in that the principal amount of outstanding bonds is measured net of
underwriters' discount and costs of issuance. The law further provides that
bonds to be refunded from the proceeds of Commonwealth refunding bonds are to be
excluded from outstanding "direct" bonds upon the issuance of the refunding
bonds. Pursuant to special legislation enacted over the years, certain
outstanding Commonwealth debt obligations are not counted in computing the
amount of bonds subject to the limit. The statutory limit on "direct" bonds
during fiscal 2009 is $15.6 billion.

In January 1990, legislation was enacted to impose a limit on debt service
appropriations in Commonwealth budgets beginning in fiscal 1991. The law
provides that no more than 10% of the total appropriations in any fiscal year
may be expended for payment of interest and principal on general obligation debt
of the Commonwealth. The debt service relating to bonds that are excluded from
the debt limit on direct debt is not included in the limit on debt service
appropriations. The law is subject to amendment or repeal by the Legislature at
any time and may be superseded in the annual appropriations act for any year.

The Commonwealth is authorized to issue three types of debt directly - general
obligation debt, special obligation debt and federal grant anticipation notes.
General obligation debt is secured by the full faith and credit of the
Commonwealth. Special obligation debt may be secured by either a pledge of
receipts credited to the Highway Fund (a fund used to finance highway
maintenance and safety services, and provide matching funds for federally
sponsored highway projects as required) or by a pledge of receipts credited to
the Boston Convention and Exhibition Center Fund. Federal grant anticipation
notes are secured by a pledge of federal highway construction reimbursements. In
addition, certain independent authorities and agencies within the Commonwealth
are statutorily authorized to issue debt for which the Commonwealth is either
directly, in whole or in part, or indirectly, liable.

Local Aid. The Commonwealth makes substantial Local Aid payments to its cities,
towns and regional school districts to mitigate the impact of local property tax
limits on local programs and services. Local Aid payments to cities, towns and
regional school districts take the form of both direct and indirect assistance.
Direct Local Aid consists of general revenue sharing funds and specific program
funds sent directly to local governments and regional school districts as
reported on the so-called "cherry sheet" prepared by the Department of Revenue,
excluding certain pension funds and non-appropriated funds. In fiscal 2009,
approximately 16% of the Commonwealth's projected budgeted spending is estimated
to be allocated to direct Local Aid.

As a result of comprehensive education reform legislation enacted in June 1993,
a large portion of general revenue sharing funds are earmarked for public
education and are distributed through a formula designed to provide more aid to
the Commonwealth's poorer communities. The legislation requires the Commonwealth
to distribute aid to ensure that each district reaches at least a minimum level
of spending per public education pupil. Since fiscal 1994, the Commonwealth has
fully funded the requirements imposed by this legislation in each of its annual
budgets. For fiscal 2009, the Commonwealth will provide a total of $3.949
billion of state aid. The Lottery and Additional Assistance programs, which
comprise the other major components of direct Local Aid, provide unrestricted
funds for municipal use.

A statute adopted by voter initiative petition at the November 1990 statewide
election regulates the distribution of Local Aid to cities and towns. As enacted
in 1992 and subsequently amended, this statute requires that, subject to annual
appropriation, no less than 40% of collections from personal income taxes,
corporate excise taxes and lottery fund proceeds and 32% of collections from
sales and use taxes be distributed to cities and towns. By its terms, the new
formula would have provided for a substantial increase in direct Local Aid in
fiscal 1992 and subsequent years. Nonetheless, Local Aid payments remain subject
to annual appropriation by the Legislature, and the appropriations for Local Aid
since the enactment of the initiative law have not met the levels set forth in
the initiative law.

Reductions in, failure to fund or delays in the payment of Local Aid may create
financial difficulties for certain municipalities or other local government
entities. From fiscal 2004 through 2008, expenditures for Direct Local Aid,
exclusive of school building assistance, were $4.149 billion, $4.224 billion, $
4.430 billion, $4.805 billion, and $5.041 billion, respectively. The fiscal 2004
final supplemental appropriations act signed into law on September 17, 2004
appropriated $75.0 million in one-time local aid payments to be distributed in
fiscal 2005. The Commonwealth was able to avoid further cuts in fiscal 2005 and
restored much of the funding in fiscal 2006. For fiscal 2009, expenditures for
Direct Local Aid are projected to total $4.724 billion.

The Commonwealth maintains a $1.000 billion commercial paper program supported
by credit lines and a letter of credit from commercial banks. The program allows
for the periodic issuance of commercial paper as either bond anticipation notes
or revenue anticipation notes (RANS) for operating purposes to meet cash flow
needs. In particular, the Commonwealth makes local aid payments of approximately
$1 billion to its cities and towns at the end of each calendar quarter, which
often result in short-term cash flow borrowings. All short-term cash flow
borrowings, including both commercial paper and revenue anticipation notes, must
be repaid by the end of the fiscal year (June 30). As of approximately March 26,
2009, the state has liquidity support for a $1 billion tax-exempt commercial
paper program for general obligation notes, through five $200 million credit
lines due to expire in January 2010, June 2010, December 2010 (two lines) and
September 2011, respectively. The Commonwealth has relied upon this $1 billion
commercial paper capacity for additional liquidity since 2002.

In November 1980, voters in the Commonwealth approved a statewide tax limitation
initiative petition, commonly known as Proposition 2 1/2, to constrain levels of
property taxation and to limit the charges and fees imposed on cities and towns
by certain governmental entities, including county governments. Proposition 2
1/2 is not a provision of the state constitution and accordingly is subject to
amendment or repeal by the Legislature. Proposition 2 1/2, as amended to date,
limits the property taxes that may be levied by any city or town in any fiscal
year to the lesser of (i) 2.5% of the full and fair cash valuation of the real
estate and personal property therein, and (ii) 2.5% over the previous year's
levy limit plus any growth in the tax base from certain new construction and
parcel subdivisions. Proposition 2 1/2 also limits any increase in the charges
and fees assessed by certain governmental entities, including county
governments, on cities and towns to the sum of (i) 2.5% of the total charges and
fees imposed in the preceding fiscal year, and (ii) any increase in charges for
services customarily provided locally or services obtained by the city or town
at its option. The law contains certain override provisions and, in addition,
permits debt service on specific bonds and notes and expenditures for identified
capital projects to be excluded from the limits by a majority vote at a general
or special election. At the time Proposition 2 1/2 was enacted, many cities and
towns had property tax levels in excess of the limit and were therefore required
to roll back property taxes with a concurrent loss of revenues. Between fiscal
1981 and fiscal 2008, the aggregate property tax levy grew from $3.347 billion
to $10.992 billion, a compound annual growth rate of 4.46%.

Many communities have responded to the limitation imposed by Proposition 2 1/2
through statutorily permitted overrides and exclusions. There are three types of
referenda questions (override of levy limit, exclusion of debt service, or
exclusion of capital expenditures) that permit communities to exceed the limits
of Proposition 2 1/2.

Certain of the Commonwealth's cities and towns have at times experienced and are
currently experiencing serious financial difficulties, which have and may
further adversely affect their credit standing. The recurrence of such financial
difficulties, or financial difficulties of the Commonwealth, including further
reductions of direct local aid payments, could adversely affect the market
values and marketability or result in default in payment on, outstanding
obligations issued by the Commonwealth or its public authorities or
municipalities. In addition, Massachusetts statutes which limit the taxing
authority of the Commonwealth or certain Massachusetts governmental entities may
impair the ability of issuers of some Massachusetts obligations to maintain debt
service on their obligations.

Medicaid. The Medicaid program (also referred to as MassHealth) provides health
care to low-income children and families, certain low-income adults, disabled
individuals, and low-income elders. The program, which is administered by the
Executive Office of Health and Human Services, receives 50% in federal
reimbursement on most expenditures and, beginning in fiscal 1999, payments for
some children's benefits are 65% federally reimbursable under the State
Children's Health Insurance Program ("SCHIP").

Nearly 30% of the Commonwealth's budget is devoted to Medicaid. It is the
largest item in the Commonwealth's budget and has been one of the fastest
growing budget items. Medicaid spending from fiscal 2005 to fiscal 2009 is
estimated to have grown by 7.4% on a compound annual basis. During the same
period, Medicaid enrollment is estimated to have increased 4.8% on a compound
annual basis. The projected increase in enrollment is largely a result of
eligibility expansions authorized in 2006 health care reform legislation.

Based on enactment of legislation filed by the Governor in January, 2009 to
close fiscal 2009 budget shortfalls, the fiscal 2009 budget includes $8.579
billion for Medicaid programs and administrative expenses (after certain
spending reductions by the Governor (known as "9C spending reductions") totaling
$238.5 million, partially offset by $177 million in spending adjustments to fund
certain program deficiencies). This amount is a 3.9% increase in spending over
fiscal year 2008 levels. These spending levels are supported in part by
increases in the federal medical assistance percentage (FMAP) made available
through the American Recovery and Reinvestment Act of 2009. The Executive Office
for Administration and Finance initially estimated that the Commonwealth would
receive $533 million in additional funding in fiscal 2009 through this FMAP
increase.

Revised estimates based on the final version of the American Recovery and
Reinvestment Act of 2009 suggest that the Commonwealth will in fact receive
greater amounts of additional federal revenue through increases in the FMAP. As
a result, the Commonwealth expects to receive $806 million in fiscal 2009 and
over $1.1 billion in fiscal 2010 in additional Medicaid matching funds. On March
25, 2009, the Governor proposed a framework for using the additional revenues
beyond its original estimates of FMAP receipts ($273 million in additional FMAP
funds in fiscal 2009 and $406 million in fiscal 2010) to help fund additional,
high-priority Medicaid spending and address other potential health care-related
needs. As a result of a mid-year review, fiscal 2009 spending for the Medicaid
program is now projected to be $8.626 billion. This figure reflects potential
spending shortfalls as well as Medicaid spending priorities supported through
updated estimates of FMAP receipts. Among other things, the additional funding
will allow for the Medicaid program to address some remaining shortfalls in the
program and protect key safety net services.

The Division of Health Care Finance and Policy administers the Health Safety Net
(formerly the Uncompensated Care Pool), which reimburses acute care hospitals
and community health centers in Massachusetts for eligible services provided to
low-income uninsured and underinsured residents of the Commonwealth. The
Division monitors utilization and costs paid from the Health Safety Net.
According to the Division, Health Safety Net service volume for hospitals and
community health centers decreased by 36% during the six-month period of April,
2008 through September, 2008, as compared to the same six-month period during
the prior year. Total costs declined by 38%, comparing Health Safety Net fiscal
2008 to the prior year. (The Health Safety Net's fiscal year runs from October 1
through September 30.)

Pending finalization of claims data review, Health Safety Net expenditures for
un-reimbursed care provided to low-income uninsured and underinsured individuals
at acute care hospitals and community health centers were $415.6 million in the
Health Safety Net's fiscal 2008. The General Fund (the Commonwealth's primary
governmental fund) contributed $49.6 million in funding for the Health Safety
Net in fiscal 2008, while $344 million is expected to be generated from hospital
and insurer assessments and surplus funds transferred from prior-year balances.
In addition, $60 million in reimbursement for care provided to low-income
uninsured and underinsured individuals provided at acute hospitals is expected
to be funded by supplemental payments made from other sources. This results in a
projected $38 million surplus for Health Safety Net in its fiscal 2008, which
has been accounted for on the Commonwealth's fiscal 2009 balance sheet.

The fiscal 2009 budget authorizes $453 million in payments made during the
Health Safety Net's fiscal 2009 for care provided to low-income uninsured and
underinsured individuals at acute care hospitals and community health centers.

Health Care Reform Legislation. In April 2006, legislation was enacted to reform
health care by mandating that individuals 18 years and older purchase insurance,
while offering subsidized coverage to uninsured residents whose income is less
than 300% of the federal poverty level and providing new, affordable products
for uninsured residents whose income exceeds this threshold. The reform asks
employers to play a role by requiring that businesses with 11 or more full-time
employees either contribute to coverage or pay an assessment. These businesses
must also establish a mechanism wherein employees can pay for health insurance
coverage on a pre-tax basis. Businesses that are subject to this requirement but
do not comply may potentially face a surcharge. The legislation also created the
Commonwealth Health Insurance Connector Authority (Connector), charged with
linking uninsured residents to affordable, and in some cases subsidized,
coverage.

The health care reform legislation expanded eligibility for MassHealth, restored
certain MassHealth benefits and services that had been cut during prior fiscal
crises and created new MassHealth programs. Eligibility for the SCHIP program
was increased to 300% of the federal poverty level, as was eligibility for
MassHealth's Insurance Partnership program. The legislation also increased or
eliminated enrollment caps for MassHealth Essential (which offers benefits to
long-term unemployed adults), MassHealth HIV Family Assistance (which covers
individuals up to 200% of the federal poverty level who are HIV-positive) and
CommonHealth (which covers disabled individuals). Enrollment caps for all of
these programs have since been eliminated. Moreover, optional MassHealth
benefits that were discontinued in fiscal 2002 have been restored by the
legislation. The legislation also created new smoking cessation and wellness
programs within MassHealth.

Additionally, the health care reform legislation provided for rate increases for
acute care hospitals, physicians and managed care organizations. To reflect the
need to maintain support for safety net institutions after the sunsetting of
previous mechanisms for making supplemental payments to these health systems,
Section 122 of the health care reform legislation requires the Commonwealth to
make transitional supplemental payments to certain safety net providers through
fiscal 2009. MassHealth spending attributable to health care reform is divided
between the MassHealth spending totals listed above and certain amounts
distributed through the Commonwealth Care Trust Fund.

The health care reform legislation also created the Connector Authority to
administer the new Commonwealth Care program, a subsidized health insurance
coverage program for adults whose income is up to 300% of the federal poverty
level and who do not have access to employer-sponsored insurance. Commonwealth
Care began enrolling individuals on October 1, 2006. As of March 1, 2009, over
165,000 residents with incomes up to 300% of the federal poverty level were
enrolled in Commonwealth Care.

The fiscal 2009 budget includes $869 million for Commonwealth Care, based on
prior cost and enrollment projections anticipating that the program would grow
to 225,000 members by the end of fiscal 2009. As of approximately March 26,
2009, Commonwealth Care was projected to cost approximately $788 million in
fiscal year 2009. Although costs for Commonwealth Care are lower than expected
in fiscal 2009, program financing remains a challenge, given the significant
decline in state tax revenues. The program is expected to be fully funded in
fiscal 2009 and fiscal 2010. The Connector Authority continues to monitor cost
and enrollment trends for fiscal 2009 and will revise estimates based on updated
information. The cost estimates discussed above represent projections of gross
funding needs for Commonwealth Care (net of enrollee contributions) and do not
account for federal reimbursement under the Commonwealth's Medicaid waiver.

Through the Commonwealth Choice program, the Connector Authority is also
responsible for offering unsubsidized, affordable health insurance plans to
individuals whose income exceeds 300% of the federal poverty level but who do
not currently have access to health coverage. Commonwealth Choice also allows
small businesses to offer their employees a choice of health insurance plans. As
of March 1, 2009, more than 21,000 individuals have enrolled in health plans
through the Commonwealth Choice program.

Transportation. The $14.808 billion Central Artery/Ted Williams Tunnel Project
was substantially completed on January 13, 2006. The Transportation Finance
Commission, established by state legislation in 2004, published a report in 2007
analyzing the Commonwealth's future funding needs and anticipated funding gaps
related to maintaining the Commonwealth's transportation system over the next 20
years. For state-controlled roads and bridges and state environmental transit
commitments related to the Central Artery/Ted Williams Tunnel project, the
report identified funding needs of $25.670 billion and expected available state
and federal funding of $16.820 billion, leaving a funding gap of $8.849 billion.
The report also identified funding gaps related to the Massachusetts turnpike
system, local roads and bridges, MBTA operations and capital needs and the Tobin
Bridge. The report estimated a funding gap for all of these transportation
assets of between $15 billion and $19 billion over the next 20 years. The report
also included several transportation proposals that the Transportation Finance
Commission estimated could generate more than $18.7 billion to fund
transportation and infrastructure improvements over the next 20 years.

On February 5, 2009, the Senate Chairman of the Joint Committee on
Transportation filed legislation to establish a new Massachusetts Surface
Transportation Authority (MSTA) that would assume responsibility for operating,
maintaining and financing the Commonwealth's roads, bridges and transit
operations. On March 25, 2009, the Senate approved a revised version of the
legislation that would transfer the state highway system, the western turnpike,
the Tobin Bridge, the Massachusetts Highway System, and the public transit
system to the new MSTA over the next two years. Under this proposal, a new
Surface Transportation Trust Fund would be established to receive all
transportation-related revenues, and expenditures from that fund would be made
by the MSTA. The MSTA would be authorized to issue bonds payable from revenues
allocated to the Trust Fund and other resources available to it, subject to a
ceiling of $10 billion of bonds outstanding at any time. Except under certain
circumstances, the MSTA's debt would not be a debt of the Commonwealth or
secured by a pledge of the Commonwealth's full faith and credit. Among the
revenues that would be deposited in the Surface Transportation Trust Fund would
be the gasoline tax receipts that are pledged to the payment of outstanding
Commonwealth special obligation bonds, and the MSTA would become responsible for
paying the debt service on those bonds. On June 26, 2009, Governor Patrick
signed the transportation overhaul bill into law.

Pensions. The Commonwealth is responsible for the payment of pension benefits
for Commonwealth employees (members of the state employees' retirement system)
and for teachers of the cities, towns and regional school districts throughout
the state (including members of the teachers' retirement system and teachers in
the Boston public schools, who are members of the State-Boston retirement system
but whose pensions are also the responsibility of the Commonwealth). The state
employees' and teachers' retirement systems are partially funded by employee
contributions of regular compensation. Legislation approved in 1997 provided,
subject to legislative approval, for annual increases in cost-of-living
allowances equal to the lesser of 3% or the previous year's percentage increase
in the United States Consumer Price Index on the first $12,000 of benefits for
members of the state employees' and teachers' retirement systems, to be funded
by the investment income of the systems. The Commonwealth pension funding
schedule assumes that annual increases of 3% will be approved.

Employees of certain independent authorities and agencies, such as the
Massachusetts Water Resources Authority and of counties, cities and towns (other
than teachers) are covered by 104 separate retirement systems. The Commonwealth
assumed responsibility, beginning in fiscal 1982, for payment of cost of living
adjustments for the 104 local retirement systems, in accordance with the
provisions of Proposition 2 1/2. However, the 1997 legislation removed from the
Commonwealth the cost of future cost-of-living adjustments for these local
retirement systems and provided that local retirement systems fund future
cost-of-living adjustments. Local retirement systems that have established
pension funding schedules may opt in to 3% annual increases in cost-of-living
allowances as well, with the costs and actuarial liabilities attributable to the
cost-of-living allowances required to be reflected in such systems' funding
schedules. Legislation approved in 1999 allows local retirement systems to
increase the cost-of-living allowance up to 3% during years that the previous
year's percentage increase in the United States Consumer Price Index is less
than 3%. The fiscal 2006 general appropriation act ("GAA") included a 3% cost of
living increase. The state employees' and state teachers' retirement systems
were originally established as "pay-as-you-go" systems, meaning that amounts
were appropriated each year to pay current benefits, and no provision was made
to fund currently the future liabilities already incurred. In fiscal 1978 the
Commonwealth began to address the unfunded liabilities of the two state systems
by making appropriations to pension reserves. Comprehensive pension funding
legislation approved in January 1988, as subsequently amended, requires the
Commonwealth to fund future pension liabilities currently and to amortize the
Commonwealth's accumulated unfunded liability to zero by June 30, 2023.

July 1997 legislation required the Secretary of Administration and Finance to
prepare a funding schedule providing for both the normal cost of Commonwealth
benefits (normal cost being that portion of the actuarial present value of
pension benefits which is allocated to a valuation year by an actuarial cost
method) and the amortization of the unfunded actuarial liability of the
Commonwealth for its pension obligations. The funding schedule was required to
be updated periodically on the basis of new actuarial valuation reports prepared
under the direction of the Secretary of Administration and Finance. The
Secretary was also required to conduct experience investigations every six
years. Funding schedules are to be filed with the Legislature triennially by
January 15 and were subject to legislative approval. Under the July 1997 pension
legislation, if a schedule was not approved by the Legislature, payments were to
be made in accordance with the most recently approved schedule; such payments,
however, would be required to be at least equal to the prior year's payments.

In fiscal 2005, Governor Romney and legislative leaders agreed to an updated
funding schedule that incorporated a January 1, 2004 actuarial valuation. The
assumptions underlying the new funding schedule retain the 2023 date for fully
amortizing the unfunded liability (as was used in prior versions of the funding
schedule) and utilize an amortization growth rate of 4.5% per year.

Actuarial valuations of the Commonwealth's pension obligation were calculated as
of January 1, 2008. The unfunded actuarial accrued liability as of that date for
the total obligation was approximately $12.105 billion, including approximately
$2.420 billion for the State Employees' Retirement System, $8.072 billion for
the Massachusetts Teachers' Retirement System, $1.237 billion for Boston
Teachers and $376 million for cost-of-living increases reimbursable to local
systems. The valuation study estimated the total actuarial accrued liability as
of January 1, 2008 to be approximately $56.637 billion (comprised of $22.821
billion for state employees, $30.955 billion for state teachers, $2.485 billion
for Boston Teachers and $376 million for cost-of-living increases reimbursable
to local systems). Total assets were valued at approximately $44.532 billion
based on a five-year average valuation method, which equaled 90.4% of the
January 1, 2008 total asset market value. The valuation method was the same as
the method used in the 2007 valuation.

Accounting standards promulgated in 2004 by the Governmental Accounting
Standards Board (GASB) required the Commonwealth to begin disclosing its
liability for other post-employment benefits (commonly referred to as "OPEB") in
its fiscal 2008 financial reports. An initial valuation report by an independent
actuarial firm of the Commonwealth's liability for these health care and life
insurance benefits was released in June, 2006. The January 1, 2008 valuation
report was released on December 4, 2008.

According to the December, 2008 report, assuming no pre-funding, the actuarial
accrued liability of the Commonwealth for OPEB obligations earned through
January 1, 2008 was $15.637 billion. If partial pre-funding was assumed, the
actuarial accrued liability was reduced to $11.649 billion. This difference is
solely attributable to the standards requirement that a lower discount rate must
be used without pre-funding. Under partial pre-funding, the annual required
contribution was calculated in December, 2008 to commence at $981.4 million for
fiscal 2009 and projected to increase to $1.65 billion for fiscal 2018.

Should the Commonwealth not fully fund the amortization of the actuarial
liability, a liability for the difference between the amount funded and the
actuarially required contribution will be reflected on the Commonwealth's
statement of net assets, as presented on a GAAP basis. The liability will
increase or decrease each year depending on the amount funded, investment return
and changes in amortization and assumptions. This change in liability will be
reflected either as a revenue or expense item in the Commonwealth's statement of
activities as presented on a GAAP basis, dependent on these factors.

In making these calculations, the independent actuarial firm utilized employment
and other data provided by the Commonwealth and assumed annual claims growth
initially at 10.5% in 2006 (used for initial valuation) declining to 9.5% in the
current valuation and ultimately to 5% after ten years and continuation of
current benefit levels and current retiree contribution requirements.

The independent actuarial report covered only the Commonwealth's OPEB
obligations for Commonwealth employees and their survivors. Municipalities and
authorities of the Commonwealth, even if their health care coverage is
administered by the Group Insurance Commission, will perform their own
valuations, as the Commonwealth acts only as an agent for these entities with
respect to OPEB and does not assume the risk or financial burden of their health
care costs.

The difference between the value of pre-funded and non-pre-funded OPEB
liabilities is due to the discount rate used in the calculation. In the absence
of pre-funding, the discount rate must approximate the Commonwealth's rate of
return on non-pension (liquid) investments over the long term, estimated at 4.5%
for the purpose of this study. In the event of pre-funding, the discount rate
would increase to a standard return on long-term investments, estimated at 6.40%
for the purpose of this study. In order to qualify its OPEB liabilities as
pre-funded, the Commonwealth must deposit annual contributions in a qualifying
trust in accordance with the requirements of GASB Statement No. 45 (and similar
to the program for funding the Commonwealth's unfunded actuarial liability for
pensions).

GASB Statement No. 45 requires that OPEB obligations be recalculated at two-year
intervals. Such calculations may be affected by many factors, including changing
experience and assumptions regarding future health care claims, by whether or
not the Commonwealth enacts legislation that qualifies its OPEB obligations to
be calculated on a pre-funded basis, by changes in the Commonwealth's employee
profile and possibly by changes in OPEB coverage levels and retiree contribution
requirements. Accordingly, it should be anticipated that the actuarial accrued
liability of the Commonwealth for OPEB liabilities may fluctuate.

The executive and legislative branches have been working to develop a short- and
long- term strategy for addressing the Commonwealth's OPEB liability. The State
Retiree Benefits Trust Fund was created, and in fiscal 2008 spending for current
retirees' healthcare occurred from the State Retiree Benefits Trust Fund,
helping to consolidate the state's retiree funding efforts and better project
future liabilities. In fiscal 2008, the State Retiree Benefits Trust Fund
benefited from a one-time transfer of approximately $400 million from the Health
Care Security Trust. The fiscal 2008 budget also established a special
commission, consisting of representatives of the executive and legislative
branches, to study the Commonwealth's liability for paying retiree health care
and other non-pension benefits.

The special commission released its report in July, 2008. In its report, the
special commission recommends that the Commonwealth develop a strategy to
pre-fund the Commonwealth's OPEB liability. The commission identifies three
funding sources -- tobacco settlement funds, unanticipated budgetary surpluses
and annual legislative appropriations -- and recommends funneling funds from all
three sources to the State Retiree Benefits Trust Fund in order to address the
unfunded OPEB liability. With regard to tobacco settlement funds, the commission
advises a phased-in approach, whereby a specified percentage of the settlement
funds (increasing from 25% of such funds in year one to 90% of such funds in
year four and thereafter) would be transferred to the State Retiree Benefits
Trust Fund. In addition to using the tobacco settlement funds, the commission
further recommends that the Commonwealth allocate 50% of any unanticipated
surplus funds in a budget surplus year to the Trust Fund. Finally, the
commission recommends that annual appropriations to the Trust Fund be included
in each annual budget so as to eliminate the unfunded liability by 2038.

The fiscal 2009 budget does not include any of the special commission's
recommendations for addressing the Commonwealth's OPEB liability.

The Governor's fiscal 2010 budget recommendations would require adoption of a
funding schedule for the Commonwealth's unfunded OPEB liability. Under the
Governor's proposal, funding would be phased in, starting as early as fiscal
2011, using tobacco settlement proceeds and a portion of budget surpluses. The
Governor, in the legislation he filed on January 28, 2009, also included a
number technical sections that related to the administration and management of
the State Retiree Benefits Trust fund. Both the provisions included in the
Governor's fiscal 2010 budget recommendation and the accompanying legislation
filed on January 28, 2009 are consistent with recommendations put forth by the
commission.



                       INVESTMENT POLICIES AND TECHNIQUES


Descriptions in this Statement of Additional Information of a particular
investment practice or technique in which the Fund may engage are meant to
describe the spectrum of investments that 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 techniques described herein may not be available, permissible,
economically feasible or effective for their intended purposes in all markets.
Certain practices, techniques or instruments may not be principal activities of
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 include the one-year, three-year and five-year constant maturity
Treasury rates, the three-month Treasury bill rate, the 180-day Treasury bill
rate, rates on longer-term Treasury securities, the 11th District Federal Home
Loan Bank Cost of Funds, the National Median Cost of Funds, the one-month,
three-month, six-month or one-year London Interbank Offered Rate ("LIBOR"), the
prime rate of a specific bank or commercial paper rates. Some indices, such as
the one-year constant maturity Treasury rate, closely mirror changes in market
interest rate levels. Others, such as the 11th District Home Loan Bank Cost of
Funds index, tend to lag behind changes in market rate levels and tend to be
somewhat less volatile.

The mortgage-backed securities either issued or guaranteed by GNMA, FHLMC or
FNMA ("Certificates") are called pass-through Certificates because a pro rata
share of both regular interest and principal payments (less GNMA's, FHLMC's or
FNMA's fees and any applicable loan servicing fees), as well as unscheduled
early prepayments on the underlying mortgage pool, are passed through monthly to
the holder of the Certificate (i.e., a fund). The principal and interest on GNMA
securities are guaranteed by GNMA and backed by the full faith and credit of the
US Government. FNMA guarantees full and timely payment of all interest and
principal, while FHLMC guarantees timely payment of interest and ultimate
collection of principal. Mortgage-backed securities from FNMA and FHLMC are not
backed by the full faith and credit of the United States; however, they are
generally considered to offer minimal credit risks. The yields provided by these
mortgage-backed securities have historically exceeded the yields on other types
of US Government Securities with comparable maturities in large measure due to
the prepayment risk discussed below.

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 Segregation. Certain investment transactions expose the Portfolio to an
obligation to make future payments to third parties. Examples of these types of
transactions, include, but are not limited to, reverse repurchase agreements,
short sales, dollar rolls, when-issued, delayed-delivery or forward commitment
transactions and certain derivatives such as swaps, futures, forwards, and
options. To the extent that the Portfolio engages in such transactions, the
Portfolio will (to the extent required by applicable law) either (1) segregate
cash or liquid assets in the prescribed amount or (2) otherwise "cover" its
future obligations under the transaction, such as by holding an offsetting
investment. If the Portfolio segregates sufficient cash or other liquid assets
or otherwise "covers" its obligations under such transactions, the Portfolio
will not consider the transactions to be borrowings for purposes of its
investment restrictions or "senior securities" under 1940 Act, and therefore,
such transactions will not be subject to the 300% asset coverage requirement
under the 1940 Act otherwise applicable to borrowings by the Portfolio.

In some cases (e.g., with respect to futures and forwards that are contractually
required to "cash-settle"), the Portfolio will segregate cash or other liquid
assets with respect to the amount of the daily net (marked-to-market) obligation
arising from the transaction, rather than the notional amount of the underlying
contract. By segregating assets in an amount equal to the net obligation rather
than the notional amount, the Portfolio will have the ability to employ leverage
to a greater extent than if it set aside cash or other liquid assets equal to
the notional amount of the contract, which may increase the risk associated with
such transactions.

The Portfolio may utilize methods of segregating assets or otherwise "covering"
transactions that are currently or in the future permitted under the 1940 Act,
the rules and regulation thereunder, or orders issued by the SEC thereunder. For
these purposes, interpretations and guidance provided by the SEC staff may be
taken into account when deemed appropriate by the Portfolio.

Assets used as segregation or cover cannot be sold while the position in the
corresponding transaction is open, unless they are replaced with other
appropriate assets. As a result, the commitment of a large portion of a
Portfolio's assets for segregation and cover purposes could impede portfolio
management or the Portfolio's ability to meet redemption requests or other
current obligations.

Segregating assets or otherwise "covering" for these purposes does not
necessarily limit the percentage of the assets of the Portfolio that may be at
risk with respect to certain derivative transactions.


Bank and Savings and Loan Obligations. These obligations include negotiable
certificates of deposit, bankers' acceptances, deposit notes, fixed time
deposits or other short-term bank obligations. Certificates of deposit are
negotiable certificates evidencing the obligations of a bank to repay funds
deposited with it for a specified period of time. The Fund may invest in
certificates of deposit of large domestic banks and their foreign branches,
large US regulated subsidiaries of large foreign banks (i.e., banks which at the
time of their most recent annual financial statements show total assets in
excess of $1 billion), and of smaller banks as described below. Although the
Fund recognizes that the size of a bank is important, this fact alone is not
necessarily indicative of its creditworthiness. Investment in certificates of
deposit issued by foreign branches of domestic banks involves investment risks
that are different in some respects from those associated with investment in
certificates of deposit issued by domestic branches of domestic banks, including
the possible imposition of withholding taxes on interest income, the possible
adoption of foreign governmental restrictions which might adversely affect the
payment of principal and interest on such certificates of deposit, or other
adverse political or economic developments. In addition, it might be more
difficult to obtain and enforce a judgment against a foreign branch of a
domestic bank.

Certificates of Participation. The Fund may purchase Certificates of
Participation in trusts that hold Municipal Securities. A Certificate of
Participation gives the Fund an undivided interest in the Municipal Security in
the proportion that the Fund's interest bears to the total principal amount of
the Municipal Security. Certificates of Participation may be variable rate or
fixed rate. Because Certificates of Participation are interests in Municipal
Securities that are generally funded through government appropriations, they are
subject to the risk that sufficient appropriations as to the timely payment of
principal and interest on the underlying Municipal Securities may not be made. A
Certificate of Participation may be backed by a guarantee of a financial
institution that satisfies rating agencies as to the credit quality of the
Municipal Security supporting the payment of principal and interest on the
Certificate of Participation. Payments of principal and interest would be
dependent upon the underlying Municipal Security and may be guaranteed under a
letter of credit to the extent of such credit. The quality rating by a rating
service of an issue of Certificates of Participation is based primarily upon the
rating of the Municipal Security held by the Trust and the credit rating of the
issuer of any letter of credit and of any other guarantor providing credit
support to the issue. The Fund's Advisor considers these factors as well as
others, such as any quality ratings issued by the rating services identified
above, in reviewing the credit risk presented by a Certificate of Participation
and in determining whether the Certificate of Participation is appropriate for
investment by the Fund. It is anticipated by the Fund's Advisor that, for most
publicly offered Certificates of Participation, there will be a liquid secondary
market or there may be demand features enabling the Fund to readily sell its
Certificates of Participation prior to maturity to the issuer or a third party.

Commercial Paper. Commercial paper consists of short-term, unsecured promissory
notes issued to finance short-term credit needs. The commercial paper purchased
by the Fund will consist only of direct obligations issued by domestic and
foreign entities.

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.



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.

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 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 "Ratings of
Investments" for a more complete description of the ratings assigned by 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 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 requirements 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 1933 Act 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
increasing 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.

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.

Industrial Development and Pollution Control Bonds. Industrial Development and
Pollution Control Bonds (which are types of private activity bonds), although
nominally issued by municipal authorities, are generally not secured by the
taxing power of the municipality but are secured by the revenues of the
authority derived from payments by the industrial user. Under federal tax
legislation, certain types of Industrial Development Bonds and Pollution Control
Bonds may no longer be issued on a tax-exempt basis, although previously-issued
bonds of these types and certain refundings of such bonds are not affected. For
the purposes of the Fund's investment limitation regarding concentration of
investments in any one industry, industrial development or other private
activity bonds ultimately payable by companies within the same industry will be
considered as if they were issued by issuers in the same industry.

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, such borrowings will
comply with the Fund's non-fundamental policies.

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. Purchase and sales of shares of Central Funds are made at net
asset value.

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.


Inverse Floaters. The Fund may invest in inverse floaters. Inverse floaters are
debt instruments with a floating rate of interest that bears an inverse
relationship to changes in short-term market interest rates. Investments in this
type of security involve special risks as compared to investments in, for
example, a fixed rate municipal security. The debt instrument in which the Fund
invests may be a tender option bond trust (the "trust"), which can be
established by a fund, a financial institution or a broker, consisting of
underlying municipal obligations with intermediate to long maturities and a
fixed interest rate. Other investors in the trust usually consist of money
market fund investors receiving weekly floating interest rate payments who have
put options with the financial institutions. The Fund may enter into shortfall
and forbearance agreements by which the Fund agrees to reimburse the trust, in
certain circumstances, for the difference between the liquidation value of the
fixed rate municipal security held by the trust and the liquidation value of the
floating rate notes. The Fund could lose money and its NAV could decline as a
result of investments in inverse floaters if movements in interest rates are
incorrectly anticipated. Moreover, the markets for inverse floaters may be less
developed and may have less liquidity than the markets for more traditional
municipal securities, especially during periods of instability in the credit
markets. The Fund's investments in inverse floaters will not be considered
borrowing within the meaning of the 1940 Act or for purposes of the Fund's
investment restrictions on borrowing.

Investment-Grade Bonds. The Fund may purchase "investment-grade" bonds, which
are those rated Aaa, Aa, A or Baa by Moody's; AAA, AA, A or BBB by S&P; or F1,
F2 or F3 by Fitch's or 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.


Letters of Credit. Municipal obligations, including certificates of
participation, commercial paper and other short-term obligations, may be backed
by an irrevocable letter of credit of a bank which assumes the obligation for
payment of principal and interest in the event of default by the issuer. Only
banks which, in the opinion of the Advisor, are of investment quality comparable
to other permitted investments of the Fund may be used for letter of credit
backed investments.

Municipal Securities. Municipal obligations are issued by or on behalf of
states, territories and possessions of the United States and their political
subdivisions, agencies and instrumentalities and the District of Columbia to
obtain funds for various public purposes. The interest on these obligations is
generally exempt from federal income tax in the hands of most investors. The two
principal classifications of municipal obligations are "notes" and "bonds."

Municipal notes are generally used to provide for short-term capital needs and
generally have maturities of one year or less. Municipal notes include Tax
Anticipation Notes, Revenue Anticipation Notes, Bond Anticipation Notes and
Construction Loan Notes. Tax Anticipation Notes are sold to finance working
capital needs of municipalities. They are generally payable from specific tax
revenues expected to be received at a future date. Revenue Anticipation Notes
are issued in expectation of receipt of other types of revenue. Tax Anticipation
Notes and Revenue Anticipation Notes are generally issued in anticipation of
various seasonal revenue such as income, sales, use and business taxes. Bond
Anticipation Notes are sold to provide interim financing and Construction Loan
Notes are sold to provide construction financing. These notes are generally
issued in anticipation of long-term financing in the market. In most cases,
these monies provide for the repayment of the notes. After the projects are
successfully completed and accepted, many projects receive permanent financing
through the Federal Housing Administration under "Fannie Mae" (the Federal
National Mortgage Association) or GNMA (the Government National Mortgage
Association). There are, of course, a number of other types of notes issued for
different purposes and secured differently than those described above.

Municipal bonds, which meet longer-term capital needs and generally have
maturities of more than one year when issued, have two principal
classifications: "general obligation" bonds and "revenue" bonds. Issuers of
general obligation bonds include states, counties, cities, towns and regional
districts. The proceeds of these obligations are used to fund a wide range of
public projects including the construction or improvement of schools, highways
and roads, water and sewer systems and a variety of other public purposes. The
basic security behind general obligation bonds is the issuer's pledge of its
full faith, credit, and taxing power for the payment of principal and interest.
The taxes that can be levied for the payment of debt service may be limited or
unlimited as to rate or amount or special assessments.

The principal security for a revenue bond is generally the net revenues derived
from a particular facility or group of facilities or, in some cases, from the
proceeds of a special excise or other specific revenue source. Revenue bonds
have been issued to fund a wide variety of capital projects including: electric,
gas, water and sewer systems; highways, bridges and tunnels; port and airport
facilities; colleges and universities; and hospitals. Although the principal
security behind these bonds varies widely, many provide additional security in
the form of a debt service reserve fund whose monies may also be used to make
principal and interest payments on the issuer's obligations. Housing finance
authorities have a wide range of security including partially or fully-insured,
rent-subsidized and/or collateralized mortgages, and/or the net revenues from
housing or other public projects. In addition to a debt service reserve fund,
some authorities provide further security in the form of a state's ability
(without obligation) to make up deficiencies in the debt reserve fund. Lease
rental bonds issued by a state or local authority for capital projects are
secured by annual lease rental payments from the state or locality to the
authority sufficient to cover debt service on the authority's obligations.

Some issues of municipal bonds are payable from United States Treasury bonds and
notes held in escrow by a trustee, frequently a commercial bank. The interest
and principal on these US Government securities are sufficient to pay all
interest and principal requirements of the municipal securities when due. Some
escrowed Treasury securities are used to retire municipal bonds at their
earliest call date, while others are used to retire municipal bonds at their
maturity.

Securities purchased for the Fund may include variable/floating rate
instruments, variable mode instruments, put bonds, and other obligations which
have a specified maturity date but also are payable before maturity after notice
by the holder ("demand obligations"). Demand obligations are considered for the
Fund's purposes to mature at the demand date.

There are, in addition, a variety of hybrid and special types of municipal
obligations as well as numerous differences in the security of municipal
obligations both within and between the two principal classifications (i.e.,
notes and bonds) discussed above.

An entire issue of municipal securities may be purchased by one or a small
number of institutional investors such as the Fund. Thus, such an issue may not
be said to be publicly offered. Unlike the equity securities of operating
companies or mutual funds which must be registered under the Securities Act of
1933 prior to offer and sale unless an exemption from such registration is
available, municipal securities, whether publicly or privately offered, may
nevertheless be readily marketable. A secondary market exists for municipal
securities which have been publicly offered as well as securities which have not
been publicly offered initially but which may nevertheless be readily
marketable. Municipal securities purchased for the Fund are subject to the
limitations on holdings of securities which are not readily marketable based on
whether it may be sold in a reasonable time consistent with the customs of the
municipal markets (usually seven days) at a price (or interest rate) which
accurately reflects its recorded value. The Fund believes that the quality
standards applicable to their investments enhance marketability. In addition,
stand-by commitments, participation interests and demand obligations also
enhance marketability.

Provisions of the federal bankruptcy statutes relating to the adjustment of
debts of political subdivisions and authorities of states of the United States
provide that, in certain circumstances, such subdivisions or authorities may be
authorized to initiate bankruptcy proceedings without prior notice to or consent
of creditors, which proceedings could result in material and adverse
modification or alteration of the rights of holders of obligations issued by
such subdivisions or authorities.

Litigation challenging the validity under state constitutions of present systems
of financing public education has been initiated or adjudicated in a number of
states, and legislation has been introduced to effect changes in public school
finances in some states. In other instances there has been litigation
challenging the issuance of pollution control revenue bonds or the validity of
their issuance under state or federal law which litigation could ultimately
affect the validity of those Municipal Securities or the tax-free nature of the
interest thereon.

For the purpose of the Fund's investment restrictions, the identification of the
"issuer" of municipal obligations which are not general obligation bonds is made
by the Advisor on the basis of the characteristics of the obligation as
described above, the most significant of which is the source of funds for the
payment of principal and interest on such obligations.

Municipal Lease Obligations and Participation Interests. Participation interests
represent undivided interests in municipal leases, installment purchase
contracts, conditional sales contracts or other instruments. These are typically
issued by the Trust or other entity which has received an assignment of the
payments to be made by the state or political subdivision under such leases or
contracts. They may be variable rate or fixed rate.

The Fund may purchase from banks participation interests in all or part of
specific holdings of municipal obligations, provided the participation interest
is fully insured. Each participation is backed by an irrevocable letter of
credit or guarantee of the selling bank that the Advisor has determined meets
the prescribed quality standards of the Fund. Therefore, either the credit of
the issuer of the municipal obligation or the selling bank, or both, will meet
the quality standards of the particular fund. The Fund has the right to sell the
participation back to the bank after seven days' notice for the full principal
amount of the Fund's interest in the municipal obligation plus accrued interest,
but only (i) as required to provide liquidity to the Fund, (ii) to maintain a
high quality investment portfolio or (iii) upon a default under the terms of the
municipal obligation. The selling bank will receive a fee from the Fund in
connection with the arrangement. The Fund will not purchase participation
interests unless in the opinion of bond counsel, counsel for the issuers of such
participations or counsel selected by the Advisor, the interest from such
participations is exempt from regular federal income tax and state income tax
for the Fund.

A municipal lease obligation may take the form of a lease, installment purchase
contract or conditional sales contract which is issued by a state or local
government and authorities to acquire land, equipment and facilities. Income
from such obligations is generally exempt from state and local taxes in the
state of issuance. Municipal lease obligations frequently involve special risks
not normally associated with general obligations or revenue bonds. Leases and
installment purchase or conditional sale contracts (which normally provide for
title in the leased asset to pass eventually to the governmental issuer) have
evolved as a means for governmental issuers to acquire property and equipment
without meeting the constitutional and statutory requirements for the issuance
of debt. The debt issuance limitations are deemed to be inapplicable because of
the inclusion in many leases or contracts of "non-appropriation" clauses that
relieve the governmental issuer of any obligation to make future payments under
the lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis. In addition,
such leases or contracts may be subject to the temporary abatement of payments
in the event the issuer is prevented from maintaining occupancy of the leased
premises or utilizing the leased equipment. Although the obligations may be
secured by the leased equipment or facilities, the disposition of the property
in the event of nonappropriation or foreclosure might prove difficult, time
consuming and costly, and result in a delay in recovery or the failure to fully
recover the Fund's original investment.

Certain municipal lease obligations and participation interests may be deemed
illiquid for the purpose of the Fund's limitation on investments in illiquid
securities. Other municipal lease obligations and participation interests
acquired by the Fund may be determined by the Advisor to be liquid securities
for the purpose of such limitation. In determining the liquidity of municipal
lease obligations and participation interests, the Advisor will consider a
variety of factors including: (1) the willingness of dealers to bid for the
security; (2) the number of dealers willing to purchase or sell the obligation
and the number of other potential buyers; (3) the frequency of trades or quotes
for the obligation; and (4) the nature of the marketplace trades. In addition,
the Advisor will consider factors unique to particular lease obligations and
participation interests affecting the marketability thereof. These include the
general creditworthiness of the issuer, the importance to the issuer of the
property covered by the lease and the likelihood that the marketability of the
obligation will be maintained throughout the time the obligation is held by the
Fund.

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

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 Code and to maintain exemption
from the registration requirements of the 1940 Act, as amended. 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 the account 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
(including interest) 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 such securities at an agreed time and
price. The Fund maintains a segregated account in connection with outstanding
reverse repurchase agreements. 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 fluctuations
in the market value of fund assets and its yield and may be viewed as a form of
leverage.

Securities Backed by Guarantees. The Fund may invest in securities backed by
guarantees from banks, insurance companies and other financial institutions.
Consequently, 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 and affect its share price.

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 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,
fixed-income indices and other financial instruments, purchase and sell futures
contracts and options thereon, and enter into various transactions such as
swaps, caps, floors or collars (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 (except to the
extent that 80% of the Fund's net assets are required to be invested in
tax-exempt municipal securities, and as limited by the Fund's other investment
restrictions and 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
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 temporary substitute
for purchasing or selling particular securities. Some Strategic Transactions may
also be used to enhance potential gain although no more than 5% of the Fund's
assets will be committed to certain Strategic Transactions entered into for
non-hedging purposes. 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 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 that 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 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 a Fund's assets in special accounts, as described
in the section entitled "Asset Segregation."

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 may not 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 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 other 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 any 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, but not
limited to, US Treasury and agency securities, mortgage-backed securities,
foreign sovereign debt, corporate debt securities, equity securities (including
convertible securities), 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, and municipal obligations.
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, but not
limited to, US Treasury and agency securities, mortgage-backed securities,
foreign sovereign debt, corporate debt securities, equity securities (including
convertible securities), 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, and municipal obligations. 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.




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 or fixed-income 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" under the regulations of the Commodity Futures Trading Commission.
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 management and
return enhancement 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 mark to market value of the contract
fluctuates. The purchase of options 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.

Options on Securities Indices and Other Financial Indices. The Fund 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.

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.

Swaps, Caps, Floors and Collars. Among the Strategic Transactions into which the
Fund may enter are interest rate, 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, 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. 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 an 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.

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 return may experience greater volatility during periods of
rising interest rates than under normal market conditions.



Third Party Puts. The Fund may purchase long-term fixed rate bonds that have
been coupled with an option granted by a third party financial institution
allowing the Fund at specified intervals to tender (or "put") the bonds to the
institution and receive the face value thereof (plus accrued interest). These
third party puts are available in several different forms, may be represented by
custodial receipts or trust certificates and may be combined with other features
such as interest rate swaps. The Fund receives a short-term rate of interest
(which is periodically reset), and the interest rate differential between that
rate and the fixed rate on the bond is retained by the financial institution.
The financial institution granting the option does not provide credit
enhancement, and in the event that there is a default in the payment of
principal or interest, or downgrading of a bond to below investment grade, or a
loss of the bond's tax-exempt status, the put option will terminate
automatically, the risk to the Fund will be that of holding such a long-term
bond and the weighted average maturity of the Fund's portfolio would be
adversely affected.

These bonds coupled with puts may present the same tax issues as are associated
with Stand-By Commitments. As with any Stand-By Commitments acquired by the
Fund, the Fund intends to take the position that it is the owner of any
municipal obligation acquired subject to a third-party put, and that tax-exempt
interest earned with respect to such municipal obligations will be tax-exempt in
its hands. There is no assurance that the Internal Revenue Service will agree
with such position in any particular case. Additionally, the federal income tax
treatment of certain other aspects of these investments, including the treatment
of tender fees and swap payments, in relation to various regulated investment
company tax provisions is unclear. However, the Advisor seeks to manage the
Fund's portfolio in a manner designed to minimize any adverse impact from these
investments.

Stand-by Commitments. A stand-by commitment is a right acquired by the Fund,
when it purchases a municipal obligation from a broker, dealer or other
financial institution ("seller"), to sell up to the same principal amount of
such securities back to the seller, at the Fund's option, at a specified price.
Stand-by commitments are also known as "puts." The exercise by the Fund of a
stand-by commitment is subject to the ability of the other party to fulfill its
contractual commitment.

Stand-by commitments acquired by the Fund will have the following features: (1)
they will be in writing and will be physically held by the Fund's custodian; (2)
the Fund's right to exercise them will be unconditional and unqualified; (3)
they will be entered into only with sellers which in the Advisor's opinion
present a minimal risk of default; (4) although stand-by commitments will not be
transferable, municipal obligations purchased subject to such commitments may be
sold to a third party at any time, even though the commitment is outstanding;
and (5) their exercise price will be (i) the Fund's acquisition cost (excluding
any accrued interest which the Fund paid on their acquisition), less any
amortized market premium or plus any amortized original issue discount during
the period the Fund owned the securities, plus (ii) all interest accrued on the
securities since the last interest payment date.

The Fund expects that stand-by commitments generally will be available without
the payment of any direct or indirect consideration. However, if necessary or
advisable, the Fund will pay for stand-by commitments, either separately in cash
or by paying a higher price for portfolio securities which are acquired subject
to the commitments.

It is difficult to evaluate the likelihood of use or the potential benefit of a
stand-by commitment. Therefore, it is expected that the Advisor will determine
that stand-by commitments ordinarily have a "fair value" of zero, regardless of
whether any direct or indirect consideration was paid. However, if the market
price of the security subject to the stand-by commitment is less than the
exercise price of the stand-by commitment, such security will ordinarily be
valued at such exercise price. Where the Fund has paid for a stand-by
commitment, its cost will be reflected as unrealized depreciation for the period
during which the commitment is held.


The Advisor understands that the Internal Revenue Service (the "IRS") has issued
a favorable revenue ruling to the effect that, under specified circumstances, a
regulated investment company will be the owner of tax-exempt municipal
obligations acquired subject to a put option. The IRS has also issued private
letter rulings to certain taxpayers (which do not serve as precedent for other
taxpayers) to the effect that tax-exempt interest received by a regulated
investment company with respect to such obligations will be tax-exempt in the
hands of the company and may be distributed to its shareholders as
exempt-interest dividends. The IRS has subsequently announced that it will not
ordinarily issue advance ruling letters as to the identity of the true owner of
property in cases involving the sale of securities or participation interests
therein if the purchaser has the right to cause the security, or the
participation interest therein, to be purchased by either the seller or a third
party. The Fund intends to take the position that it owns any municipal
obligations acquired subject to a stand-by commitment and that tax-exempt
interest earned with respect to such municipal obligations will be tax-exempt in
its hands. There is no assurance that the IRS will agree with such position in
any particular case.




Variable Rate Demand Instruments. The Fund may purchase variable rate demand
instruments, which are obligations providing for a periodic adjustment in the
interest rate paid on the instrument according to changes in interest rates
generally. These instruments also permit the Fund to demand payment of the
unpaid principal balance plus accrued interest upon a specified number of days'
notice to the issuer or its agent. The demand feature may be backed by a bank
letter of credit or guarantee issued with respect to such instrument. The Fund
generally intends to exercise the demand only (1) upon a default under the terms
of the obligation, (2) as needed to provide liquidity to the Fund, (3) to
maintain a high quality investment portfolio or (4) to maximize the Fund's
yield. A bank that issues a repurchase commitment may receive a fee from the
Fund for this arrangement. The issuer of a variable rate demand instrument may
have a corresponding right to prepay in its discretion the outstanding principal
of the instrument plus accrued interest upon notice comparable to that required
for the holder to demand payment.

The variable rate demand instruments that the Fund may purchase are payable on
demand on not more than seven calendar days' notice. The terms of the
instruments provide that interest rates are adjustable at intervals ranging from
daily up to six months, and the adjustments are based upon the current interest
rate environment as provided in the respective instruments. The Fund will
determine the variable rate demand instruments that it will purchase in
accordance with procedures designed to minimize credit risks.

The Advisor may determine that an unrated variable rate demand instrument meets
the Fund's quality criteria by reason of being backed by a letter of credit or
guarantee issued by a bank that meets the quality criteria for the Fund. Thus,
either the credit of the issuer of the obligation or the guarantor bank or both
will meet the quality standards of the Fund. The Advisor will reevaluate each
unrated variable rate demand instrument held by the Fund on a quarterly basis to
determine that it continues to meet the Fund's quality criteria.

The interest rate of the underlying variable rate demand instruments may change
with changes in interest rates generally, but the variable rate nature of these
instruments should decrease changes in value due to interest rate fluctuations.
Accordingly, as interest rates decrease or increase, the potential for capital
gain and the risk of capital loss on the disposition of portfolio securities are
less than would be the case with a comparable portfolio of fixed income
securities. The Fund may purchase variable rate demand instruments on which
stated minimum or maximum rates, or maximum rates set by state law, limit the
degree to which interest on such variable rate demand instruments may fluctuate;
to the extent it does, increases or decreases in value of such variable rate
demand notes may be somewhat greater than would be the case without such limits.
Because the adjustment of interest rates on the variable rate demand instruments
is made in relation to movements of the applicable rate adjustment index, the
variable rate demand instruments are not comparable to long-term fixed interest
rate securities. Accordingly, interest rates on the variable rate demand
instruments may be higher or lower than current market rates for fixed rate
obligations of comparable quality with similar final maturities.

The maturity of the variable rate demand instruments held by the Fund will
ordinarily be deemed to be the longer of (1) the notice period required before
the Fund is entitled to receive payment of the principal amount of the
instrument or (2) the period remaining until the instrument's next interest rate
adjustment.

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.

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.

Portfolio Holdings

In addition to the public disclosure of Fund portfolio holdings through required
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 certain third parties, such as
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 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.


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, alpha, beta, tracking
error, default rate, portfolio turnover, and risk and style characteristics so
long as the identity of 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 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, 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, and its predecessors have more than 80 years of experience managing mutual
funds. DIMA provides a full range of investment advisory services to
institutional and retail clients. The Advisor is 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. DWS Investments is part of Deutsche Bank's Asset Management division
and, within the US, represents the retail asset management activities of
Deutsche Bank AG, Deutsche Bank Trust Company Americas, Deutsche Investment
Management Americas Inc. and DWS Trust Company.

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

In certain cases, the investments for the Fund are managed by the same
individuals who manage one or more other mutual funds advised by the Advisor
that have similar names, objectives and investment styles. You should be aware
that the Fund is likely to differ from these other mutual funds in size, cash
flow pattern and tax matters. Accordingly, the holdings and performance of the
Fund can be expected to vary from those of these other mutual funds.

Certain investments may be appropriate for the Fund and also for other clients
advised by the Advisor. 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. Frequently, a
particular security may be bought or sold for only one client or in different
amounts and at different times for more than one but less than all clients.
Likewise, a particular security may be bought for one or more clients when one
or more other clients are selling the security. In addition, purchases or sales
of the same security may be made for two or more clients on the same day. In
such event, such transactions will be allocated among the clients in a manner
believed by the Advisor to be equitable to each. In some cases, this procedure
could have an adverse effect on the price or amount of the securities purchased
or sold by the Fund. Purchase and sale orders for the Fund may be combined with
those of other clients of the Advisor in the interest of achieving the most
favorable net results to the Fund.

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

Investment Management Agreement

The Board and the shareholders 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 Fund's 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 the
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 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.


From time to time, Deutsche Bank or an affiliate (collectively, "DB") may at its
sole discretion invest its own assets in shares of the Fund ("proprietary
investment") for such purposes it deems appropriate, including investments
designed to assist in the management of the Fund's portfolio. Any proprietary
investment may be hedged and, in that event, the return on the proprietary
investment, net of the effect of the hedge, would be expected to differ from the
return of the Fund. DB has no obligation to make any proprietary investments and
the amount of any proprietary investment that is made may or may not be
significant in comparison to the level of assets of the Fund. In the event that
a proprietary investment is made, except as otherwise required under the
Investment Company Act of 1940, DB would be permitted to redeem the investment
at such time that it deems appropriate.


In addition, the Board and shareholders approved a new 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 Fund pays the Advisor an annual advisory fee equal to 0.450% for the first
$250 million of average daily net assets, 0.420% on the next $750 million of net
assets, 0.400% on the next $1.5 billion of net assets, 0.380% of the next $2.5
billion, 0.350% of the next $2.5 billion, 0.330% of the next $2.5 billion,
0.310% of the next $2.5 billion and 0.300% thereafter. The fee is accrued daily
and 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. All of the Fund's expenses are paid
out of gross investment income.

For fiscal years ended March 31, 2009, 2008 and 2007, the Fund paid advisory
fees aggregating $1,902,986, $2,156,013 and $2,336,477, respectively.

Through September 30, 2009, the Advisor has agreed to contractually waive a
portion of its management fees and reimburse expenses to the extent necessary to
maintain total annual operating expenses at 0.67% for Class S shares, excluding
certain expenses such as extraordinary expenses, taxes, brokerage and interest.

For the period from October 1, 2009 through September 30, 2010, the Advisor has
agreed to contractually waive a portion of its management fees and reimburse
expenses to the extent necessary to maintain total annual operating expenses at
a ratio no higher than 0.70% for Class S shares, excluding certain expenses such
as extraordinary expenses, taxes, brokerage and interest.




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

Compensation of Portfolio Managers


Portfolio managers are eligible for total compensation comprised of base salary
and variable compensation.

Base Salary - Base salary is linked to job functions, responsibilities and
financial services industry peer comparison through the use of extensive market
data surveys.

Variable Compensation - Generally, variable compensation comprises a greater
proportion of total compensation as a portfolio manager's seniority and
compensation levels increase. Variable compensation may include a cash bonus
incentive, and potential participation in long-term incentive programs including
but not limited to, Deutsche Bank equity, equity linked vehicle, and restricted
cash. Variable compensation is determined based on an analysis of a number of
factors, including among other things, the performance of Deutsche Bank, the
performance of the Asset Management division, and the portfolio manager's
individual contribution. In evaluating individual contribution, management will
consider a combination of quantitative and qualitative factors. Top performing
investment professionals earn a total compensation package that is highly
competitive. As variable compensation increases, the percentage awarded in
long-term incentives also increases. Long-term incentives are subject to a
clawback provision for unvested portions only during the three-year life of the
plan should the individual engage in any conduct that is a significant breach of
DB policies and procedures.

o        The  quantitative   analysis  of  a  portfolio   manager's   individual
         performance is based on, among other factors, performance of all of the
         accounts managed by the portfolio  manager (which includes the fund and
         any other  accounts  managed  by the  portfolio  manager)  over a one-,
         three-,  and five-year  period relative to the appropriate  Morningstar
         and Lipper peer group universes and/or benchmark index(es) with respect
         to   each    account.    Additionally,    the    portfolio    manager's
         retail/institutional   asset  mix  is  weighted,   as  appropriate  for
         evaluation purposes.  Generally the benchmark index used is a benchmark
         index  set  forth  in  the  fund's   prospectus  to  which  the  fund's
         performance is compared. Additional or different appropriate peer group
         or  benchmark  indices  may also be used.  Primary  weight  is given to
         pre-tax  portfolio  performance  over  three-year  and  five-year  time
         periods  (adjusted as appropriate  if the portfolio  manager has served
         for less than five years) with lesser  consideration given to portfolio
         performance  over a one-year  period.  The  increase  or  decrease in a
         fund's  assets  due to the  purchase  or  sale of  fund  shares  is not
         considered a material factor.

o        The   qualitative   analysis  of  a  portfolio   manager's   individual
         performance  is based on, among other things,  the results of an annual
         management  and  internal  peer  review   process,   and   management's
         assessment  of overall  portfolio  manager  contributions  to  investor
         relations,  the investment  process and overall  performance  (distinct
         from fund and other  account  performance).  Other  factors,  including
         contributions  made to the  investment  team,  as well as  adherence to
         Compliance  Policies and Procedures,  Risk Management  procedures,  the
         firm's  Code of Ethics and  "living the values" of the Advisor are also
         factors.

The quantitative analysis of a portfolio manager's performance is given more
weight in determining variable compensation than the qualitative portion.

Fund Ownership of Portfolio Managers

The following table shows the dollar range of shares owned beneficially and of
record by each member of the Fund's portfolio management team in the 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.

<TABLE>
<CAPTION>

                                          Dollar Range of                    Dollar Range of All DWS
Name of Portfolio Manager                 Fund Shares Owned                      Fund Shares Owned
-------------------------                 -----------------                      -----------------
<S>                                             <C>                                     <C>

Philip Condon                              $10,001 - $50,000                   Over $1,000,000
Rebecca Flinn                             $50,001 - $100,000                 $100,001 - $500,000

</TABLE>


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. Total assets attributed to
each portfolio manager in the tables below include total assets of each account
managed by them, although the manager may only manage a portion of such
account's assets. 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 as of the Fund's
most recent fiscal year end.

Other SEC Registered Investment Companies Managed:

<TABLE>
<CAPTION>
                                                                           Number of
                                   Number of          Total Assets of      Investment             Total Assets of
                                   Registered         Registered           Company Accounts       Performance-
                                   Investment         Investment           with Performance-      Based Fee
Name of Portfolio Manager          Companies          Companies            Based Fee              Accounts
-------------------------          ---------          ---------            ---------              --------
<S>                                   <C>               <C>                     <C>                   <C>

Philip Condon                          8              $6,725,854,908             0                    $0
Rebecca Flinn                          2              $1,013,561,533             0                    $0


Other Pooled Investment Vehicles Managed:

                                                                            Number of Pooled
                                                                            Investment
                                   Number of                                Vehicle Accounts      Total Assets of
                                   Pooled           Total Assets of         with                  Performance-
                                   Investment       Pooled Investment       Performance-          Based Fee
Name of Portfolio Manager          Vehicles         Vehicles                Based Fee             Accounts
-------------------------          --------         --------                ---------             --------
Philip Condon                          0                 $0                     0                    $0
Rebecca Flinn                          0                 $0                     0                    $0
Other Accounts Managed:

                                                                            Number of
                                                                            Other Accounts        Total Assets of
                                   Number of                                with                  Performance-
                                   Other            Total Assets of         Performance-          Based Fee
Name of Portfolio Manager          Accounts         Other Accounts          Based Fee             Accounts
-------------------------          --------         --------------          ---------             --------
Philip Condon                         0                   $0                     0                    $0
Rebecca Flinn                         0                   $0                     0                    $0
</TABLE>

In addition to the accounts above, an investment professional may manage
accounts in a personal capacity that may include holdings that are similar to,
or the same as, those of the Fund. The Advisor has in place a Code of Ethics
that is designed to address conflicts of interest and that, among other things,
imposes restrictions on the ability of portfolio managers and other "access
persons" to invest in securities that may be recommended or traded in the Fund
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 the Advisor, 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  the  Advisor  may  have   differing   investment
         strategies, a particular security may be bought for one or more clients
         when one or more other clients are selling the security. The investment
         results  achieved for the Fund may differ from the results achieved for
         other  clients of the Advisor.  In addition,  purchases or sales of the
         same  security  may be made for two or more clients on the same day. In
         such event,  such transactions will be allocated among the clients in a
         manner  believed by the Advisor to be most  equitable  to each  client,
         generally utilizing a pro rata allocation  methodology.  In some cases,
         the allocation  procedure could  potentially  have an adverse effect or
         positive  effect on the price or amount of the securities  purchased or
         sold by the Fund. Purchase and sale orders for the Fund may be combined
         with those of other clients of the Advisor 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.

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

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

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




Codes of Ethics

The Fund, the Advisor, 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 requirements and
restrictions set forth in the applicable Code of Ethics. The Advisor's Code of
Ethics contains provisions and requirements designed to identify and address
certain conflicts of interest between personal investment activities and the
interests of the Fund. Among other things, the Advisor's Code of Ethics
prohibits certain types of transactions absent prior approval, imposes time
periods during which personal transactions may not be made in certain
securities, and requires the submission of duplicate broker confirmations and
quarterly reporting of securities transactions. Additional restrictions apply to
portfolio managers, traders, research analysts and others involved in the
investment advisory process. Exceptions to these and other provisions of the
Advisor's Code of Ethics may be granted in particular circumstances after review
by appropriate personnel.

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 Investments 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 overseeing the DWS Funds continue to be independent of
DeAM; the Chairmen of the DWS Funds' Boards of Trustees 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 the Financial Industry Regulatory Authority, or
"FINRA") announced final agreements in which Deutsche Investment Management
Americas Inc. ("DIMA"), Deutsche Asset Management, Inc. ("DAMI") and DWS Scudder
Distributors, Inc. (now known as DWS Investments Distributors, Inc. ("DIDI"))
settled administrative proceedings regarding disclosure of brokerage allocation
practices in connection with sales of the DWS Funds' (now known as the DWS
Investments 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 DIDI'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 DWS Fund shares. These directed brokerage
practices were discontinued in October 2003.




Under the terms of the settlements, in which DIMA, DAMI and DIDI neither
admitted nor denied any of the regulators' findings, DIMA, DAMI and DIDI 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 DIDI 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-investments.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, 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.

                             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 all
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 of 0.100% of the Fund's average daily
net assets.


For the period from June 1, 2006 through March 31, 2007, DIMA received an
administrative services fee from the Fund of $373,806. For the year ended March
31, 2008, DIMA received an administrative services fee of $458,140. For the year
ended March 31, 2009, DIMA received an administrative services fee of $435,235,
of which $30,868 was unpaid as of March 31, 2009

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 party 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.

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

The Trust, on behalf of the Fund has an underwriting agreement with DIDI, 222
South Riverside Plaza, Chicago, Illinois 60606 (the "Distributor"), a
Massachusetts corporation, which is a subsidiary of the Advisor, a Delaware
corporation. The Trust's underwriting agreement dated April 5, 2002, had an
initial term ending September 30, 2003, and from year to year thereafter only if
its continuance is approved annually by a majority of the members of the Board
of Trustees who are not parties to such agreement or interested persons of any
such party and either by vote of a majority of the Board of Trustees or a
majority of the outstanding voting securities of 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 a Fund
shall bear some or all of such expenses.

Although the Fund does 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
because no sales commission or load is charged to the investor. The Distributor
has made no firm commitment to acquire shares of the Fund.



Custodian, Transfer Agent and Shareholder Service Agent


Custodian: SSB, Lafayette Corporate Center, 2 Avenue De Lafayette, Boston, MA
02111, as custodian, has custody of all securities and cash of the Fund. SSB
attends to the collection of principal and income, and payment for and
collection of proceeds of securities bought and sold by the Fund.

Transfer Agent and Shareholder Service Agent. DWS Investments Service Company
("DISC" or the "Transfer Agent"), 210 West 10th Street, Kansas City, Missouri
64105-1614, an affiliate of the Advisor, is the transfer agent, dividend-paying
agent and shareholder service agent for all classes of the Fund. 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
$20.99 to $24.09 per account, for open wholesale money funds the fee is $35.55
per account, while for certain retirement accounts serviced on the recordkeeping
system of ExpertPlan, Inc., the fee is a flat fee up to $3.91 per account (as of
February 2009, 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
fees in excess of 0.25%, and processing of proxy statements, may only be
reimbursed by the Fund with the prior approval of the Fund's Board.





For the year ended March 31, 2009, the amount charged to the Fund by the
Transfer Agent for Class S shares aggregated $107,079, of which $107,079 was
waived. For the year ended March 31, 2008, the amount charged to the Fund by the
Transfer Agent for Class S shares aggregated $137,029, of which $137,029 was
waived. For the year ended March 31, 2007, the amount charged to the Fund by the
Transfer Agent for Classes S and AARP (Class AARP existed through July 14, 2006)
in total aggregated $119,880, of which $56,444 was waived.


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.

Pursuant to a sub-transfer agency agreement between DISC and DST Systems, Inc.
("DST"), DISC 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 DISC, not by the Funds.



Independent    Registered    Public Accounting Firm


The financial highlights of the Fund included in the Fund's prospectus and the
Financial Statements incorporated by reference in this Statement of Additional
Information have been so included or incorporated by reference in reliance on
the report of PricewaterhouseCoopers LLP, 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, MA 02110-2624, serves as
legal counsel to the Fund and to the Independent Trustees.


                             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. Provided a
Subadvisor is acting in accordance with any instructions and directions of the
Advisor or the Board, the Subadvisor is authorized to pay to a broker or dealer
who provides third party brokerage and research services a commission for
executing a portfolio transaction for the Fund, if the Subadvisor determines in
good faith that such commission was reasonable in relation to the value of the
third party brokerage and research services provided by such broker or dealer.




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 March 31, 2009, 2008 and 2007, the Fund did not pay
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 March 31, 2009, the Fund did not hold
any securities of its regular broker dealers.


Portfolio Turnover

Portfolio turnover rate is defined by the SEC as the ratio of the lesser of
sales or purchases to the monthly average value of such securities owned during
the year, excluding all securities whose remaining maturities at the time of
acquisition were one year or less.

Higher levels of activity by the Fund result in higher transaction costs and may
also result in taxes on realized capital gains to be borne by the Fund's
shareholders. Purchases and sales are made whenever necessary, in the Advisor's
discretion, to meet the Fund's objective.


Portfolio turnover rates for the two most recent fiscal years for the Fund were
58% and 48% for the fiscal years ended March 31, 2009 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.

Information regarding tax-deferred retirement plans is not applicable to the DWS
Massachusetts Tax-Free Fund.

Orders will be confirmed at a price based on the net asset value of the Fund
next determined after receipt in good order by DIDI 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 DIDI 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 DIDI effective on that day
("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, if an automatic investment plan (AIP) of
$50/month is established. DWS Investments 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-SSC (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 DIDI, 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 FINRA 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.


DIDI has adopted an Incentive Plan (the "Plan") covering wholesalers that are
regional vice presidents ("DWS Investments Wholesalers"). Generally, DWS
Investments 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 Investments 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 -- "Focus list funds," "Extended list funds" or "Index funds" --
taking into consideration, among other things, the following criteria, where
applicable:

o    The  Fund's  consistency  with  DWS  Investments'  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 Investments, 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 on the Focus
list and Extended list 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-investments.com, approximately one month after the end of each
quarter. DWS Investments Wholesalers receive the highest compensation for Focus
list funds, less for Extended list funds and the lowest for Index funds. The
level of compensation among these categories may differ significantly.

In the normal course of business, DWS Investments will from time to time
introduce new funds into the DWS family of funds. As a general rule, new funds
will be assigned to the Focus list compensation category. As described above,
the fund category assignments are reviewed periodically and are subject to
change.

The prospect of receiving, or the receipt of, additional compensation by a DWS
Investments Wholesaler under the Plan may provide an incentive to favor
marketing the Focus list or Extended list funds over Index funds. The Plan,
however, will not change the price that investors pay for shares of a fund. The
DWS Investments Compliance Department monitors DWS Investments 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.

Dividend Payment Option. Investors may have dividends and distributions
automatically deposited to their predesignated bank account through DWS
Investments' 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-investments.com or calling (800) 728-3337. Confirmation Statements will
be mailed to shareholders as notification that distributions have been
deposited.

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.

Eligible Class S Investors

A.   The following investors may purchase Class S shares of DWS Funds either (i)
     directly  from DWS  Investments  Distributors,  Inc.  ("DIDI"),  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 DIDI  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.

DIDI 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, .05% 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 Investments 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
Ensemble Financial Services
First Allied Securities
First Clearing/Wachovia Securities
HD Vest Investment Securities, Inc.
ING Advisors Network
John Hancock Distributors LLC
LPL Financial
M.L. Stern & Co.
Meridien Financial Group
Merrill  Lynch,  Pierce,  Fenner  & Smith Inc.
Morgan Stanley
Oppenheimer & Co., Inc.
PlanMember Services
Prime Capital Inc.
Raymond James & Associates
Raymond James Financial Services
RBC Dain Rauscher, Inc
Securities America, Inc.
UBS Financial Services
Wells Fargo Investments, LLC

Channel: Cash Product Platform
Allegheny Investments LTD
Bank of America
Bank of New York (Hare & Co.)
BMO Capital Markets
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
J.P. Morgan Clearing Corp.
Legent Clearing LLC
Lincoln Investment Planning
LPL Financial
Mellon Financial Markets LLC
Mesirow Financial, Inc.
Penson Financial Services
Pershing Choice Platform
ProFunds Distributors, Inc.
Ridge    Clearing   &   Outsourcing Solutions
Robert W. Baird & Co.
Romano Brothers and Company
SAMCO Capital Markets
Smith Moore & Company
Sungard Institutional Brokerage Inc.
Treasury Curve LLC
US Bancorp
UBS Financial Services
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
EquiTrust Life Insurance Company
Farm Bureau 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 plan. Investments are made automatically (minimum $500
and maximum $250,000 for initial investments and a minimum of $50 and maximum
$250,000 for subsequent investments) from the shareholder's account at a bank,
savings and loan or credit union into the shareholder's Fund account.
Termination by a shareholder will become effective within thirty days after the
Shareholder Service Agent has received the request. The Fund may immediately
terminate a shareholder's automatic investment plan 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 Investments Individual
Retirement Account (IRA), DWS Simplified Profit Sharing and Money Purchase
Pension Plans, DWS Investments 401(k) and DWS Investments 403(b) Plan holders),
members of FINRA, and banks.

It is our policy to offer purchase privileges to current or former directors or
trustees of the Deutsche or DWS mutual funds, employees, their spouses or life
partners and children or step-children age 21 or younger of Deutsche Bank or its
affiliates or a sub-adviser to any fund in the DWS family of funds or a
broker-dealer authorized to sell shares of the funds. Qualified individuals will
generally be allowed to purchase shares in the class with the lowest expense
ratio, usually the Institutional Class shares. If a fund does not offer
Institutional Class shares, these individuals will be allowed to buy Class A
shares at NAV. The funds also reserve the right to waive the minimum account
balance requirement for employee and director accounts. Fees generally charged
to IRA accounts will be charged to accounts of employees and directors.

Redemptions



General. Policies and procedures affecting transactions in Fund shares can be
changed at any time without notice, subject to applicable law. Transactions may
be contingent upon proper completion of application forms and other documents by
shareholders and their receipt by 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 (including any
applicable sales charge) of the Fund next determined after receipt in good order
by DIDI of the order accompanied by payment. However, orders received by dealers
or other financial services firms prior to the determination of net asset value
and received in good order by DIDI prior to the close of its business day will
be confirmed at a price based on the net asset value effective on that day
("trade date").

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 DIDI, 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 (excluding custodial
accounts for gifts and transfers to minors), provided the trustee, executor or
guardian is named in the account registration. Other institutional account
holders and guardian account holders of custodial accounts for gifts and
transfers to minors 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 or guardian 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. An owner of $5,000 or more of a class of the Fund's
shares at the offering price may provide for the payment from the owner's
account of any requested dollar amount to be paid to the owner or a designated
payee monthly, quarterly, semiannually or annually. The $5,000 minimum account
size is not applicable to IRAs. The minimum periodic payment is $50. Shares are
redeemed so that the payee should receive payment approximately the first of the
month. Investors using this Plan must reinvest Fund distributions.

In-kind Redemptions. A Fund reserves the right to honor any request for
redemption or repurchase by making payment in whole or in part in readily
marketable securities. These securities will be chosen by the fund and valued as
they are for purposes of computing the fund's net asset value. A shareholder may
incur transaction expenses in converting these securities to cash.

Checkwriting. The checkwriting privilege is only open to those shareholders who
were shareholders of the Scudder Massachusetts Limited Term Tax-Free Fund, which
merged into the DWS Massachusetts Tax-Free Fund on July 31, 2000. Checks may be
used to pay any person, provided that each check is for at least $100 and not
more than $5 million. By using the checks, the shareholder will receive daily
dividend credit on his or her shares until the check has cleared the banking
system. Investors who purchased shares by check may write checks against those
shares only after they have been on the Fund's book for seven business days.
Shareholders who use this service may also use other redemption procedures. No
shareholder may write checks against certificated shares. The Fund pays the bank
charges for this service. However, the Fund will review the cost of operation
periodically and reserve the right to determine if direct charges to the persons
who avail themselves of this service would be appropriate. The Fund, DWS
Investments Service Corporation and State Street Bank and Trust Company reserve
the right at any time to suspend or terminate the Checkwriting procedure.

Exchanges


Shareholders may request a taxable exchange of their shares for shares of the
corresponding class of certain 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.

Shareholders who exchange their shares out of a DWS money market fund (not
including shares acquired by dividend reinvestment or by exchange from Class A
shares of another DWS fund) into Class A shares of certain other DWS funds, will
generally be subject to the applicable sales charge.

Certain DWS funds may not be available to shareholders on an exchange. To learn
more about which DWS funds may be available on exchange, please contact your
financial services firm or visit our Web site at: www.dws-investments.com or
call (800) 728-3337.

Shareholders may obtain prospectus(es) of the DWS fund they are exchanging into
from dealers, other firms or DIDI.




                                    DIVIDENDS


The Fund intends to declare daily 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 November or December or
otherwise as needed. If the Fund does not distribute the amount of capital gain
and/or ordinary income required to be distributed by an excise tax provision of
the Code, the Fund may be subject to that excise tax on the undistributed
amounts. In certain circumstances, the Fund may determine that it is in the
interest of shareholders to distribute less than the required amount and pay any
necessary Fund-level income and/or excise taxes. See "Taxes" below for more
information.

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

Dividends paid by 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 dividends 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 dividends 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 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 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 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 advisors 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 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 its
          taxable  year,  (i) at least  50% of the  market  value of the  Fund's
          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 of such other
          securities  to a value not greater  than 5% of the value of the Fund's
          total  assets  and to not  more  than  10% of the  outstanding  voting
          securities of such issuer,  and (ii) not more than 25% of the value of
          its 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 (i) 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 (ii)
          the  excess,  if any, of its  interest  income  excludable  from gross
          income  under  section  103(a) over its  deductions  disallowed  under
          sections 265 and 171(a)(2), for such year.

In general, for purposes of the 90% gross income requirement described in (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 directly by the
regulated investment company. However, 100% of the net income derived from an
interest in a "qualified publicly traded partnership" (generally, a partnership
(x) the interests in which are traded on an established securities market or are
readily tradable on a secondary market or the substantial equivalent thereof,
and (y) that derives less than 90% of its income from the qualifying income
described in paragraph (a)(i) above) will be treated as qualifying income. In
general, such entities will be treated as partnerships for federal income tax
purposes because they meet the passive income requirement under Code section
7704(c)(2). For purposes of meeting the diversification test in (b) above, the
term "outstanding voting securities of such issuer" will include the equity
securities of a qualified publicly traded partnership. Also for purposes of the
diversification test in (b) above, the identification of the issuer (or, in some
cases, issuers) of a particular Fund investment can depend on the terms and
conditions of that investment. In some cases, identification of the issuer (or
issuers) is uncertain under current law, and an adverse determination or future
guidance by the IRS with respect to issuer identification for a particular type
of investment may adversely affect the Fund's ability to meet the
diversification test in (b) above.

If the Fund qualifies as a regulated investment company that is accorded special
tax treatment, the Fund will not be subject to federal income tax on income
distributed in a timely manner to its shareholders in the form of dividends
(including Capital Gain Dividends, as defined below).

If for any taxable year the Fund were not to qualify for the special federal
income tax treatment accorded regulated investment companies, all of its taxable
income would 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, would be taxable to
shareholders as ordinary income. Such distributions may be eligible (i) to be
treated as "qualified dividend income," in the case of individual and other
noncorporate shareholders, subject to reduced rates of federal income taxation
for taxable years beginning before January 1, 2011 and (ii) for the 70%
dividends received deduction in the case of corporate shareholders, provided, in
both cases, the shareholder meets certain holding period and other requirements
in respect of the Fund shares. In addition, the Fund could be required to
recognize unrealized gains, pay substantial taxes and interest and make
substantial distributions before re-qualifying as a regulated investment company
that is accorded special tax treatment.

As described in "Dividends" above, the Fund intends to distribute monthly to its
shareholders substantially all of its net investment income (excluding
short-term capital gain), and at least annually its short-term and long-term net
realized capital gains. Any taxable income including net capital gain (that is,
the excess of net realized long-term capital gains over net realized short-term
capital losses) retained by the Fund will be subject to tax at the Fund level at
regular corporate rates. The Fund may also retain for investment its net capital
gain. 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 timely 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 against
their federal income tax liabilities, if any, 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 liability, if any, and to
claim refunds on a properly-filed US tax return to the extent the credit exceeds
such liabilities. If the Fund makes this designation, for federal income tax
purposes, the tax basis of shares owned by a shareholder of the Fund would 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
under clause (i) of the preceding sentence and the tax deemed paid by the
shareholder under clause (ii) of the preceding sentence.

In determining its net capital gain for Capital Gain Dividend 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.

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 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, as discussed in "Dividends" above, the Fund may
retain (and be subject to Fund-level income and/or excise tax on) a portion of
its capital gain or other income if it appears to be in the interest of the
Fund.

Taxation of Fund Distributions. Distributions on the Fund's shares are generally
subject to US federal income tax as described herein to the extent they do not
exceed the Fund's realized income and gains, even though such distributions may
economically represent a return of capital of a particular shareholder's
investment. Such distributions are likely to occur in respect of shares
purchased at a time when the Fund's net asset value reflects gains that are
either unrealized, or realized but not distributed, that were therefore included
in the price the shareholder paid. Such distributions may reduce the fair market
value of the Fund's shares below the shareholder's cost basis in those shares.
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 may nevertheless be taxable to them.

The Fund intends to pay dividends that pass through to shareholders the
tax-exempt character of exempt interest earned by the Fund ("exempt-interest
dividends") for US federal income tax purposes. As discussed further below, the
Fund intends that most of its distributions to shareholders will be
exempt-interest dividends, which are exempt from federal income tax, but may be
subject to state and local taxes. In addition, an investment in the Fund may
result in liability for the federal alternative minimum tax, both for individual
and corporate shareholders.

 For US federal income tax purposes, distributions of investment income other
than exempt-interest dividends 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. In general, the Fund will recognize long-term capital gain or
loss on investments it has owned (or is deemed to have owned) for more than one
year, and short-term capital gain or loss on investments it has owned (or is
deemed to have owned) for one year or less. Distributions of net capital gain
that are properly designated by the Fund as capital gain dividends ("Capital
Gain Dividends") will be taxable to shareholders as long-term capital gains.
Distributions from capital gains are generally made after applying any available
capital loss carryovers. 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. It is currently unclear whether Congress will extend this
provision for tax years beginning on or after January 1, 2011. Distributions of
net short-term capital gain (as reduced by any net long-term capital loss for
the taxable year) will be taxable to shareholders as ordinary income.
Distributions are taxable as described herein whether shareholders receive them
in cash or reinvest them in additional shares of the Fund or another DWS Fund
through the reinvestment privilege.

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.

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 level; however, the Fund does not expect a significant
portion of Fund distributions to be derived from qualified dividend income. It
is currently unclear whether Congress will extend this provision for tax years
beginning on or after January 1, 2011.

Any distribution of income that is attributable to (i) income received by the
Fund in lieu of dividends with respect to securities on loan pursuant to a
securities lending transaction or (ii) dividend income received by the Fund on
securities it temporarily purchased from a counterparty pursuant to a repurchase
agreement that is treated for U.S. federal income tax purposes as a loan by the
Fund, such distribution may not constitute qualified dividend income to
individual shareholders and may not be eligible for the dividends-received
deduction for corporate shareholders. Similarly, any distribution of income that
is attributable to (i) income received by the Fund in lieu of tax-exempt
interest with respect to securities on loan or (ii) tax-exempt interest received
by the Fund on tax-exempt securities it temporarily purchased from a
counterparty pursuant to a repurchase agreement that is treated for U.S. federal
income tax purposes as a loan by the Fund, may not constitute an exempt-interest
dividend to shareholders.

Special Rules for Debt Obligations. Some debt obligations with a fixed maturity
date of more than one year from the date of issuance (and zero-coupon debt
obligations with a fixed maturity date of more than one year from the date of
issuance) that are acquired by the Fund will be treated as debt obligations that
are issued originally at a discount. Generally, the amount of the original issue
discount ("OID") is treated as interest income and is included in the Fund's
income (and required to be distributed by the Fund) 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. OID of a state or municipal obligation
(whether interest bearing or not) is exempt from tax if stated interest on the
obligation is exempt under Code section 103(a) or would be exempt were the
obligation interest-bearing.

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." Very generally, market discount is the
excess of the stated redemption price of a debt obligation over the purchase
price of such obligation (or in the case of an obligation issued with OID, its
"revised issue price"). 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. Alternatively,
the Fund may elect to accrue market discount currently, in which case the
discount accrues (as ordinary income) ratably in equal daily installments or, if
the Fund so elects, at a constant (compound) interest rate. Either election will
affect the character and timing of recognition of income by the Fund.

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 OID, or
in certain cases, "acquisition discount" (very generally, the excess of the
stated redemption price over the purchase price). The Fund will be required to
include the OID or acquisition discount in income (as ordinary 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 OID or
acquisition discount accrues ratably in equal daily installments or, if the Fund
so elects, at a constant (compound) interest rate. If the Fund elects the
constant interest rate method, the character and timing of recognition of income
by the Fund will differ from what they would have been under the default pro
rata method.

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 Dividend than
they would in the absence of such transactions.

A portion of the OID accrued on certain high yield discount obligations may not
be deductible to the issuer and will instead be treated as a dividend paid by
the issuer for purposes of the dividends received deduction. In such cases, if
the issuer of the high yield discount obligations is a domestic corporation,
dividend payments by the Fund may be eligible for the dividends received
deduction to the extent attributable to the deemed dividend portion of such OID.

At-Risk or Defaulted Securities. 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 whether or to what extent the Fund should
recognize market discount on a debt obligation, when the Fund may cease to
accrue interest, OID or market discount, when and to what extent the Fund may
take deductions for bad debts or worthless securities and how the Fund should
allocate payments received on obligations in default 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 U.S. federal income or excise tax.

A Fund may invest directly or indirectly in residual interests in real estate
mortgage investment conduits ("REMICs") or equity interests in taxable mortgage
pools ("TMPs"). Under a notice issued by the IRS in October 2006 and Treasury
regulations that have yet to be issued but may apply retroactively, a portion of
a Fund's income (including income allocated to the Fund from a REIT or other
pass-through entity) that is attributable to a residual interest in a REMIC or
an equity interest in a TMP (referred to in the Code as an "excess inclusion")
will be subject to U.S. federal income tax in all events. This notice also
provides, and the regulations are expected to provide, that excess inclusion
income of a regulated investment company will be allocated to shareholders of
the regulated investment company in proportion to the dividends received by such
shareholders, with the same consequences as if the shareholders held the related
interest directly. As a result, a Fund investing in such interests may not be a
suitable investment for charitable remainder trusts, as noted below.

In general, excess inclusion income allocated to shareholders (i) cannot be
offset by net operating losses (subject to a limited exception for certain
thrift institutions), (ii) will constitute unrelated business taxable income
("UBTI") to entities (including a qualified pension plan, an individual
retirement account, a 401(k) plan, a Keogh plan or other tax-exempt entity)
subject to tax on UBTI, thereby potentially requiring such an entity that is
allocated excess inclusion income, and otherwise might not be required to file a
tax return, to file a tax return and pay tax on such income, and (iii) in the
case of a non-U.S. shareholder, will not qualify for any reduction in U.S.
federal withholding tax.

Derivatives, Hedging and Other Related Transactions. The Fund's transactions in
certain derivative instruments (e.g., forward contracts and swap agreements),
options, and other hedging, short sale or similar transactions, if any, may be
subject to one or more special tax rules (e.g., mark-to-market, notional
principal contract, straddle, constructive sale, wash sale and short sale
rules). These rules may affect whether gains and losses recognized by the Fund
are treated as ordinary or capital or as short-term or long-term, accelerate the
recognition of income or gains to the Fund, defer losses to the Fund, and cause
adjustments in the holding periods of the Fund's securities. These rules could
therefore affect the amount, timing and/or character of distributions to
shareholders. Because the tax rules applicable to these types of transactions
are in some cases uncertain under current law, an adverse determination or
future guidance by the IRS with respect to these rules (which determination or
guidance could be retroactive) may affect whether the Fund has made sufficient
distributions, and otherwise satisfied the relevant requirements, to maintain
its qualification as a regulated investment company and avoid a Fund-level tax.

 In general, option premiums received by the Fund are not immediately included
in the income of the Fund. Instead, the premiums are recognized when the option
contract expires, the option is exercised by the holder, or the Fund transfers
or otherwise terminates the option (e.g., through a closing transaction). If an
option written by the Fund is exercised and the Fund sells or delivers the
underlying stock, the Fund generally will recognize capital gain or loss equal
to (a) sum of the strike price and the option premium received by the Fund minus
(b) the Fund's basis in the stock. Such gain or loss generally will be
short-term or long-term depending upon the holding period of the underlying
stock. If securities are purchased by the Fund pursuant to the exercise of a put
option written by it, the Fund generally will subtract the premium received from
its cost basis in the securities purchased. The gain or loss with respect to any
termination of the Fund's obligation under an option other than through the
exercise of the option and related sale or delivery of the underlying stock
generally will be short-term gain or loss depending on whether the premium
income received by the Fund is greater or less than the amount paid by the Fund
(if any) in terminating the transaction. Thus, for example, if an option written
by the Fund expires unexercised, the Fund generally will recognize short-term
gain equal to the premium received.

The tax treatment of certain futures contracts entered into by the Fund as well
as listed non-equity options written or purchased by the Fund on U.S. exchanges
(including options on futures contracts, equity indices and debt securities)
will be governed by section 1256 of the Code ("section 1256 contracts"). Gains
or losses on section 1256 contracts generally are considered 60% long-term and
40% short-term capital gains or losses ("60/40"). Also, section 1256 contracts
held by the Fund at the end of each taxable year (and, for purposes of the 4%
excise tax, on certain other dates as prescribed under the Code) are "marked to
market" with the result that unrealized gains or losses are treated as though
they were realized and the resulting gain or loss is treated as ordinary or
60/40 gain or loss, as applicable.

Book-Tax Differences. Certain of the Fund's investments in derivative
instruments and hedging activities are likely to produce a difference between
its book income and its taxable income. If there are differences between the
Fund's book income and the sum of its taxable income and net tax-exempt income,
the Fund may be required to distribute amounts in excess of its book income or a
portion of Fund distributions may be treated as a return of capital to
shareholders. If the Fund's book income exceeds the sum of its taxable income
(including realized capital gains) and net tax-exempt income, the distribution
(if any) of such excess generally will be treated as (i) a dividend to the
extent of the Fund's remaining earnings and profits (including earnings and
profits arising from tax-exempt income), (ii) thereafter, as a return of capital
to the extent of the recipient's basis in its shares, and (iii) thereafter as
gain from the sale or exchange of a capital asset. If the Fund's book income is
less than the sum of its taxable income and net tax-exempt 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.

Sale, Exchange or Redemption of Shares. The sale, exchange or redemption of Fund
shares will generally 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 will be treated
as short-term capital gain or loss. However, any loss realized upon a taxable
disposition of Fund 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. In addition, any loss realized upon a taxable disposition of Fund
shares held by a shareholder for six months or less will be disallowed, to the
extent of any exempt-interest dividends received by the shareholder with respect
to the shares. Further, all or a portion of any loss realized upon a taxable
disposition of Fund shares will be disallowed under the Code's "wash-sale" rule
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.

Backup Withholding. Under the backup withholding provisions of the Code,
redemption proceeds as well as distributions may be subject to federal income
tax withholding for certain individual shareholders if (i) the shareholder fails
to furnish the Fund with a correct "taxpayer identification number" (TIN), (ii)
the shareholder underreports dividend or interest income, or (iii) the
shareholder has not certified to the Fund that withholding does not apply. The
backup withholding rules may also apply to distributions that are properly
designated as exempt-interest dividends. The backup withholding tax rate is 28%
for amounts paid through 2010. This rate will expire and the backup withholding
rate will be 31% for amounts paid after December 31, 2010, unless Congress
enacts tax legislation providing otherwise.

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 IRS.

Non-US Shareholders. Distributions properly designated as Capital Gain Dividends
and exempt-interest dividends generally will not be subject to withholding of
federal income tax. However, exempt-interest dividends may be subject to backup
withholding (as discussed above). In general, dividends other than Capital Gain
Dividends and exempt-interest dividends paid by the Fund to a shareholder that
is not a "US person" within the meaning of the Code (a "foreign shareholder")
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 shareholder directly, would not be
subject to withholding. However, effective for taxable years of the Fund
beginning before January 1, 2010, the Fund is not required to withhold any
amounts (i) with respect to distributions (other than distributions to a foreign
shareholder (A) that has not provided a satisfactory statement that the
beneficial owner is not a US person, (B) to the extent that the dividend is
attributable to certain interest on an obligation if the foreign shareholder is
the issuer or is a 10% shareholder of the issuer, (C) that is within certain
foreign countries that have inadequate information exchange with the United
States, or (D) to the extent the dividend is attributable to interest paid by a
person that is a related person of the foreign shareholder and the foreign
shareholder is a controlled foreign corporation) from US-source interest income
of types similar to those not subject to US federal income tax if earned
directly by an individual foreign shareholder, to the extent such distributions
are properly designated by the Fund ("interest-related dividends"), and (ii)
with respect to distributions (other than (A) distributions to an individual
foreign shareholder who is present in the United States for a period or periods
aggregating 183 days or more during the year of the distribution and (B)
distributions subject to special rules regarding the disposition of US real
property interests 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 ("short-term capital gain dividends"). Depending on the circumstances, the
Fund may make designations of interest-related and/or short-term capital gain
dividends with respect to all, some or none of its potentially eligible
dividends and/or treat such dividends, in whole or in part, as ineligible for
these exemptions from withholding. The Fund does not currently intend to make
designations of interest-related dividends. Absent legislation extending these
exemptions for taxable years beginning on or after January 1, 2010, these
special withholding exemptions for interest-related and short-term capital gain
dividends will expire and these dividends generally will be subject to
withholding as described above. It is currently unclear whether Congress will
extend the exemptions for tax years beginning on or after January 1, 2010.

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
shareholders should contact their intermediaries regarding the application of
these rules to their accounts.

A foreign shareholder 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 or exempt-interest dividends unless (i)
such gain or dividend is effectively connected with the conduct by the foreign
shareholder of a trade or business within the United States, (ii) in the case of
a foreign shareholder that is an individual, the shareholder 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. If a foreign 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 foreign shareholder in the United
States

Special rules would apply if the Fund were either a "U.S. real property holding
corporation" ("USRPHC") or would be a USRPHC but for the operation of certain
exceptions to the definition thereof. Very generally, a USRPHC is a domestic
corporation that holds USRPIs the fair market value of which equals or exceeds
50% of the sum of the fair market values of the corporation's USPRIs, interests
in real property located outside the United States, and other assets. USRPIs are
generally defined as any interest in U.S. real property and any interest (other
than solely as a creditor) in a USRPHC or former USRPHC.

If the Fund were a USRPHC or would be a USRPHC but for the exceptions referred
to above, any distributions by the Fund to a foreign shareholder (including, in
certain cases, distributions made by the Fund in redemption of its shares) that
are attributable to gains realized by the Fund on the disposition of USRPIs or
to distributions received by the Fund from a lower-tier RIC or REIT that the
Fund is required to treat as USRPI gain in its hands generally will be subject
to U.S. tax withholding. In addition, such distributions may result in the
foreign shareholder being required to file a U.S. tax return and pay tax on the
distributions at regular U.S. federal income tax rates. The consequences to a
foreign shareholder, including the rate of such withholding and character of
such distributions (e.g., as ordinary income or USRPI gain), will vary depending
upon the extent of the foreign shareholder's current and past ownership of the
Fund. Absent legislation, after December 31, 2009, this "look-through" USRPI
treatment for distributions by the Fund, if it were either a USRPHC or would be
a USRPHC but for the operation of the exceptions referred to above, to foreign
shareholders will only apply to those distributions that, in turn, are
attributable to distributions received by the Fund from a lower-tier REIT that
the Fund is required to treat as USRPI gain in its hands.

In addition, if the Fund were a USRPHC or former USRPHC, it may be required to
withhold U.S. tax on the proceeds of a share redemption by a greater-than-5%
foreign shareholder, in which case such foreign shareholder generally would also
be required to file U.S. tax returns and pay any additional taxes due in
connection with the redemption.

The Fund generally does not expect that it will be a USRPHC or would be a USRPHC
but for the operation of the special exceptions referred to above. Foreign
shareholders should consult their tax advisors concerning the application of
these rules to their investment in the Fund.

In order to qualify for any exemptions from withholding described above or for
lower withholding tax rates under income tax treaties, or to establish an
exemption from backup withholding, a foreign shareholder must comply with
special certification and filing requirements relating to its non-US status
(including, in general, furnishing an IRS Form W-8BEN or substitute form).

A foreign shareholder may be subject to state and local tax and to the US
federal estate tax in addition to the US federal income tax referred to above.

Tax Shelter Reporting Regulations. Under Treasury regulations, if a shareholder
recognizes with respect to the Fund's shares a loss of $2 million or more for an
individual shareholder or $10 million or more for a corporate shareholder, the
shareholder must file with the IRS a disclosure statement on Form 8886. Direct
shareholders of portfolio securities are in many cases 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.

Tax  Effects  of  the  Fund's  Main Investment Strategy

Exempt-Interest Dividends. The Fund is eligible to pay exempt-interest dividends
to its shareholders only for taxable years in which, at the close of each
quarter, at least 50% of the total value of the Fund's assets consists of
securities generating interest that is exempt from federal income tax under Code
section 103(a). The Fund intends to satisfy this requirement. Fund distributions
properly designated as exempt-interest dividends are not generally taxable to
Fund shareholders for US federal income tax purposes, but they may be subject to
state and local taxes. You are advised to consult with your tax advisor about
state and local tax matters. In addition, an investment in the Fund may result
in liability for the federal alternative minimum tax, both for individual and
corporate shareholders. For example, if the Fund invests in "private activity
bonds," certain shareholders may become subject to alternative minimum tax on
the part of the Fund's distributions derived from interest on such bonds. If the
Fund intends to be eligible to pay exempt-interest dividends, the Fund may be
limited in its ability to enter into taxable transactions involving forward
commitments, repurchase agreements, financial futures and options contracts on
financial futures, tax-exempt bond indices and other assets.

In general, exempt-interest dividends, if any, attributable to interest received
on certain private activity obligations and certain industrial development bonds
will not be tax-exempt to any shareholders who are "substantial users" of the
facilities financed by such obligations or bonds or who are "related persons" of
such substantial users.

A shareholder who receives Social Security or railroad retirement benefits,
should consult his or her tax advisor to determine what effect, if any, an
investment in the Fund may have on the federal taxation of such benefits.
Exempt-interest dividends are included in income for purposes of determining the
amount of benefits that are taxable.

Part or all of the interest on indebtedness, if any, incurred or continued by a
shareholder to purchase or carry shares of the Fund paying exempt-interest
dividends is not deductible. The portion of interest that is not deductible is
equal to the total interest paid or accrued on the indebtedness, multiplied by
the percentage of the Fund's total distributions (not including distributions
from net long-term capital gains) paid to the shareholder that are
exempt-interest dividends. Under rules used by the IRS to determine when
borrowed Funds are considered used for the purpose of purchasing or carrying
particular assets, the purchase of shares may be considered to have been made
with borrowed funds even though such Funds are not directly traceable to the
purchase of shares.

The Fund, which intends to be eligible to pay exempt-interest dividends, will
inform investors within 60 days of the Fund's fiscal year-end of the percentage
of its income distributions designated as exempt-interest dividends. The
percentage is applied uniformly to all distributions made during the year. The
percentage of income designated as exempt-interest dividends for any particular
distribution may be substantially different from the percentage of the Fund's
income that was tax-exempt during the period covered by the distribution.

Information for Massachusetts Residents. Individual shareholders of DWS
Massachusetts Tax-Free Fund resident in Massachusetts will not be subject to
Massachusetts personal income tax on distributions received from the Fund to the
extent such distributions constitute (1) exempt-interest dividends under Code
section 852(b)(5) which the Fund properly identifies as consisting of interest
on tax-exempt obligations of the Commonwealth of Massachusetts or its political
subdivisions or any agency or instrumentality of the foregoing, (2) Capital Gain
Dividends under Code section 852(b)(3) which the Fund properly identifies as
capital gains attributable to tax-exempt obligations of the Commonwealth of
Massachusetts or its political subdivisions or any agency or instrumentality of
the foregoing, or (3) dividends which the Fund properly identifies as
attributable to interest on tax-exempt obligations of the United States and
instrumentalities or obligations issued by the Commonwealth of Puerto Rico, its
subdivisions or authorities, or the governments of the Virgin Islands and Guam.
From time to time, legislation may be introduced or litigation may arise that
would change the tax treatment of exempt-interest dividends. Such litigation or
legislation may have the effect of raising the state or other taxes payable by
shareholders on such dividends. Shareholders should consult their tax advisors
for the current law on exempt-interest dividends.

Other distributions from the Fund, including those derived from taxable interest
income and long-term and short-term capital gains, generally will not be exempt
from Massachusetts personal income taxation except for distributions which
qualify as capital gain dividends under Code section 852(b)(3), and are properly
identified by the Fund as attributable to the sale of certain Massachusetts
obligations issued pursuant to legislation which specifically exempts capital
gain on the sale of such obligations from Massachusetts income taxation.

Fund distributions will not be excluded from net income, and shares of the Fund
will not be excluded from the net worth of intangible property corporations, for
purposes of computing the Massachusetts corporate excise tax.

General Considerations. Tax legislation in recent years has included several
provisions that may affect the supply of, and the demand for, tax-exempt bonds.
It is not possible to predict with certainty the effect of these recent tax law
changes upon the tax-exempt bond market, including the availability of
obligations appropriate for investment, nor is it possible to predict any
additional restrictions that may be enacted in the future.

The federal income tax discussion set forth above is for general information
only. Prospective investors should consult their tax advisors regarding the
specific federal tax consequences of purchasing, holding, and disposing of
shares of the Fund, as well as the effects of state, local and foreign tax law
and any proposed tax law changes.

Tax-Equivalent Yield

Tax-equivalent yield is the net annualized taxable yield needed to produce a
specified tax-exempt yield at a given tax rate based on a specified 30 day (or
one month) period assuming semiannual compounding of income. Tax-equivalent
yield is calculated by dividing that portion of a Fund's yield (as computed in
the yield description above) which is tax-exempt by one minus a stated income
tax rate and adding the product to that portion, if any, of the yield of the
Fund that is not tax-exempt.

Tax-Exempt Versus Taxable Yield. You may want to determine which investment --
tax-exempt or taxable -- will provide you with a higher after-tax return. To
determine the taxable equivalent yield, simply divide the yield from the
tax-exempt investment by the sum of 1 minus your marginal tax rate. The tables
below are provided for your convenience in making this calculation for selected
tax-exempt yields and taxable income levels. These yields are presented for
purposes of illustration only and are not representative of any yield the Fund
may generate. The tables are based upon current law as to the 2009 tax rates
schedules.



<TABLE>

MASSACHUSETTS

Tax Equivalent Yields

DWS Investments 2009
<CAPTION>
                                                                                                                        Combined
                                      Effective       Combined                                            Effective   Massachusetts
                          Effective   Federal      Massachusetts and                          Effective    Federal     and Federal
Taxable Income Single     State Rate    Rate      Federal Tax Bracket   Taxable Income Joint  State Rate    Rate       Tax Bracket
---------------------     ----------    ----      -------------------   --------------------  ----------    ----       ------------
<S>                          <C>          <C>            <C>                     <C>             <C>         <C>            <C>

$33,950-$82,250             5.30%       25.00%        28.98%              $67,900-$137,050      5.30%       25.00%         28.98%
$82,250-$171,550            5.30%       28.00%        31.82%             $137,050-$208,850      5.30%       28.00%         31.82%
$171,550-$372,950           5.30%       33.00%        36.55%             $208,850-$372,950      5.30%       33.00%         36.55%
over $372,950               5.30%       35.00%        38.45%                 over $372,950      5.30%       35.00%         38.45%


                   If your combined federal and state effective tax rate in 2008 is:
                    28.98%      31.82%          36.55%              38.45%             28.98%     31.82%        36.55%     38.45%
To match these
tax-free yields:   Your taxable investment would have to earn the following yield:

2.00%               2.82%        2.93%           3.15%              3.25%               2.82%      2.93%          3.15%    3.25%
3.00%               4.22%        4.40%           4.73%              4.87%               4.22%      4.40%          4.73%    4.87%
4.00%               5.63%        5.87%           6.30%              6.50%               5.63%      5.87%          6.30%    6.50%
5.00%               7.04%        7.33%           7.88%              8.12%               7.04%      7.33%          7.88%    8.12%
6.00%               8.45%        8.80%           9.46%              9.75%               8.45%      8.80%          9.46%    9.75%
7.00%               9.86%       10.27%          11.03%             11.37%               9.86%     10.27%         11.03%   11.37%
8.00%              11.26%       11.73%          12.61%             13.00%              11.26%     11.73%         12.61%   13.00%
9.00%              12.67%       13.20%          14.18%             14.62%              12.67%     13.20%         14.18%   14.62%

</TABLE>
<!-- MARKER FORMAT-SHEET="Para Flush Level 4" FSL="Default" -->

Please note:

1)   This chart does not take into consideration any local or city tax rates.

2)   The effective state and federal tax rates are calculated  using the highest
     marginal tax rate within the applicable tax bracket.

3)   The combined effective tax rate reflects a deduction for state income taxes
     on the federal return.

4)   Taxable income amounts  represent taxable income as defined in the Internal
     Revenue  Code. It is assumed that the  definition of taxable  income is the
     same under  Massachusetts  Personal Income Tax law; however,  Massachusetts
     taxable  income  may  vary  due  to  differences  in  exemptions,  itemized
     deductions, and other items.


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


                           BOARD MEMBERS 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.

<TABLE>
<CAPTION>
Independent Board Members
<S>                                             <C>                                                     <C>

--------------------------------------------------------------------------------------------------------------------
 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
--------------------------------------------------------------------------------------------------------------------
Paul K. Freeman                   Consultant, World Bank/Inter-American Development Bank;               125
(1950)                            Governing Council of the Independent Directors Council
Chairperson since 2009, and       (governance, executive committees); formerly: Project
Board Member since 1993           Leader, International Institute for Applied Systems Analysis
                                  (1998-2001); Chief Executive Officer, The Eric Group, Inc.
                                  (environmental insurance) (1986-1998)
--------------------------------------------------------------------------------------------------------------------
John W. Ballantine (1946)         Retired; formerly: Executive Vice President and Chief Risk            125
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:               125
 Board Member since               Association of Public Television Stations; Becton Dickinson
 1990                             and Company(2) (medical technology company); Belo
                                  Corporation(2) (media company); Boston Museum
                                  of Science; Public Radio International; PRX,
                                  The Public Radio Exchange; The PBS Foundation;
                                  former Directorships: American Public
                                  Television; Concord Academy; New England
                                  Aquarium; Mass. Corporation for Educational
                                  Telecommunications; Committee for Economic
                                  Development; Public Broadcasting Service
--------------------------------------------------------------------------------------------------------------------
Dawn-Marie Driscoll (1946)        President, Driscoll Associates (consulting firm); Executive           125
Board Member since 1987           Fellow, Center for Business Ethics, Bentley University;
                                  formerly: Partner, Palmer & Dodge (1988-1990); Vice President
                                  of Corporate Affairs and General Counsel, Filene's
                                  (1978-1988); Directorships: Trustee of 20 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
                                  University; Trustee, Southwest Florida Community Foundation
                                  (charitable organization); former Directorships: Investment
                                  Company Institute (audit, executive, nominating committees)
                                  and Independent Directors Council (governance, executive
                                  committees)
--------------------------------------------------------------------------------------------------------------------
Keith R. Fox (1954)               Managing General Partner, Exeter Capital Partners (a series           125
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           125
(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,         125
(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)          Managing Director, Diamond Management & Technology                    125
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             125
(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); Director, CardioNet,
                                  Inc.(2) (2009-present) (health care); 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(2) (January 2007-June 2007)
--------------------------------------------------------------------------------------------------------------------
William N. Searcy, Jr.            Private investor since October 2003; Trustee of 20 open-end           125
(1946)                            mutual funds managed by Sun Capital Advisers, Inc. (since
Board Member since                October 1998); formerly: Pension & Savings Trust Officer,
1993                              Sprint Corporation(2) (telecommunications) (November
                                  1989-September 2003)
--------------------------------------------------------------------------------------------------------------------
Jean Gleason Stromberg            Retired; formerly: Consultant (1997-2001); Director, US               125
(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;
                                  Business Leadership Council, Wellesley College; former
                                  Directorships: Service Source, Inc., 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         128
Board Member since 1999           firm) (1983 to present); Director, The Phoenix Boys Choir
                                  Association
--------------------------------------------------------------------------------------------------------------------

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(3)                Managing  Director(4),  Deutsche  Asset  Management;  Head  of        125
 (1958)                           Deutsche Asset  Management  Americas;  CEO of DWS Investments;
 Board Member since               relocated  to  Germany  in July  2009 as Vice  Chairman(4) of
 2006                             Deutsche Asset  Management and Member of the Management Board
                                  of DWS Investments, responsible for Global
                                  Relationship Management; formerly: board member of
                                  DWS Investments, Germany (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(5)

--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth,
 Position with the Trust and               Business Experience and
 Length of Time Served(6)            Directorships During the Past 5 Years
--------------------------------------------------------------------------------------------------------------------
 Michael G. Clark(7) (1965)       Managing Director(4), 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(8) (1962)          Director(4), Deutsche Asset Management
 Vice President and Secretary,
 1999-present
--------------------------------------------------------------------------------------------------------------------
 Paul H. Schubert(7) (1963)       Managing Director(4), 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)
--------------------------------------------------------------------------------------------------------------------
 Caroline Pearson(8) (1962)       Managing Director(4), Deutsche Asset Management
 Assistant Secretary,
 1997-present
--------------------------------------------------------------------------------------------------------------------
 Rita Rubin(9) (1970)             Vice President and Counsel, Deutsche Asset Management (since October 2007);
 Assistant Secretary,             formerly, Vice President, Morgan Stanley Investment Management (2004-2007);
 2009-present                     Attorney, Shearman & Sterling LLP (2004); Vice President and Associate General
                                  Counsel, UBS Global Asset Management (2001-2004)
--------------------------------------------------------------------------------------------------------------------
 Paul Antosca(8)                  Director(4), 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 (8)                   Director(4), Deutsche Asset Management (since 2007); formerly: Vice President,
 (1967)                           State Street Corporation (2002-2007)
 Assistant Treasurer,
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Diane Kenneally(8)               Director(4), Deutsche Asset Management
 (1966)
 Assistant Treasurer,
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Jason Vazquez(9) (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(9) (1962)           Managing Director(4), 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(9)        Director(4), Deutsche Asset Management (2006-present); formerly: Director,
 (1951)                           Senior Vice President, General Counsel, and Assistant Secretary, Hansberger
 Chief Legal Officer, 2006-       Global Investors, Inc. (1996-2006); Director, National Society of Compliance
 present                          Professionals (2002-2005) (2006-2009)
 --------------------------------------------------------------------------------------------------------------------


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

(3)  The mailing  address of Axel  Schwarzer  is DWS  Investment  GmbH,  Mainzer
     Landstr. 178-190, Floor 5C, 60327 Frankfurt am Main, Germany.  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.

(4)  Executive title, not a board directorship.

(5)  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.

(6)  The length of time  served  represents  the year in which the  officer  was
     first elected in such capacity for one or more DWS funds.

(7)  Address: 345 Park Avenue, New York, New York 10154.

(8)  Address: One Beacon Street, Boston, Massachusetts 02108.

(9)  Address: 280 Park Avenue, New York, New York 10017.

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 Investments Distributors, Inc.

 Paul H. Schubert:                      Vice President
 Jason Vazquez:                         Vice President and AML Compliance Officer
 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 2008, the Audit Committee of the Fund's Board held six (6)
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 2008, the Nominating and Governance Committee of the Fund's Board
held four (4) 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. During the calendar year 2008, the Contract Review
Committee of the Fund's Board held seven (7) meetings.

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 2008, the Equity Oversight
Committee of the Fund's Board held five (5) 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, Kenneth
C. Froewiss and Robert H. Wadsworth. During the calendar year 2008, the
Fixed-Income Oversight Committee of the Fund's Board held five (5) 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 Marketing and Shareholder Services
Committee also considers matters relating to fund mergers and liquidations and
the organization of new funds. The members of the Marketing and Shareholder
Services Committee are Richard J. Herring (Chair), Dawn-Marie Driscoll (Vice
Chair), Rebecca W. Rimel, Jean Gleason Stromberg and Robert H. Wadsworth. During
the calendar year 2008, the Marketing/Distribution/Shareholder Service Committee
of the Fund's Board held four (4) 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 Dawn-Marie Driscoll (Chair), John W. Ballantine (Vice Chair), 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), Rebecca W. Rimel (Alternate) and William N.
Searcy, Jr. (Alternate). During the calendar year 2008, the Operations Committee
held four (4) meetings and the Valuation Sub-Committee held no meetings.

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 retainer fees and specified amounts for
various committee services and for the Board Chairperson. 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 2008. 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.

                             Aggregate Compensation         Total Compensation
                             from DWS Massachusetts            from Fund and
  Name of Board Member          Tax-Free Fund               DWS Fund Complex(1)

  John W. Ballantine                   $744                    $237,500
  Henry P. Becton, Jr.(2)            $1,753                    $246,000
  Dawn-Marie Driscoll(2)((3))        $2,065                    $292,500
  Keith R. Fox((2))                  $1,633                    $229,500
  Paul K. Freeman                      $790                    $255,000
  Kenneth C. Froewiss                $1,608                    $226,750
  Richard J. Herring(2)              $1,699                    $240,000
  William McClayton((4))               $772                    $257,500
  Rebecca W. Rimel(2)                $1,670                    $233,500
  William N. Searcy, Jr.             $1,680                    $238,000
  Jean Gleason Stromberg             $1,597                    $225,500
  Robert H. Wadsworth                  $772                    $273,500

(1)      The DWS fund complex is composed of 136 funds as of December 31, 2008.

(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 $8,000 for Mr. Becton, $2,000 for
         Ms. Driscoll, $2,000 for Mr. Fox, $2,000 for Dr. Herring and $8,000 for
         Ms. Rimel. These meeting fees were borne by the funds.

(3)      Includes $70,000 in annual retainer fees received by Ms. Driscoll as
         Chairperson of DWS funds.

(4)      Includes $15,000 paid to Mr. McClayton for numerous special meetings of
         an ad hoc committee of the former Chicago Board in connection with
         board consolidation initiatives.

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,
2008.


                                      Dollar Range of Beneficial            Aggregate Dollar Range of
                                               Ownership               Ownership in all Funds Overseen by
                                         in DWS Massachusetts                     Board Member
Board Member                                 Tax-Free Fund                in the DWS Fund Complex((1))

Independent Board Member:

John W. Ballantine                               None                       Over $100,000
Henry P. Becton, Jr.                    $1-$10,000                          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                           None                       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, 2008. 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 July 7, 2009, 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 July 7, 2009, no person owned of
record or beneficially 5% or more of any class of the Fund's outstanding shares,
except as noted below.

DWS Massachusetts Tax Free Fund

Name and Address of Investor Ownership                          Shares                      % of Total Shares

NFS LLC FBO                                                   105,066.30                    8.22% of Class A
JOYCE BUSH TTEE
JOYCE BUSH TR
U/W 11/8/02
EAST HARWICH MA  02645-1518

MORGAN STANLEY & CO.                                           92,688.76                    7.25% of Class A
HARBORSIDE FINANCIAL CENTER
PLAZA II 3RD FLOOR
JERSEY CITY NJ  07311

CHARLES SCHWAB & CO INC                                        84,115.59                    6.58% of Class A
SPECIAL CUSTODY ACCOUNT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMERS
ATTN MUTUAL FUNDS
SAN FRANCISCO CA  94104-4151

MORGAN STANLEY & CO.                                           18,809.53                    12.9% of Class B
HARBORSIDE FINANCIAL CENTER
PLAZA II 3RD FLOOR
JERSEY CITY NJ  07311

RALPH J CHISHOLM                                               14,306.15                    9.81% of Class B
WILMINGTON MA  01887-2209

LORRAINE E KETCHEN &                                           11,209.98                    7.69% of Class B
LESLIE A LEVESQUE JTWROS
SPRINGFIELD MA  01118-1876

LPL FINANCIAL SERVICES                                         8,424.45                     5.78% of Class B
A/C XXXX-XXXX
SAN DIEGO CA  92121-1968

BEATRICE E GRANT TTEE                                          8,238.07                     5.65% of Class B
BEATRICE E GRANT TRUST
U/A 09/27/1991
SOMERSET MA  02726-3822

NFS LLC FEBO                                                   7,363.84                     5.05% of Class B
EDWARD F CALLAHAN
JOAN R CALLAHAN
WALTHAM MA  02451-0832

MORGAN STANLEY & CO.                                           76,022.69                    16.85% of Class C
HARBORSIDE FINANCIAL CENTER
PLAZA II 3RD FLOOR
JERSEY CITY NJ  07311
</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.

                                FUND ORGANIZATION

The DWS Massachusetts Tax-Free Fund is a non-diversified series of DWS State
Tax-Free 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
that was approved by shareholders in 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; and (d)
such additional matters as may be required by law 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 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.

                             PROXY VOTING GUIDELINES


The Fund has delegated proxy voting responsibilities to the Advisor, subject to
the Board's general oversight. The Advisor votes proxies pursuant to the proxy
voting policy and guidelines set forth in Appendix A to this SAI).

You may obtain information about how a fund voted proxies related to its
portfolio securities during the 12-month period ended June 30 by visiting the
Securities and Exchange Commission's Web site at www.sec.gov or by visiting our
Web site at: www.dws-investments.com (click on "proxy voting" at the bottom of
the page).



                              FINANCIAL STATEMENTS


The financial statements, including the investment portfolio, of DWS
Massachusetts Tax-Free 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 March 31, 2009, are
incorporated herein by reference and are hereby deemed to be a part of this
Statement of Additional Information.


                             ADDITIONAL INFORMATION

The CUSIP number of DWS Massachusetts Tax-Free Fund, Class S is 23337J500.

The Fund has a fiscal year end of March 31.

The Fund's prospectus and this Statement of Additional Information omit certain
information contained in the Registration Statement which the Fund has filed
with the SEC under the Securities Act of 1933 and reference is hereby made to
the Registration Statement for further information with respect to 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 A -- PROXY VOTING GUIDELINES

       Deutsche Asset Management ("AM") Proxy Voting Policy and Guidelines


I.       INTRODUCTION

AM has adopted and implemented the following policies and procedures, which it
believes are reasonably designed to ensure that proxies are voted in the best
economic interest of clients, in accordance with its fiduciary duties and local
regulation. These Proxy Voting Policies, Procedures and Guidelines shall apply
to all accounts managed by US domiciled advisers and to all US client accounts
managed by non US regional offices. Non US regional offices are required to
maintain procedures and to vote proxies as may be required by law on behalf of
their non US clients. In addition, AM's proxy policies reflect the fiduciary
standards and responsibilities for ERISA accounts.

The attached guidelines represent a set of global recommendations that were
determined by the Global Proxy Voting Sub-Committee ("the GPVSC"). These
guidelines were developed to provide AM with a comprehensive list of
recommendations that represent how AM will generally vote proxies for its
clients. The recommendations derived from the application of these guidelines
are not intended to influence the various AM legal entities either directly or
indirectly by parent or affiliated companies. In addition, the organizational
structures and documents of the various AM legal entities allows, where
necessary or appropriate, the execution by individual AM subsidiaries of the
proxy voting rights independently of any DB parent or affiliated company. This
applies in particular to non U.S. fund management companies. The individuals
that make proxy voting decisions are also free to act independently, subject to
the normal and customary supervision by the management/boards of these AM legal
entities.


II.      AM'S PROXY VOTING RESPONSIBILITIES

Proxy votes are the property of AM's advisory clients.(1) As such, AM's
authority and responsibility to vote such proxies depend upon its contractual
relationships with its clients. AM has delegated responsibility for effecting
its advisory clients' proxy votes to Institutional Shareholder Services ("ISS"),
an independent third-party proxy voting specialist. ISS votes AM's advisory
clients' proxies in accordance with AM's proxy guidelines or AM's specific
instructions. Where a client has given specific instructions as to how a proxy
should be voted, AM will notify ISS to carry out those instructions. Where no
specific instruction exists, AM will follow the procedures in voting the proxies
set forth in this document. Certain Taft-Hartley clients may direct AM to have
ISS vote their proxies in accordance with Taft Hartley voting Guidelines

_____________________

(1)      For purposes of these Policies and Procedures, "clients" refers to
         persons or entities: for which AM serves as investment adviser or
         sub-adviser; for which AM votes proxies; and that have an economic or
         beneficial ownership interest in the portfolio securities of issuers
         soliciting such proxies.

Clients may in certain instances contract with their custodial agent and notify
AM that they wish to engage in securities lending transactions. In such cases,
it is the responsibility of the custodian to deduct the number of shares that
are on loan so that they do not get voted twice.


III.     POLICIES

1.       Proxy voting activities are conducted in the best economic interest of
         clients

AM has adopted the following policies and procedures to ensure that proxies are
voted in accordance with the best economic interest of its clients, as
determined by AM in good faith after appropriate review.

2.       The Global Proxy Voting Sub-Committee

The Global Proxy Voting Sub-Committee (the "GPVSC") is an internal working group
established by the applicable AM's Investment Risk Oversight Committee pursuant
to a written charter. The GPVSC is responsible for overseeing AM's proxy voting
activities, including:

(i)    adopting, monitoring and updating guidelines, attached as Exhibit A (the
       "Guidelines"), that provide how AM will generally vote proxies pertaining
       to a comprehensive list of common proxy voting matters;

(ii)   voting proxies where (A) the issues are not covered by specific client
       instruction or the Guidelines; (B) the Guidelines specify that the issues
       are to be determined on a case-by-case basis; or (C) where an exception
       to the Guidelines may be in the best economic interest of AM's clients;
       and

(iii)  monitoring the Proxy Vendor Oversight's proxy voting activities (see
       below).

AM's Proxy Vendor Oversight, a function of AM's Operations Group, is responsible
for coordinating with ISS to administer AM's proxy voting process and for voting
proxies in accordance with any specific client instructions or, if there are
none, the Guidelines, and overseeing ISS' proxy responsibilities in this regard.

3.       Availability of Proxy Voting Policies and Procedures and proxy voting
         record

Copies of these Policies and Procedures, as they may be updated from time to
time, are made available to clients as required by law and otherwise at AM's
discretion. Clients may also obtain information on how their proxies were voted
by AM as required by law and otherwise at AM's discretion; however, AM must not
selectively disclose its investment company clients' proxy voting records. The
Proxy Vendor Oversight will make proxy voting reports available to advisory
clients upon request. The investment companies' proxy voting records will be
disclosed to shareholders by means of publicly-available annual filings of each
company's proxy voting record for 12-month periods ended June 30 (see
"Recordkeeping" below), if so required by relevant law.


IV.      PROCEDURES

The key aspects of AM's proxy voting process are as follows:

1.       The GPVSC's Proxy Voting Guidelines

The Guidelines set forth the GPVSC's standard voting positions on a
comprehensive list of common proxy voting matters. The GPVSC has developed, and
continues to update the Guidelines based on consideration of current corporate
governance principles, industry standards, client feedback, and the impact of
the matter on issuers and the value of the investments.

The GPVSC will review the Guidelines as necessary to support the best economic
interests of AM's clients and, in any event, at least annually. The GPVSC will
make changes to the Guidelines, whether as a result of the annual review or
otherwise, taking solely into account the best economic interests of clients.
Before changing the Guidelines, the GPVSC will thoroughly review and evaluate
the proposed change and the reasons therefore, and the GPVSC Chair will ask
GPVSC members whether anyone outside of the AM organization (but within Deutsche
Bank and its affiliates) or any entity that identifies itself as a AM advisory
client has requested or attempted to influence the proposed change and whether
any member has a conflict of interest with respect to the proposed change. If
any such matter is reported to the GPVSC Chair, the Chair will promptly notify
the Conflicts of Interest Management Sub-Committee (see below) and will defer
the approval, if possible. Lastly, the GPVSC will fully document its rationale
for approving any change to the Guidelines.

The Guidelines may reflect a voting position that differs from the actual
practices of the public company(ies) within the Deutsche Bank organization or of
the investment companies for which AM or an affiliate serves as investment
adviser or sponsor. Investment companies, particularly closed-end investment
companies, are different from traditional operating companies. These differences
may call for differences in voting positions on the same matter. Further, the
manner in which AM votes investment company proxies may differ from proposals
for which a AM-advised or sponsored investment company solicits proxies from its
shareholders. As reflected in the Guidelines, proxies solicited by closed-end
(and open-end) investment companies are generally voted in accordance with the
pre-determined guidelines of ISS. See Section IV.3.B.

Funds ("Underlying Funds") in which Topiary Fund Management Fund of Funds (each,
a "Fund") invest, may from time to time seek to revise their investment terms
(i.e. liquidity, fees, etc.) or investment structure. In such event, the
Underlying Funds may require approval/consent from its investors to effect the
relevant changes. Topiary Fund Management has adopted Proxy Voting Procedures
which outline the process for these approvals.

2.       Specific proxy voting decisions made by the GPVSC

The Proxy Vendor Oversight will refer to the GPVSC all proxy proposals (i) that
are not covered by specific client instructions or the Guidelines; or (ii) that,
according to the Guidelines, should be evaluated and voted on a case-by-case
basis.

Additionally, if, the Proxy Vendor Oversight, the GPVSC Chair or any member of
the GPVSC, a portfolio manager, a research analyst or a sub-adviser believes
that voting a particular proxy in accordance with the Guidelines may not be in
the best economic interests of clients, that individual may bring the matter to
the attention of the GPVSC Chair and/or the Proxy Vendor Oversight.(2)

_____________________

(2)      The Proxy Vendor Oversight generally monitors upcoming proxy
         solicitations for heightened attention from the press or the industry
         and for novel or unusual proposals or circumstances, which may prompt
         the Proxy Vendor Oversight to bring the solicitation to the attention
         of the GPVSC Chair. AM portfolio managers, AM research analysts and
         sub-advisers also may bring a particular proxy vote to the attention of
         the GPVSC Chair, as a result of their ongoing monitoring of portfolio
         securities held by advisory clients and/or their review of the periodic
         proxy voting record reports that the GPVSC Chair distributes to AM
         portfolio managers and AM research analysts.

If the Proxy Vendor Oversight refers a proxy proposal to the GPVSC or the GPVSC
determines that voting a particular proxy in accordance with the Guidelines is
not in the best economic interests of clients, the GPVSC will evaluate and vote
the proxy, subject to the procedures below regarding conflicts.

The GPVSC endeavors to hold meetings to decide how to vote particular proxies
sufficiently before the voting deadline so that the procedures below regarding
conflicts can be completed before the GPVSC's voting determination.

3.       Certain proxy votes may not be cast

In some cases, the GPVSC may determine that it is in the best economic interests
of its clients not to vote certain proxies. If the conditions below are met with
regard to a proxy proposal, AM will abstain from voting:

o        Neither the Guidelines nor specific client instructions cover an issue;

o        ISS does not make a recommendation on the issue;

o        The GPVSC cannot convene on the proxy proposal at issue to make a
         determination as to what would be in the client's best interest. (This
         could happen, for example, if the Conflicts of Interest Management
         Sub-committee found that there was a material conflict or if despite
         all best efforts being made, the GPVSC quorum requirement could not be
         met).

In addition, it is AM's policy not to vote proxies of issuers subject to laws of
those jurisdictions that impose restrictions upon selling shares after proxies
are voted, in order to preserve liquidity. In other cases, it may not be
possible to vote certain proxies, despite good faith efforts to do so. For
example, some jurisdictions do not provide adequate notice to shareholders so
that proxies may be voted on a timely basis. Voting rights on securities that
have been loaned to third-parties transfer to those third-parties, with loan
termination often being the only way to attempt to vote proxies on the loaned
securities. Lastly, the GPVSC may determine that the costs to the client(s)
associated with voting a particular proxy or group of proxies outweighs the
economic benefits expected from voting the proxy or group of proxies.

The Proxy Vendor Oversight will coordinate with the GPVSC Chair regarding any
specific proxies and any categories of proxies that will not or cannot be voted.
The reasons for not voting any proxy shall be documented.

4.       Conflict of Interest Procedures

A. Procedures to Address Conflicts of Interest and Improper Influence

Overriding Principle. In the limited circumstances where the GPVSC votes
proxies,(3) the GPVSC will vote those proxies in accordance with what it, in
good faith, determines to be the best economic interests of AM's clients.(4)

_____________________

(3)      As mentioned above, the GPVSC votes proxies (i) where neither a
         specific client instruction nor a Guideline directs how the proxy
         should be voted, (ii) where the Guidelines specify that an issue is to
         be determined on a case by case basis or (iii) where voting in
         accordance with the Guidelines may not be in the best economic
         interests of clients.

(4)      The Proxy Vendor Oversight, who serves as the non-voting secretary of
         the GPVSC, may receive routine calls from proxy solicitors and other
         parties interested in a particular proxy vote. Any contact that
         attempts to exert improper pressure or influence shall be reported to
         the Conflicts of Interest Management Sub-Committee.

Independence of the GPVSC. As a matter of Compliance policy, the GPVSC and the
Proxy Vendor Oversight are structured to be independent from other parts of
Deutsche Bank. Members of the GPVSC and the employee responsible for Proxy
Vendor Oversight are employees of AM. As such, they may not be subject to the
supervision or control of any employees of Deutsche Bank Corporate and
Investment Banking division ("CIB"). Their compensation cannot be based upon
their contribution to any business activity outside of AM without prior approval
of Legal and Compliance. They can have no contact with employees of Deutsche
Bank outside of the Private Client and Asset Management division ("PCAM")
regarding specific clients, business matters or initiatives without the prior
approval of Legal and Compliance. They furthermore may not discuss proxy votes
with any person outside of AM (and within AM only on a need to know basis).

Conflict Review Procedures. There will be a committee (the "Conflicts of
Interest Management Sub-Committee") established within AM that will monitor for
potential material conflicts of interest in connection with proxy proposals that
are to be evaluated by the GPVSC. Promptly upon a determination that a vote
shall be presented to the GPVSC, the GPVSC Chair shall notify the Conflicts of
Interest Management Sub-Committee. The Conflicts of Interest Management
Sub-Committee shall promptly collect and review any information deemed
reasonably appropriate to evaluate, in its reasonable judgment, if AM or any
person participating in the proxy voting process has, or has the appearance of,
a material conflict of interest. For the purposes of this policy, a conflict of
interest shall be considered "material" to the extent that a reasonable person
could expect the conflict to influence, or appear to influence, the GPVSC's
decision on the particular vote at issue. GPVSC should provide the Conflicts of
Interest Management Sub-Committee a reasonable amount of time (no less than 24
hours) to perform all necessary and appropriate reviews. To the extent that a
conflicts review can not be sufficiently completed by the Conflicts of Interest
Management Sub-Committee the proxies will be voted in accordance with the
standard guidelines.

The information considered by the Conflicts of Interest Management Sub-Committee
may include without limitation information regarding (i) AM client
relationships; (ii) any relevant personal conflict known by the Conflicts of
Interest Management Sub-Committee or brought to the attention of that
sub-committee; (iii) and any communications with members of the GPVSC (or anyone
participating or providing information to the GPVSC) and any person outside of
the AM organization (but within Deutsche Bank and its affiliates) or any entity
that identifies itself as a AM advisory client regarding the vote at issue. In
the context of any determination, the Conflicts of Interest Management
Sub-Committee may consult with, and shall be entitled to rely upon, all
applicable outside experts, including legal counsel.

Upon completion of the investigation, the Conflicts of Interest Management
Sub-Committee will document its findings and conclusions. If the Conflicts of
Interest Management Sub-Committee determines that (i) AM has a material conflict
of interest that would prevent it from deciding how to vote the proxies
concerned without further client consent or (ii) certain individuals should be
recused from participating in the proxy vote at issue, the Conflicts of Interest
Management Sub-Committee will so inform the GPVSC chair.

If notified that AM has a material conflict of interest as described above, the
GPVSC chair will obtain instructions as to how the proxies should be voted
either from (i) if time permits, the effected clients, or (ii) in accordance
with the standard guidelines. If notified that certain individuals should be
recused from the proxy vote at issue, the GPVSC Chair shall do so in accordance
with the procedures set forth below.

Note: Any AM employee who becomes aware of a potential, material conflict of
interest in respect of any proxy vote to be made on behalf of clients shall
notify Compliance. Compliance shall call a meeting of the conflict review
committee to evaluate such conflict and determine a recommended course of
action.

Procedures to be followed by the GPVSC. At the beginning of any discussion
regarding how to vote any proxy, the GPVSC Chair (or his or her delegate) will
inquire as to whether any GPVSC member (whether voting or ex officio) or any
person participating in the proxy voting process has a personal conflict of
interest or has actual knowledge of an actual or apparent conflict that has not
been reported to the Conflicts of Interest Management Sub-Committee.

The GPVSC Chair also will inquire of these same parties whether they have actual
knowledge regarding whether any director, officer or employee outside of the AM
organization (but within Deutsche Bank and its affiliates) or any entity that
identifies itself as a AM advisory client, has: (i) requested that AM, the Proxy
Vendor Oversight (or any member thereof) or a GPVSC member vote a particular
proxy in a certain manner; (ii) attempted to influence AM, the Proxy Vendor
Oversight (or any member thereof), a GPVSC member or any other person in
connection with proxy voting activities; or (iii) otherwise communicated with a
GPVSC member or any other person participating or providing information to the
GPVSC regarding the particular proxy vote at issue, and which incident has not
yet been reported to the Conflicts of Interest Management Sub- Committee.

If any such incidents are reported to the GPVSC Chair, the Chair will promptly
notify the Conflicts of Interest Management Sub-Committee and, if possible, will
delay the vote until the Conflicts of Interest Management Sub-Committee can
complete the conflicts report. If a delay is not possible, the Conflicts of
Interest Management Sub-Committee will instruct the GPVSC whether anyone should
be recused from the proxy voting process, or whether AM should vote the proxy in
accordance with the standard guidelines, seek instructions as to how to vote the
proxy at issue from ISS or, if time permits, the effected clients. These
inquiries and discussions will be properly reflected in the GPVSC's minutes.

Duty to Report. Any AM employee, including any GPVSC member (whether voting or
ex officio), that is aware of any actual or apparent conflict of interest
relevant to, or any attempt by any person outside of the AM organization (but
within Deutsche Bank and its affiliates) or any entity that identifies itself as
a AM advisory client to influence, how AM votes its proxies has a duty to
disclose the existence of the situation to the GPVSC Chair (or his or her
designee) and the details of the matter to the Conflicts of Interest Management
Sub-Committee. In the case of any person participating in the deliberations on a
specific vote, such disclosure should be made before engaging in any activities
or participating in any discussion pertaining to that vote.

Recusal of Members. The GPVSC will recuse from participating in a specific proxy
vote any GPVSC members (whether voting or ex officio) and/or any other person
who (i) are personally involved in a material conflict of interest; or (ii) who,
as determined by the Conflicts of Interest Management Sub-Committee, have actual
knowledge of a circumstance or fact that could effect their independent
judgment, in respect of such vote. The GPVSC will also exclude from
consideration the views of any person (whether requested or volunteered) if the
GPVSC or any member thereof knows, or if the Conflicts of Interest Management
Sub-Committee has determined, that such other person has a material conflict of
interest with respect to the particular proxy, or has attempted to influence the
vote in any manner prohibited by these policies.

If, after excluding all relevant GPVSC voting members pursuant to the paragraph
above, there are three or more GPVSC voting members remaining, those remaining
GPVSC members will determine how to vote the proxy in accordance with these
Policies and Procedures. If there are fewer than three GPVSC voting members
remaining, the GPVSC Chair will vote the proxy in accordance with the standard
guidelines, will obtain instructions as to how to have the proxy voted from, if
time permits, the effected clients and otherwise from ISS.

B.       Investment Companies and Affiliated Public Companies

Investment Companies. As reflected in the Guidelines, all proxies solicited by
open-end and closed-end investment companies are voted in accordance with the
pre-determined guidelines of ISS, unless the investment company client directs
AM to vote differently on a specific proxy or specific categories of proxies.
However, regarding investment companies for which AM or an affiliate serves as
investment adviser or principal underwriter, such proxies are voted in the same
proportion as the vote of all other shareholders (i.e., "mirror" or "echo"
voting). Master fund proxies solicited from feeder funds are voted in accordance
with applicable provisions of Section 12 of the Investment Company Act of 1940.

Subject to participation agreements with certain Exchange Traded Funds ("ETF")
issuers that have received exemptive orders from the U.S. Securities and
Exchange Commission allowing investing DWS funds to exceed the limits set forth
in Section 12(d)(1)(A) and (B) of the Investment Company Act of 1940, DeAM will
echo vote proxies for ETFs in which Deutsche Bank holds more than 25% of
outstanding voting shares globally when required to do so by participation
agreements and SEC orders.

Affiliated Public Companies. For proxies solicited by non-investment company
issuers of or within the Deutsche Bank organization, e.g., Deutsche bank itself,
these proxies will be voted in the same proportion as the vote of other
shareholders (i.e., "mirror" or "echo" voting).

Note: With respect to the QP Trust (not registered under the Investment Company
Act of 1940), the Fund is not required to engage in echo voting and the
investment adviser will use these Guidelines, and may determine, with respect to
the QP Trust, to vote contrary to the positions in the Guidelines, consistent
with the Fund's best interest.

C.       Other Procedures That Limit Conflicts of Interest

AM and other entities in the Deutsche Bank organization have adopted a number of
policies, procedures and internal controls that are designed to avoid various
conflicts of interest, including those that may arise in connection with proxy
voting, including:

o        Deutsche Bank Americas Restricted Activities Policy. This policy
         provides for, among other things, independence of AM employees from
         CIB, and information barriers between AM and other affiliates.
         Specifically, no AM employee may be subject to the supervision or
         control of any employee of CIB. No AM employee shall have his or her
         compensation based upon his or her contribution to any business
         activity within the Bank outside of the business of AM, without the
         prior approval of Legal or Compliance. Further, no employee of CIB
         shall have any input into the compensation of a AM employee without the
         prior approval of Legal or Compliance. Under the information barriers
         section of this policy, as a general rule, AM employees who are
         associated with the investment process should have no contact with
         employees of Deutsche Bank or its affiliates, outside of PCAM,
         regarding specific clients, business matters, or initiatives. Further,
         under no circumstances should proxy votes be discussed with any
         Deutsche Bank employee outside of AM (and should only be discussed on a
         need-to-know basis within AM).

Other relevant internal policies include the Deutsche Bank Americas Code of
Professional Conduct, the Deutsche Asset Management Information Sharing
Procedures, the Deutsche Asset Management Code of Ethics, the Sarbanes-Oxley
Senior Officer Code of Ethics, and the Deutsche Bank Group Code of Conduct. The
GPVSC expects that these policies, procedures and internal controls will greatly
reduce the chance that the GPVSC (or, its members) would be involved in, aware
of or influenced by, an actual or apparent conflict of interest.


V.       RECORDKEEPING

At a minimum, the following types of records must be properly maintained and
readily accessible in order to evidence compliance with this policy.

o        AM will maintain a record of each vote cast by AM that includes among
         other things, company name, meeting date, proposals presented, vote
         cast and shares voted.

o        The Proxy Vendor Oversight maintains records for each of the proxy
         ballots it votes. Specifically, the records include, but are not
         limited to:

         -        The proxy statement (and any additional solicitation
                  materials) and relevant portions of annual statements.

         -        Any additional information considered in the voting process
                  that may be obtained from an issuing company, its agents or
                  proxy research firms.

         -        Analyst worksheets created for stock option plan and share
                  increase analyses.

         -        Proxy Edge print-screen of actual vote election.

o        AM will retain these Policies and Procedures and the Guidelines; will
         maintain records of client requests for proxy voting information; and
         will retain any documents the Proxy Vendor Oversight or the GPVSC
         prepared that were material to making a voting decision or that
         memorialized the basis for a proxy voting decision.

o        The GPVSC also will create and maintain appropriate records documenting
         its compliance with these Policies and Procedures, including records of
         its deliberations and decisions regarding conflicts of interest and
         their resolution.

o        With respect to AM's investment company clients, ISS will create and
         maintain records of each company's proxy voting record for 12-month
         periods ended June 30. AM will compile the following information for
         each matter relating to a portfolio security considered at any
         shareholder meeting held during the period covered by the report and
         with respect to which the company was entitled to vote:

         -        The name of the issuer of the portfolio security;

         -        The exchange ticker symbol of the portfolio security (if
                  symbol is available through reasonably practicable means);

         -        The Council on Uniform Securities Identification Procedures
                  number for the portfolio security (if the number is available
                  through reasonably practicable means);

         -        The shareholder meeting date;

         -        A brief identification of the matter voted on;

         -        Whether the matter was proposed by the issuer or by a security
                  holder;

         -        Whether the company cast its vote on the matter;

         -        How the company cast its vote (e.g., for or against proposal,
                  or abstain; for or withhold regarding election of directors);
                  and

         -        Whether the company cast its vote for or against management.

Note: This list is intended to provide guidance only in terms of the records
that must be maintained in accordance with this policy. In addition, please note
that records must be maintained in accordance with the applicable AM Records
Management Policy.

With respect to electronically stored records, "properly maintained" is defined
as complete, authentic (unalterable) usable and backed-up. At a minimum, records
should be retained for a period of not less than six years (or longer, if
necessary to comply with applicable regulatory requirements), the first three
years in an appropriate AM office.


VI.      THE GPVSC'S OVERSIGHT ROLE

In addition to adopting the Guidelines and making proxy voting decisions on
matters referred to it as set forth above, the GPVSC will monitor the proxy
voting process by reviewing summary proxy information presented by ISS. The
GPVSC will use this review process to determine, among other things, whether any
changes should be made to the Guidelines. This review will take place at least
quarterly and will be documented in the GPVSC's minutes.


Attachment A - Global Proxy Voting Guidelines







                            Deutsche Asset Management

                         Global Proxy Voting Guidelines



                             As Amended October 2008


                                [GRAPHIC OMITTED]
Table of contents

I        Board Of Directors And Executives

         A        Election Of Directors

         B        Classified Boards Of Directors

         C        Board And Committee Independence

         D        Liability And Indemnification Of Directors

         E        Qualifications Of Directors

         F        Removal Of Directors And Filling Of Vacancies

         G        Proposals To Fix The Size Of The Board

         H        Proposals to Restrict Chief Executive Officer's Service on

                  Multiple Boards

         I        Proposals to Restrict Supervisory Board Members Service on

                  Multiple Boards

         J        Proposals to Establish Audit Committees

II       Capital Structure

         A        Authorization Of Additional Shares

         B        Authorization Of "Blank Check" Preferred Stock

         C        Stock Splits/Reverse Stock Splits

         D        Dual Class/Supervoting Stock

         E        Large Block Issuance

         F        Recapitalization Into A Single Class Of Stock

         G        Share Repurchases

         H        Reductions In Par Value

III      Corporate Governance Issues

         A        Confidential Voting

         B        Cumulative Voting

         C        Supermajority Voting Requirements

         D        Shareholder Right To Vote

IV       Compensation

         A        Establishment of a Remuneration Committee

         B        Executive And Director Stock Option Plans

         C        Employee Stock Option/Purchase Plans

         D        Golden Parachutes

         E        Proposals To Limit Benefits Or Executive Compensation

         F        Option Expensing

         G        Management board election and motion

         H        Remuneration (variable pay)

         I        Long-term incentive plans

         J        Shareholder Proposals Concerning "Pay For Superior
                  Performance"

         K        Executive Compensation Advisory

V        Anti-Takeover Related Issues

         A        Shareholder Rights Plans ("Poison Pills")

         B        Reincorporation

         C        Fair-Price Proposals

         D        Exemption From State Takeover Laws

         E        Non-Financial Effects Of Takeover Bids

VI       Mergers & Acquisitions

VII      Social & Political Issues

         A        Labor & Human Rights

         B        Diversity & Equality

         C        Health & Safety

         D        Government/Military

         E        Tobacco

VIII     Environmental Issues

IX       Miscellaneous Items

         A        Ratification Of Auditors

         B        Limitation Of Non-Audit Services Provided By Independent
                  Auditor

         C        Audit Firm Rotation

         D        Transaction Of Other Business

         E        Motions To Adjourn The Meeting

         F        Bundled Proposals

         G        Change Of Company Name

         H        Proposals Related To The Annual Meeting

         I        Reimbursement Of Expenses Incurred From Candidate Nomination

         J        Investment Company Proxies

         K        International Proxy Voting


These Guidelines may reflect a voting position that differs from the actual
practices of the public company (ies) within the Deutsche Bank organization or
of the investment companies for which AM or an affiliate serves as investment
adviser or sponsor.

NOTE: Because of the unique structure and regulatory scheme applicable to
closed-end investment companies, the voting guidelines (particularly those
related to governance issues) generally will be inapplicable to holdings of
closed-end investment companies. As a result, determinations on the appropriate
voting recommendation for closed-end investment company shares will be made on a
case-by-case basis.


I.       Board of Directors and Executives

A.       Election of Directors

Routine: AM Policy is to vote "for" the uncontested election of directors. Votes
for a director in an uncontested election will be withheld in cases where a
director has shown an inability to perform his/her duties in the best interests
of the shareholders.

Proxy contest: In a proxy contest involving election of directors, a
case-by-case voting decision will be made based upon analysis of the issues
involved and the merits of the incumbent and dissident slates of directors. AM
will incorporate the decisions of a third party proxy research vendor,
currently, Institutional Shareholder Services ("ISS") subject to review by the
Proxy Voting Sub-Committee (GPVSC) as set forth in the AM's Proxy Voting
Policies and Procedures.

Rationale: The large majority of corporate directors fulfill their fiduciary
obligation and in most cases support for management's nominees is warranted. As
the issues relevant to a contested election differ in each instance, those cases
must be addressed as they arise.

B.       Classified Boards of Directors

AM policy is to vote against proposals to classify the board and for proposals
to repeal classified boards and elect directors annually.

Rationale: Directors should be held accountable on an annual basis. By
entrenching the incumbent board, a classified board may be used as an
anti-takeover device to the detriment of the shareholders in a hostile take-over
situation.

C.       Board and Committee Independence

AM policy is to vote:

1.       "For" proposals that require that a certain percentage (majority up to
         66 2/3%) of members of a board of directors be comprised of independent
         or unaffiliated directors.

2.       "For" proposals that require all members of a company's compensation,
         audit, nominating, or other similar committees be comprised of
         independent or unaffiliated directors.

3.       "Against" shareholder proposals to require the addition of special
         interest, or constituency, representatives to boards of directors.

4.       "For" separation of the Chairman and CEO positions.

5.       "Against" proposals that require a company to appoint a Chairman who is
         an independent director.

Rationale: Board independence is a cornerstone of effective governance and
accountability. A board that is sufficiently independent from management assures
that shareholders' interests are adequately represented. However, the Chairman
of the board must have sufficient involvement in and experience with the
operations of the company to perform the functions required of that position and
lead the company.

No director qualifies as 'independent' unless the board of directors
affirmatively determines that the director has no material relationship with the
listed company (either directly or as a partner, shareholder or officer of an
organization that has a relationship with the company).

Whether a director is in fact not "independent" will depend on the laws and
regulations of the primary market for the security and the exchanges, if any, on
which the security trades.

D.       Liability and Indemnification of Directors

AM policy is to vote "for" management proposals to limit directors' liability
and to broaden the indemnification of directors, unless broader indemnification
or limitations on directors' liability would effect shareholders' interests in
pending litigation.

Rationale: While shareholders want directors and officers to be responsible for
their actions, it is not in the best interests of the shareholders for them to
be to risk averse. If the risk of personal liability is too great, companies may
not be able to find capable directors willing to serve. We support expanding
coverage only for actions taken in good faith and not for serious violations of
fiduciary obligation or negligence.

E.       Qualifications of Directors

AM policy is to follow management's recommended vote on either management or
shareholder proposals that set retirement ages for directors or require specific
levels of stock ownership by directors.

Rationale: As a general rule, the board of directors, and not the shareholders,
is most qualified to establish qualification policies.

F.       Removal of Directors and Filling of Vacancies

AM policy is to vote "against" proposals that include provisions that directors
may be removed only for cause or proposals that include provisions that only
continuing directors may fill board vacancies.

Rationale: Differing state statutes permit removal of directors with or without
cause. Removal of directors for cause usually requires proof of self-dealing,
fraud or misappropriation of corporate assets, limiting shareholders' ability to
remove directors except under extreme circumstances. Removal without cause
requires no such showing.

Allowing only incumbent directors to fill vacancies can serve as an
anti-takeover device, precluding shareholders from filling the board until the
next regular election.

G.       Proposals to Fix the Size of the Board

AM policy is to vote:

1.       "For" proposals to fix the size of the board unless: (a) no specific
         reason for the proposed change is given; or (b) the proposal is part of
         a package of takeover defenses.

2.       "Against" proposals allowing management to fix the size of the board
         without shareholder approval.

Rationale: Absent danger of anti-takeover use, companies should be granted a
reasonable amount of flexibility in fixing the size of its board.

H.       Proposals to Restrict Chief Executive Officer's Service on Multiple
         Boards

AM policy is to vote "For" proposals to restrict a Chief Executive Officer from
serving on more than three outside boards of directors.

Rationale: Chief Executive Officer must have sufficient time to ensure that
shareholders' interests are represented adequately.

Note: A director's service on multiple closed-end fund boards within a fund
complex are treated as service on a single Board for the purpose of the proxy
voting guidelines.

I.       Proposals to Restrict Supervisory Board Members Service on Multiple
         Boards (For FFT Securities)

AM policy is to vote "for" proposals to restrict a Supervisory Board Member from
serving on more than five supervisory boards.

Rationale: We consider a strong, independent and knowledgeable supervisory board
as important counter-balance to executive management to ensure that the
interests of shareholders are fully reflected by the company.

Full information should be disclosed in the annual reports and accounts to allow
all shareholders to judge the success of the supervisory board controlling their
company.

Supervisory Board Member must have sufficient time to ensure that shareholders'
interests are represented adequately.

Note: A director's service on multiple closed-end fund boards within a fund
complex are treated as service on a single Board for the purpose of the proxy
voting guidelines.

J.       Proposals to Establish Audit Committees (For FFT and U.S. Securities)
         AM policy is to vote "for" proposals that require the establishment of
         audit committees.

Rationale: The audit committee should deal with accounting and risk management
related questions, verifies the independence of the auditor with due regard to
possible conflicts of interest. It also should determine the procedure of the
audit process.


II.      Capital Structure

A.       Authorization of Additional Shares (For U.S. Securities)

AM policy is to vote "for" proposals to increase the authorization of existing
classes of stock that do not exceed a 3:1 ratio of shares authorized to shares
outstanding for a large cap company, and do not exceed a 4:1 ratio of shares
authorized to shares outstanding for a small-midcap company (companies having a
market capitalization under one billion U.S. dollars.).

Rationale: While companies need an adequate number of shares in order to carry
on business, increases requested for general financial flexibility must be
limited to protect shareholders from their potential use as an anti-takeover
device. Requested increases for specifically designated, reasonable business
purposes (stock split, merger, etc.) will be considered in light of those
purposes and the number of shares required.

B.       Authorization of "Blank Check" Preferred Stock (For U.S. Securities)

AM policy is to vote:

1.   "Against" proposals to create blank check preferred stock or to increase
     the number of authorized shares of blank check preferred stock unless the
     company expressly states that the stock will not be used for anti-takeover
     purposes and will not be issued without shareholder approval.

2.   "For" proposals mandating shareholder approval of blank check stock
     placement.

Rationale: Shareholders should be permitted to monitor the issuance of classes
of preferred stock in which the board of directors is given unfettered
discretion to set voting, dividend, conversion and other rights for the shares
issued.

C.       Stock Splits/Reverse Stock Splits

AM policy is to vote "for" stock splits if a legitimate business purpose is set
forth and the split is in the shareholders' best interests. A vote is cast "for"
a reverse stock split only if the number of shares authorized is reduced in the
same proportion as the reverse split or if the effective increase in authorized
shares (relative to outstanding shares) complies with the proxy guidelines for
common stock increases (see, Section II.A, above.)

Rationale: Generally, stock splits do not detrimentally effect shareholders.
Reverse stock splits, however, may have the same result as an increase in
authorized shares and should be analyzed accordingly.

D.       Dual Class/Supervoting Stock

AM policy is to vote "against" proposals to create or authorize additional
shares of super-voting stock or stock with unequal voting rights.

Rationale: The "one share, one vote" principal ensures that no shareholder
maintains a voting interest exceeding their equity interest in the company.

E.       Large Block Issuance (For U.S. Securities)

AM policy is to address large block issuances of stock on a case-by-case basis,
incorporating the recommendation of an independent third party proxy research
firm (currently ISS) subject to review by the GPVSC as set forth in AM's Proxy
Policies and Procedures.

Additionally, AM supports proposals requiring shareholder approval of large
block issuances.

Rationale: Stock issuances must be reviewed in light of the business
circumstances leading to the request and the potential impact on shareholder
value.

F.       Recapitalization into a Single Class of Stock

AM policy is to vote "for" recapitalization plans to provide for a single class
of common stock, provided the terms are fair, with no class of stock being
unduly disadvantaged.

Rationale: Consolidation of multiple classes of stock is a business decision
that may be left to the board and/management if there is no adverse effect on
shareholders.

G.       Share Repurchases

AM policy is to vote "for" share repurchase plans provided all shareholders are
able to participate on equal terms.

Rationale: Buybacks are generally considered beneficial to shareholders because
they tend to increase returns to the remaining shareholders.

H.       Reductions in Par Value

AM policy is to vote "for" proposals to reduce par value, provided a legitimate
business purpose is stated (e.g., the reduction of corporate tax
responsibility.)

Rationale: Usually, adjustments to par value are a routine financial decision
with no substantial impact on shareholders.


III.     Corporate Governance Issues

A.       Confidential Voting

AM policy is to vote "for" proposals to provide for confidential voting and
independent tabulation of voting results and to vote "against" proposals to
repeal such provisions.

Rationale: Confidential voting protects the privacy rights of all shareholders.
This is particularly important for employee-shareholders or shareholders with
business or other affiliations with the company, who may be vulnerable to
coercion or retaliation when opposing management. Confidential voting does not
interfere with the ability of corporations to communicate with all shareholders,
nor does it prohibit shareholders from making their views known directly to
management.

B.       Cumulative Voting (For U.S. Securities)

AM policy is to vote "against" shareholder proposals requesting cumulative
voting and "for" management proposals to eliminate it. The protections afforded
shareholders by cumulative voting are not necessary when a company has a history
of good performance and does not have a concentrated ownership interest.
Accordingly, a vote is cast "against" cumulative voting and "for" proposals to
eliminate it if:

a)       The company has a five year return on investment greater than the
         relevant industry index,

b)       All directors and executive officers as a group beneficially own less
         than 10% of the outstanding stock, and

c)       No shareholder (or voting block) beneficially owns 15% or more of the
         company.

Thus, failure of any one of the three criteria results in a vote for cumulative
voting in accordance with the general policy.

Rationale: Cumulative voting is a tool that should be used to ensure that
holders of a significant number of shares may have board representation;
however, the presence of other safeguards may make their use unnecessary.

C.       Supermajority Voting Requirements

AM policy is to vote "against" management proposals to require a supermajority
vote to amend the charter or bylaws and to vote "for" shareholder proposals to
modify or rescind existing supermajority requirements.

*Exception made when company holds a controlling position and seeks to lower
threshold to maintain control and/or make changes to corporate by-laws.

Rationale: Supermajority voting provisions violate the democratic principle that
a simple majority should carry the vote. Setting supermajority requirements may
make it difficult or impossible for shareholders to remove egregious by-law or
charter provisions. Occasionally, a company with a significant insider held
position might attempt to lower a supermajority threshold to make it easier for
management to approve provisions that may be detrimental to shareholders. In
that case, it may not be in the shareholders interests to lower the
supermajority provision.

D.       Shareholder Right to Vote

AM policy is to vote "against" proposals that restrict the right of shareholders
to call special meetings, amend the bylaws, or act by written consent. Policy is
to vote "for" proposals that remove such restrictions.

Rationale: Any reasonable means whereby shareholders can make their views known
to management or effect the governance process should be supported.


IV.      Compensation

Annual Incentive Plans or Bonus Plans are often submitted to shareholders for
approval. These plans typically award cash to executives based on company
performance. Deutsche Bank believes that the responsibility for executive
compensation decisions rest with the board of directors and/or the compensation
committee, and its policy is not to second-guess the board's award of cash
compensation amounts to executives unless a particular award or series of awards
is deemed excessive. If stock options are awarded as part of these bonus or
incentive plans, the provisions must meet Deutsche Bank's criteria regarding
stock option plans, or similar stock-based incentive compensation schemes, as
set forth below.

A.       Establishment of a Remuneration Committee (For FFT Securities)

AM policy is to vote "for" proposals that require the establishment of a
remuneration committee.

Rationale: Corporations should disclose in each annual report or proxy statement
their policies on remuneration. Essential details regarding executive
remuneration including share options, long-term incentive plans and bonuses,
should be disclosed in the annual report, so that investors can judge whether
corporate pay policies and practices meet the standard.

The remuneration committee shall not comprise any board members and should be
sensitive to the wider scene on executive pay. It should ensure that
performance-based elements of executive pay are designed to align the interests
of shareholders.

B.       Executive and Director Stock Option Plans

AM policy is to vote "for" stock option plans that meet the following criteria:

(1)      The resulting dilution of existing shares is less than (a) 15 percent
         of outstanding shares for large capital corporations or (b) 20 percent
         of outstanding shares for small-mid capital companies (companies having
         a market capitalization under one billion U.S. dollars.)

(2)      The transfer of equity resulting from granting options at less than FMV
         is no greater than 3% of the over-all market capitalization of large
         capital corporations, or 5% of market cap for small-mid capital
         companies.

(3)      The plan does not contain express repricing provisions and, in the
         absence of an express statement that options will not be repriced; the
         company does not have a history of repricing options.

(4)      The plan does not grant options on super-voting stock.

AM will support performance-based option proposals as long as a) they do not
mandate that all options granted by the company must be performance based, and
b) only certain high-level executives are subject to receive the performance
based options.

AM will support proposals to eliminate the payment of outside director pensions.

Rationale: Determining the cost to the company and to shareholders of
stock-based incentive plans raises significant issues not encountered with
cash-based compensation plans. These include the potential dilution of existing
shareholders' voting power, the transfer of equity out of the company resulting
from the grant and execution of options at less than FMV and the authority to
reprice or replace underwater options. Our stock option plan analysis model
seeks to allow reasonable levels of flexibility for a company yet still protect
shareholders from the negative impact of excessive stock compensation.
Acknowledging that small mid-capital corporations often rely more heavily on
stock option plans as their main source of executive compensation and may not be
able to compete with their large capital competitors with cash compensation, we
provide slightly more flexibility for those companies.

C.       Employee Stock Option/Purchase Plans

AM policy is to vote for employee stock purchase plans (ESPP's) when the plan
complies with Internal Revenue Code 423, allowing non-management employees to
purchase stock at 85% of FMV.

AM policy is to vote "for" employee stock option plans (ESOPs) provided they
meet the standards for stock option plans in general. However, when computing
dilution and transfer of equity, ESOPs are considered independently from
executive and director option plans.

Rationale: ESOPs and ESPP's encourage rank-and-file employees to acquire an
ownership stake in the companies they work for and have been shown to promote
employee loyalty and improve productivity.

D.       Golden Parachutes

AM policy is to vote "for" proposals to require shareholder approval of golden
parachutes and for proposals that would limit golden parachutes to no more than
three times base compensation. Policy is to vote "against" more restrictive
shareholder proposals to limit golden parachutes.

Rationale: In setting a reasonable limitation, AM considers that an effective
parachute should be less attractive than continued employment and that the IRS
has opined that amounts greater than three times annual salary, are excessive.

E.       Proposals to Limit Benefits or Executive Compensation

AM policy is to vote "against"

1.   Proposals to limit benefits, pensions or compensation and

2.   Proposals that request or require disclosure of executive compensation
     greater than the disclosure required by Securities and Exchange Commission
     (SEC) regulations.

Rationale: Levels of compensation and benefits are generally considered to be
day-to-day operations of the company, and are best left unrestricted by
arbitrary limitations proposed by shareholders.

F.       Option Expensing

AM policy is to support proposals requesting companies to expense stock options.

Rationale: Although companies can choose to expense options voluntarily, the
Financial Accounting Standards Board (FASB) does not yet require it, instead
allowing companies to disclose the theoretical value of options as a footnote.
Because the expensing of stock options lowers earnings, most companies elect not
to do so. Given the fact that options have become an integral component of
compensation and their exercise results in a transfer of shareholder value, AM
agrees that their value should not be ignored and treated as "no cost"
compensation. The expensing of stock options would promote more modest and
appropriate use of stock options in executive compensation plans and present a
more accurate picture of company operational earnings.

G.        Management board election and motion (For FFT Securities)

AM policy is to vote "against":

o        the election of board members with positions on either remuneration or
         audit committees;

o        the election of supervisory board members with too many supervisory
         board mandates;

o        "automatic" election of former board members into the supervisory
         board.

Rationale: Management as an entity, and each of its members, are responsible for
all actions of the company, and are - subject to applicable laws and regulations
- accountable to the shareholders as a whole for their actions.

Sufficient information should be disclosed in the annual company report and
account to allow shareholders to judge the success of the company.

H.       Remuneration (variable pay): (For FFT Securities)

Executive remuneration for Management Board

AM policy is to vote "for" remuneration for Management Board that is transparent
and linked to results.

Rationale: Executive compensation should motivate management and align the
interests of management with the shareholders. The focus should be on criteria
that prevent excessive remuneration; but enable the company to hire and retain
first-class professionals.

Shareholder interests are normally best served when management is remunerated to
optimise long-term returns. Criteria should include suitable measurements like
return on capital employed or economic value added.

Interests should generally also be correctly aligned when management own shares
in the company - even more so if these shares represent a substantial portion of
their own wealth.

Its disclosure shall differentiate between fixed pay, variable (performance
related) pay and long-term incentives, including stock option plans with
valuation ranges as well as pension and any other significant arrangements.

Executive remuneration for Supervisory Board

AM policy is to vote "for" remuneration for Supervisory Board that is at least
50% in fixed form.

Rationale: It would normally be preferable if performance linked compensation
were not based on dividend payments, but linked to suitable result based
parameters. Consulting and procurement services should also be published in the
company report.

I.       Long-term incentive plans (For FFT Securities)

AM policy is to vote "for" long-term incentive plans for members of a management
board that reward for above average company performance.

Rationale: Incentive plans will normally be supported if they:

o        directly align the interests of members of management boards with those
         of shareholders;

o        establish challenging performance criteria to reward only above average
         performance;

o        measure performance by total shareholder return in relation to the
         market or a range of comparable companies;

o        are long-term in nature and encourage long-term ownership of the shares
         once exercised through minimum holding periods;

o        do not allow a repricing of the exercise price in stock option plans.

J.       Shareholder Proposals Concerning "Pay for Superior Performance"

AM policy is to address pay for superior performance proposals on a case-by-case
basis, incorporating the recommendation of an independent third party proxy
research firm (currently ISS) subject to review by the GPVSC as set forth in
AM's Proxy Policies and Procedures.

Rationale: While AM agrees that compensation issues are better left to the
discretion of management, they appreciate the need to monitor for excessive
compensation practices on a case by case basis. If, after a review of the ISS
metrics, AM is comfortable with ISS's applying this calculation and will vote
according to their recommendation.

K.       Executive Compensation Advisory

AM policy is to follow management's recommended vote on shareholder proposals to
propose an advisory resolution seeking to ratify the compensation of the
company's named executive officers (NEOs) on an annual basis.

Rationale: AM believes that controls exist within senior management and
corporate compensation committees, ensuring fair compensation to executives.
This might allow shareholders to require approval for all levels of management's
compensation.

V.       Anti-Takeover Related Issues

A.       Shareholder Rights Plans ("Poison Pills")

AM policy is to vote "for" proposals to require shareholder ratification of
poison pills or that request boards to redeem poison pills, and to vote
"against" the adoption of poison pills if they are submitted for shareholder
ratification.

Rationale: Poison pills are the most prevalent form of corporate takeover
defenses and can be (and usually are) adopted without shareholder review or
consent. The potential cost of poison pills to shareholders during an attempted
takeover outweighs the benefits.

B.       Reincorporation

AM policy is to examine reincorporation proposals on a case-by-case basis. The
voting decision is based on: (1) differences in state law between the existing
state of incorporation and the proposed state of incorporation; and (2)
differences between the existing and the proposed charter/bylaws/articles of
incorporation and their effect on shareholder rights. If changes resulting from
the proposed reincorporation violate the corporate governance principles set
forth in these guidelines, the reincorporation will be deemed contrary to
shareholder's interests and a vote cast "against."

Rationale: Reincorporations can be properly analyzed only by looking at the
advantages and disadvantages to their shareholders. Care must be taken that
anti-takeover protection is not the sole or primary result of a proposed change.

C.       Fair-Price Proposals

AM policy is to vote "for" management fair-price proposals, provided that: (1)
the proposal applies only to two-tier offers; (2) the proposal sets an objective
fair-price test based on the highest price that the acquirer has paid for a
company's shares; (3) the supermajority requirement for bids that fail the
fair-price test is no higher than two-thirds of the outstanding shares; (4) the
proposal contains no other anti-takeover provisions or provisions that restrict
shareholders rights.

A vote is cast for shareholder proposals that would modify or repeal existing
fair-price requirements that do not meet these standards.

Rationale: While fair price provisions may be used as anti-takeover devices, if
adequate provisions are included, they provide some protection to shareholders
who have some say in their application and the ability to reject those
protections if desired.

D.       Exemption from state takeover laws

AM policy is to vote "for" shareholder proposals to opt out of state takeover
laws and to vote "against" management proposals requesting to opt out of state
takeover laws.

Rationale: Control share statutes, enacted at the state level, may harm
long-term share value by entrenching management. They also unfairly deny certain
shares their inherent voting rights.

E.       Non-financial Effects of Takeover Bids

Policy is to vote "against" shareholder proposals to require consideration of
non-financial effects of merger or acquisition proposals.

Rationale: Non-financial effects may often be subjective and are secondary to
AM's stated purpose of acting in its client's best economic interest.


VI.      Mergers & Acquisitions

Evaluation of mergers, acquisitions and other special corporate transactions
(i.e., takeovers, spin-offs, sales of assets, reorganizations, restructurings
and recapitalizations) are performed on a case-by-case basis incorporating
information from an independent proxy research source (currently ISS.)
Additional resources including portfolio management and research analysts may be
considered as set forth in AM's Policies and Procedures.


VII.     Social, Environmental & Political Issues

Social and environmental issues are becoming increasingly important to corporate
success. We incorporate social and environmental considerations into both our
investment decisions and our proxy voting decisions - particularly if the
financial performance of the company could be impacted.

With increasing frequency, shareholder proposals are submitted relating to
social and political responsibility issues. Almost universally, the company
management will recommend a vote "against" these proposals. These types of
proposals cover an extremely wide range of issues. Many of the issues tend to be
controversial and are subject to more than one reasonable, yet opposing, theory
of support. More so than with other types of proxy proposals, social and
political responsibility issues may not have a connection to the economic and
corporate governance principles effecting shareholders' interests. AM's policy
regarding social and political responsibility issues, as with any other issue,
is designed to protect our client shareholders' economic interests.

Occasionally, a distinction is made between a shareholder proposal requesting
direct action on behalf of the board and a request for a report on (or
disclosure of) some information. In order to avoid unduly burdening any company
with reporting requirements, AM's policy is to vote against shareholder
proposals that demand additional disclosure or reporting than is required by the
Securities and Exchange Commission unless it appears there is a legitimate issue
and the company has not adequately addressed shareholders' concerns.

A.       Labor & Human Rights

AM policy is to vote "against" adopting global codes of conduct or workplace
standards exceeding those mandated by law.

Rationale: Additional requirements beyond those mandated by law are deemed
unnecessary and potentially burdensome to companies

B.       Diversity & Equality

1.       AM policy is to vote "against" shareholder proposals to force equal
         employment opportunity, affirmative action or board diversity.

Rationale: Compliance with State and Federal legislation along with information
made available through filings with the EEOC provides sufficient assurance that
companies act responsibly and make information public.

2.       AM policy is also to vote "against" proposals to adopt the Mac Bride
         Principles. The Mac Bride Principles promote fair employment,
         specifically regarding religious discrimination.

Rationale: Compliance with the Fair Employment Act of 1989 makes adoption of the
Mac Bride Principles redundant. Their adoption could potentially lead to charges
of reverse discrimination.

C.       Health & Safety

1.       AM policy is to vote "against" adopting a pharmaceutical price
         restraint policy or reporting pricing policy changes.

Rationale: Pricing is an integral part of business for pharmaceutical companies
and should not be dictated by shareholders (particularly pursuant to an
arbitrary formula.) Disclosing pricing policies may also jeopardize a company's
competitive position in the marketplace.

2.       AM policy is to vote "against" shareholder proposals to control the use
         or labeling of and reporting on genetically engineered products.

Rationale: Additional requirements beyond those mandated by law are deemed
unnecessary and potentially burdensome to companies.

D.       Government/Military

1.       AM policy is to vote against shareholder proposals regarding the
         production or sale of military arms or nuclear or space-based weapons,
         including proposals seeking to dictate a company's interaction with a
         particular foreign country or agency.

Rationale: Generally, management is in a better position to determine what
products or industries a company can and should participate in. Regulation of
the production or distribution of military supplies is, or should be, a matter
of government policy.

2.       AM policy is to vote "against" shareholder proposals regarding
         political contributions and donations.

Rationale: The Board of Directors and Management, not shareholders, should
evaluate and determine the recipients of any contributions made by the company.

3.       AM policy is to vote "against" shareholder proposals regarding
         charitable contributions and donations.

Rationale: The Board of Directors and Management, not shareholders, should
evaluate and determine the recipients of any contributions made by the company.

E.       Tobacco

1.       AM policy is to vote "against" shareholder proposals requesting
         additional standards or reporting requirements for tobacco companies as
         well as "against" requesting companies to report on the intentional
         manipulation of nicotine content.

Rationale: Where a tobacco company's actions meet the requirements of legal and
industry standards, imposing additional burdens may detrimentally effect a
company's ability to compete. The disclosure of nicotine content information
could affect the company's rights in any pending or future litigation.

2.       Shareholder requests to spin-off or restructure tobacco businesses will
         be opposed.

Rationale: These decisions are more appropriately left to the Board and
management, and not to shareholder mandate.


VIII.    Environmental Issues

AM policy is to follow management's recommended vote on CERES Principles or
other similar environmental mandates (e.g., those relating to Greenhouse gas
emissions or the use of nuclear power).

Rationale: Environmental issues are extensively regulated by outside agencies
and compliance with additional requirements often involves significant cost to
companies.


IX.      Miscellaneous Items

A.       Ratification of Auditors

AM policy is to vote "for" a) the management recommended selection of auditors
and b) proposals to require shareholder approval of auditors.

Rationale: Absent evidence that auditors have not performed their duties
adequately, support for management's nomination is warranted.

B.       Limitation of non-audit services provided by independent auditor

AM policy is to support proposals limiting non-audit fees to 50% of the
aggregate annual fees earned by the firm retained as a company's independent
auditor.

Rationale: In the wake of financial reporting problems and alleged audit
failures at a number of companies, AM supports the general principle that
companies should retain separate firms for audit and consulting services to
avoid potential conflicts of interest. However, given the protections afforded
by the recently enacted Sarbanes-Oxley Act of 2002 (which requires Audit
Committee pre-approval for non-audit services and prohibits auditors from
providing specific types of services), and the fact that some non-audit services
are legitimate audit-related services, complete separation of audit and
consulting fees may not be warranted. A reasonable limitation is appropriate to
help ensure auditor independence and it is reasonable to expect that audit fees
exceed non-audit fees.

C.       Audit firm rotation

AM policy is to support proposals seeking audit firm rotation unless the
rotation period sought is less than five years.

Rationale: While the Sarbanes-Oxley Act mandates that the lead audit partner be
switched every five years, AM believes that rotation of the actual audit firm
would provide an even stronger system of checks and balances on the audit
function.

D.       Transaction of Other Business

AM policy is to vote against "transaction of other business" proposals.

Rationale: This is a routine item to allow shareholders to raise other issues
and discuss them at the meeting. As the nature of these issues may not be
disclosed prior to the meeting, we recommend a vote against these proposals.
This protects shareholders voting by proxy (and not physically present at a
meeting) from having action taken at the meeting that they did not receive
proper notification of or sufficient opportunity to consider.

E.       Motions to Adjourn the Meeting

AM Policy is to vote against proposals to adjourn the meeting.

Rationale: Management may seek authority to adjourn the meeting if a favorable
outcome is not secured. Shareholders should already have had enough information
to make a decision. Once votes have been cast, there is no justification for
management to continue spending time and money to press shareholders for
support.

F.       Bundled Proposals

AM policy is to vote against bundled proposals if any bundled issue would
require a vote against it if proposed individually.

Rationale: Shareholders should not be forced to "take the good with the bad" in
cases where the proposals could reasonably have been submitted separately.

G.       Change of Company Name

AM policy is to support management on proposals to change the company name.

Rationale: This is generally considered a business decision for a company.

H.       Proposals Related to the Annual Meeting

AM Policy is to vote in favor of management for proposals related to the conduct
of the annual meeting (meeting time, place, etc.)

Rationale: These are considered routine administrative proposals.

I.       Reimbursement of Expenses Incurred from Candidate Nomination

AM policy is to follow management's recommended vote on shareholder proposals
related to the amending of company bylaws to provide for the reimbursement of
reasonable expenses incurred in connection with nominating one or more
candidates in a contested election of directors to the corporation's board of
directors.

Rationale: Corporations should not be liable for costs associated with
shareholder proposals for directors.

J.       Investment Company Proxies

Proxies solicited by investment companies are voted in accordance with the
recommendations of an independent third party, currently ISS. However, regarding
investment companies for which AM or an affiliate serves as investment adviser
or principal underwriter, such proxies are voted in the same proportion as the
vote of all other shareholders. Proxies solicited by master funds from feeder
funds will be voted in accordance with applicable provisions of Section 12 of
the Investment Company Act of 1940.

Investment companies, particularly closed-end investment companies, are
different from traditional operating companies. These differences may call for
differences in voting positions on the same matter. For example, AM could vote
"for" staggered boards of closed-end investment companies, although AM generally
votes "against" staggered boards for operating companies. Further, the manner in
which AM votes investment company proxies may differ from proposals for which a
AM-advised investment company solicits proxies from its shareholders. As
reflected in the Guidelines, proxies solicited by closed-end (and open-end)
investment companies are voted in accordance with the pre-determined guidelines
of an independent third-party.

Subject to participation agreements with certain Exchange Traded Funds ("ETF")
issuers that have received exemptive orders from the U.S. Securities and
Exchange Commission allowing investing DWS funds to exceed the limits set forth
in Section 12(d)(1)(A) and (B) of the Investment Company Act of 1940, DeAM will
echo vote proxies for ETFs in which Deutsche Bank holds more than 25% of
outstanding voting shares globally when required to do so by participation
agreements and SEC orders.

Note: With respect to the QP Trust (not registered under the Investment Company
Act of 1940), the Fund is not required to engage in echo voting and the
investment adviser will use these Guidelines, and may determine, with respect to
the QP Trust, to vote contrary to the positions in the Guidelines, consistent
with the Fund's best interest.


K.       International Proxy Voting

The above guidelines pertain to issuers organized in the United States, Canada
and Germany. Proxies solicited by other issuers are voted in accordance with
international guidelines or the recommendation of ISS and in accordance with
applicable law and regulation.

APPENDIX B -- RATINGS OF INVESTMENTS


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:

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.

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

<TABLE>
<CAPTION>
  Item 23.          Exhibits
  --------          --------
<S>                 <C>            <C>        <C>
                    (a)
                                   (1)        Amended and Restated Declaration of Trust dated June 2, 2008.
                                              (Incorporated by reference to Post-Effective Amendment No. 44 to the
                                              Registration Statement.)

                                   (2)        Amended and Restated Establishment and Designation of Classes of Series
                                              and Classes of Shares of Beneficial Interest, With $.01 Par Value, is
                                              filed herein.

                    (b)
                                              By-laws of the Registrant dated April 1, 2008.
                                              (Incorporated by reference to Post-Effective Amendment No. 44 to the
                                              Registration Statement.)
                    (c)
                                              Inapplicable.
                    (d)
                                              Amended and Restated Investment Management Agreement between the
                                              Registrant, on behalf of DWS Massachusetts Tax-Free Fund, and Deutsche
                                              Investment Management Americas Inc., dated June 1, 2006 and revised as
                                              of October 1, 2007.
                                              (Incorporated by reference to Post-Effective Amendment No. 44 to the
                                              Registration Statement.)
                    (e)
                                   (1)        Underwriting Agreement between the Registrant and Scudder Investor
                                              Services, Inc. dated September 7, 1998.
                                              (Incorporated by reference to Post-Effective Amendment No. 27 to the
                                              Registration Statement.)

                                   (2)        Underwriting Agreement between the Registrant and Scudder Investors
                                              Services, Inc., dated May 8, 2000.
                                              (Incorporated by reference to Post Effective Amendment No. 34 to the
                                              Registration Statement.)

                                   (3)        Underwriting and Distribution Services Agreement between the Registrant
                                              and Kemper Distributors, Inc., dated November 13, 2000.
                                              (Incorporated by reference to Post Effective Amendment No. 34 to the
                                              Registration Statement.)

                                   (4)        Underwriting Agreement between the Registrant and Scudder Investor
                                              Services, Inc., dated April 5, 2002.
                                              (Incorporated by reference to Post-Effective Amendment No. 36 to the
                                              Registration Statement.)

                                   (5)        Underwriting and Distribution Services Agreement between the Registrant
                                              and Scudder Distributors, Inc. dated April 5, 2002.
                                              (Incorporated by reference to Post-Effective Amendment No. 36 to the
                                              Registration Statement.)



                                       2
<PAGE>

                                   (6)        Underwriting Agreement between the Registrant and Scudder Distributors,
                                              Inc. dated September 30, 2002.
                                              (Incorporated by reference to Post-Effective Amendment No. 42 to the
                                              Registration Statement.)
                    (f)
                                              Inapplicable.
                    (g)
                                              Master Custodian Agreement between the Registrant and State Street Bank
                                              and Trust Company dated November 17, 2008 is filed herein.

                    (h)
                                   (1)        Shareholder Services Agreement between the Registrant and Kemper
                                              Distributors, Inc., dated December 29, 2000.
                                              (Incorporated by reference to Post Effective Amendment No. 34 to the
                                              Registration Statement.)

                                   (2)        Shareholder Services Agreement between the Registrant and Scudder
                                              Distributors, Inc., dated April 5, 2002.
                                              (Incorporated by reference to Post-Effective Amendment No. 36 to the
                                              Registration Statement.)

                                   (3)        Letter of Indemnity to the Scudder Funds dated October 13, 2004.
                                              (Incorporated by reference to Post-Effective Amendment No. 42 to the
                                              Registration Statement.)

                                   (4)        Letter of Indemnity to the Scudder Funds dated October 13, 2004.
                                              (Incorporated by reference to Post-Effective Amendment No. 42 to the
                                              Registration Statement.)

                                   (5)        Letter of Indemnity to the Scudder Funds dated October 13, 2004.
                                              (Incorporated by reference to Post-Effective Amendment No. 42 to the
                                              Registration Statement.)

                                   (6)        Transfer Agency and Service Agreement dated April 1, 2007.
                                              (Incorporated by reference to Post-Effective Amendment No. 43 to the
                                              Registration Statement.)

                                   (7)        Form of Mutual Fund Rule 22c-2 Information Sharing Agreement between DWS
                                              Scudder Distributors, Inc. and certain financial intermediaries is filed
                                              herein.

                                   (8)        Form of Expense Limitation Agreement, dated October 1, 2007, between the
                                              Registrant and Deutsche Investment Management Americas Inc. is filed
                                              herein.

                                   (9)        Amended and Restated Administrative Services Agreement between the
                                              Registrant and Deutsche Investment Management Americas Inc. dated October
                                              1, 2008 is filed herein.
                    (i)
                                              Opinion and Consent of Legal Counsel.
                                              (Incorporated by reference to Post-Effective Amendment No. 36 to the
                                              Registration Statement.)
                    (j)
                                              Consent of Independent Registered Public Accounting Firm is filed herein.


                                       3
<PAGE>

                    (k)
                                              Inapplicable.
                    (l)
                                              Inapplicable.
                    (m)
                                              Rule 12b-1 Plans for Classes A, B and C between Scudder Massachusetts Tax
                                              Free Fund and Kemper Distributors, Inc. dated December 29, 2000.
                                              (Incorporated by reference to Post Effective Amendment No. 34 to the
                                              Registration Statement.)
                    (n)
                                              Amended and Restated Plan with respect to the Registrant pursuant to Rule
                                              18f-3, dated March 11, 2009 is filed herein.

                    (o)
                                              Inapplicable.

                    (p)
                                   (1)        Consolidated Code of Ethics dated March 14, 2006.
                                              (Incorporated by reference to Post-Effective Amendment No. 42 to the
                                              Registration Statement.)

                                   (2)        Code of Ethics for Deutsche Asset Management - U.S., dated January 1, 2009
                                              is filed herein.
</TABLE>



Item 24.          Persons Controlled by or under Common Control with Fund
--------          -------------------------------------------------------

                  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


                                       4
<PAGE>

                  Investment Company Act of 1940, the 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 the Registrant and the trustees who were not
                  "interested persons" of Scudder, Deutsche Bank or Registrant
                  (the "Independent Directors") 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 Independent 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. (hereafter,
                  "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 Independent Trustees) and consultants, whether retained by
                  the Registrant or the Independent 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, that 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,
                  and in light of the rebuttable presumption generally afforded
                  to non-interested board members of an investment company that
                  they have not engaged in disabling conduct, DIMA has also
                  agreed, subject to applicable law and regulation, to indemnify
                  and hold harmless each of the Independent 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 Independent
                  Trustees, arising from the matters alleged in any Private
                  Litigation and Enforcement Actions or matters arising from or
                  similar in subject matter to the matters alleged in the
                  Private Litigation and Enforcement Actions (collectively,
                  "Covered Matters"), including without limitation:

                  1. all reasonable legal and other expenses incurred by the
                  Independent 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;



                                       5
<PAGE>

                  2. all liabilities and reasonable legal and other expenses
                  incurred by any Independent Trustee in connection with any
                  judgment resulting from, or settlement of, any such
                  proceeding, action or matter;

                  3. any loss or reasonable legal and other expenses incurred by
                  any Independent 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 Independent Trustees or acting otherwise) for the
                  benefit of the Independent 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 reasonable legal and other expenses incurred by
                  any Independent Trustee, whether or not such loss or expense
                  is incurred with respect to a Covered Matter, which is
                  otherwise covered under the terms of any specified policy of
                  insurance, but for which the Independent 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 any
                  Covered Matter; provided, that the total amount that DIMA will
                  be obligated to pay under this provision for all loss or
                  expense shall not exceed the amount that DIMA and any of its
                  affiliates actually receive under that policy of insurance for
                  or with respect to any and all Covered Matters; and

                  5. all liabilities and reasonable legal and other expenses
                  incurred by any Independent 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 Independent Trustee
                  (i) with respect to any particular proceeding or action as to
                  which the Board of the Registrant has determined that such
                  Independent Trustee ultimately would not be entitled to
                  indemnification with respect thereto, or (ii) for any
                  liability of the Independent Trustee to the Registrant or its
                  shareholders to which such 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 Trustee of the Registrant as determined in a final
                  adjudication in such proceeding or action. In addition, to the
                  extent that DIMA has paid costs or expenses under the
                  agreement to any individual Independent Trustee with respect
                  to a particular proceeding or action, and there is a final
                  adjudication in such proceeding or action of the Independent
                  Trustee's liability to the Registrant or its shareholders by
                  reason of willful misfeasance, bad faith, gross negligence, or
                  reckless disregard of the Independent Trustee's duties as a
                  Trustee of the Registrant, such Independent 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)



                                       6
<PAGE>

                  DWS Investments Distributors, Inc. acts as principal
                  underwriter of the Registrant's shares and acts as principal
                  underwriter for registered open-end management investment
                  companies other funds managed by Deutsche Investment
                  Management Americas Inc.

                  (b)

                  Information on the officers and directors of DWS Investments
                  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 Investments
          Distributors, Inc.
          Name and Principal             Positions and Offices with               Positions and
          Business Address               DWS Investments Distributors, Inc.       Offices with Registrant
          ----------------               ----------------------------------       -----------------------

<S>      <C>                            <C>                                       <C>
         Philipp Hensler                Director, Chairman of the Board and CEO   None
         345 Park Avenue
         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
         100 Plaza One
         Jersey City, NJ 07311

         Paul Schubert                  Vice President                            Chief Financial Officer
         345 Park Avenue
         New York, NY 10154

         Mark Perrelli                  Vice President                            None
         345 Park Avenue
         New York, NY 10154

         Donna White                    Chief Compliance Officer                  None
         280 Park Avenue
         New York, NY 10017

         Jason Vazquez                  Vice President and AML Compliance Officer Anti-Money Laundering
         280 Park Avenue                                                          Compliance Officer
         New York, NY 10017

         Caroline Pearson               Secretary                                 Assistant Secretary
         One Beacon Street
         Boston, MA 02108

         Philip J. Collora              Assistant Secretary                       None
         222 South Riverside Plaza
         Chicago, IL 60606



                                       7
<PAGE>

                      (1)                             (2)                                  (3)
          DWS Investments
          Distributors, Inc.
          Name and Principal             Positions and Offices with               Positions and
          Business Address               DWS Investments Distributors, Inc.       Offices with Registrant
          ----------------               ----------------------------------       -----------------------

         Patricia DeFilippis            Assistant Secretary                       None
         280 Park Avenue
         New York, NY 10017

         Anjie LaRocca                  Assistant Secretary                       None
         280 Park Avenue
         New York, NY 10017

</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., One Beacon Street, Boston, MA
                  02108-3107. 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
                  agent is maintained by DWS Investments Service Company, 210
                  West 10th Street, Kansas City, MO 64105-1614, or DST Systems,
                  Inc., the sub-transfer agent, at 127 West 10th Street, Kansas
                  City, Missouri 64105.

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 21st day of July 2009.

                             DWS STATE TAX-FREE 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                                    July 21, 2009

 /s/Paul H. Schubert
 -------------------------------------
 Paul H. Schubert                           Chief Financial Officer and Treasurer        July 21, 2009

 /s/John W. Ballantine
 -------------------------------------
 John W. Ballantine*                        Trustee                                      July 21, 2009

 /s/Henry P. Becton, Jr.
 -------------------------------------
 Henry P. Becton, Jr.*                      Trustee                                      July 21, 2009

  /s/Dawn-Marie Driscoll
 -------------------------------------
 Dawn-Marie Driscoll*                       Trustee                                      July 21, 2009

 /s/Keith R. Fox
 -------------------------------------
 Keith R. Fox*                              Trustee                                      July 21, 2009

 /s/Paul K. Freeman
 -------------------------------------
 Paul K. Freeman*                           Chairperson and Trustee                      July 21, 2009

 /s/Kenneth C. Froewiss
 -------------------------------------
 Kenneth C. Froewiss*                       Trustee                                      July 21, 2009

 /s/Richard J. Herring
 -------------------------------------
 Richard J. Herring*                        Trustee                                      July 21, 2009

 /s/William McClayton
 -------------------------------------
 William McClayton*                         Trustee                                      July 21, 2009

 /s/Rebecca W. Rimel
 -------------------------------------
 Rebecca W. Rimel*                          Trustee                                      July 21, 2009

 /s/William N. Searcy, Jr.
 -------------------------------------
 William N. Searcy, Jr.*                    Trustee                                      July 21, 2009


<PAGE>

 SIGNATURE                                  TITLE                                        DATE
 ---------                                  -----                                        ----

 /s/Jean Gleason Stromberg
 -------------------------------------
 Jean Gleason Stromberg*                    Trustee                                      July 21, 2009

 /s/Robert H. Wadsworth
 -------------------------------------
 Robert H. Wadsworth*                       Trustee                                      July 21, 2009

 /s/Axel Schwarzer
 -------------------------------------
 Axel Schwarzer*                            Trustee                                      July 21, 2009

</TABLE>




*By:     /s/Thomas H. Connors
         -----------------------------
         Thomas Connors**


**       Attorney-in-fact pursuant to the powers of attorney as contained in and
         incorporated by reference to Post Effective Amendment No. 44 as filed
         on July 29, 2008 and as filed herein



                                       2
<PAGE>
<TABLE>
<S>                                     <C>                                     <C>
Cash Account Trust                      DWS International Fund, Inc.            DWS Strategic Government
Cash Management Portfolio               DWS Investment Trust                            Securities Fund
Cash Reserve Fund, Inc.                 DWS Investments VIT Funds               DWS Strategic Income Fund
DWS Advisor Funds                       DWS Investors Funds, Inc.               DWS Strategic Municipal Income
DWS Balanced Fund                       DWS Money Funds                                 Trust
DWS Blue Chip Fund                      DWS Money Market Trust                  DWS Target Date Series
DWS Communications Fund, Inc.           DWS Multi-Market Income Trust           DWS Target Fund
DWS Dreman Value Income Edge            DWS Municipal Income Trust              DWS Tax Free Trust
        Fund, Inc.                      DWS Municipal Trust                     DWS Technology Fund
DWS Equity 500 Index Portfolio          DWS Mutual Funds, Inc.                  DWS Value Builder Fund, Inc.
DWS Equity Partners Fund, Inc.          DWS Portfolio Trust                     DWS Value Equity Trust
DWS Equity Trust                        DWS RREEF Real Esate Fund,              DWS Value Series, Inc.
DWS Global/International Fund,                  Inc.                            DWS Variable Series I
        Inc.                            DWS RREEF Real Estate Fund II,          DWS Variable Series II
DWS Global Commodities Stock                    Inc.                            Investors Cash Trust
        Fund, Inc.                      DWS RREEF World Real Estate &           Tax-Exempt California Money
DWS Global High Income Fund,                    Tactical Fund, Inc.                     Market Fund
        Inc.                            DWS Securities Trust                    The Central Europe & Russian
DWS High Income Series                  DWS State Tax Free Trust                        Fund, Inc.
DWS High Income Trust                   DWS State Tax-Free Income               The European Equity Fund, Inc.
DWS Income Trust                                Series                          The New Germany Fund, Inc.
DWS Institutional Funds                 DWS Strategic Income Trust
</TABLE>

                                 (each a "Fund")

                                Power of Attorney

KNOW ALL PERSONS BY THESE PRESENTS, that the following person, whose signature
appears below, does hereby constitute and appoint John Millette, Thomas Connors
and Caroline Pearson, and each of them, severally, with full powers of
substitution, his true and lawful attorney and agent to execute in his name,
place and stead (in such capacity) any and all amendments to enable the Fund to
comply with the Securities Act of 1933, as amended (the "1933 Act") and/or 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 pursuant to the
1933 Act and/or 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 President 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/or the 1940 Act, and any other
instruments or documents related thereto, and the undersigned does hereby ratify
and confirm all that each said attorney-in-fact and agent, or may substitute or
substitutes therefor, shall lawfully do or cause to be done by virtue hereof.

SIGNATURE                    TITLE                         DATE
---------                    -----                         ----
                             President                     September 25, 2008
/s/Michael G. Clark
-------------------
Michael G. Clark

<PAGE>

                                 DWS FUNDS BOARD
                                 ---------------

                     CERTIFICATE OF THE ASSISTANT SECRETARY

          I, Caroline Pearson, do hereby certify as follows:

1.       That I am the duly elected Assistant Secretary of the Funds listed on
         the attached Appendix A, (each a "Fund," and each Fund's underlying
         portfolios, if applicable, a "Series");

2.       I further certify that the following is a complete and correct copy of
         resolutions adopted by the members of the Board of Directors/Trustees
         of the Funds at meetings duly called, convened and held on September
         19, 2008, at which a quorum was present and acting throughout, and that
         such resolutions have not been amended and are in full force and
         effect:


                  WHEREAS, the President of the Fund, Michael Clark, desires to
                  execute a Power of Attorney and thereby delegate legal
                  authority to the below-designated individuals to sign
                  Registration Statements, including any amendments, on his
                  behalf:

                  NOW THEREFORE BE IT:

                  RESOLVED, that the following individuals be, and they hereby
                  are, and each of them hereby is, given a Power of Attorney in
                  substantially the form presented to this meeting, with such
                  changes as the officers, with the advice of counsel, shall
                  recommend, to sign the Fund's Registration Statements,
                  including any amendments:

                  Thomas Connors
                  John Millette
                  Caroline Pearson; and

                  FURTHER RESOLVED, that any Registration Statement signed
                  pursuant to such Power of Attorney shall comply with Rule 483
                  (b) of the Securities Act of 1933 as amended, including, but
                  not limited to the inclusion of: (1) a copy of the authorizing
                  Power of Attorney; and (2) a certified copy of the resolutions
                  of the Board authorizing such delegation as Exhibits thereto.

IN WITNESS WHEREOF, I hereunto set my hand this twenty-fourth day of September,
2008.


                                                 /s/Caroline Pearson
                                                 -------------------
                                                 Caroline Pearson
                                                 Assistant Secretary


<PAGE>

                                   APPENDIX A

CASH ACCOUNT TRUST, and its series:
Government & Agency Securities Portfolio
Money Market Portfolio
Tax-Exempt Portfolio

CASH MANAGEMENT PORTFOLIO

CASH RESERVE FUND, INC., and its series:
Prime Series

DWS ADVISOR FUNDS, and its series:
DWS Core Fixed Income Fund
DWS High Income Plus Fund
DWS International Select Equity Fund
DWS Lifecycle Long Range Fund
DWS Micro Cap Fund
DWS Mid Cap Growth Fund
DWS RREEF Real Estate Securities Fund
DWS RREEF Global Real Estate Securities Fund
DWS Short Duration Fund
DWS Short Duration Plus Fund
DWS Short-Term Municipal Bond Fund
DWS Small Cap Growth Fund
NY Tax Free Money Fund
Tax Free Money Fund Investment

DWS BALANCED FUND

DWS BLUE CHIP FUND

DWS COMMUNICATIONS FUND, INC.

DWS DREMAN VALUE INCOME EDGE FUND, INC.

DWS EQUITY 500 INDEX PORTFOLIO

DWS EQUITY PARTNERS FUND, INC.

DWS EQUITY TRUST, and its series:
DWS Alternative Asset Allocation Plus Fund
DWS Core Plus Allocation Fund
DWS Disciplined Long/Short Growth Fund
DWS Disciplined Long/Short Value Fund
DWS Disciplined Market Neutral Fund

DWS GLOBAL COMMODITIES STOCK FUND, INC.

DWS GLOBAL/INTERNATIONAL FUND, INC., and its series:
DWS Emerging Markets Fixed Income Fund
DWS Global Bond Fund
DWS Global Opportunities Fund
DWS Global Thematic Fund
DWS RREEF Global Infrastructure Fund

DWS GLOBAL HIGH INCOME FUND, INC.

DWS HIGH INCOME SERIES
DWS High Income Fund


<PAGE>

DWS HIGH INCOME TRUST

DWS INCOME TRUST, and its series:
DWS GNMA Fund

DWS INSTITUTIONAL FUNDS, and its series:
Cash Management Fund Institutional
Cash Reserves Fund Institutional
Daily Assets Fund Institutional
DWS Commodity Securities Fund
DWS EAFE Equity Index Fund
DWS Equity 500 Index Fund
DWS Inflation Protected Plus Fund
DWS U.S. Bond Index Fund

DWS INTERNATIONAL FUND, INC. , and its series:
DWS Emerging Markets Equity Fund
DWS Europe Equity Fund
DWS International Fund
DWS International Value Opportunities Fund
DWS Latin America Equity Fund

DWS INVESTMENT TRUST, and its series:
DWS Capital Growth Fund
DWS Growth & Income Fund
DWS Large Company Growth Fund
DWS S&P 500 Index Fund
DWS Small Cap Core Fund

DWS INVESTMENTS VIT TRUST, and its series:
DWS Equity 500 Index VIP
DWS Small Cap Index VIP

DWS INVESTORS FUNDS, INC., and its series:
DWS Japan Equity Fund

DWS MONEY FUNDS, and its series:
DWS Money Market Prime Series

DWS MONEY MARKET TRUST, and its series
DWS Money Market Series

DWS MULTI-MARKET INCOME TRUST

DWS MUNICIPAL INCOME TRUST

DWS MUNICIPAL TRUST, and its series:
DWS Strategic High Yield Tax-Free Fund
DWS Managed Municipal Bond Fund

DWS MUTUAL FUNDS, INC., and its series:
DWS Gold & Precious Metals Fund

DWS PORTFOLIO TRUST, and its series:
DWS Core Plus Income Fund
DWS Floating Rate Plus Fund

DWS RREEF REAL ESTATE FUND, INC.


<PAGE>

DWS RREEF REAL ESTATE FUND II, INC.

DWS RREEF WORLD REAL ESTATE & TACTICAL STRATEGIES FUND, INC.

DWS SECURITIES TRUST, and its series:
DWS Climate Change Fund
DWS Health Care Fund

DWS STATE TAX-FREE INCOME SERIES, and its series:
DWS California Tax-Free Income Fund
DWS New York Tax-Free Income Fund

DWS STATE TAX FREE TRUST, and its series:
DWS Massachusetts Tax-Free Fund

DWS STRATEGIC GOVERNMENT SECURITIES FUND

DWS STRATEGIC INCOME TRUST

DWS STRATEGIC INCOME FUND

DWS STRATEGIC MUNICIPAL INCOME TRUST

DWS TARGET DATE SERIES, and its series:
DWS LifeCompass Retirement Fund
DWS LifeCompass 2015 Fund
DWS LifeCompass 2020 Fund
DWS LifeCompass 2030 Fund
DWS LifeCompass 2040 Fund

DWS TARGET FUND, and its series:
DWS Target 2010 Fund
DWS Target 2011 Fund
DWS Target 2012 Fund
DWS Target 2013 Fund
DWS Target 2014 Fund
DWS LifeCompass Income Fund
DWS LifeCompass Protect Fund

DWS TAX FREE TRUST, and its series
DWS Intermediate Tax/AMT Free Fund

DWS TECHNOLOGY FUND

DWS VALUE BUILDER FUND, INC.


DWS VALUE EQUITY TRUST, and its series:
DWS Enhanced S&P 500 Index Fund
DWS Equity Income Fund

DWS VALUE SERIES, INC. and its series:
DWS Dreman Concentrated Value Fund
DWS Dreman High Return Equity Fund
DWS Dreman Mid Cap Value Fund
DWS Dreman Small Cap Value Fund
DWS Large Cap Value Fund


<PAGE>

DWS VARIABLE SERIES I, and its series
DWS Bond VIP
DWS Capital Growth VIP
DWS Global Opportunities VIP
DWS Growth & Income VIP
DWS Health Care VIP
DWS International VIP

DWS VARIABLE SERIES II, and its series
DWS Balanced VIP
DWS Blue Chip VIP
DWS Conservative Allocation VIP
DWS Core Fixed Income VIP
DWS Davis Venture Value VIP
DWS Dreman High Return Equity VIP
DWS Dreman Small Mid Cap Value VIP
DWS Global Thematic VIP
DWS Government & Agency Securities VIP
DWS Growth Allocation VIP
DWS High Income VIP
DWS International Select Equity VIP
DWS Janus Growth & Income VIP
DWS Large Cap Value VIP
DWS Mid Cap Growth VIP
DWS Moderate Allocation VIP
DWS Money Market VIP
DWS Small Cap Growth VIP
DWS Strategic Income VIP
DWS Technology VIP
DWS Turner Mid Cap Growth VIP

INVESTORS CASH TRUST, and its series:
Treasury Portfolio

TAX-EXEMPT CALIFORNIA MONEY MARKET FUND


<PAGE>

                                                               File No. 02-84021
                                                               File No. 811-3749


                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549



                                    EXHIBITS

                                       TO

                                    FORM N-1A

                         POST-EFFECTIVE AMENDMENT NO. 45
                            TO REGISTRATION STATEMENT

                                      UNDER

                           THE SECURITIES ACT OF 1933

                                       AND

                                AMENDMENT NO. 46

                            TO REGISTRATION STATEMENT

                                      UNDER

                       THE INVESTMENT COMPANY ACT OF 1940



                            DWS STATE TAX-FREE TRUST



                                       9
<PAGE>

                            DWS STATE TAX -FREE TRUST


                                  EXHIBIT INDEX
                                  -------------

                                     (a)(2)
                                       (g)
                                     (h)(7)
                                     (h)(8)
                                     (h)(9)
                                       (j)
                                       (n)
                                     (p)(2)






                                       10