UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

 

FORM            N-CSR

 

| Investment Company Act file number | 811-5482 |
|------------------------------------|----------|

 

DWS High Income 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) 454-7190

 

Paul            Schubert

345            Park Avenue

New York, NY 10154-0004

(Name            and Address of Agent for Service)

 

| Date of fiscal year end: | 11/30 |
|--------------------------|-------|

 

| Date of reporting period: | 11/30/08 |
|---------------------------|----------|

 

 

**ITEM            1.**           **REPORT TO STOCKHOLDERS**

 

----

|  

NOVEMBER 30,                    2008
Annual Report                    to Shareholders |
|-----------------------------------------------------------------------------------------------|
|                                                                                          |
|  

**DWS High                    Income Trust**

Ticker Symbol:                    KHI   |
|                                                                                               |

**Contents**

| **3**Performance Summary

**5**Portfolio Management Review

**10**Portfolio Summary

**12**Investment Portfolio

**24**Financial Statements

**28**Financial Highlights

**29**Notes to Financial Statements

**38**Report of Independent Registered Public Accounting                    Firm

**39**Tax Information

**39**Other Information

**40**Dividend Reinvestment Plan

**42**Investment Management Agreement Approval

**47**Trustees and Officers

**51**Additional Information |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Investments in funds        involve risk. Yields and market value will fluctuate. The fund invests in lower-quality and        non-rated securities which present greater risk of loss of principal and interest than        higher-quality securities. Additionally, investing in emerging markets presents certain        risks, such as currency fluctuation, political and economic changes and market risks. Bond        investments are subject to interest-rate risk such that when interest rates rise, the        prices of the bonds, and thus the value of the bond investment, can decline and the        investor can lose principal value. Leverage results in additional risks and can magnify the        effect of any losses. All of these factors may result in greater share price volatility.        Closed-end funds, unlike open-end funds, are not continuously offered. There is an initial        public offering and once issued, shares of closed-end funds are sold in the open market        through a stock exchange. Shares of closed-end funds frequently trade at a discount to net        asset value. The price of the fund's shares is determined by a number of factors, several        of which are beyond the control of the fund. Therefore, the fund cannot predict whether its        shares will trade at, below or above net asset value.

*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.*

*NOT FDIC/NCUA INSURED        NO BANK GUARANTEE MAY LOSE VALUE NOT A DEPOSIT NOT INSURED BY ANY FEDERAL        GOVERNMENT AGENCY*

**Performance        SummaryNovember 30, 2008**

**Performance is        historical, assumes reinvestment of all dividend and capital gain distributions, and does        not guarantee future results. Investment return and principal value fluctuate with changing        market conditions so that, when sold, shares may be worth more or less than their original        cost. Current performance may be lower or higher than the performance data quoted. Please        visit www.dws-investments.com for the Fund's most recent month-end        performance.**

**Fund specific data and        performance are provided for information purposes only and are not intended for trading        purposes.**

Returns and rankings based        on net asset value during all periods shown reflect fee reductions. Without these fee        reductions, returns and rankings would have been lower.

| **Average                    Annual Total Returns**as of                    11/30/08 |
|--------------------------------------------------------------------------------------|
| **DWS High                    Income Trust**                                         | **1-Year** | **3-Year** | **5-Year** | **10-Year** |
| **Based on                    Net Asset Value(a)**                                   | **-37.13%** | **-11.07%** | **-3.03%** | **.09%** |
| **Based on                    Market Price(a)**                                      | **-41.98%** | **-23.50%** | **-10.33%** | **-2.77%** |
| Credit Suisse High Yield                Index(b)                                     | -30.06% | -6.79% | -1.22% | 2.28% |
| Lipper Closed-End High Current Yield Funds                (Leveraged) Category(c)    | -45.86% | -16.58% | -5.12% | -1.17% |

*Sources: Lipper Inc.        and Deutsche Investment Management Americas Inc.*

| **Net Asset                    Value and Market Price** |
|---------------------------------------------------------|
|                                                    | **As of                    11/30/08** | **As of                    11/30/07** |
| Net Asset Value                                         | $                    3.03 | $                    5.43 |
| Market Price                                            | $                    2.52 | $                    4.91 |

*Prices and net asset        value fluctuate and are not guaranteed.*

| **Distribution Information**                                                                             |
|----------------------------------------------------------------------------------------------------------|
| Twelve Months as of 11/30/08:
Income                    Dividends                                        | $                    .51 |
| November Income Dividend                                                                                 | $                    .0420 |
| Current Annualized Distribution Rate (Based on Net                Asset Value) as of 11/30/08+ | 16.63% |
| Current Annualized Distribution Rate (Based on                Market Price) as of 11/30/08+    | 20.00% |

| **Lipper                    Rankings — Closed-End High Current Yield Funds (Leveraged)                    Category**as of 11/30/08 |
|----------------------------------------------------------------------------------------------------------------------------------------------------|
| **Period**                                                                                                                                         | **Rank** |   | **Number of                    Funds Tracked** | **Percentile Ranking (%)** |
| 1-Year                                                                                                                                             | 12 | of | 38 | 31 |
| 3-Year                                                                                                                                             | 11 | of | 32 | 34 |
| 5-Year                                                                                                                                             | 9 | of | 28 | 32 |
| 10-Year                                                                                                                                            | 4 | of | 19 | 20 |

**Source: Lipper Inc.        Rankings are historical and do not guarantee future results. Rankings are based on net        asset value total return with distributions reinvested.**

**Portfolio Management        Review**

**DWS High Income        Trust**

Deutsche Investment Management        Americas Inc. ("DIMA" or the "Advisor"), which is part of Deutsche Asset Management, is the        investment advisor for DWS High Income Trust. DIMA and its predecessors have more than 80        years of experience managing mutual funds and DIMA provides a full range of investment        advisory services to institutional and retail clients.

Deutsche Asset Management is a        global asset management organization that offers a wide range of investing expertise and        resources. This well-resourced global investment platform brings together a wide variety of        experience and investment insight across industries, regions, asset classes and investing        styles.

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

**Portfolio Manager**

*Gary Sullivan,        CFA*

Managing Director of        Deutsche Asset Management and Portfolio Manager of the fund.

• Joined Deutsche        Asset Management in 1996 and the fund in 2006. Served as the head of the High Yield        group in Europe and as an Emerging Markets portfolio manager.

• Prior to that, four        years at Citicorp as a research analyst and structurer of collateralized mortgage        obligations. Prior to Citicorp, served as an officer in the US Army from 1988 to        1991.

• BS, United States        Military Academy (West Point); MBA, New York University, Stern School of        Business

In the following interview,        Portfolio Manager Gary Sullivan discusses DWS High Income Trust's strategy and the market        environment during the 12-month period ended November 30, 2008.

*The views expressed in        the following discussion reflect those of the portfolio manager only through the end of the        period of the report as stated on the cover. The portfolio manager's views are subject to        change at any time based on market and other conditions and should not be construed as a        recommendation. Past performance is no guarantee of future results. Current and future        portfolio holdings are subject to risk.*

**Q: How did the        high-yield bond market perform during the annual period?**

**A:**High-yield bonds produced a negative absolute return and        underperformed the broader bond market by a wide margin during the past year. The Credit        Suisse High Yield Index (the fund's benchmark) returned -30.06% during the 12-month        period, well behind the 1.74% return of the Barclays Capital US Aggregate        Index.1 After a difficult third quarter (marked by a 8.04% decline for the        Credit Suisse High Yield Index), the high-yield market posted its two worst months on        record, dropping 15.84% in October of 2008 and another 8.63% in November of 2008. The        period from September through the end of November was one of the most turbulent and        volatile for the financial markets in decades, as the resurgence of the year-long credit        crisis sent investors fleeing into Treasuries, draining liquidity away from the capital        markets and severely depressing the returns of higher-risk assets.

For several reasons,        high-yield bonds were particularly vulnerable to the crosscurrents affecting the broader        financial system. First, concerns about a sharp economic slowdown led to speculation that        the high-yield default rate would soar from its current level of 3%-4%, which is low on a        historical basis.2 Second, the crisis caused a number of corporations to lose        access to credit — at least temporarily — an issue of particular importance for        companies in the high-yield sector. And third, forced selling by market participants put        additional pressure on bond prices.

The extreme weakness in high yield        caused the spread between high-yield bonds and Treasuries to increase from 575 basis points        (5.75 percentage points) one year ago to 1,816 basis points on November 30,        2008.3 At this level, the yield spread stands well above previous all-time high        levels of 1,080 basis points in September 2002 and 1,096 basis points in 1990. This        indicates that on a historical basis, the high-yield sector is trading at extremely        distressed levels.

**Q: How        did the fund perform?**

**A:**For the fiscal year ended November 30, 2008,the fund's total return        based on net asset value was -37.13%, underperforming the -30.06% return for its        benchmark, but outperforming the -45.86% average return of the 38 funds in its Lipper peer        group, Closed-End High Current Yield Funds.4 The November 30, 2008 NAV per        share was $3.03, compared with $5.43 twelve months prior.

For the fiscal year ended November        30, 2008, the fund's total return based on the market price of its shares quoted on the New        York stock exchange was -41.98%. The fund's share market price as of November 30, 2008 was        $2.52 per share. The fund's market price stood at $4.91 twelve months prior. The market        price discount of the shares, as a percentage of NAV, was approximately 16.8% on        November 30, 2008, compared to approximately 9.6% on November 30, 2007. (Performance        is calculated based on the reinvestment of dividends. Past performance is no guarantee of        future results. Please see pages 3 and 4        for complete performance information.)

The fund maintained a leverage        position throughout the period, meaning that the fund borrowed money as permitted by the        fund's loan agreement. At the close of the period, the portfolio was 31.88% leveraged,        meaning that the fund borrowed $45.8 million as of November 30, 2008. In employing        leverage, the fund uses a secure line of credit, and then invests the proceeds in        longer-term securities.

**Q: What individual        securities helped performance?**

**A:**Throughout the year, we kept the portfolio defensively positioned in        terms of both credit quality and sector allocation.5 The portfolio maintained a        higher average credit quality than that of the benchmark, and it remained underweight in        financials and housing, as well as in cyclical industries such as retail and        paper.6 We continued to overweight the more defensive sectors, such as health        care/acute care, utilities and aerospace/defense.

Our decision to        avoid exposure to a number of individual issuers that underperformed the benchmark,        particularly those in real estate and mortgage sectors, helped the fund's relative        performance.

The leading individual contributor        to performance was DRS Technologies, Inc.*, a defense-related firm that was bid for by the        investment-grade rated company Finmeccanica. Also performing well for the fund were Kansas        City Southern Railway Co. and its subsidiary Kansas City Southern de Mexico SA de CV. The        company has a substantial asset base, which was viewed as a positive attribute amid the        credit crisis. Two utilities held in the fund — AES Corp. and Allegheny Energy Supply        Co., LLC — saw their bonds gain ground due to the companies' steady cash flows and        defensive nature. In addition, the bonds of Allied Security, Inc. rose in price when the        company was bought out and its bonds were tendered at a premium.

**Q: What holdings hurt        performance?**

**A:**The fund's performance was hurt by its position in bonds issued by        GMAC Corp. These bonds generated very poor performance due to GMAC's exposure to rising        defaults on auto loans.

The fund's performance was also hurt        by positions in two companies forced to go through debt restructurings: American Color        Graphics, Inc.* and Tropicana Entertainment LLC. Another notable detractor was Young        Broadcasting, Inc., whose bonds lost ground when the company ran into difficulties selling        its holding in the San Francisco television station KRON, raising the likelihood of a        restructuring.

**Q: What        is your view on the high-yield market as a whole?**

**A:**Given that the outlook remains dim for the global economy over the        next several months, we remain sensitive to downside risks. Although recent measures        enacted by US and foreign governments to aid the global financial industry are expected to        offer some relief from this unprecedented financial crisis, many uncertainties remain about        its longer-term effects. Nonetheless, in light of the fact that high-yield spreads have        moved to historically wide levels, we believe the market still offers good risk-adjusted        return opportunities in specific credits.

We believe that a cautious        investment approach remains necessary. Given the uncertainty in the global financial        markets, we expect that the key to outperformance throughout 2009 will be the avoidance of        individual credit defaults. We therefore continue to focus carefully on credit research and        the fundamental credit strength of issuers in the fund.

**Portfolio        Summary**

| **Asset                    Allocation**(As a % of Investment                    Portfolio excluding Securities Lending Collateral) | **11/30/08** | **11/30/07** |
|------------------------------------------------------------------------------------------------------------------------------------|--------------|--------------|
|                                                                                                                               |         |         |
| Corporate                    Bonds                                                                                                 | 89%          | 90%          |
| Loan                    Participations and Assignments                                                                             | 9%           | 6%           |
| Cash                    Equivalents                                                                                                | 1%           | 3%           |
| Preferred                    Securities                                                                                            | 1%           | —      |
| Other                    Investments                                                                                               | —      | 1%           |
|                                                                                                                               | 100%         | 100%         |

| **Sector                    Diversification**(Excludes Cash                    Equivalents and Securities Lending Collateral) | **11/30/08** | **11/30/07** |
|-------------------------------------------------------------------------------------------------------------------------------|--------------|--------------|
|                                                                                                                          |         |         |
| Energy                                                                                                                        | 16%          | 10%          |
| Consumer                    Discretionary                                                                                     | 14%          | 23%          |
| Materials                                                                                                                     | 14%          | 12%          |
| Utilities                                                                                                                     | 14%          | 8%           |
| Telecommunication Services                                                                                                    | 11%          | 8%           |
| Industrials                                                                                                                   | 9%           | 12%          |
| Health                    Care                                                                                                | 8%           | 6%           |
| Financials                                                                                                                    | 8%           | 14%          |
| Information                    Technology                                                                                     | 3%           | 4%           |
| Consumer                    Staples                                                                                           | 3%           | 3%           |
|                                                                                                                          | 100%         | 100%         |

| **Quality**(Excludes Cash Equivalents and Securities Lending Collateral) | **11/30/08** | **11/30/07** |
|--------------------------------------------------------------------------------------------------------|--------------|--------------|
|                                                                                                   |         |         |
| BBB                                                                                                    | 4%           | 1%           |
| BB                                                                                                     | 29%          | 18%          |
| B                                                                                                      | 47%          | 50%          |
| Below                    B                                                                             | 16%          | 25%          |
| Not                    Rated                                                                           | 4%           | 6%           |
|                                                                                                   | 100%         | 100%         |

*Asset allocation,        sector diversification and quality are subject to change.*

*The quality ratings        represent the lower of Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's        Corporation ("S&P") credit ratings. The ratings of Moody's and S&P represent their        opinions as to the quality of the securities they rate. Ratings are relative and subjective        and are not absolute standards of quality. The Fund's credit quality does not remove market        risk.*

| **Interest                    Rate Sensitivity** | **11/30/08**                 | **11/30/07**                 |
|--------------------------------------------------|------------------------------|------------------------------|
|                                             |                         |                         |
| Effective                    Maturity            | 6.2                    years | 8.2                    years |
| Duration                                         | 4.1                    years | 5.0                    years |

*Interest rate sensitivity is subject to        change.*

*For more complete        details about the Fund's investment portfolio, see page 12. A        quarterly Fact Sheet is available upon request. A complete list of the fund's        portfolio holdings is posted as of the month end 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. Please see the Additional        Information section for contact information.*

Following the Fund's fiscal first        and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form        N-Q. The form will be available on the SEC's Web site at www.sec.gov, and it also may be        reviewed and copied 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.

**Investment        Portfolioas of November 30, 2008**

|                                                                                                                                     | **Principal                    Amount ($)(a)** | **Value                    ($)** |
|------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------|----------------------------------|
|                                                                                                                                     |                                           |
| **Corporate Bonds                    125.7%**                                                                                            |
| **Consumer                    Discretionary 17.6%**                                                                                      |
| AMC                    Entertainment, Inc., 8.0%, 3/1/2014                                                                               | 670,000                                        | 415,400                          |
| American                    Achievement Corp., 144A, 8.25%, 4/1/2012                                                                     | 205,000                                        | 200,900                          |
| American                    Achievement Group Holding Corp., 14.75%, 10/1/2012 (PIK)                                                | 446,173                                        | 424,422                          |
| Asbury                    Automotive Group, Inc.:                                                                                        |                                           |                             |
| 7.625%,                    3/15/2017                                                                                                     | 475,000                                        | 190,000                          |
| 8.0%,                    3/15/2014                                                                                                       | 200,000                                        | 82,000                           |
| Ashtead                    Holdings PLC, 144A, 8.625%, 8/1/2015                                                                          | 515,000                                        | 298,700                          |
| CanWest                    MediaWorks LP, 144A, 9.25%, 8/1/2015                                                                          | 345,000                                        | 113,850                          |
| Carrols Corp.,                    9.0%, 1/15/2013                                                                                        | 215,000                                        | 142,975                          |
| Charter                    Communications Operating LLC, 144A, 10.875%, 9/15/2014                                                   | 1,380,000                                      | 990,150                          |
| CSC Holdings,                    Inc.:                                                                                                   |                                           |                             |
| 6.75%,                    4/15/2012                                                                                                      | 435,000                                        | 364,317                          |
| Series B,                    7.625%, 4/1/2011                                                                                            | 375,000                                        | 331,875                          |
| Denny's                    Holdings, Inc., 10.0%, 10/1/2012                                                                              | 135,000                                        | 92,475                           |
| DirecTV                    Holdings LLC, 7.625%, 5/15/2016                                                                               | 1,120,000                                      | 954,800                          |
| Dollarama                    Group LP, 8.883%***, 8/15/2012 (b)                                                                          | 350,000                                        | 234,500                          |
| EchoStar DBS                    Corp.:                                                                                                   |                                           |                             |
| 6.375%,                    10/1/2011                                                                                                     | 610,000                                        | 518,500                          |
| 6.625%,                    10/1/2014                                                                                                     | 590,000                                        | 421,850                          |
| 7.125%,                    2/1/2016                                                                                                      | 550,000                                        | 390,500                          |
| Fontainebleau                    Las Vegas Holdings LLC, 144A, 10.25%, 6/15/2015                                                    | 455,000                                        | 59,150                           |
| General Motors                    Corp., 7.4%, 9/1/2025                                                                                  | 245,000                                        | 44,100                           |
| Great Canadian                    Gaming Corp., 144A, 7.25%, 2/15/2015                                                                   | 410,000                                        | 282,900                          |
| Group 1                    Automotive, Inc., 8.25%, 8/15/2013                                                                            | 200,000                                        | 122,000                          |
| Hertz Corp.,                    8.875%, 1/1/2014                                                                                         | 1,280,000                                      | 660,800                          |
| Idearc, Inc.,                    8.0%, 11/15/2016                                                                                        | 960,000                                        | 79,200                           |
| Indianapolis                    Downs LLC, 144A, 11.0%, 11/1/2012                                                                        | 265,000                                        | 125,875                          |
| Isle of Capri                    Casinos, Inc., 7.0%, 3/1/2014                                                                           | 415,000                                        | 176,375                          |
| Kabel                    Deutschland GmbH, 10.625%, 7/1/2014                                                                             | 735,000                                        | 588,918                          |
| Lamar Media                    Corp., Series C, 6.625%, 8/15/2015                                                                        | 285,000                                        | 206,625                          |
| Liberty Media                    LLC:                                                                                                    |                                           |                             |
| 5.7%,                    5/15/2013                                                                                                       | 60,000                                         | 40,256                           |
| 8.25%,                    2/1/2030                                                                                                       | 500,000                                        | 300,000                          |
| 8.5%,                    7/15/2029                                                                                                       | 675,000                                        | 418,311                          |
| MediMedia USA,                    Inc., 144A, 11.375%, 11/15/2014                                                                        | 205,000                                        | 159,900                          |
| MGM                    MIRAGE:                                                                                                           |                                           |                             |
| 6.0%,                    10/1/2009                                                                                                       | 308,000                                        | 249,480                          |
| 6.625%,                    7/15/2015 (c)                                                                                                 | 840,000                                        | 443,100                          |
| 8.375%,                    2/1/2011 (c)                                                                                                  | 425,000                                        | 205,063                          |
| MTR Gaming                    Group, Inc., Series B, 9.75%, 4/1/2010                                                                     | 650,000                                        | 484,250                          |
| Norcraft                    Holdings LP, 9.75%, 9/1/2012                                                                                 | 1,130,000                                      | 904,000                          |
| Penske                    Automotive Group, Inc., 7.75%, 12/15/2016                                                                      | 835,000                                        | 304,775                          |
| Pinnacle                    Entertainment, Inc., 8.75%, 10/1/2013                                                                        | 335,000                                        | 254,600                          |
| Quebecor                    Media, Inc., 7.75%, 3/15/2016                                                                                | 290,000                                        | 194,300                          |
| Quebecor                    World, Inc., 144A, 9.75%, 1/15/2015**                                                                        | 330,000                                        | 21,450                           |
| Reader's                    Digest Association, Inc., 9.0%, 2/15/2017                                                                    | 305,000                                        | 70,531                           |
| Sabre Holdings                    Corp., 8.35%, 3/15/2016                                                                                | 375,000                                        | 112,500                          |
| Seminole Hard                    Rock Entertainment, Inc., 144A, 5.319%***, 3/15/2014                                               | 475,000                                        | 251,750                          |
| Shingle                    Springs Tribal Gaming Authority, 144A, 9.375%, 6/15/2015                                                 | 335,000                                        | 150,750                          |
| Simmons Co.,                    Step-up Coupon, 0% to 12/15/2009, 10.0% to 12/15/2014                                          | 1,345,000                                      | 269,000                          |
| Sinclair                    Television Group, Inc., 8.0%, 3/15/2012 (c)                                                                  | 388,000                                        | 302,640                          |
| Sirius XM                    Radio, Inc., 9.625%, 8/1/2013                                                                               | 900,000                                        | 220,500                          |
| Sonic                    Automotive, Inc., Series B, 8.625%, 8/15/2013                                                                   | 405,000                                        | 145,800                          |
| Time Warner,                    Inc., 9.125%, 1/15/2013                                                                                  | 845,000                                        | 823,068                          |
| Travelport                    LLC:                                                                                                       |                                           |                             |
| 7.436%***,                    9/1/2014                                                                                                   | 315,000                                        | 75,600                           |
| 9.875%,                    9/1/2014                                                                                                      | 75,000                                         | 26,250                           |
| Trump                    Entertainment Resorts, Inc., 8.5%, 6/1/2015                                                                     | 120,000                                        | 17,400                           |
| United                    Components, Inc., 9.375%, 6/15/2013                                                                            | 70,000                                         | 36,400                           |
| Unity Media                    GmbH:                                                                                                     |                                           |                             |
| 144A, 8.75%,                    2/15/2015 EUR                                                                                            | 945,000                                        | 912,149                          |
| 144A, 10.375%,                    2/15/2015                                                                                              | 260,000                                        | 173,875                          |
| UPC Holding                    BV:                                                                                                       |                                           |                             |
| 144A, 7.75%,                    1/15/2014 EUR                                                                                            | 435,000                                        | 417,116                          |
| 144A, 8.0%,                    11/1/2016 EUR                                                                                             | 195,000                                        | 162,217                          |
| Vertis, Inc.,                    13.5%, 4/1/2014 (PIK)                                                                                   | 154,392                                        | 36,020                           |
| Videotron                    Ltd., 144A, 9.125%, 4/15/2018                                                                               | 160,000                                        | 140,800                          |
| Vitro SAB de                    CV, 9.125%, 2/1/2017                                                                                     | 1,290,000                                      | 341,850                          |
| Young                    Broadcasting, Inc., 8.75%, 1/15/2014                                                                            | 2,020,000                                      | 30,300                           |
|                                                                                                                                     | **17,209,158**                                 |
| **Consumer                    Staples 4.0%**                                                                                             |
| Alliance One                    International, Inc., 8.5%, 5/15/2012                                                                     | 205,000                                        | 153,750                          |
| Delhaize                    America, Inc.:                                                                                               |                                           |                             |
| 8.05%,                    4/15/2027                                                                                                      | 115,000                                        | 98,851                           |
| 9.0%,                    4/15/2031                                                                                                       | 978,000                                        | 903,223                          |
| General                    Nutrition Centers, Inc.,                    7.584%***, 3/15/2014 (PIK)                                        | 235,000                                        | 135,125                          |
| North Atlantic                    Trading Co., 144A, 10.0%, 3/1/2012                                                                     | 1,616,750                                      | 994,301                          |
| Smithfield                    Foods, Inc., 7.75%, 7/1/2017                                                                               | 165,000                                        | 86,213                           |
| Viskase                    Companies, Inc., 11.5%, 6/15/2011                                                                             | 2,185,000                                      | 1,529,500                        |
|                                                                                                                                     | **3,900,963**                                  |
| **Energy                    20.1%**                                                                                                      |
| Atlas Energy                    Resources LLC, 144A, 10.75%, 2/1/2018                                                                    | 910,000                                        | 573,300                          |
| Belden &                    Blake Corp., 8.75%, 7/15/2012                                                                            | 1,940,000                                      | 1,358,000                        |
| Bristow Group,                    Inc., 7.5%, 9/15/2017                                                                                  | 450,000                                        | 310,500                          |
| Chaparral                    Energy, Inc.:                                                                                               |                                           |                             |
| 8.5%,                    12/1/2015                                                                                                       | 635,000                                        | 234,950                          |
| 8.875%,                    2/1/2017                                                                                                      | 230,000                                        | 85,100                           |
| Chesapeake                    Energy Corp.:                                                                                              |                                           |                             |
| 6.25%,                    1/15/2018                                                                                                      | 260,000                                        | 170,300                          |
| 6.875%,                    1/15/2016                                                                                                     | 1,549,000                                      | 1,092,045                        |
| 7.25%,                    12/15/2018                                                                                                     | 725,000                                        | 507,500                          |
| 7.5%,                    6/15/2014                                                                                                       | 190,000                                        | 148,200                          |
| Cimarex Energy                    Co., 7.125%, 5/1/2017                                                                                  | 360,000                                        | 280,800                          |
| Colorado                    Interstate Gas Co., 6.8%, 11/15/2015                                                                         | 1,020,000                                      | 851,823                          |
| Delta                    Petroleum Corp., 7.0%, 4/1/2015                                                                                 | 850,000                                        | 208,250                          |
| Dynegy                    Holdings, Inc., 6.875%, 4/1/2011                                                                               | 130,000                                        | 106,925                          |
| El Paso                    Corp.:                                                                                                        |                                           |                             |
| 7.25%,                    6/1/2018                                                                                                       | 765,000                                        | 531,675                          |
| 9.625%,                    5/15/2012                                                                                                     | 275,000                                        | 240,466                          |
| Energy                    Transfer Partners LP, 6.0%, 7/1/2013                                                                           | 1,145,000                                      | 1,018,306                        |
| EXCO                    Resources, Inc., 7.25%, 1/15/2011                                                                                | 628,000                                        | 483,560                          |
| Forest Oil                    Corp., 144A, 7.25%, 6/15/2019                                                                              | 230,000                                        | 157,550                          |
| Frontier Oil                    Corp.:                                                                                                   |                                           |                             |
| 6.625%,                    10/1/2011                                                                                                     | 320,000                                        | 280,000                          |
| 8.5%,                    9/15/2016                                                                                                       | 690,000                                        | 579,600                          |
| KCS Energy,                    Inc., 7.125%, 4/1/2012                                                                                    | 1,735,000                                      | 1,249,200                        |
| Mariner                    Energy, Inc.:                                                                                                 |                                           |                             |
| 7.5%,                    4/15/2013                                                                                                       | 400,000                                        | 260,000                          |
| 8.0%,                    5/15/2017                                                                                                       | 445,000                                        | 238,075                          |
| Newfield                    Exploration Co., 7.125%, 5/15/2018                                                                           | 685,000                                        | 486,350                          |
| OPTI Canada,                    Inc.:                                                                                                    |                                           |                             |
| 7.875%,                    12/15/2014                                                                                                    | 540,000                                        | 205,200                          |
| 8.25%,                    12/15/2014                                                                                                     | 1,305,000                                      | 508,950                          |
| Petrohawk                    Energy Corp.:                                                                                               |                                           |                             |
| 144A, 7.875%,                    6/1/2015                                                                                                | 200,000                                        | 141,000                          |
| 9.125%,                    7/15/2013                                                                                                     | 415,000                                        | 317,475                          |
| Plains                    Exploration & Production Co.:                                                                              |                                           |                             |
| 7.0%,                    3/15/2017                                                                                                       | 380,000                                        | 254,600                          |
| 7.625%,                    6/1/2018                                                                                                      | 765,000                                        | 508,725                          |
| Quicksilver                    Resources, Inc., 7.125%, 4/1/2016                                                                         | 1,060,000                                      | 609,500                          |
| Range                    Resources Corp., 7.25%, 5/1/2018                                                                                | 75,000                                         | 59,531                           |
| SandRidge                    Energy, Inc., 144A, 8.0%, 6/1/2018                                                                          | 300,000                                        | 192,000                          |
| Southwestern                    Energy Co., 144A, 7.5%, 2/1/2018                                                                         | 525,000                                        | 443,625                          |
| Stallion                    Oilfield Services, 144A, 9.75%, 2/1/2015                                                                     | 230,000                                        | 86,250                           |
| Stone Energy                    Corp.:                                                                                                   |                                           |                             |
| 6.75%,                    12/15/2014                                                                                                     | 740,000                                        | 421,800                          |
| 8.25%,                    12/15/2011                                                                                                     | 1,155,000                                      | 854,700                          |
| Tennessee Gas                    Pipeline Co., 7.625%, 4/1/2037                                                                          | 340,000                                        | 251,887                          |
| Tesoro Corp.,                    6.5%, 6/1/2017                                                                                          | 440,000                                        | 257,400                          |
| Whiting                    Petroleum Corp.:                                                                                              |                                           |                             |
| 7.0%,                    2/1/2014                                                                                                        | 430,000                                        | 290,250                          |
| 7.25%,                    5/1/2012                                                                                                       | 830,000                                        | 630,800                          |
| 7.25%,                    5/1/2013                                                                                                       | 175,000                                        | 124,250                          |
| Williams                    Companies, Inc.:                                                                                             |                                           |                             |
| 8.125%,                    3/15/2012                                                                                                     | 1,440,000                                      | 1,245,600                        |
| 8.75%,                    3/15/2032                                                                                                      | 730,000                                        | 532,900                          |
| Williams                    Partners LP, 7.25%, 2/1/2017                                                                                 | 335,000                                        | 262,975                          |
|                                                                                                                                     | **19,651,893**                                 |
| **Financials                    10.2%**                                                                                                  |
| Algoma                    Acquisition Corp., 144A, 9.875%, 6/15/2015                                                                     | 1,065,000                                      | 553,800                          |
| Ashton Woods                    USA LLC, 9.5%, 10/1/2015**                                                                               | 1,060,000                                      | 212,000                          |
| Buffalo                    Thunder Development Authority, 144A, 9.375%, 12/15/2014                                                  | 200,000                                        | 64,000                           |
| Conproca SA de                    CV, REG S, 12.0%, 6/16/2010                                                                            | 1,646,500                                      | 1,695,895                        |
| Eaton Vance                    Corp., CDO II, Series C-X, 13.68%, 7/15/2012**                                                       | 5,807,673                                      | 0                                |
| Ford Motor                    Credit Co., LLC:                                                                                           |                                           |                             |
| 7.25%,                    10/25/2011                                                                                                     | 2,660,000                                      | 1,176,534                        |
| 7.875%,                    6/15/2010                                                                                                     | 550,000                                        | 280,355                          |
| GMAC LLC,                    6.875%, 9/15/2011                                                                                           | 1,495,000                                      | 574,466                          |
| Hawker                    Beechcraft Acquisition Co., LLC:                                                                               |                                           |                             |
| 8.5%,                    4/1/2015                                                                                                        | 1,070,000                                      | 502,900                          |
| 8.875%,                    4/1/2015 (PIK)                                                                                                | 635,000                                        | 260,350                          |
| Hexion US                    Finance Corp., 9.75%, 11/15/2014                                                                            | 210,000                                        | 109,200                          |
| Inmarsat                    Finance II PLC, 10.375%, 11/15/2012                                                                          | 1,215,000                                      | 1,066,162                        |
| iPayment,                    Inc., 9.75%, 5/15/2014                                                                                      | 365,000                                        | 248,200                          |
| Local TV                    Finance LLC, 144A, 9.25%, 6/15/2015 (PIK)                                                                    | 345,000                                        | 138,431                          |
| New ASAT                    (Finance) Ltd., 9.25%, 2/1/2011                                                                              | 570,000                                        | 58,425                           |
| NiSource                    Finance Corp., 6.15%, 3/1/2013                                                                               | 575,000                                        | 483,188                          |
| Orascom                    Telecom Finance SCA, 144A, 7.875%, 2/8/2014                                                                   | 435,000                                        | 239,250                          |
| Rainbow                    National Services LLC, 144A, 10.375%, 9/1/2014                                                                | 81,000                                         | 70,065                           |
| Sprint Capital                    Corp.:                                                                                                 |                                           |                             |
| 7.625%,                    1/30/2011                                                                                                     | 425,000                                        | 306,000                          |
| 8.375%,                    3/15/2012                                                                                                     | 170,000                                        | 115,600                          |
| Tropicana                    Entertainment LLC, 9.625%, 12/15/2014**                                                                     | 1,100,000                                      | 38,500                           |
| UCI Holdco,                    Inc., 10.319%***, 12/15/2013 (PIK)                                                                        | 520,673                                        | 166,616                          |
| Universal City                    Development Partners, 11.75%, 4/1/2010                                                                 | 1,695,000                                      | 1,101,750                        |
| Williams                    Companies, Inc., Credit Linked Certificate Trust, 144A, 6.75%,                    4/15/2009                  | 10,000                                         | 9,740                            |
| Wind                    Acquisition Finance SA:                                                                                          |                                           |                             |
| 144A, 9.75%,                    12/1/2015 EUR                                                                                            | 415,000                                        | 421,656                          |
| 144A, 10.75%,                    12/1/2015                                                                                               | 85,000                                         | 69,700                           |
|                                                                                                                                     | **9,962,783**                                  |
| **Health Care                    8.5%**                                                                                                  |
| Advanced                    Medical Optics, Inc., 7.5%, 5/1/2017                                                                         | 835,000                                        | 459,250                          |
| Community                    Health Systems, Inc., 8.875%, 7/15/2015                                                                     | 2,990,000                                      | 2,399,475                        |
| HCA,                    Inc.:                                                                                                            |                                           |                             |
| 9.125%,                    11/15/2014                                                                                                    | 535,000                                        | 434,688                          |
| 9.25%,                    11/15/2016                                                                                                     | 2,045,000                                      | 1,661,562                        |
| 9.625%,                    11/15/2016 (PIK)                                                                                              | 565,000                                        | 406,800                          |
| HEALTHSOUTH                    Corp., 10.75%, 6/15/2016                                                                                  | 305,000                                        | 269,925                          |
| IASIS                    Healthcare LLC, 8.75%, 6/15/2014                                                                                | 440,000                                        | 334,400                          |
| Psychiatric                    Solutions, Inc., 7.75%, 7/15/2015                                                                         | 390,000                                        | 282,750                          |
| Surgical Care                    Affiliates, Inc., 144A,                    8.875%, 7/15/2015 (PIK)                                      | 410,000                                        | 246,000                          |
| The Cooper                    Companies, Inc., 7.125%, 2/15/2015                                                                         | 680,000                                        | 508,300                          |
| Vanguard                    Health Holding Co. I, LLC, Step-up Coupon, 0% to 10/1/2009, 11.25% to                    10/1/2015 | 480,000                                        | 369,600                          |
| Vanguard                    Health Holding Co. II, LLC, 9.0%, 10/1/2014                                                                  | 1,140,000                                      | 912,000                          |
|                                                                                                                                     | **8,284,750**                                  |
| **Industrials                    12.9%**                                                                                                 |
| Allied Waste                    North America, Inc., 6.5%, 11/15/2010                                                                    | 575,000                                        | 543,375                          |
| ARAMARK Corp.,                    8.5%, 2/1/2015                                                                                         | 175,000                                        | 145,250                          |
| Baldor                    Electric Co., 8.625%, 2/15/2017 (c)                                                                            | 360,000                                        | 264,600                          |
| BE Aerospace,                    Inc., 8.5%, 7/1/2018                                                                                    | 880,000                                        | 726,000                          |
| Belden, Inc.,                    7.0%, 3/15/2017                                                                                         | 340,000                                        | 253,300                          |
| Bombardier,                    Inc., 144A, 6.75%, 5/1/2012                                                                               | 1,270,000                                      | 1,079,500                        |
| Browning-Ferris Industries, Inc., 7.4%,                    9/15/2035                                                                     | 1,095,000                                      | 788,400                          |
| Cenveo Corp.,                    144A, 10.5%, 8/15/2016                                                                                  | 360,000                                        | 276,300                          |
| Congoleum                    Corp., 8.625%, 8/1/2008**                                                                                   | 715,000                                        | 536,250                          |
| Esco                    Corp.:                                                                                                           |                                           |                             |
| 144A,                    6.694%***, 12/15/2013                                                                                           | 40,000                                         | 26,000                           |
| 144A, 8.625%,                    12/15/2013                                                                                              | 725,000                                        | 558,250                          |
| General Cable                    Corp.:                                                                                                  |                                           |                             |
| 6.258%***,                    4/1/2015                                                                                                   | 530,000                                        | 302,100                          |
| 7.125%,                    4/1/2017                                                                                                      | 400,000                                        | 252,000                          |
| Gibraltar                    Industries, Inc., Series B, 8.0%, 12/1/2015                                                                 | 145,000                                        | 90,625                           |
| Great Lakes                    Dredge & Dock Co., 7.75%, 12/15/2013                                                                  | 305,000                                        | 233,325                          |
| K. Hovnanian                    Enterprises, Inc., 8.875%, 4/1/2012                                                                      | 380,000                                        | 140,600                          |
| Kansas City                    Southern de Mexico SA de CV:                                                                              |                                           |                             |
| 7.375%,                    6/1/2014                                                                                                      | 690,000                                        | 507,150                          |
| 7.625%,                    12/1/2013                                                                                                     | 905,000                                        | 683,275                          |
| 9.375%,                    5/1/2012                                                                                                      | 1,145,000                                      | 910,275                          |
| Kansas City                    Southern Railway Co., 8.0%, 6/1/2015                                                                      | 710,000                                        | 528,950                          |
| Mobile                    Services Storage Group, Inc., 9.75%, 8/1/2014                                                                  | 445,000                                        | 329,300                          |
| Moog, Inc.,                    144A, 7.25%, 6/15/2018                                                                                    | 150,000                                        | 115,500                          |
| Navios                    Maritime Holdings, Inc., 9.5%, 12/15/2014                                                                      | 570,000                                        | 342,000                          |
| Ply Gem                    Industries, Inc., 11.75%, 6/15/2013 (c)                                                                       | 255,000                                        | 151,088                          |
| R.H. Donnelley                    Corp., Series A-4, 8.875%, 10/15/2017                                                                  | 1,240,000                                      | 161,200                          |
| RBS Global                    & Rexnord Corp., 9.5%, 8/1/2014                                                                        | 325,000                                        | 227,500                          |
| Seitel, Inc.,                    9.75%, 2/15/2014                                                                                        | 230,000                                        | 133,400                          |
| Titan                    International, Inc., 8.0%, 1/15/2012                                                                            | 995,000                                        | 776,100                          |
| TransDigm,                    Inc., 7.75%, 7/15/2014                                                                                     | 205,000                                        | 155,800                          |
| United Rentals                    North America, Inc.:                                                                                   |                                           |                             |
| 6.5%,                    2/15/2012                                                                                                       | 750,000                                        | 525,000                          |
| 7.0%,                    2/15/2014                                                                                                       | 960,000                                        | 547,200                          |
| US Concrete,                    Inc., 8.375%, 4/1/2014                                                                                   | 380,000                                        | 212,800                          |
| Vought                    Aircraft Industries, Inc., 8.0%, 7/15/2011                                                                     | 215,000                                        | 148,350                          |
|                                                                                                                                     | **12,670,763**                                 |
| **Information                    Technology 4.1%**                                                                                       |
| Alion Science                    & Technology Corp., 10.25%, 2/1/2015                                                                | 345,000                                        | 189,750                          |
| Freescale                    Semiconductor, Inc., 8.875%, 12/15/2014                                                                     | 1,175,000                                      | 399,500                          |
| L-3                    Communications Corp.:                                                                                             |                                           |                             |
| 5.875%,                    1/15/2015                                                                                                     | 1,150,000                                      | 931,500                          |
| Series B,                    6.375%, 10/15/2015                                                                                          | 1,085,000                                      | 900,550                          |
| Lucent                    Technologies, Inc., 6.45%, 3/15/2029                                                                           | 1,235,000                                      | 494,000                          |
| MasTec, Inc.,                    7.625%, 2/1/2017                                                                                        | 475,000                                        | 356,250                          |
| Sanmina-SCI                    Corp., 144A, 5.569%***, 6/15/2010                                                                         | 171,000                                        | 145,350                          |
| Seagate                    Technology HDD Holdings, 6.8%, 10/1/2016                                                                      | 695,000                                        | 434,375                          |
| Vangent, Inc.,                    9.625%, 2/15/2015                                                                                      | 275,000                                        | 159,500                          |
|                                                                                                                                     | **4,010,775**                                  |
| **Materials                    16.4%**                                                                                                   |
| Appleton                    Papers, Inc., Series B, 8.125%, 6/15/2011                                                                    | 200,000                                        | 129,000                          |
| ARCO Chemical                    Co., 9.8%, 2/1/2020                                                                                     | 2,955,000                                      | 945,600                          |
| Cascades,                    Inc., 7.25%, 2/15/2013                                                                                      | 1,002,000                                      | 561,120                          |
| Chemtura                    Corp., 6.875%, 6/1/2016                                                                                      | 745,000                                        | 409,750                          |
| Clondalkin                    Acquisition BV, 144A, 4.819%***, 12/15/2013                                                                | 465,000                                        | 279,000                          |
| CPG                    International I, Inc., 10.5%, 7/1/2013                                                                            | 760,000                                        | 425,600                          |
| Exopack                    Holding Corp., 11.25%, 2/1/2014                                                                               | 1,125,000                                      | 708,750                          |
| Freeport-McMoRan Copper & Gold,                    Inc.:                                                                             |                                           |                             |
| 8.25%,                    4/1/2015                                                                                                       | 1,450,000                                      | 1,051,250                        |
| 8.375%,                    4/1/2017                                                                                                      | 2,110,000                                      | 1,498,100                        |
| GEO Specialty                    Chemicals, Inc.:                                                                                        |                                           |                             |
| 144A, 7.5%***,                    3/31/2015 (PIK)                                                                                        | 729,241                                        | 510,469                          |
| 144A,                    10.698%***, 12/31/2009                                                                                          | 1,194,000                                      | 835,800                          |
| Georgia-Pacific LLC:                                                                                                                     |                                           |                             |
| 144A, 7.125%,                    1/15/2017                                                                                               | 260,000                                        | 191,100                          |
| 9.5%,                    12/1/2011                                                                                                       | 285,000                                        | 249,375                          |
| Hexcel Corp.,                    6.75%, 2/1/2015                                                                                         | 1,510,000                                      | 1,147,600                        |
| Huntsman LLC,                    11.625%, 10/15/2010                                                                                     | 1,738,000                                      | 1,651,100                        |
| Jefferson                    Smurfit Corp., 8.25%, 10/1/2012                                                                             | 415,000                                        | 116,200                          |
| Koppers                    Holdings, Inc., Step-up Coupon, 0% to 11/15/2009, 9.875% to                    11/15/2014      | 590,000                                        | 457,250                          |
| Metals USA                    Holdings Corp.,                    10.883%***, 7/1/2012 (PIK)                                              | 235,000                                        | 64,625                           |
| Millar Western                    Forest Products Ltd.,                    7.75%, 11/15/2013                                             | 180,000                                        | 75,600                           |
| NewMarket                    Corp., 7.125%, 12/15/2016                                                                                   | 810,000                                        | 631,800                          |
| NewPage Corp.,                    10.0%, 5/1/2012 (c)                                                                                    | 680,000                                        | 367,200                          |
| OI European                    Group BV, 144A, 6.875%, 3/31/2017 EUR                                                                     | 400,000                                        | 365,774                          |
| Pliant Corp.,                    11.85%, 6/15/2009 (PIK)                                                                                 | 3                                              | 2                                |
| Radnor                    Holdings Corp., 11.0%, 3/15/2010**                                                                             | 180,000                                        | 225                              |
| Rhodia SA,                    144A, 8.068%***, 10/15/2013 EUR                                                                            | 410,000                                        | 278,585                          |
| Terra Capital,                    Inc., Series B, 7.0%, 2/1/2017                                                                         | 790,000                                        | 570,775                          |
| The Mosaic                    Co., 144A, 7.375%, 12/1/2014                                                                               | 2,220,000                                      | 1,887,000                        |
| Witco Corp.,                    6.875%, 2/1/2026                                                                                         | 275,000                                        | 107,250                          |
| Wolverine                    Tube, Inc., 10.5%, 4/1/2009                                                                                 | 600,000                                        | 540,000                          |
|                                                                                                                                     | **16,055,900**                                 |
| **Telecommunication Services                    13.0%**                                                                                  |
| BCM Ireland                    Preferred Equity Ltd., 144A, 11.245%***, 2/15/2017 (PIK) EUR                                         | 403,249                                        | 99,872                           |
| Centennial                    Communications Corp.:                                                                                      |                                           |                             |
| 10.0%,                    1/1/2013                                                                                                       | 260,000                                        | 261,300                          |
| 10.125%,                    6/15/2013                                                                                                    | 570,000                                        | 562,162                          |
| Cincinnati                    Bell, Inc.:                                                                                                |                                           |                             |
| 7.25%,                    7/15/2013                                                                                                      | 1,060,000                                      | 869,200                          |
| 8.375%,                    1/15/2014 (c)                                                                                                 | 395,000                                        | 291,806                          |
| Cricket                    Communications, Inc.:                                                                                         |                                           |                             |
| 9.375%,                    11/1/2014                                                                                                     | 800,000                                        | 635,000                          |
| 144A, 10.0%,                    7/15/2015                                                                                                | 730,000                                        | 594,950                          |
| Embratel,                    Series B, 11.0%, 12/15/2008                                                                                 | 235,000                                        | 232,650                          |
| Grupo Iusacell                    Celular SA de CV, 10.0%, 3/31/2012                                                                     | 168,288                                        | 117,802                          |
| Hellas                    Telecommunications Luxembourg V, 144A, 8.818%***, 10/15/2012 EUR                                               | 220,000                                        | 148,088                          |
| Intelsat                    Corp.:                                                                                                       |                                           |                             |
| 144A, 9.25%,                    8/15/2014                                                                                                | 145,000                                        | 125,063                          |
| 144A, 9.25%,                    6/15/2016                                                                                                | 1,665,000                                      | 1,390,275                        |
| Intelsat                    Subsidiary Holding Co., Ltd., 144A, 8.875%, 1/15/2015                                                   | 870,000                                        | 726,450                          |
| iPCS, Inc.,                    5.318%***, 5/1/2013                                                                                       | 180,000                                        | 126,000                          |
| MetroPCS                    Wireless, Inc., 9.25%, 11/1/2014                                                                             | 1,010,000                                      | 828,200                          |
| Millicom                    International Cellular SA, 10.0%, 12/1/2013                                                                  | 1,985,000                                      | 1,637,625                        |
| Qwest                    Corp.:                                                                                                          |                                           |                             |
| 7.25%,                    9/15/2025                                                                                                      | 120,000                                        | 76,800                           |
| 7.875%,                    9/1/2011                                                                                                      | 1,210,000                                      | 998,250                          |
| 8.875%,                    3/15/2012                                                                                                     | 260,000                                        | 214,500                          |
| Sprint Nextel                    Corp., 6.0%, 12/1/2016                                                                                  | 360,000                                        | 199,800                          |
| Stratos Global                    Corp., 9.875%, 2/15/2013                                                                               | 260,000                                        | 243,100                          |
| Telesat                    Canada, 144A, 11.0%, 11/1/2015                                                                                | 1,255,000                                      | 828,300                          |
| Virgin Media                    Finance PLC:                                                                                             |                                           |                             |
| 8.75%,                    4/15/2014                                                                                                      | 905,000                                        | 653,862                          |
| 8.75%,                    4/15/2014 EUR                                                                                                  | 570,000                                        | 463,314                          |
| Windstream                    Corp.:                                                                                                     |                                           |                             |
| 7.0%,                    3/15/2019                                                                                                       | 515,000                                        | 356,635                          |
| 8.625%,                    8/1/2016                                                                                                      | 80,000                                         | 62,400                           |
|                                                                                                                                     | **12,743,404**                                 |
| **Utilities                    18.9%**                                                                                                   |
| AES                    Corp.:                                                                                                            |                                           |                             |
| 8.0%,                    10/15/2017                                                                                                      | 890,000                                        | 614,100                          |
| 144A, 8.0%,                    6/1/2020                                                                                                  | 710,000                                        | 454,400                          |
| 144A, 8.75%,                    5/15/2013                                                                                                | 2,288,000                                      | 2,013,440                        |
| Allegheny                    Energy Supply Co., LLC, 144A,                    8.25%, 4/15/2012                                           | 3,285,000                                      | 3,087,900                        |
| CenterPoint                    Energy, Inc., Series B, 7.25%, 9/1/2010                                                                   | 405,000                                        | 395,838                          |
| CMS Energy                    Corp., 8.5%, 4/15/2011                                                                                     | 2,045,000                                      | 1,948,500                        |
| Edison Mission                    Energy, 7.0%, 5/15/2017                                                                                | 930,000                                        | 697,500                          |
| Energy Future                    Holdings Corp., 144A,                    10.875%, 11/1/2017                                             | 1,080,000                                      | 696,600                          |
| IPALCO                    Enterprises, Inc., 144A, 7.25%, 4/1/2016                                                                       | 315,000                                        | 239,400                          |
| Knight, Inc.,                    6.5%, 9/1/2012                                                                                          | 325,000                                        | 260,000                          |
| Mirant                    Americas Generation LLC, 8.3%, 5/1/2011                                                                        | 1,250,000                                      | 1,156,250                        |
| Mirant North                    America LLC, 7.375%, 12/31/2013                                                                          | 280,000                                        | 242,200                          |
| NRG Energy,                    Inc.:                                                                                                     |                                           |                             |
| 7.25%,                    2/1/2014                                                                                                       | 825,000                                        | 672,375                          |
| 7.375%,                    2/1/2016                                                                                                      | 780,000                                        | 633,750                          |
| 7.375%,                    1/15/2017                                                                                                     | 290,000                                        | 234,175                          |
| NV Energy,                    Inc.:                                                                                                      |                                           |                             |
| 6.75%,                    8/15/2017                                                                                                      | 880,000                                        | 717,785                          |
| 8.625%,                    3/15/2014                                                                                                     | 155,000                                        | 143,681                          |
| Oncor Electric                    Delivery Co., 7.0%, 9/1/2022                                                                           | 285,000                                        | 246,470                          |
| Orion Power                    Holdings, Inc., 12.0%, 5/1/2010                                                                           | 1,990,000                                      | 1,930,300                        |
| Regency Energy                    Partners LP, 8.375%, 12/15/2013                                                                        | 520,000                                        | 367,900                          |
| Reliant                    Energy, Inc., 7.875%, 6/15/2017                                                                               | 880,000                                        | 640,200                          |
| Texas                    Competitive Electric Holdings Co., LLC, 144A, 10.5%, 11/1/2015                                             | 1,785,000                                      | 1,142,400                        |
|                                                                                                                                     | **18,535,164**                                 |
| **Total                    Corporate Bonds** (Cost $185,049,685)                                                                         | **123,025,553**                                |
|                                                                                                                                     |
| **Loan Participations                    and Assignments 13.3%**                                                                         |
| **Senior                    Loans*****                                                                                                   |
| Advanced                    Medical Optics, Inc., Term Loan B, LIBOR plus 1.75%, 4.516%,                    4/2/2014                     | 195,556                                        | 132,977                          |
| Algoma Steel,                    Inc., Term Loan B, LIBOR plus 2.5%, 5.266%, 6/20/2013                                              | 337,807                                        | 253,355                          |
| Alliance                    Mortgage Cycle Loan, Term Loan A, LIBOR plus 7.25%, 10.016%,                    6/1/2010**                   | 466,667                                        | 0                                |
| Alltel                    Communication, Inc., Term Loan B1, LIBOR plus 2.75%, 5.516%,                    5/15/2015                      | 2,488,715                                      | 2,389,864                        |
| Aspect                    Software, Inc., Term Loan B, LIBOR plus 2.5%, 5.266%, 6/29/2011                                                | 367,193                                        | 286,411                          |
| Buffets,                    Inc.:                                                                                                        |                                           |                             |
| Letter of                    Credit, LIBOR plus 7.25%, 10.016%, 5/1/2013                                                                 | 118,441                                        | 37,664                           |
| Term Loan B,                    LIBOR plus 7.25%, 10.016%, 11/1/2013                                                                     | 602,660                                        | 191,646                          |
| Term Loan DIP,                    LIBOR plus 7.25%, 10.016%, 1/22/2009                                                                   | 289,728                                        | 92,134                           |
| Charter                    Communications Operating LLC:                                                                                 |                                           |                             |
| Incremental                    Term Loan, LIBOR plus 5.0%, 7.766%, 3/6/2014                                                         | 636,800                                        | 492,565                          |
| Term Loan,                    LIBOR plus 2.0%, 4.766%, 3/6/2014                                                                          | 973,545                                        | 662,478                          |
| Cricket                    Communications, Inc., Term Loan B, LIBOR plus 3.0%, 5.766%,                    6/16/2013                      | 537,252                                        | 437,189                          |
| Energy Future                    Holdings Corp., Term Loan B2, LIBOR plus 3.5%, 6.266%, 10/14/2014                                       | 3,078,900                                      | 2,102,627                        |
| Ford Motor                    Co., Term Loan B, LIBOR plus 3.0%, 5.766%, 12/16/2013                                                 | 389,010                                        | 163,384                          |
| General                    Nutrition Centers, Inc., Term Loan B, LIBOR plus 2.25%, 5.016%,                    9/16/2013                  | 197,990                                        | 131,168                          |
| Georgia-Pacific Corp., Term Loan B1, LIBOR plus                    2.0%, 4.766%, 12/20/2012                                              | 796,070                                        | 624,421                          |
| Golden Nugget,                    Term Loan, 6.51%, 6/16/2014                                                                            | 390,000                                        | 78,000                           |
| Graphic                    Packaging International, Inc., Term Loan, LIBOR plus 2.75%, 5.516%,                    5/16/2014              | 822,036                                        | 630,230                          |
| Hawker                    Beechcraft, Inc.:                                                                                              |                                           |                             |
| Letter of                    Credit, LIBOR plus 2.0%, 4.766%, 3/26/2014                                                                  | 43,427                                         | 22,995                           |
| Term Loan B,                    LIBOR plus 2.0%, 4.766%, 3/26/2014                                                                       | 741,452                                        | 392,599                          |
| HCA, Inc.,                    Term Loan A, LIBOR plus 1.5%, 4.266%, 11/17/2012                                                      | 2,704,925                                      | 2,154,473                        |
| Hexion                    Specialty Chemicals:                                                                                           |                                           |                             |
| Term Loan C1,                    LIBOR plus 2.25%, 5.016%, 5/6/2013                                                                      | 966,252                                        | 537,879                          |
| Term Loan C2,                    LIBOR plus 2.25%, 5.016%, 5/6/2013                                                                      | 250,293                                        | 139,330                          |
| IASIS                    Healthcare LLC, Term Loan, LIBOR plus 5.25%, 8.016%, 6/15/2014 (PIK)                                            | 470,678                                        | 258,873                          |
| Longview Power                    LLC:                                                                                                   |                                           |                             |
| Letter of                    Credit, 3.663%, 4/1/2014                                                                                    | 41,000                                         | 28,085                           |
| Term Loan B,                    5.125%, 4/1/2014                                                                                         | 113,000                                        | 77,405                           |
| Demand Draw,                    5.75%, 4/1/2014                                                                                          | 131,000                                        | 89,735                           |
| NewPage Corp.,                    Term Loan, LIBOR plus 3.75%, 6.516%, 12/19/2014                                                   | 79,400                                         | 57,962                           |
| Sabre, Inc.,                    Term Loan B, LIBOR plus 2.0%, 4.766%, 9/30/2014                                                     | 330,415                                        | 135,159                          |
| Symbion,                    Inc.:                                                                                                        |                                           |                             |
| Term Loan A,                    LIBOR plus 3.25%, 6.016%, 8/23/2013                                                                      | 151,360                                        | 102,168                          |
| Term Loan B,                    LIBOR plus 3.25%, 6.016%, 8/23/2014                                                                      | 151,360                                        | 105,952                          |
| Tribune Co.,                    Tranche B, LIBOR plus 3.0%, 5.766%, 5/19/2014                                                       | 671,500                                        | 195,366                          |
| **Total Loan                    Participations and Assignments** (Cost $18,805,363)                                                      | **13,004,094**                                 |
|                                                                                                                                     |
| **Preferred Securities                    0.6%**                                                                                         |
| **Financials**                                                                                                                           |
| Citigroup,                    Inc., Series E, 8.4%, 4/30/2018 (d)                                                                        | 685,000                                        | 404,458                          |
| Xerox Capital                    Trust I, 8.0%, 2/1/2027 (c)                                                                             | 235,000                                        | 172,487                          |
| **Total                    Preferred Securities** (Cost $891,661)                                                                        | **576,945**                                    |

|                                                                            | **Units** | **Value                    ($)** |
|---------------------------------------------------------------------------------|-----------|----------------------------------|
|                                                                            |      |
| **Other Investments                    0.5%**                                   |
| Hercules,                    Inc., (Bond Unit), 6.5%, 6/30/2029 (Cost $482,087) | 775,000   | **480,500**                      |

|                                                                                     | **Shares** | **Value                    ($)** |
|------------------------------------------------------------------------------------------|------------|----------------------------------|
|                                                                                     |       |
| **Common Stocks                    0.0%**                                                |
| **Consumer                    Discretionary 0.0%**                                       |
| Vertis                    Holdings, Inc.*                                                | 7,700      | **0**                            |
| **Materials                    0.0%**                                                    |
| GEO Specialty                    Chemicals, Inc.*                                        | 14,091     | 11,977                           |
| GEO Specialty                    Chemicals, Inc. 144A*                                   | 1,283      | 1,091                            |
|                                                                                     | **13,068** |
| **Total                    Common Stocks** (Cost $154,244)                               | **13,068** |
|                                                                                     |
| **Warrants                    0.0%**                                                     |
| **Financials                    0.0%**                                                   |
| New ASAT                    (Finance) Ltd., Expiration Date 2/1/2011*                    | 105,300    | **11,832**                       |
| **Industrials                    0.0%**                                                  |
| Dayton                    Superior Corp., 144A, Expiration Date 6/15/2009*               | 60         | **0**                            |
| **Total                    Warrants** (Cost $1)                                          | **11,832** |
| **Convertible Preferred                    Stocks 0.0%**                                 |
| **Consumer                    Discretionary**                                            |
| ION Media                    Networks, Inc.:                                             |       |                             |
| 144A,                    12.0%*                                                          | 2          | 1,300                            |
| Series AI,                    144A, 12.0%*                                               | 15,000     | 98                               |
| **Total                    Convertible Preferred Stocks** (Cost $38,784)                 | **1,398**  |
|                                                                                     |
| **Securities Lending                    Collateral 1.9%**                                |
| Daily Assets                    Fund Institutional, 2.31% (e) (f) (Cost $1,822,385) | 1,822,385  | **1,822,385**                    |
|                                                                                     |
| **Cash Equivalents                    0.6%**                                             |
| Cash                    Management QP Trust, 2.01% (e) (Cost $594,926)                   | 594,926    | **594,926**                      |

|                                                                   | **% of Net                    Assets** | **Value                    ($)** |
|------------------------------------------------------------------------|----------------------------------------|----------------------------------|
|                                                                   |                                   |
| **Total                    Investment Portfolio** (Cost $207,839,136)+ | 142.6                                  | **139,530,701**                  |
| **Other                    Assets and Liabilities, Net**               | 4.2                                    | **4,093,126**                    |
| **Notes                    Payable**                                   | (46.8)                                 | **(45,800,000)**                 |
| **Net                    Assets**                                      | 100.0                                  | **97,823,827**                   |

| **Security**                          | **Coupon** | **Maturity                    Date** | **Principal                    Amount ($)** | **Acquisition Cost ($)** | **Value                    ($)** |
|---------------------------------------|------------|--------------------------------------|--------------------------------------------------|-------------------------------|----------------------------------|
| Alliance Mortgage Cycle Loan          | 10.016%    | 6/4/2010                             | 466,667                                          | USD                           | 467,631                          | 0 |
| Ashton Woods USA LLC                  | 9.5%       | 10/1/2015                            | 1,060,000                                        | USD                           | 982,877                          | 212,000 |
| Congoleum Corp.                       | 8.625%     | 8/1/2008                             | 715,000                                          | USD                           | 600,300                          | 536,250 |
| Eaton Vance Corp., CDO II, Series C-X | 13.68%     | 7/15/2012                            | 5,807,673                                        | USD                           | 3,904,801                        | 0 |
| Quebecor World, Inc.                  | 9.75%      | 1/15/2015                            | 330,000                                          | USD                           | 330,000                          | 21,450 |
| Radnor Holdings Corp.                 | 11.0%      | 3/15/2010                            | 180,000                                          | USD                           | 117,163                          | 225 |
| Tropicana Entertainment LLC           | 9.625%     | 12/15/2014                           | 1,100,000                                        | USD                           | 827,274                          | 38,500 |
| * *                              |       |                                 |                                             | * *                      | **7,230,046**                    | **808,425** |

*144A: Security exempt        from registration under Rule 144A of the Securities Act of 1933. These securities may be        resold in transactions exempt from registration, normally to qualified institutional        buyers.*

*CDO: Collateralized        Debt Obligation*

*LIBOR: Represents the        London InterBank Offered Rate.*

*PIK: Denotes that all        or a portion of the income is paid in-kind.*

*REG S: Securities sold        under Regulation S may not be offered, sold or delivered within the United States or to, or        for the account or benefit of, US persons, except pursuant to an exemption from, or in a        transaction not subject to, the registration requirements of the Securities Act of        1933.*

*At November 30, 2008,        open credit default swap contract purchased was as follows:*

| **Effective/                    Expiration Dates** | **Notional                    Amount ($)** | **Fixed                    Cash Flows Paid** | **Reference                    Obligation/                    Quality Rating (h)** | **Value                    ($)** | **Upfront                    Premiums Paid/ (Received)($)** | **Unrealized Appreciation ($)** |
|----------------------------------------------------|--------------------------------------------|----------------------------------------------|------------------------------------------------------------------------------------|----------------------------------|-------------------------------------------------------------|---------------------------------|
| 5/2/2008                    6/20/2013              | 360,0002                                   | Fixed                    — 7.25%       | Lyondell Chemical Company, 9.8%,                    2/1/2020, B-         | 164,038                          | —                                                     | **164,038**                     |

*At November 30, 2008,        open credit default swap contracts sold were as follows:*

| **Effective/                    Expiration Dates**       | **Notional                    Amount ($) (g)** | **Fixed                    Cash Flows Received** | **Reference                    Obligation/                    Quality Rating (h)** | **Value                    ($)** | **Upfront                    Premiums Paid/ (Received)($)** | **Unrealized Appreciation/ (Depreciation)                    ($)** |
|----------------------------------------------------------|------------------------------------------------|--------------------------------------------------|------------------------------------------------------------------------------------|----------------------------------|-------------------------------------------------------------|--------------------------------------------------------------------|
| 10/3/2007                    12/20/2008                  | 335,0002                                       | 3.2%                                             | General                    Motors Corp., 7.125%, 7/15/2013, CCC+                   | (28,546)                         | —                                                     | (28,546)                                                           |
| 10/3/2007                    12/20/2008                  | 355,0003                                       | 2.6%                                             | General                    Motors Corp., 7.125%, 7/15/2013, CCC+                   | (29,891)                         | —                                                     | (29,891)                                                           |
| 10/23/2007                    12/20/2008                 | 560,0002                                       | 3.0%                                             | General                    Motors Corp., 7.125%, 7/15/2013, CCC+                   | (52,213)                         | —                                                     | (52,213)                                                           |
| 10/4/2007                    12/20/2008                  | 335,0004                                       | 3.1%                                             | Ford Motor                    Co., 6.5%, 8/1/2018, CCC                        | (20,980)                         | —                                                     | (20,980)                                                           |
| 10/5/2007                    12/20/2008                  | 200,0002                                       | 3.15%                                            | Ford Motor                    Co., 6.5%, 8/1/2018, CCC                        | (12,499)                         | —                                                     | (12,499)                                                           |
| 10/23/2007                    12/20/2008                 | 810,0003                                       | 3.4%                                             | Ford Motor                    Co., 6.5%, 8/1/2018, CCC                        | (56,970)                         | —                                                     | (56,970)                                                           |
| 11/20/2007                    12/20/2008                 | 370,0001                                       | 4.02%                                            | Tenet                    Healthcare Corp., 7.375%, 2/1/2013, B                     | 2,337                            | —                                                     | 2,337                                                              |
| 2/14/2008                    3/20/2009                   | 1,110,0001                                     | 3.8%                                             | HCA, Inc.,                    7.7%, 3/20/2009, B-                             | (3,998)                          | —                                                     | (3,998)                                                            |
| 2/26/2008                    3/20/2009                   | 850,0001                                       | 5.0%                                             | Tenet                    Healthcare Corp., 7.375%, 2/1/2013, B                     | 3,987                            | —                                                     | 3,987                                                              |
| **Total net                    unrealized depreciation** | **(198,773)**                                  | **—**                                      | **(198,773)**                                                                      |

| (g)*The                maximum potential amount of future undiscounted payments that the Fund could be                required to make under a credit default swap contract would be the notional amount                of the contract. These potential amounts would be partially offset by any recovery                values of the referenced debt obligation or net amounts received from the                settlement of buy protection credit default swap contracts entered into by the Fund                for the same referenced debt obligation.*(h)*The                quality ratings represent the lower of Moody's Investors Service, Inc. ("Moody's")                or Standard & Poor's Corporation ("S&P") credit ratings. Quality ratings                serve as an indicator of the current status of the payment/performance risk of the                credit derivative.*Counterparties:1*Merrill Lynch, Pierce, Fenner & Smith,                Inc.*2*Morgan Stanley Co., Inc.*3*Citigroup Global Markets, Inc.*4*Goldman Sachs & Co.* |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*At        November 30, 2008, the Fund had the following open forward foreign currency exchange        contracts:*

| **Contracts                    to Deliver** |    | **In                    Exchange For** |   | **Settlement Date** | **Unrealized Appreciation ($)** |
|---------------------------------------------|---------|----------------------------------------|--------|---------------------|---------------------------------|
| USD                                         | 178,835 | * *                               | EUR    | 142,800             | * *                        | 12/19/2008 | 2,483 |

| **Contracts                    to Deliver** |      | **In                    Exchange For** |   | **Settlement Date** | **Unrealized Depreciation ($)** |
|---------------------------------------------|-----------|----------------------------------------|--------|---------------------|---------------------------------|
| EUR                                         | 2,808,000 | * *                               | USD    | 3,514,055           | * *                        | 12/19/2008 | (51,372) |

| **Currency                    Abbreviations** |
|-----------------------------------------------|
| EUR EuroUSD United States Dollar              |

***Fair Value        Measurements***

*Financial Accounting        Standards Board Statement of Financial Accounting Standards No. 157, Fair Value        Measurements, establishes a three-tier hierarchy for measuring fair value and requires        additional disclosure about the classification of fair value measurements.*

*Various inputs are used        in determining the value of the Fund's investments. These inputs are summarized in three        broad levels. Level 1 includes quoted prices in active markets for identical securities.        Level 2 includes other significant observable inputs (including quoted prices for similar        securities, interest rates, prepayment speeds and credit risk). Level 3 includes        significant unobservable inputs (including the Fund's own assumptions in determining the        fair value of investments). The inputs or methodology used for valuing securities are not        necessarily an indication of the risk associated with investing in those        securities.*

*The        following is a summary of the inputs used as of November 30, 2008 in valuing the Fund's        investments. For information on the Fund's policy regarding the valuation of investments,        please refer to the Security Valuation section of Note A in the accompanying Notes to the        Financial Statements.*

| **Valuation                    Inputs** | **Investments in Securities**        | **Other                    Financial Instruments++** |
|-----------------------------------------|--------------------------------------|------------------------------------------------------|
| Level 1                                 | $                    1,822,385       | $                    —                         |
| Level 2                                 | 136,904,808                          | (83,624)                                             |
| Level 3                                 | 803,508                              | —                                              |
| **Total**                               | **$                    139,530,701** | **$                    (83,624)**                    |

*The following is a        reconciliation of the Fund's Level 3 investments for which significant unobservable inputs        were used in determining value at November 30, 2008:*

|                                                            | **Investments in Securities**    |
|-----------------------------------------------------------------|----------------------------------|
| **Balance as                    of December 1, 2007**           | $                    839,024     |
| Total realized gain (loss)                                      | —                          |
| Change in unrealized appreciation                (depreciation) | (762,333)                        |
| Amortization premium/discount                                   | 7,728                            |
| Net purchases (sales)                                           | 60,339                           |
| Net transfers in (out) of Level 3                               | 658,750                          |
| **Balance as                    of November 30, 2008**          | **$                    803,508** |

*The accompanying notes        are an integral part of the financial statements.*

**Financial        Statements**

| **Statement                    of Assets and Liabilities**as of                    November 30, 2008                                                                                                                              |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Assets**                                                                                                                                                                                                                        |
| Investments:
Investments                    in securities, at value (cost $205,421,825) — including $1,698,763                    of securities loaned                                                                 | $                    137,113,390 |
| Investment in                    Daily Assets Fund Institutional (cost $1,822,385)*                                                                                                                                               | 1,822,385 |
| Investment in                    Cash Management QP Trust (cost $594,926)                                                                                                                                                    | 594,926 |
| Total investments, at value                (cost $207,839,136)                                                                                                                                                               | 139,530,701 |
| Foreign currency, at value (cost $81)                                                                                                                                                                                             | 80 |
| Receivable for investments sold                                                                                                                                                                                                   | 1,603,350 |
| Interest receivable                                                                                                                                                                                                               | 4,391,930 |
| Unrealized appreciation on credit default swap                contracts                                                                                                                                                           | 170,362 |
| Unrealized appreciation on forward foreign currency                exchange contracts                                                                                                                                             | 2,483 |
| Due from Advisor                                                                                                                                                                                                                  | 252,946 |
| Other assets                                                                                                                                                                                                                      | 22,838 |
| Total assets                                                                                                                                                                                                                      | 145,974,690 |
| **Liabilities**                                                                                                                                                                                                                   |
| Cash overdraft                                                                                                                                                                                                                    | 53,334 |
| Notes payable                                                                                                                                                                                                                     | 45,800,000 |
| Interest on notes payable                                                                                                                                                                                                         | 40,774 |
| Payable upon return of securities loaned                                                                                                                                                                                          | 1,822,385 |
| Unrealized depreciation on credit default swap                contracts                                                                                                                                                           | 205,097 |
| Unrealized depreciation on forward foreign currency                exchange contracts                                                                                                                                             | 51,372 |
| Net payable on closed forward foreign currency                exchange contracts                                                                                                                                                  | 2,677 |
| Accrued management fee                                                                                                                                                                                                            | 72,248 |
| Other accrued expenses and payables                                                                                                                                                                                               | 102,976 |
| Total liabilities                                                                                                                                                                                                                 | 48,150,863 |
| **Net assets,                    at value**                                                                                                                                                                                       | **$                    97,823,827** |
| **Net Assets                    Consist of**                                                                                                                                                                                      |
| Undistributed net investment income                                                                                                                                                                                               | 937,233 |
| Net unrealized appreciation (depreciation)                    on:
Investments                                                                                                                                                     | (68,308,435) |
| Credit                    default swap contracts                                                                                                                                                                                  | (34,735) |
| Foreign                    currency                                                                                                                                                                                               | (58,942) |
| Accumulated net realized gain (loss)                                                                                                                                                                                              | (106,435,273) |
| Paid-in capital                                                                                                                                                                                                                   | 271,723,979 |
| **Net assets,                    at value**                                                                                                                                                                                       | **$                    97,823,827** |
| **Net Asset                    Value**                                                                                                                                                                                            |
| **Net Asset Value** per share                ($97,823,827 ÷ 32,291,598 outstanding shares of beneficial                interest, $.01 par value, unlimited number of shares                authorized) | **$                    3.03** |

*The accompanying notes        are an integral part of the financial statements.*

| **Statement                    of Operations**for the year ended                    November 30, 2008                    |
|--------------------------------------------------------------------------------------------------------------------------|
| **Investment                    Income**                                                                                 |
| Income:Interest (net of foreign taxes withheld of                $2,587)                                                 | $                    19,534,763 |
| Interest — Cash Management                QP Trust                                                            | 160,499 |
| Securities lending income, including income from                Daily Assets Fund Institutional, net of borrower rebates | 70,826 |
| Dividends                                                                                                                | 867 |
| Total Income                                                                                                             | 19,766,955 |
| Expenses:Management fee                                                                                                  | 1,320,889 |
| Services to shareholders                                                                                                 | 83,188 |
| Custodian fee                                                                                                            | 20,835 |
| Professional fees                                                                                                        | 130,114 |
| Trustees' fees and expenses                                                                                              | 24,775 |
| Reports to shareholders                                                                                                  | 71,487 |
| Interest expense                                                                                                         | 2,215,545 |
| Stock exchange listing fees                                                                                              | 28,507 |
| Other                                                                                                                    | 54,754 |
| Total expenses before expense reductions                                                                                 | 3,950,094 |
| Expense reductions                                                                                                       | (12,662) |
| Total expenses after expense reductions                                                                                  | 3,937,432 |
| **Net                    investment income**                                                                             | **15,829,523** |
| **Realized                    and Unrealized Gain (Loss)**                                                               |
| Net realized gain (loss) from:Investments                                                                                | (22,504,658) |
| Credit default swap contracts                                                                                            | (75,814) |
| Foreign currency                                                                                                         | 858,925 |
| Payments by affiliates (see Note H)                                                                                      | 253,140 |
| * *                                                                                                                 | (21,468,407) |
| Change in net unrealized appreciation                (depreciation) on:Investments                                       | (55,228,657) |
| Credit default swap contracts                                                                                            | (19,368) |
| Unfunded loan commitments                                                                                                | 1,130 |
| Foreign currency                                                                                                         | (122,240) |
| * *                                                                                                                 | (55,369,135) |
| **Net gain                    (loss)**                                                                                   | **(76,837,542)** |
| **Net                    increase (decrease) in net assets resulting from operations**                                   | **$                    (61,008,019)** |

*The        accompanying notes are an integral part of the financial statements.*

| **Statement                    of Cash Flows**for the year ended                    November 30, 2008                                                                                        |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Increase                    (decrease) in cash:**

**Cash Flows                    from Operating Activities:**                                                                            |
| Net increase (decrease) in net assets resulting                from operations                                                                                                               | $                    (61,008,019) |
| **Adjustments                    to reconcile net increase (decrease) in net assets resulting from operations to                    net cash provided (used) by operating activities:** |
| Purchases of long-term investments                                                                                                                                                           | $                    (107,380,898) |
| Net purchases, sales and maturities of short-term                investments                                                                                                                 | 6,287,148 |
| Net amortization of premium (discount)                                                                                                                                                       | (798,407) |
| Proceeds from sales and maturities of long-term                investments                                                                                                                   | 119,970,414 |
| (Increase) decrease in interest                receivable                                                                                                                                    | 804,929 |
| (Increase) decrease in other assets                                                                                                                                                          | (239,518) |
| (Increase) decrease in receivable for investments                sold                                                                                                                        | (228,560) |
| Increase (decrease) in interest on notes                payable                                                                                                                              | (130,788) |
| Increase (decrease) in payable for investments                purchased                                                                                                                      | (7,740,068) |
| Increase (decrease) in accrued expenses and                payables                                                                                                                          | (136,926) |
| Change in net unrealized (appreciation)                depreciation on investments                                                                                                           | 55,228,657 |
| Change in net unrealized (appreciation)                depreciation on credit default swap contracts                                                                                    | 19,368 |
| Change in net unrealized (appreciation)                depreciation on forward foreign currency exchange contracts                                                                           | 112,521 |
| Change in net unrealized (appreciation)                depreciation in unfunded loan commitments                                                                                             | (1,130) |
| Net realized (gain) loss from                investments                                                                                                                                     | 22,504,658 |
| **Cash                    provided (used) by operating activities**                                                                                                                          | **$                    27,263,381** |
| **Cash Flows                    from Financing Activities:**                                                                                                                                 |
| Net increase (decrease) in cash                overdraft                                                                                                                                     | $                    (159,873) |
| Net increase (decrease) in notes payable                                                                                                                                                     | (10,700,000) |
| Distributions paid                                                                                                                                                                           | (16,404,133) |
| **Cash                    provided (used) by financing activities**                                                                                                                          | **(27,264,006)** |
| Increase (decrease) in cash                                                                                                                                                                  | (625) |
| Cash at beginning of period (including foreign                currency)                                                                                                                      | 705 |
| **Cash at end                    of period (including foreign currency)**                                                                                                                    | **$                    80** |
| **Supplemental Disclosure**                                                                                                                                                                  |
| Interest paid on notes                                                                                                                                                                       | $                    2,333,919 |

*The        accompanying notes are an integral part of the financial statements.*

| **Statement                    of Changes in Net Assets**                                                                                             |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Increase                    (Decrease) in Net Assets**                                                                                              | **Years                    Ended November 30,** |
| **2008**                                                                                                                                              | **2007** |
| Operations:Net investment income                                                                                                                      | $                    15,829,523 | $                    16,384,535 |
| Net realized gain (loss)                                                                                                                              | (21,468,407) | (7,329) |
| Change in net unrealized appreciation                (depreciation)                                                                                   | (55,369,135) | (14,750,735) |
| Net increase (decrease) in net assets resulting                from operations                                                                        | (61,008,019) | 1,626,471 |
| Distributions to shareholders from:Net investment income                                                                                              | (16,404,133) | (17,024,212) |
| Fund share and paid-in capital                transactions:Reinvestment of distributions                                                              | — | 778,578 |
| Reimbursement by Advisor (see Note H)                                                                                                                 | — | 175,116 |
| Net increase (decrease) in net assets from Fund                share and paid-in capital transactions                                                 | — | 953,694 |
| **Increase                    (decrease) in net assets**                                                                                              | (77,412,152) | (14,444,047) |
| Net assets at beginning of period                                                                                                                     | 175,235,979 | 189,680,026 |
| Net assets at end of period (including                undistributed net investment income of $937,233 and $159,483,                respectively) | **$                    97,823,827** | **$                    175,235,979** |
| **Other                    Information**                                                                                                              |
| Shares outstanding at beginning of                period                                                                                              | 32,291,598 | 32,160,492 |
| Shares issued to shareholders in reinvestment of                dividends                                                                             | — | 131,106 |
| Shares outstanding at end of period                                                                                                                   | 32,291,598 | 32,291,598 |

*The        accompanying notes are an integral part of the financial statements.*

**Financial        Highlights**

| **Years Ended                    November 30,**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | **2008**                      | **2007**                      | **2006**                      | **2005**                      | **2004**                      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------|-------------------------------|-------------------------------|-------------------------------|-------------------------------|
| **Selected                    Per Share Data**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **Net asset                    value, beginning of period**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | **$                    5.43** | **$                    5.90** | **$                    5.85** | **$                    6.15** | **$                    5.81** |
| *Income                    (loss) from investment operations:*

Net                    investment incomea                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | .49                           | .51                           | .54                           | .60                           | .66                           |
| Net realized                    and unrealized gain (loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | (2.38)                        | (.46)                         | .13                           | (.24)                         | .32                           |
| **Total from                    investment operations**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | (1.89)                        | .05                           | .67                           | .36                           | .98                           |
| *Less                    distributions from:*

Net                    investment income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | (.51)                         | (.53)                         | (.61)                         | (.66)                         | (.64)                         |
| Tax return of                    capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | —                       | —                       | (.01)                         | —                       | —                       |
| **Total                    distributions**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | (.51)                         | (.53)                         | (.62)                         | (.66)                         | (.64)                         |
| Reimbursement by Advisor                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | —                       | .01                           | —                       | —                       | —                       |
| **Net asset                    value, end of period**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | **$                    3.03** | **$                    5.43** | **$                    5.90** | **$                    5.85** | **$                    6.15** |
| **Market                    value, end of period**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | **$                    2.52** | **$                    4.91** | **$                    6.12** | **$                    7.67** | **$                    7.39** |
| **Total                    Return**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Based on net asset                value (%)b                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | (37.13)d,f                    | .93d,e                        | 10.83d                        | 4.60                          | 16.53                         |
| Based on market                value (%)b                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | (41.98)                       | (12.02)                       | (12.32)                       | 14.14                         | 13.47                         |
| **Ratios to                    Average Net Assets and Supplemental Data**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| Net assets, end of period                ($ millions)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 98                            | 175                           | 190                           | 187                           | 195                           |
| Ratio of expenses before fee reductions (including                interest expense) (%)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 2.54                          | 2.97                          | 2.76                          | 2.25                          | 1.71                          |
| Ratio of expenses after fee reductions (including                interest expense) (%)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 2.53                          | 2.97                          | 2.75                          | 2.25                          | 1.71                          |
| Ratio of expenses after fee reductions (excluding                interest expense) (%)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 1.11                          | 1.10                          | 1.02                          | 1.13                          | 1.07                          |
| Ratio of net investment income (%)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 10.19                         | 8.75                          | 9.26                          | 9.95                          | 11.08                         |
| Portfolio turnover rate (%)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 53                            | 57                            | 87                            | 102                           | 135                           |
| Total debt outstanding at end of period                ($ thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 45,800                        | 56,500                        | 62,000                        | 60,750                        | 65,000                        |
| Asset coverage per $1,000 of                debtc                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 3,137                         | 4,102                         | 4,059                         | 4,075                         | 3,994                         |
| a*Based on average shares outstanding during the                period.*b*Total return based on net asset value reflects                changes in the Fund's net asset value during each period. Total return based on                market value reflects changes in market value. Each figure assumes that dividend                and capital gain distributions, if any, were reinvested. These figures will differ                depending upon the level of any discount from or premium to net asset value at                which the Fund's shares traded during the period.*c*Asset coverage equals the total net assets plus                borrowings of the Fund divided by the borrowings outstanding at period                end.*d*Total return would have been lower had certain                fees not been reduced.*e*Includes a non-recurring reimbursement from the                Advisor for a fee previously charged to the Fund (see Note H). Excluding this                non-recurring reimbursement, total return would have been 0.10%                lower.*f*Includes a reimbursement from the Advisor to                reimburse the effect of a loss incurred in violation of investment restrictions                during the period (see Note H). Excluding this reimbursement, total return would                have been 0.16% lower.* |

**Notes to Financial        Statements**

**A. Significant Accounting        Policies**

DWS High Income Trust (the ``Fund'')        is registered under the Investment Company Act of 1940, as amended (the ``1940 Act''), as a        closed-end, diversified management investment company organized as a Massachusetts business        trust.

The Fund's financial statements are        prepared in accordance with accounting principles generally accepted in the United States        of America which require the use of management estimates. Actual results could differ from        those estimates. The policies described below are followed consistently by the Fund in the        preparation of its financial statements.

**Security        Valuation.** Investments are stated at value determined as of the close of regular        trading on the New York Stock Exchange on each day the exchange is open for trading. Debt        securities are valued by independent pricing services approved by the Trustees of the Fund.        If the pricing services are unable to provide valuations, the securities are valued at the        most recent bid quotation or evaluated price, as applicable, obtained from one or more        broker-dealers. Such services may use various pricing techniques which take into account        appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading        characteristics and other data, as well as broker quotes. Equity securities are valued at        the most recent sale price or official closing price reported on the exchange (US or        foreign) or over-the-counter market on which the security is traded most extensively.        Securities for which no sales are reported are valued at the calculated mean between the        most recent bid and asked quotations on the relevant market or, if a mean cannot be        determined, at the most recent bid quotation.

Money market instruments purchased        with an original or remaining maturity of sixty days or less, maturing at par, are valued        at amortized cost. Investments in open-end investment companies and Cash Management QP        Trust are valued at their net asset value each business day.

Securities and other assets for        which market quotations are not readily available or for which the above valuation        procedures are deemed not to reflect fair value are valued in a manner that is intended to        reflect their fair value as determined in accordance with procedures approved by the        Trustees.

The Fund adopted Financial        Accounting Standards Board ("FASB") Statement of Financial Accounting Standards No. 157,        Fair Value Measurements, effective at the beginning of the Fund's fiscal year. Disclosure        about the classification of fair value measurements is included at the end of the Fund's        Investment Portfolio.

**New Accounting        Pronouncement.** In March 2008, the FASB issued Statement of Financial Accounting        Standards No. 161 ("FAS 161"), "Disclosures about Derivative Instruments and Hedging        Activities". FAS 161 requires enhanced disclosure about an entity's derivative and        hedging activities including qualitative disclosures about the objectives and strategies        for using derivatives, quantitative disclosures about fair value amounts of gains and        losses on derivative instruments, and disclosures about credit-risk-related contingent        features in derivative agreements. FAS 161 is effective for fiscal years and interim        periods beginning after November 15, 2008. Management is currently reviewing the enhanced        disclosure requirements for the adoption of FAS 161.

**Securities Lending.** The Fund may lend        securities to financial institutions. The Fund retains beneficial ownership of the        securities it has loaned and continues to receive interest and dividends paid by the issuer        of securities and to participate in any changes in their market value. The Fund requires        the borrowers of the securities to maintain collateral with the Fund consisting of liquid,        unencumbered assets having a value at least equal to the value of the securities loaned.        When the collateral falls below specified amounts, the lending agents will use their best        efforts to obtain additional collateral on the next business day to meet required amounts        under the security lending agreement. The Fund may invest the cash collateral into a joint        trading account in an affiliated money market fund pursuant to Exemptive Orders issued by        the SEC. The Fund receives compensation for lending its securities either in the form of        fees or by earning interest on invested cash collateral net of borrower rebates and fees        paid to a lending agent. Either the Fund or the borrower may terminate the loan. There may        be risks of delay and costs in recovery of securities or even loss of rights in the        collateral should the borrower of the securities fail financially. The Fund is also subject        to all investment risks associated with the value of any cash collateral received,        including, but not limited to, interest rate, credit and liquidity risk associated with        such investments.

**Credit Default        Swap Contracts.** A credit default swap is a contract between a buyer and a seller        of protection against pre-defined credit events for the reference entity. The Fund may buy        or sell credit default swap contracts to seek to increase the Fund's income, to add        leverage to the portfolio, to gain exposure to an underlying issuer's credit quality        characteristics without directly investing in that issuer, or to hedge the risk of default        on Fund securities. As a seller in the credit default swap contract, the Fund is required        to pay the par (or other agreed-upon) value of the referenced entity to the counterparty        with the occurrence of a credit event by a third party, such as a US or foreign corporate        issuer, on the reference entity, which would likely result in a loss to the Fund. In        return, the Fund receives from the counterparty a periodic stream of payments over the term        of the contract provided that no credit event has occurred. If no credit event occurs, the        Fund keeps the stream of payments with no payment obligations. The Fund may also buy credit        default swap contracts in order to hedge against the risk of a credit event on debt        securities, in which case the Fund functions as the counterparty referenced above. This        involves the risk that the contract may expire worthless. It also involves counterparty        risk — that the seller may fail to satisfy its payment obligations to the Fund with        the occurrence of a credit event. When the Fund sells a credit default swap contract it        will "cover" its commitment. This may be achieved by, among other methods, maintaining cash        or liquid assets equal to the aggregate notional value of the reference entities for all        outstanding credit default swap contracts sold by the Fund.

Credit default swap        contracts are marked to market daily based upon quotations from a board approved pricing        vendor and the change in value, if any, is recorded daily as unrealized gain or loss. An        upfront payment made by the Fund is recorded as an asset on the Statement of Assets        and Liabilities. An upfront payment received by the Fund is recorded as a liability on        the Statement of Assets and Liabilities. Under the terms of the credit default swap        contracts, the Fund receives or makes quarterly payments based on a specified interest rate        on a fixed notional amount. These payments are recorded as a realized gain or loss on the        Statement of Operations. Payments received or made as a result of a credit event or        termination of the contract are recognized, net of a proportional amount of the upfront        payment, as realized gains or losses.

The Fund adopted FASB Staff Position        (FSP) FAS 133-1 and FIN 45-4, "Disclosures about Credit Derivatives and Certain Guarantees:        An Amendment of FASB Statement No.133 and FASB Interpretation No. 45", effective November        30, 2008. The amendments to FAS 133 include required disclosure for (i) the nature and        terms of the credit derivative, reasons for entering into the credit derivative, the events        or circumstances that would require the seller to perform under the credit derivative, and        the current status of the payment/performance risk of the credit derivative, (ii) the        undiscounted maximum potential amount of future payments the seller could be required to        make under the credit derivative, (iii) the fair value of the credit derivative, and (iv)        the nature of any recourse provisions and assets held either as collateral or by third        parties.

The amendments to FIN 45 require        additional disclosure about the current status of the payment/performance risk of a        guarantee. All changes to accounting policies have been made in accordance with the FSP and        incorporated for the current period in this note and at the end of the Fund's Investment        Portfolio.

**Foreign Currency        Translations.** The books and records of the Fund are maintained in US dollars.        Investment securities and other assets and liabilities denominated in a foreign currency        are translated into US dollars at the prevailing exchange rates at period end. Purchases        and sales of investment securities, income and expenses are translated into US dollars at        the prevailing exchange rates on the respective dates of the transactions.

Net realized and unrealized gains        and losses on foreign currency transactions represent net gains and losses between trade        and settlement dates on securities transactions, the disposition of forward foreign        currency exchange contracts and foreign currencies, and the difference between the amount        of net investment income accrued and the US dollar amount actually received. That portion        of both realized and unrealized gains and losses on investments that results from        fluctuations in foreign currency exchange rates is not separately disclosed but is included        with net realized and unrealized gain/appreciation and loss/depreciation on        investments.

**Forward Foreign        Currency Exchange Contracts.** A forward foreign currency exchange contract        ("forward currency contract") is a commitment to purchase or sell a foreign currency at the        settlement date at a negotiated rate. The Fund may enter into forward currency contracts in        order to hedge its exposure to changes in foreign currency exchange rates on its foreign        currency denominated portfolio holdings and to facilitate transactions in foreign currency        denominated securities.

Forward currency        contracts are valued at the prevailing forward exchange rate of the underlying currencies        and unrealized gain (loss) is recorded daily. Sales and purchases of forward currency        contracts having the same settlement date and broker are offset and any gain (loss) is        realized on the date of offset; otherwise, gain (loss) is realized on settlement date.        Realized and unrealized gains and losses which represent the difference between the value        of a forward currency contract to buy and a forward currency contract to sell are included        in net realized and unrealized gain (loss) from foreign currency related        transactions.

Certain risks may arise upon        entering into forward currency contracts from the potential inability of counterparties to        meet the terms of their contracts. Additionally, when utilizing forward currency contracts        to hedge, the Fund gives up the opportunity to profit from favorable exchange rate        movements during the term of the contract.

**When        Issued/Delayed Delivery Securities.** The Fund may purchase securities with        delivery or payment to occur at a later date beyond the normal settlement period. At the        time the Fund enters into a commitment to purchase a security, the transaction is recorded        and the value of the security is reflected in the net asset value. The price of such        security and the date when the security will be delivered and paid for are fixed at the        time the transaction is negotiated. The value of the security may vary with market        fluctuations. No interest accrues to the Fund until payment takes place. At the time the        Fund enters into this type of transaction it is required to segregate cash or other liquid        assets at least equal to the amount of the commitment.

Certain risks may arise upon        entering into when-issued or delayed delivery securities from the potential inability of        counterparties to meet the terms of their contracts or if the issuer does not issue the        securities due to political, economic, or other factors. Additionally, losses may arise due        to changes in the value of the underlying securities.

**Senior        Loans.** Senior Loans are portions of loans originated by banks and sold in pieces        to investors. These US dollar-denominated fixed and floating rate loans ("Loans") in which        the Fund invests, are arranged between the borrower and one or more financial institutions        ("Lenders"). These loans are corporate obligations often issued in connection with        recapitalizations, acquisitions, leveraged buy-outs and refinancings. The Fund invests in        such Loans in the form of participations in Loans ("Participations") or assignments of all        or a portion of Loans from third parties ("Assignments"). Participations typically result        in the Fund having a contractual relationship only with the Lender, not with the borrower.        The Fund has the right to receive payments of principal, interest and any fees to which it        is entitled from the Lender selling the Participation and only upon receipt by the Lender        of the payments from the borrower. In connection with purchasing Participations, the Fund        generally has no right to enforce compliance by the borrower with the terms of the loan        agreement relating to the Loan, or any rights of set-off against the borrower, and the Fund        will not benefit directly from any collateral supporting the Loan in which it has purchased        the Participation. As a result, the Fund assumes the credit risk of both the borrower and        the Lender that is selling the Participation. Assignments typically result in the Fund        having a direct contractual relationship with the borrower, and the Fund may enforce        compliance by the borrower with the terms of the loan agreement. All Senior Loans involve        interest rate risk, liquidity risk and credit risk, including the potential default or        insolvency of the borrower.

**Federal Income Taxes.** The Fund's policy        is to comply with the requirements of the Internal Revenue Code, as amended, which are        applicable to regulated investment companies, and to distribute all of its taxable income        to its shareholders.

At November 30, 2008, the Fund had a        net tax basis capital loss carryforward of approximately $100,376,000, which may be applied        against any realized net taxable capital gains of each succeeding year until fully utilized        or until November 30, 2009 ($20,780,000), November 30, 2010 ($39,455,000), November 30,        2011 ($16,502,000), November 30, 2013 ($515,000), November 30, 2014 ($3,515,000), November        30, 2015 ($1,317,000) and November 30, 2016 ($18,292,000), the respective expiration dates,        whichever occurs first. During the year ended November 30, 2008, the Fund lost,        through expiration, $9,086,000 of prior year capital loss carryforward.

In addition, from November 1, 2008        through November 30, 2008, the Fund incurred approximately $4,593,000 of net realized        capital losses. As permitted by tax regulations, the Fund intends to elect to        defer these losses and treat them as arising in the fiscal year ended November 30,        2009.

The Fund has reviewed the tax        positions for the open tax years as of November 30, 2008 and has determined that no        provision for income tax is required in the Fund's financial statements. The Fund's federal        tax returns for the prior three fiscal years remain subject to examination by the Internal        Revenue Service.

**Distribution of        Income and Gains.** Net investment income of the Fund is declared and distributed        to shareholders monthly. Net realized gains from investment transactions, in excess of        available capital loss carryforwards, would be taxable to the Fund if not distributed, and,        therefore, will be distributed to shareholders at least annually.

The timing and characterization of        certain income and capital gains distributions are determined annually in accordance with        federal tax regulations which may differ from accounting principles generally accepted in        the United States of America. These differences primarily relate to forward currency        contracts, certain securities sold at a loss and premium amortization on debt securities.        As a result, net investment income (loss) and net realized gain (loss) on investment        transactions for a reporting period may differ significantly from distributions during such        period. Accordingly, the Fund may periodically make reclassifications among certain of its        capital accounts without impacting the net asset value of the Fund.

At November 30,        2008, the Fund's components of distributable earnings (accumulated losses) on a tax-basis        were as follows:

| Undistributed ordinary income                             | $                    965,856       |
|-----------------------------------------------------------|------------------------------------|
| Capital loss carryforwards                                | $                    (100,376,000) |
| Net unrealized depreciation on                investments | $                    (69,774,050)  |

In addition, the tax character of        distributions paid to shareholders by the Fund is summarized as follows:

|                                | **Years                    Ended November 30,** |
|-------------------------------------|-------------------------------------------------|
|                                | **2008**                                        | **2007** |
| Distributions from ordinary income* | $                    16,404,133                 | $                    17,024,212 |

**Statement of Cash        Flows.** Information on financial transactions which have been settled through the        receipt and disbursement of cash is presented in the Statement of Cash Flows. The cash        amount shown in the Statement of Cash Flows represents the foreign currency positions at        the Fund's custodian bank at November 30, 2008. Previously, the Fund has utilized the        direct method for presentation of its Statement of Cash Flows. The Fund has changed its        presentation to the indirect method, which it believes provides a useful format and        conforms to more common industry practice.

**Contingencies.** In the normal course of        business, the Fund may enter into contracts with service providers that contain general        indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as        this would involve future claims that may be made against the Fund that have not yet been        made. However, based on experience, the Fund expects the risk of loss to be        remote.

**Other.**        Investment transactions are accounted for on a trade date plus one basis for daily net        asset value calculations. However, for financial reporting purposes, investment security        transactions are reported on trade date. Interest income is recorded on the accrual basis.        Dividend income is recorded on the ex-dividend date, net of foreign withholding taxes.        Realized gains and losses from investment transactions are recorded on an identified cost        basis. All premiums and discounts are amortized/accreted for financial reporting purposes,        with the exception of securities in default of principal.

**B. Purchases and Sales of        Securities**

During the year ended November 30,        2008, purchases and sales of investment securities (excluding short-term instruments)        aggregated $107,380,898 and $119,970,414, respectively.

**C. Related Parties**

**Management        Agreement.** Under the Investment Management Agreement with Deutsche Investment        Management Americas Inc. ("DIMA" or the "Advisor"), an indirect, wholly owned subsidiary of        Deutsche Bank AG, the Advisor directs the investments of the Fund in accordance with its        investment objectives, policies and restrictions. The Advisor determines the securities,        instruments and other contracts relating to investments to be purchased, sold or entered        into by the Fund. In addition to portfolio management services, the Advisor provides        certain administrative services in accordance with the Investment Management Agreement. The        Fund pays a monthly management fee based on the Fund's average weekly net assets, computed        and accrued daily and payable monthly at the following annual rates:

| First $250 million of the Fund's average weekly net                assets | .85% |
|---------------------------------------------------------------------------|------|
| Over $250 million of such assets                                          | .75% |

Accordingly, for        the year ended November 30, 2008, the fee pursuant to the Investment Management Agreement        was equivalent to an annual effective rate of 0.85% of the Fund's average daily net        assets.

**Service Provider        Fees.** DWS Investments Service Company (``DISC''), an affiliate of the Advisor,        is the transfer agent, dividend-paying agent and shareholder service agent for the Fund.        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 service        agent functions to DST. DISC compensates DST out of the shareholder servicing fee it        receives from the Fund. For the year ended November 30, 2008, the amount charged to the        Fund by DISC aggregated $65,580, of which $17,990 is unpaid.

**Typesetting and        Filing Service Fees.** Under an agreement with DIMA, DIMA is compensated for        providing typesetting and certain regulatory filing services to the Fund. For the year        ended November 30, 2008, the amount charged to the Fund by DIMA included in the Statement        of Operations under "reports to shareholders" aggregated $9,171, of which $8,337 is        unpaid.

**Trustees' Fees        and Expenses.** The Fund paid each Trustee not affiliated with the Advisor        retainer fees plus specified amounts for various committee services and for the Board        Chairperson and Vice Chairperson.

In connection with the board        consolidation on April 1, 2008, of the two DWS Funds Boards of Trustees, certain        Independent Board Members retired prior to their normal retirement date, and received a        one-time retirement benefit. DIMA has agreed to reimburse the Funds for the cost of this        benefit. During the period ended November 30, 2008, the Fund paid its allocated portion of        the retirement benefit of $8,165 to the non-continuing Independent Board Members, and the        Fund was reimbursed by DIMA for this payment.

**Cash Management        QP Trust.** Pursuant to an Exemptive Order issued by the SEC, the Fund may        invest in the Cash Management QP Trust (the ``QP Trust'') and other affiliated funds        managed by the Advisor. The QP Trust seeks to provide as high a level of current income as        is consistent with the preservation of capital and the maintenance of liquidity. The QP        Trust does not pay the Advisor a management fee for the affiliated funds' investments in        the QP Trust.

**D. Investing in        High Yield Securities**

Investing in high yield securities        may involve greater risks and considerations not typically associated with investing in US        Government bonds and other high quality fixed-income securities. These securities are        non-investment grade securities, often referred to as "junk bonds." Economic downturns may        disrupt the high yield market and impair the ability of issuers to repay principal and pay        interest. Also, an increase in interest rates would likely have an adverse impact on the        value of such obligations. Moreover, high yield securities may be less liquid due to the        extent that there is no established retail secondary market and because of a decline in the        value of such securities.

**E. Investing in Emerging        Markets**

Investing in emerging markets may        involve special risks and considerations not typically associated with investing in the        United States of America. These risks include revaluation of currencies, high rates of        inflation, repatriation restrictions of income and capital, and future adverse political,        social and economic developments. Moreover, securities issued in these markets may be less        liquid, subject to government ownership controls or delayed settlements and may have prices        more volatile than those of comparable securities of issuers in the United States of        America.

**F. Fee Reductions**

For the year ended November 30,        2008, the Advisor agreed to reimburse the Fund $289, which represents a portion of the        expected fee savings for the Advisor through December 31, 2007, related to the outsourcing        by the Advisor of certain administrative services to an unaffiliated service        provider.

In addition, the Fund has entered        into an arrangement with its custodian and transfer agent whereby credits realized as a        result of uninvested cash balances are used to reduce a portion of the Fund's custodian        expenses. During the year ended November 30, 2008, the Fund's custodian fee was reduced by        $3,336 and $872, respectively, for custody and transfer agent credits earned.

**G. Borrowings**

The Fund has entered into a        revolving credit agreement dated May 31, 2002 with a commercial paper conduit (the        "Lender"), as amended through September 9, 2008, which allows the Fund to borrow against a        secured line of credit in an aggregate amount up to $90,000,000 ($89,000,000 effective        September 9, 2008). The borrowings under the line of credit are secured by a pledge of the        Fund's portfolio securities. The revolving credit agreement facility has a maturity date of        June 24, 2010 subject to early termination discussed below. There is no assurance the        facility will be renewed in 2010. The notes payable represents a secured loan of        $45,800,000, which is the amount drawn on the facility at November 30, 2008. The note bears        interest at the commercial paper rate plus program fees. A commitment fee is charged to the        Fund and is included with "interest expense" on the Statement of Operations. An arrangement        fee incurred by the Fund in connection with its loan was deferred and is being amortized on        a straight-line basis over a five-year period. The loan amounts and rates are reset        periodically under the revolving credit agreement. The weighted average outstanding daily        balance of all loans (based on the number of days the loans were outstanding) during the        year ended November 30, 2008 was $57,829,781, with a weighted average interest rate of        3.34%.

Draws on the line        of credit are funded by the issuance of commercial paper notes. The Lender's obligation        under the note is supported by a Stand by Purchase Agreement between the Lender and a        commercial bank. The Lender's commitment under the revolving credit agreement is subject to        early termination on the scheduled termination date of the Stand by Purchase Agreement. The        Stand by Purchase Agreement had an initial term of 364 days, and is renewable for        additional periods, which may be shorter than 364 days. As such, the revolving credit        agreement may be terminated by the Lender upon ninety (90) days notice if the Liquidity        Agreement is not renewed at any time, and is also subject to other customary termination        events.

**H. Payments Made by        Affiliates**

During the year ended November 30,        2007, the Advisor fully reimbursed the Fund $175,116 for a fee previously charged to the        Fund. This reimbursement was treated as a capital contribution and is reported as        "Reimbursement by Advisor" on the Statement of Changes in Net Assets.

During the year ended November 30,        2008, the Advisor fully reimbursed the Fund $194 for losses incurred on trades executed        incorrectly. In addition, the Advisor will fully reimburse the Fund $252,946 for a loss        incurred in violation of investment restrictions.

**I. Share        Repurchases**

The Fund is authorized to effect        periodic open-market repurchases for up to 5% of its outstanding shares over the        twelve-month period February 1, 2009 through January 31, 2010.

**J. Subsequent        Event**

The Fund's Agreement and Declaration        of Trust requires the submission of a proposal to shareholders to convert the Fund from a        closed-end investment company to an open-end investment company if the average discount of        its share price to net asset value exceeds 10% based on the last trading day in each week        during the 12 calendar weeks preceding the beginning of each year. The requirement has been        triggered for the year ended December 31, 2008. Such a proposal will be presented at the        next annual meeting of shareholders of the Fund which, is expected to be held in May        2009.

**Report of Independent        Registered Public Accounting Firm**

**To the Board of Trustees        and Shareholders of DWS High Income Trust:**

We have audited the accompanying        statement of assets and liabilities of DWS High Income Trust (the "Fund"), including the        investment portfolio, as of November 30, 2008, and the related statements of operations and        cash flows for the year then ended, the statement of changes in net assets for each of the        two years in the period then ended, and the financial highlights for each of the five years        in the period then ended. These financial statements and financial highlights are the        responsibility of the Fund's management. Our responsibility is to express an opinion on        these financial statements and financial highlights based on our audits.

We conducted our audits in        accordance with the standards of the Public Company Accounting Oversight Board (United        States). Those standards require that we plan and perform the audit to obtain reasonable        assurance about whether the financial statements and financial highlights are free of        material misstatement. We were not engaged to perform an audit of the Fund's internal        control over financial reporting. Our audits included consideration of internal control        over financial reporting as a basis for designing audit procedures that are appropriate in        the circumstances, but not for the purpose of expressing an opinion on the effectiveness of        the Fund's internal control over financial reporting. Accordingly, we express no such        opinion. An audit also includes examining, on a test basis, evidence supporting the amounts        and disclosures in the financial statements and financial highlights, assessing the        accounting principles used and significant estimates made by management, and evaluating the        overall financial statement presentation. Our procedures included confirmation of        securities owned as of November 30, 2008, by correspondence with the custodian and brokers        or by other appropriate auditing procedures where replies from brokers were not received.        We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial        statements and financial highlights referred to above present fairly, in all material        respects, the financial position of DWS High Income Trust at November 30, 2008, the        results of its operations and its cash flows for the year then ended, the changes in its        net assets for each of the two years in the period then ended, and the financial highlights        for each of the five years in the period then ended, in conformity with U.S. generally        accepted accounting principles.

| Boston,                    Massachusetts                    January 20, 2009 |   |  |
|------------------------------------------------------------------------------|--------|--|

**Tax        Information**

Please consult a tax advisor if you        have questions about federal or state income tax laws, or on how to prepare your tax        returns. If you have specific questions about your account, please call (800)        621-1048.

**Other        Information**

**Certifications**

The fund's chief executive officer        has certified to the New York Stock Exchange that, as of June 16, 2008, he was not aware of        any violation by the fund of applicable NYSE corporate governance listing standards. The        fund's reports to the Securities and Exchange Commission on Forms N-CSR and N-Q contain        certifications by the fund's chief executive officer and chief financial officer that        relate to the fund's disclosure in such reports and that are required by rule 30a-2 under        the 1940 Act.

**Dividend Reinvestment        Plan**

A summary of the Fund's Dividend        Reinvestment Plan (the "Plan") is set forth below. Shareholders may obtain a copy of the        entire Plan by visiting the Fund's Web site at www.dws-investments.com or by writing or        calling DWS Investment Service Company ("DISC") at:

P.O. Box 219066        Kansas City, Missouri 64121-9066        (800) 294-4366

If you wish to participate in the        Plan and your shares are held in your own name, simply contact DISC for the appropriate        form. If your shares are held in the name of a broker or other nominee, you should contact        the broker or nominee in whose name your shares are held to determine whether and how you        may participate in the Plan. The Fund's transfer agent and dividend disbursing agent (the        "Transfer Agent") will establish a Dividend Investment Account (the "Account") for        each shareholder participating in the Plan. The Transfer Agent will credit to the Account        of each participant any cash dividends and capital gains distributions (collectively,        "Distributions") paid on shares of the Fund (the "Shares"). Shares in a participant's        Account are transferable upon proper written instructions to the Transfer Agent. Upon        request to the Transfer Agent, a certificate for any or all full Shares in a participant's        Account will be sent to the participant.

If, on the record date for a        Distribution (the "Record Date"), Shares are trading at a discount from net asset value per        Share, funds credited to a participant's Account will be used to purchase Shares (the        "Purchase"). The Plan Agent (currently Computershare Inc.) will attempt, commencing five        days prior to the Payment Date and ending at the close of business on the Payment Date        ("Payment Date" as used herein shall mean the last business day of the month in which such        Record Date occurs), to acquire Shares in the open market. If and to the extent that the        Plan Agent is unable to acquire sufficient Shares to satisfy the Distribution by the close        of business on the Payment Date, the Fund will issue to the Plan Agent, Shares valued at        net asset value per Share in the aggregate amount of the remaining value of the        Distribution. If, on the Record Date, Shares are trading at a premium over net asset value        per Share, the Fund will issue on the Payment Date Shares valued at net asset value per        Share on the Record Date to the Transfer Agent in the aggregate amount of the funds        credited to the participants' Accounts. The Fund will increase the price at which Shares        may be issued under the Plan to 95% of the fair market value of the shares on the Record        Date if the net asset value per Share of the Shares on the Record Date is less than 95% of        the fair market value of the Shares on the Record Date.

The cost of Shares acquired for each        participant's Account in connection with a Purchase shall be determined by the average cost        per Share, including brokerage commissions, of the Shares acquired in connection with that        Purchase. There will be no brokerage charges with respect to Shares issued directly by the        Fund as a result of Distributions. However, each participant will pay a pro rata share of        brokerage commissions incurred with respect to open market purchases. Brokerage charges for        purchasing small amounts of Shares for individual Accounts through the Plan can be expected        to be less than the usual brokerage charges for such transactions, as the Plan Agent        will be purchasing Shares for all participants in blocks and prorating the lower commission        thus attainable.

A participant may        from time to time make voluntary cash contributions to his Account in a minimum amount of        $100 (no more than $500 may be contributed per month). Participants making voluntary cash        investments will be charged a $0.75 service fee for each such investment and will be        responsible for their pro rata share of brokerage commissions. Please contact DISC for more        information on voluntary cash contributions.

The Fund reserves the right to amend        the Plan, including provisions with respect to any Distribution paid, subsequent to notice        thereof sent to participants in the Plan at least ninety days before the record date for        such Distribution, except when such amendment is necessary or appropriate to comply        with applicable law or the rules or policies of the Securities and Exchange Commission or        any other regulatory authority, in which case such amendment shall be effective as soon as        practicable. The Plan may be terminated by the Fund.

Shareholders may withdraw from the        Plan at any time by giving the Transfer Agent a written notice. A notice of withdrawal will        be effective for the next Distribution following receipt of the notice by the Transfer        Agent provided the notice is received by the Transfer Agent at least ten days prior to the        Record Date for the Distribution. When a participant withdraws from the Plan, or when the        Plan is terminated by the Fund, the participant will receive a certificate for full Shares        in the Account, plus a check for any fractional Shares based on market price; or, if a        Participant so desires, the Transfer Agent will notify the Plan Agent to sell his Shares in        the Plan and send the proceeds to the participant, less brokerage commissions and a $2.50        service fee.

Shareholders will receive tax        information annually for personal records and to assist in preparation of their federal        income tax returns. If Shares are purchased at a discount, the amount of the discount is        considered taxable income and is added to the cost basis of the purchased        Shares.

**Investment Management        Agreement Approval**

The Board of Trustees, including the        Independent Trustees, approved the renewal of your Fund's investment management        agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA") in        September 2008.

In terms of the process that the        Board followed prior to approving the Agreement, shareholders should know that:

• At the        present time, all but one of your Fund's Trustees are independent of DIMA and its        affiliates.

• The        Trustees meet frequently to discuss fund matters. Each year, the Trustees dedicate part or        all of several meetings to contract review matters. Over the course of several months, the        Board's Contract Committee, in coordination with the Board's Fixed Income and Quant        Oversight Committee, reviewed comprehensive materials received from DIMA, independent third        parties and independent counsel. These materials included an analysis of the Fund's        performance, fees and expenses, and profitability compiled by the Fund's independent fee        consultant. The Board also received extensive information throughout the year regarding        performance of the Fund.

• The        Independent Trustees regularly meet privately with their independent counsel (and, as        needed, other advisors) to discuss contract review and other matters. In addition, the        Independent Trustees were also advised by the Fund's independent fee consultant in the        course of their review of the Fund's contractual arrangements and considered a        comprehensive report prepared by the independent fee consultant in connection with        their deliberations (the "IFC Report").

• In        connection with reviewing the Agreement, the Board also reviewed the terms of the Fund's        transfer agency agreement and other material service agreements.

• Based        on its evaluation of the information provided, the Contract Committee presented its        findings and recommendations to the Independent Trustees as a group. The Independent        Trustees reviewed the Contract Committee's findings and recommendations and presented their        recommendations to the full Board.

In connection with the contract        review process, the Contract Committee and the Board considered the factors discussed        below, among others. The Board also considered that DIMA and its predecessors have        managed the Fund since its inception, and the Board believes that a long-term relationship        with a capable, conscientious advisor is in the best interests of the Fund. The Board        considered, generally, that shareholders chose to invest or remain invested in the Fund        knowing that DIMA managed the Fund. DIMA is part of Deutsche Bank, a major global banking        institution that is engaged in a wide range of financial services. The Board believes that        there are significant advantages to being part of a global asset management business that        offers a wide range of investing expertise and resources, including hundreds of portfolio        managers and analysts with research capabilities in many countries throughout the        world.

While shareholders        may focus primarily on fund performance and fees, the Fund's Board considers these and many        other factors, including the quality and integrity of DIMA's personnel and such other        issues as back-office operations, fund valuations, and compliance policies and        procedures.

**Nature, Quality        and Extent of Services.** The Board considered the terms of the Agreement,        including the scope of advisory services provided under the Agreement. The Board noted        that, under the Agreement, DIMA provides portfolio management and administrative services        to the Fund. The Board considered the experience and skills of senior management and        investment personnel, the resources made available to such personnel, the ability of DIMA        to attract and retain high-quality personnel, and the organizational depth and stability of        DIMA. The Board reviewed the Fund's performance over short-term and long-term periods and        compared those returns to various agreed-upon performance measures, including market        indices and a peer universe compiled by the independent fee consultant using information        supplied by Lipper Inc. ("Lipper"). The Board also noted that it has put a process        into place of identifying "Focus Funds" (e.g., funds performing poorly relative to their        benchmark or a peer group compiled by Lipper), and receives more frequent reporting and        information from DIMA regarding such funds, along with DIMA's remedial plans to address        underperformance. The Board believes this process is an effective manner of identifying and        addressing underperforming funds. Based on the information provided, the Board noted that        for the one-, three- and five-year periods ended December 31, 2007, the Fund's performance        was in the 3rd quartile, 2nd quartile and 3rd quartile, respectively, of the        applicable Lipper universe (the 1st quartile being the best performers and the 4th quartile        being the worst performers). The Board also observed that the Fund has underperformed its        benchmark in each of the one- and three-year periods ended December 31, 2007 and        outperformed its benchmark in the five-year period ended December 31, 2007.

On the basis of this        evaluation and the ongoing review of investment results by the Board, the Board concluded        that the nature, quality and extent of services provided by DIMA historically have been and        continue to be satisfactory.

**Fees and        Expenses.** The Board considered the Fund's investment management fee schedule,        operating expenses, and total expense ratios, and comparative information provided by        Lipper and the independent fee consultant regarding investment management fee rates paid to        other investment advisors by similar funds (1st quartile being the most favorable and 4th        quartile being the least favorable). With respect to management fees paid to other        investment advisors by similar funds, the Board noted that the contractual fee rates paid        by the Fund were higher than the median (3rd quartile) of the applicable Lipper peer group        (based on Lipper data provided as of December 31, 2007). The Board considered that the        Fund's management fee is charged only with respect to net assets, while many of the funds        in the peer group pay management fees based upon managed assets. The Board noted that the        Fund's total (net) operating expenses were expected to be lower than the median (2nd        quartile) of the applicable Lipper expense universe (based on Lipper data provided as of        December 31, 2007). The Board considered the Fund's management fee rate as compared to fees        charged by DIMA and certain of its affiliates for comparable mutual funds and considered        differences in fund and fee structures between the DWS Funds. The Board also considered how        the Fund's total (net) operating expenses compared to the total (net) operating expenses of        a more customized peer group selected by Lipper (based on such factors as asset        size).

On the basis of the information        provided, the Board concluded that management fees were reasonable and appropriate in light        of the nature, quality and extent of services provided by DIMA.

**Profitability.** The Board reviewed        detailed information regarding revenues received by DIMA under the Agreement. The Board        considered the estimated costs and pre-tax profits realized by DIMA from advising the DWS        Funds, as well as estimates of the pre-tax profits attributable to managing the Fund in        particular. The Board also received information regarding the estimated enterprise-wide        profitability of the DWS Investments organization with respect to all fund services in        totality and by fund. The Board reviewed DIMA's methodology in allocating its costs to the        management of the Fund. Based on the information provided, the Board concluded that the        pre-tax profits realized by DIMA in connection with the management of the Fund were not        unreasonable. The Board also reviewed information regarding the profitability of certain        similar investment management firms. The Board noted that while information regarding the        profitability of such firms is limited (and in some cases is not necessarily prepared on a        comparable basis), DIMA and its affiliates' overall profitability with respect to the DWS        Investments fund complex (after taking into account distribution and other services        provided to the funds by DIMA and its affiliates) was lower than the overall profitability        levels of many comparable firms for which such data was available.

**Economies of Scale.** The Board        considered whether there are economies of scale with respect to the management of the Fund        and whether the Fund benefits from any economies of scale. The Board noted that the Fund's        management fee schedule includes fee breakpoints. The Board concluded that the Fund's fee        schedule represents an appropriate sharing between the Fund and DIMA of such economies of        scale as may exist in the management of the Fund at current asset levels.

**Other Benefits to        DIMA and Its Affiliates.** The Board also considered the character and amount of        other incidental benefits received by DIMA and its affiliates, including any fees received        by DIMA for administrative services provided to the Fund and any fees received by an        affiliate of DIMA for distribution services. The Board also considered benefits to DIMA        related to brokerage and soft-dollar allocations, including allocating brokerage to pay for        research generated by parties other than the executing broker dealers, which pertain        primarily to funds investing in equity securities, along with the incidental public        relations benefits to DIMA related to DWS Funds advertising and cross-selling opportunities        among DWS Investments products and services. The Board concluded that management fees were        reasonable in light of these fallout benefits.

**Compliance.** The Board considered the        significant attention and resources dedicated by DIMA to documenting and enhancing its        compliance processes in recent years. The Board noted in particular (i) the experience and        seniority of DIMA's chief compliance officer; (ii) the large number of compliance personnel        who report to DIMA's chief compliance officer; and (iii) the substantial commitment of        resources by DIMA and its affiliates to compliance matters.

Based on all of the information        considered and the conclusions reached, the Board (including a majority of the Independent        Trustees) determined that the continuation of the Agreement is in the best interests of the        Fund. In making this determination the Board did not give particular weight to any single        factor identified above. The Board considered these factors over the course of numerous        meetings, certain of which were in executive session with only the Independent Trustees and        their counsel present. It is possible that individual Trustees may have weighed these        factors differently in reaching their individual decisions to approve the continuation of        the Agreement.

**Trustees and        Officers**

The following table presents certain        information regarding the Board Members and Officers of the Trust as of November 30, 2008.        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 Independent Board Member is c/o Dawn-Marie Driscoll,        PO Box 100176, Cape Coral, FL 33904. Except as otherwise noted below, 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 fund. The Board Members may also serve in similar capacities        with other funds in the fund complex. The Length of Time Served represents the year in        which the Board Member joined the board of one or more DWS funds now overseen by the        Board.

| **Independent                    Board Members**                                                                 |
|------------------------------------------------------------------------------------------------------------------|
| **Name, Year                    of Birth, Position with the Fund and Length of Time                    Served1** | **Business                    Experience and Directorships During the                    Past Five Years** | **Number of                    Funds in DWS Fund Complex Overseen** |
| Dawn-Marie Driscoll (1946)Chairperson since 20042Board Member since 1987                                         | President, Driscoll Associates (consulting firm);                Executive 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) | 133 |
| Paul                K. Freeman (1950)Vice Chairperson since 2008Board Member since 1993                          | Consultant, World Bank/Inter-American Development                Bank; formerly, Project Leader, International Institute for Applied Systems                Analysis (1998-2001); Chief Executive Officer, The Eric Group, Inc. (environmental                insurance) (1986-1998) | 133 |
| John                W. Ballantine (1946)Board Member since 1999                                                  | Retired; formerly, Executive Vice President and                Chief Risk Management Officer, First Chicago NBD Corporation/The First National                Bank of Chicago (1996-1998); Executive Vice President and Head of International                Banking (1995-1996). Directorships: Healthways, Inc. (provider of disease and care                management services); Portland General Electric (utility company); Stockwell                Capital Investments PLC (private equity). Former Directorships: First Oak Brook                Bancshares, Inc. and Oak Brook Bank | 133 |
| Henry P. Becton, Jr. (1943)Board Member since 1990                                                               | Vice                Chair, WGBH Educational Foundation. Directorships: Association of Public Television                Stations; Becton Dickinson and Company3 (medical technology company);                Belo Corporation3 (media company); Boston Museum of Science; Public                Radio International. Former Directorships: American Public Television; Concord                Academy; New England Aquarium; Mass. Corporation for Educational                Telecommunications; Committee for Economic Development; Public Broadcasting                Service | 133 |
| Keith R. Fox (1954)Board Member since 1996                                                                       | Managing General Partner, Exeter Capital Partners                (a series of private equity funds). Directorships: Progressive Holding Corporation                (kitchen goods importer and distributor); Natural History, Inc. (magazine                publisher); Box Top Media Inc. (advertising); The Kennel Shop (retailer) | 133 |
| Kenneth C. Froewiss (1945)Board Member since 2001                                                                | Clinical Professor of Finance, NYU Stern School of                Business (1997-present); Member, Finance Committee, Association for Asian Studies                (2002-present); Director, Mitsui Sumitomo Insurance Group (US) (2004-present);                prior thereto, Managing Director, J.P. Morgan (investment banking firm) (until                1996) | 133 |
| Richard J. Herring (1946)Board Member since 1990                                                                 | Jacob Safra Professor of International Banking and                Professor, Finance Department, The Wharton School, University of Pennsylvania                (since July 1972); Co-Director, Wharton Financial Institutions Center (since July                2000); 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) | 133 |
| William McClayton (1944)Board Member since 2004                                                                  | Managing Director, Diamond Management &                Technology 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 | 133 |
| Rebecca W. Rimel (1951)Board Member since 1995                                                                   | President and Chief Executive Officer, The Pew                Charitable Trusts (charitable organization) (1994 to present); Trustee, Thomas                Jefferson Foundation (charitable organization) (1994 to present); Trustee,                Executive Committee, Philadelphia Chamber of Commerce (2001-2007); Trustee, Pro                Publica (2007-present) (charitable organization). Formerly, Executive Vice                President, The Glenmede Trust Company (investment trust and wealth management)                (1983-2004); Board Member, Investor Education (charitable organization)                (2004-2005); Director, Viasys Health Care3                (January 2007-June 2007) | 133 |
| William N. Searcy, Jr. (1946)Board Member since 1993                                                             | Private investor since October 2003; Trustee of 20                open-end mutual funds managed by Sun Capital Advisers, Inc. (since October 1998).                Formerly, Pension & Savings Trust Officer, Sprint Corporation3                (telecommunications) (November 1989-September 2003) | 133 |
| Jean                Gleason Stromberg (1943)Board Member since 1997                                              | Retired. Formerly, Consultant (1997-2001);                Director, US Government Accountability Office (1996-1997); Partner, Fulbright &                Jaworski, L.L.P. (law firm) (1978-1996). Directorships: The William and Flora                Hewlett Foundation; Service Source, Inc. Former Directorships: Mutual Fund                Directors Forum (2002-2004), American Bar Retirement Association (funding vehicle                for retirement plans) (1987-1990 and 1994-1996) | 133 |
| Robert H. Wadsworth(1940)Board Member since 1999                                                                 | President, Robert H. Wadsworth & Associates,                Inc. (consulting firm) (1983 to present); Director, The Phoenix Boys Choir                Association | 136 |

| **Interested                    Board Member**                                                                   |
|------------------------------------------------------------------------------------------------------------------|
| **Name, Year                    of Birth, Position with the Fund and Length of Time                    Served1** | **Business                    Experience and Directorships During the                    Past Five Years** | **Number of                    Funds in Fund Complex Overseen** |
| Axel                Schwarzer4 (1958)Board Member since 2006                                                     | Managing Director5, Deutsche Asset                Management; Head of Deutsche Asset Management Americas; CEO of DWS Investments;                formerly, board member of DWS Investments, Germany (1999-2005); formerly, Head of                Sales and Product Management for the Retail and Private Banking Division of                Deutsche Bank in Germany (1997-1999); formerly, various strategic and operational                positions for Deutsche Bank Germany Retail and Private Banking Division in the                field of investment funds, tax driven instruments and asset management for                corporates (1989-1996) | 133 |

| **Officers6**                                                                                                    |
|------------------------------------------------------------------------------------------------------------------|
| **Name, Year                    of Birth, Position with the Fund and Length of Time                    Served7** | **Principal                    Occupation(s) During Past 5 Years and Other Directorships Held** |
| Michael G. Clark8 (1965)President, 2006-present                                                                  | Managing Director5, Deutsche Asset                Management (2006-present); President of 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                Millette9 (1962)Vice President and Secretary,                1999-present                    | Director5, Deutsche Asset                Management |
| Paul                H. Schubert8 (1963)Chief Financial Officer, 2004-presentTreasurer, 2005-present              | Managing Director5, Deutsche Asset                Management (since July 2004); formerly, Executive Director, Head of Mutual Fund                Services and Treasurer for UBS Family of Funds (1998-2004); Vice President and                Director of Mutual Fund Finance at UBS Global Asset Management                (1994-1998) |
| Patricia DeFilippis10 (1963)Assistant Secretary, 2005-present                                                    | Vice                President, Deutsche Asset Management (since June 2005); formerly, Counsel, New York                Life Investment Management LLC (2003-2005); legal associate, Lord, Abbett & Co.                LLC (1998-2003) |
| Caroline Pearson9 (1962)Assistant Secretary, 1997-present                                                        | Managing Director5, Deutsche Asset                Management |
| Paul                Antosca9 (1957)Assistant Treasurer, 2007-present                                             | Director5, Deutsche Asset Management                (since 2006); Vice President, The Manufacturers Life Insurance Company (U.S.A.)                (1990-2006) |
| Jack                Clark9 (1967)Assistant Treasurer, 2007-present                                               | Director5, Deutsche Asset Management                (since 2007); formerly, Vice President, State Street Corporation                (2002-2007) |
| Diane Kenneally9 (1966)Assistant Treasurer, 2007-present                                                         | Director5, Deutsche Asset                Management |
| Jason Vazquez10 (1972)Anti-Money Laundering Compliance Officer,                2007-present                      | Vice                President, Deutsche Asset Management (since 2006); formerly, AML Operations Manager                for Bear Stearns (2004-2006), Supervising Compliance Principal and Operations                Manager for AXA Financial (1999-2004) |
| Robert Kloby10 (1962)Chief Compliance Officer, 2006-present                                                      | Managing Director5, Deutsche Asset                Management (2004-present); formerly, Chief Compliance Officer/Chief Risk Officer,                Robeco USA (2000-2004); Vice President, The Prudential Insurance Company of America                (1988-2000); E.F. Hutton and Company (1984-1988) |
| J.                Christopher Jackson10 (1951)Chief Legal Officer, 2006-present                                  | Director5, Deutsche Asset Management                (2006-present); formerly, Director, Senior Vice President, General Counsel and                Assistant Secretary, Hansberger Global Investors, Inc. (1996-2006); Director,                National Society of Compliance Professionals (2002-2005) (2006-2009) |

**Additional        Information**

|                                                                 |
|----------------------------------------------------------------------|
| **Automated                    Information Lines**                   | **DWS                    Investments Closed-End Fund Info Line**

**(800)                    349-4281** |
| **Web                    Site**                                      | **www.dws-investments.com**
Obtain quarterly fact sheets, financial                    reports, press releases and webcasts when available. |
| **Written                    Correspondence**                        | **Deutsche                    Investment Management Americas Inc.**
345 Park AvenueNew York, NY 10154 |
| **Proxy                    Voting**                                  | The                fund's policies and procedures for voting proxies for portfolio securities and                information about how the fund voted proxies related to its portfolio                securities during the 12-month period endedJune 30are available on our Web site —                www.dws-investments.com (click on "proxy voting"at the bottom of the page)                — or on the SEC's Web site — www.sec.gov. To obtain a written copy of                the fund's policies and procedures without charge, upon request, call us toll free                at (800) 621-1048. |
| **Legal                    Counsel**                                 | **Vedder                    Price P.C.**
222 North LaSalle StreetChicago, IL 60601 |
| **Dividend                    Reinvestment Plan Agent**              | **Computershare Inc.**
P.O. Box 43078Providence, RI 02940-3078 |
| **Shareholder Service Agent and Transfer                    Agent**  | **DWS                    Investments Service Company**
P.O. Box 219066Kansas City, MO 64121-9066
**(800)                    294-4366** |
| **Custodian**                                                        | **State                    Street Bank and Trust Company**
225 Franklin StreetBoston, MA 02110 |
| **Independent Registered Public Accounting                    Firm** | **Ernst &                    Young LLP**
200 Clarendon StreetBoston, MA 02116 |
| **NYSE                    Symbol**                                   | KHI |
| **CUSIP                    Number**                                  | 23337C 109 |

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| **ITEM 2.** | **CODE OF ETHICS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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|        | As of the end of the period, November 30, 2008, DWS High                            Income Trust has a code of ethics, as defined in Item 2 of Form N-CSR,                            that applies to its Principal Executive Officer and Principal Financial                            Officer.

                             

There have been no amendments to, or waivers from, a                            provision of the code of ethics during the period covered by this                            report that would require disclosure under Item 2.

                             

A copy of the code of ethics is filed as an exhibit to                            this Form N-CSR.

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| **ITEM 3.** | **AUDIT COMMITTEE FINANCIAL EXPERT**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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|        | The Funds’ audit committee is comprised solely of                            trustees who are “independent” (as such term has been                            defined by the Securities and Exchange Commission (“SEC”)                            in regulations implementing Section 407 of the Sarbanes-Oxley Act (the                            “Regulations”)). The Funds’ Board of Trustees has                            determined that there are several “audit committee financial                            experts” (as such term has been defined by the Regulations)                            serving on the Funds’ audit committee including Mr. William                            McClayton, the chair of the Funds’ audit committee. The SEC has                            stated that an audit committee financial expert is not an                            “expert” for any purpose, including for purposes of Section                            11 of the Securities Act of 1933 and the designation or identification                            of a person as an audit committee financial expert pursuant to this                            Item 3 of Form N-CSR does not impose on such person any duties,                            obligations or liability that are greater than the duties, obligations                            and liability imposed on such person as a member of the audit committee                            and board of directors in the absence of such designation or                            identification. |
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| **ITEM 4.** | **PRINCIPAL ACCOUNTANT FEES AND SERVICES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
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**DWS HIGH INCOME TRUST**

**FORM N-CSR DISCLOSURE RE: AUDIT FEES**

The            following table shows the amount of fees that Ernst & Young LLP            (“E&Y”), the Fund’s Independent Registered Public Accountant,            billed to the Fund during the Fund’s last two fiscal years. The Audit Committee            approved in advance all audit services and non-audit services that E&Y provided to            the Fund.

The            Audit Committee has delegated certain pre-approval responsibilities to its Chairman            (or, in his absence, any other member of the Audit Committee).

**Services that the Fund’s Independent Registered Public            Accountant Billed to the Fund**

 

| Fiscal YearEndedNovember 30, | Audit Fees Billed to Fund | Audit-RelatedFees Billed to Fund | Tax Fees Billed to Fund | AllOther Fees Billed to Fund |
|------------------------------|---------------------------|----------------------------------|-------------------------|------------------------------|
| 2008                         | $56,102                   | $0                               | $8,756                  | $0                           |
| 2007                         | $49,261                   | $0                               | $6,717                  | $0                           |

 

The            above "Tax Fees" were billed for professional services rendered for tax return            preparation.

 

 

**Services that the Fund’s Independent Registered Public            Accountant Billed to the Adviser and Affiliated Fund Service Providers**

The            following table shows the amount of fees billed by E&Y to Deutsche Investment            Management Americas, Inc. (“DIMA” or the “Adviser”), and any            entity controlling, controlled by or under common control with DIMA (“Control            Affiliate”) that provides ongoing services to the Fund (“Affiliated Fund            Service Provider”), for engagements directly related to the Fund’s            operations and financial reporting, during the Fund’s last two fiscal            years.

 

| Fiscal YearEndedNovember 30, | Audit-RelatedFees Billed to Adviser and Affiliated Fund Service                            Providers | Tax Fees Billed to Adviser and Affiliated Fund                            Service Providers | AllOther Fees Billed to Adviser and Affiliated Fund Service                            Providers |
|------------------------------|------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------|
| 2008                         | $0                                                                                                   | $382,000                                                                                    | $0                                                                                               |
| 2007                         | $250,000                                                                                             | $486,614                                                                                    | $0                                                                                               |

 

The            “Audit-Related Fees” were billed for services in connection with agreed            upon procedures related to fund mergers and the above “Tax Fees” were            billed in connection with tax compliance services and agreed upon            procedures.

**Non-Audit Services**

The            following table shows the amount of fees that E&Y billed during the Fund’s            last two fiscal years for non-audit services. The Audit Committee pre-approved all            non-audit services that E&Y provided to the Adviser and any Affiliated Fund Service            Provider that related directly to the Fund’s operations and financial reporting.            The Audit Committee requested and received information from E&Y about any non-audit            services that E&Y rendered during the Fund’s last fiscal year to the Adviser            and any Affiliated Fund Service Provider. The Committee considered this information in            evaluating E&Y’s independence.

 

| Fiscal YearEndedNovember 30, | TotalNon-Audit Fees Billed to Fund

(A) | Total Non-Audit Fees billed to Adviser and Affiliated                            Fund Service Providers (engagements related directly to the operations                            and financial reporting of the Fund)

(B) | Total Non-Audit Fees billed to Adviser and Affiliated                            Fund Service Providers (all other engagements)

(C) | Total of (A), (B)and (C) |
|------------------------------|-----------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|--------------------------|
| 2008                         | $8,756                                  | $382,000                                                                                                                                                                                                                     | $1,324,733                                                                                                                           | $1,715,489               |
| 2007                         | $6,717                                  | $486,614                                                                                                                                                                                                                     | $1,215,526                                                                                                                           | $1,708,857               |

 

 

All            other engagement fees were billed for services in connection with internal control            reviews, agreed upon procedures and tax compliance for DIMA and other related entities            that provide support for the operations of the fund.

             

***

 

In            connection with the audit of the 2007 and 2008 financial statements, the Fund entered            into an engagement letter with E&Y. The terms of the engagement letter required by            E&Y, and agreed to by the Audit Committee, include provisions in which the parties            consent to the sole jurisdiction of federal courts in New York, Boston or the Northern            District of Illinois, as well as a waiver of right to a trial by jury and an exclusion            of punitive damages.

 

***

E&Y advised the Fund’s Audit Committee that certain            arrangements between the Ernst & Young member firm in Germany (“E&Y            Germany”) and Deutsche Bank AG (“DB”) had been determined to be            inconsistent with the SEC auditor independence rules. DB is within the            “Investment Company Complex” (as defined by SEC rules) and therefore            covered by the SEC auditor independence rules applicable to the Fund. In 2006 and 2007,            DB provided standard overdraft protection on a depository account and a guarantee of            certain lease deposits to E&Y Germany. E&Y advised the Audit Committee that            while neither of these arrangements was ever utilized by E&Y Germany, they could            constitute lending type arrangements in violation of Rule 2-01 of            Regulation S-X. (Rule 2-01(c)(1)(ii)(A) provides that an accountant is not            independent when an accounting firm has a loan to or from an audit client.) E&Y            advised the Audit Committee that E&Y believes its independence has not been            impacted as it relates to the audits of the Fund. In reaching this conclusion, E&Y            noted a number of factors, including that neither of the arrangements was ever utilized            and, accordingly, E&Y Germany never had amounts outstanding to DB, these            arrangements were immaterial to E&Y Germany and DB and the E&Y professionals            responsible for the Fund’s audits were not aware of these arrangements. E&Y            informed the Audit Committee that E&Y Germany has cancelled the overdraft            arrangements and has terminated the guarantee on the lease deposits.

 

 

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| **ITEM 5.** | **AUDIT COMMITTEE OF LISTED REGISTRANTS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
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|        | The registrant has a separately-designated standing                            audit committee established in accordance with Section 3(a)(58)(A) of                            the Securities Exchange Act of 1934, as amended. The registrant's audit                            committee consists of William McClayton (Chairman), Keith R. Fox,                            Kenneth C. Froewiss, Henry P. Becton, Jr., John W. Ballantine and                            William N. Searcy.

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| **ITEM 6.** | **SCHEDULE OF INVESTMENTS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
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|        | Not Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
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| **ITEM 7.** | **DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES                            FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES**                                                                                                                                                                                                                                                                                                                                                                                                    |

 

|   | **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

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 |
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| (iii) | monitoring the Proxy Vendor Oversight’s proxy                            voting activities (see below). |
|-------|---------------------------------------------------------------------------------------------------------------|

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1 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.

 

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

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:

| **•** | Neither the Guidelines nor specific client instructions                            cover an issue; |
|------------|----------------------------------------------------------------------------------------------------|

| **•** | ISS does not make a recommendation on the                            issue; |
|------------|-----------------------------------------------------------------------------|

| **•** | 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.

_________________________

2 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.

 

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

*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.

_________________________

3 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. |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

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:

 

| **•** | *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.

| **•** | 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. |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **•** | 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. |
|--------|---------|-----------------------------------------------------------------------------|

| **•** | 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. |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **•** | 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. |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **•** | 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

 

 

**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”:

 

| • | the election of board members with positions on either                            remuneration or audit committees; |
|--------|---------------------------------------------------------------------------------------------------------------------|

| • | the election of supervisory board members with too many                            supervisory board mandates; |
|--------|----------------------------------------------------------------------------------------------------------------|

| • | “*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:

 

| • | directly align the interests of members of management                            boards with those of shareholders; |
|--------|---------------------------------------------------------------------------------------------------------------------|

| • | establish challenging performance criteria to reward                            only above average performance; |
|--------|-----------------------------------------------------------------------------------------------------------------|

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

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

| • | 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.

 

 

IMPORTANT: The information contained herein is the property of Deutsche            Bank Group and may not be copied, used or disclosed in whole or in part, stored in a            retrieval system or transmitted in any form or by any means (electronic, mechanical,            reprographic, recording or otherwise) without the prior written permission of Deutsche            Bank Group.

 

 

 

| **ITEM 8.** | **PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT                            INVESTMENT COMPANIES** |
|-------------|-------------------------------------------------------------------------------------------------|
|        |                                                                                            |
|        |                                                                                            |

 

**Portfolio Manager Disclosure**

 

The            following individual handles the day-to-day management of the Fund.

 

Gary            Sullivan, CFA, Managing Director of Deutsche Asset Management and Portfolio Manager of            the Fund.

| **•** | Joined Deutsche Asset Management in 1996 and the Fund in                            2006. Served as the head of the High Yield group in Europe and as an                            Emerging Markets portfolio manager. |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **•** | Prior to that, four years at Citicorp as a research                            analyst and structurer of collateralized mortgage obligations. Prior to                            Citicorp, served as an officer in the US Army from 1988 to                            1991. |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **•** | BS, United States Military Academy (West Point); MBA,                            New York University, Stern School of Business. |
|------------|---------------------------------------------------------------------------------------------------------------------------------|

**Compensation of Portfolio Managers**

 

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

 

**Base            Salary**– Base salary generally represents a smaller            percentage of portfolio managers’ total compensation than discretionary incentive            compensation. Base salary is linked to job function, responsibilities and financial            services industry peer comparison through the use of extensive market data            surveys.

 

**Discretionary Incentive****Compensation            –**Generally,discretionary            incentive compensation comprises a greater proportion of total compensation as a            portfolio manager’s seniority and compensation levels increase. Discretionary            incentive 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 employee’s individual contribution. In            evaluating individual contribution, management will consider a combination of            quantitative and qualitative factors. A portion of the portfolio manager’s            discretionary incentive compensation may be delivered in long-term equity programs            (usually in the form or Deutsche Bank equity) (the “Equity Plan”). Top            performing portfolio managers may earn discretionary incentive compensation that is a            multiple of their base salary.

 

|   | **•** | 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. |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | 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 discretionary incentive compensation that the qualitative            portion.

 

Certain            portfolio managers may also participate in the Equity Plan. The amount of equity            awarded under the long-term equity programs is generally based on the            individual’s total compensation package and may comprise from 0% to 30% of the            total compensation award. As discretionary incentive compensation increases, the            percentage of compensation awarded in Deutsche Bank equity also increases. Portfolio            managers may receive a portion of their equity compensation in the form of shares in            the proprietary mutual funds that they manage or support.

             

**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.

 

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

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

Gary                            Sullivan         | -                                                                                                | $50,001 - $100,000                                                       |
|                                                     |                                                                                             |                                                                     |

 

 

**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            provided as of the Fund’s most recent fiscal year end.

 

**Other SEC Registered Investment Companies Managed:**

 

| **Name of Portfolio Manager** | **Number of Registered Investment                            Companies** | **Total Assets of Registered Investment                            Companies** | **Number of Investment Company Accounts with                            Performance Based Fee** | **Total Assets of Performance- Based Fee                            Accounts** |
|-------------------------------|--------------------------------------------------------------------------|--------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------|
|  

Gary Sullivan         | 11                                                                       | $5,345,918,694                                                                 | None                                                                                            | -                                                                              |

 

 

**Other Pooled Investment Vehicles Managed:**

 

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

Gary Sullivan         | None                                     | -                                                                         | None                                                                                                   | -                                                                              |

 

 

**Other Accounts Managed:**

 

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

Gary Sullivan         |  

None                 |  

-                          |  

None                                                                        |  

-                                                                      |

 

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

 

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

             

| **•** | Certain investments may be appropriate for 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. |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

             

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

             

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

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

             

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

 

and            which may cause conflicts that could be to the disadvantage of the Advisor’s            advisory clients. The Advisor has instituted business and compliance policies,            procedures and disclosures that are designed to identify, monitor and mitigate            conflicts of interest and, as appropriate, to report them to the Fund’s            Board.

 

 

| **ITEM 9.** | **PURCHASES OF EQUITY SECURITIES BY CLOSED-END                            MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS** |
|-------------|-------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                |
|        |                                                                                                                                |
|        |                                                                                                                                |

|  

                             

                             

                             

                             

                             

                             

                             

                             

                             

Period | (a)

Total Number of

Shares Purchased | (b)

Average Price Paid

per Share | (c)

Total Number of

Shares Purchased as

Part of Publicly Announced

Plans or Programs |  

(d)

Maximum Number of

Shares that May Yet Be

Purchased Under the

Plans or Programs |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------|------------------------------------|------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                               |                                   |                               |                                                                                     |                                                                                           |
| December 1 through December 31                                                                                                                                                                                                                                                                                                                     | n/a                                    | n/a                                | n/a                                                                                      | n/a                                                                                            |
| January 1 through January 31                                                                                                                                                                                                                                                                                                                       | n/a                                    | n/a                                | n/a                                                                                      | n/a                                                                                            |
| February 1 through February 28                                                                                                                                                                                                                                                                                                                     | n/a                                    | n/a                                | n/a                                                                                      | n/a                                                                                            |
| March 1 through March 31                                                                                                                                                                                                                                                                                                                           | n/a                                    | n/a                                | n/a                                                                                      | n/a                                                                                            |
| April 1 through April 30                                                                                                                                                                                                                                                                                                                           | n/a                                    | n/a                                | n/a                                                                                      | n/a                                                                                            |
| May 1 through May 31                                                                                                                                                                                                                                                                                                                               | n/a                                    | n/a                                | n/a                                                                                      | n/a                                                                                            |
| June 1 through June 30                                                                                                                                                                                                                                                                                                                             | n/a                                    | n/a                                | n/a                                                                                      | n/a                                                                                            |
| July 1 through July 31                                                                                                                                                                                                                                                                                                                             | n/a                                    | n/a                                | n/a                                                                                      | n/a                                                                                            |
| August 1 through August 31                                                                                                                                                                                                                                                                                                                         | n/a                                    | n/a                                | n/a                                                                                      | n/a                                                                                            |
| September 1 through September 30                                                                                                                                                                                                                                                                                                                   | n/a                                    | n/a                                | n/a                                                                                      | n/a                                                                                            |
| October 1 through October 31                                                                                                                                                                                                                                                                                                                       | n/a                                    | n/a                                | n/a                                                                                      | n/a                                                                                            |
| November 1 through November 30                                                                                                                                                                                                                                                                                                                     | n/a                                    | n/a                                | n/a                                                                                      | n/a                                                                                            |
|                                                                                                                                                                                                                                                                                                                                               |                                   |                               |                                                                                     |                                                                                           |
| Total                                                                                                                                                                                                                                                                                                                                              | n/a                                    | n/a                                | n/a                                                                                      | n/a                                                                                            |

 

 

 

| **ITEM 10.** | **SUBMISSION OF MATTERS TO A VOTE OF SECURITY                            HOLDERS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|         | The primary function of the Nominating and Governance                            Committee is to identify and recommend individuals for membership on                            the Board and oversee the administration of the Board Governance                            Guidelines. Shareholders may recommend candidates for Board positions                            by forwarding their correspondence by U.S. mail or courier service to                            Chairman of the Board, P.O. Box 100176, Cape Coral, FL                            33910. |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **ITEM 11.** | **CONTROLS AND PROCEDURES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |

 

 

 

|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         | (a)                                     The Chief                            Executive and Financial Officers concluded that the Registrant’s                            Disclosure Controls and Procedures are effective based on the                            evaluation of the Disclosure Controls and Procedures as of a date                            within 90 days of the filing date of this report.                                                                                           |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|         | (b)                                     There have been                            no changes in the registrant’s internal control over financial                            reporting that occurred during the second fiscal quarter of the period                            covered by this report that has materially affected, or is reasonably                            likely to materially affect, the registrant’s internal controls                            over financial reporting. |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **ITEM 12.** | **EXHIBITS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|         | (a)(1)     Code of Ethics                            pursuant to Item 2 of Form N-CSR is filed and attached hereto as                            EX-99.CODE ETH.                                                                                                                                                                                                                                                                                                                                                                     |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|         | (a)(2)     Certification                            pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17                            CFR 270.30a-2(a)) is filed and attached hereto as Exhibit                            99.CERT.                                                                                                                                                                                                                                                                                  |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|         | (b)         Certification                            pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17                            CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit                            99.906CERT.                                                                                                                                                                                                                                                      |

 

 

 

----

Form            N-CSR Item F

 

**SIGNATURES**

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and            the Investment Company Act of 1940, the registrant has duly caused this report to be            signed on its behalf by the undersigned, thereunto duly authorized.

 

| Registrant: | DWS High Income Trust |
|-------------|-----------------------|

 

| By: | /s/Michael G. Clark |
|-----|---------------------|

|   | Michael G. Clark |
|--------|------------------|

President

 

| Date: | January 28, 2009 |
|-------|------------------|

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and            the Investment Company Act of 1940, this report has been signed below by the following            persons on behalf of the registrant and in the capacities and on the dates            indicated.

 

| Registrant: | DWS High Income Trust |
|-------------|-----------------------|

 

| By: | /s/Michael G. Clark |
|-----|---------------------|

|   | Michael G. Clark |
|--------|------------------|

President

 

| Date: | January 28, 2009 |
|-------|------------------|

 

 

| By: | /s/Paul Schubert |
|-----|------------------|

|   | Paul Schubert |
|--------|---------------|

Chief Financial Officer and Treasurer

 

Date:                                                                 January 28,            2009